Conservative leadership candidates are debating whether Britain should implement the ‘Article 50’ process that will set the clock ticking on Brexit. British commentators and think tanks are debating what would be the best post-Brexit model for the UK – whether a European Economic Area ‘minus’ or Free Trade Agreement ‘plus’, among many. Meanwhile, EU leaders are struggling to develop a coherent response to the shock of an imminent UK departure.
Mapping out a constructive new UK−EU relationship is crucial. But the opportunity to achieve this will be missed if leaders on both sides fail to recognize and work through some longstanding grievances first. A deep and mutual incomprehension divides many of Britain’s leaders from their European counterparts – and it risks compounding the UK−EU split.
The EU’s frustrations
Seen from EU capitals, David Cameron’s decision to hold the referendum and the Boris Johnson-led Leave campaign represents a remarkable betrayal of trust.
For one thing, it is Britain that pushed most fervently to enlarge the EU to the post-communist countries of central Europe after the Cold War. Yet Britain is now trying to detach itself from the EU so as to avoid the pressures of immigration that were an inevitable consequence of its own policy.
British leaders have also repeatedly stated that strengthening and deepening the eurozone is in Britain’s national interests. And yet its decision to leave the EU threatens to undermine the eurozone just as it is beginning a fragile recovery, putting new strains on economic growth, domestic banks and financial stability there, as well as in the UK.
Furthermore, Britain – one of the main architects of the Single Market – is now the country that risks diminishing it. Without UK support, protectionist interests will be better placed to block market reforms, meaning unemployment and slow growth are more likely to persist in parts of the EU.
Britain was one of the fiercest advocates of tough sanctions against Russia after its annexation of Crimea and intervention in eastern Ukraine in 2014. But the UK will now leave the rest of the EU to fend for itself against Putin, even as the populism he practices spreads its tentacles across Europe.
In addition, EU members feel they gave David Cameron pretty much all that he asked for in the pre-referendum negotiation, despite having to cope at the same time with the refugee crisis and the fall-out from the terrorist attacks in Paris. Cameron then ignored the deal during the referendum campaign and still lost.
The UK’s frustrations
But political leaders in the UK have their own justifiable set of complaints about the EU, beyond their fears of domination by an increasingly integrated eurozone.
To start with, EU leaders continually lecture their British counterparts about the immutability of the free movement of labour, insisting that all four ‘freedoms’ (of goods, services, capital and people) are sacrosanct. And yet the EU is far from having an open market for services. Over 60 per cent of services are still not tradeable across EU borders.
The services sector is the UK’s most competitive. Unable to maximize this advantage, the UK runs a large trade deficit with the rest of the EU, while being a net contributor to its budget. Germany and the Netherlands are also net contributors, but are able to run healthy trade surpluses in goods with their EU neighbours.
The UK’s relatively open services economy is one of the reasons why levels of employment have recovered so quickly after the financial crisis. But it is also one of the reasons why so many EU citizens have chosen to move to the UK to find work.
In contrast, a badly-designed eurozone, which contributes to slow growth across much of the rest of the EU, not only feeds the flow of migrants to the UK, but also the view that Britain could do better outside.
The EU’s Schengen Agreement has also proved to be a fair-weather arrangement. The failures of many continental European domestic security institutions to cope with growing cross-border refugee and migrant flows, rising organized crime and terrorist threats have heightened calls to harden British borders.
And the EU has done little to improve the stability and security in its neighbourhood. It naively tries to engage Russia as a ‘strategic partner’, sustains the charade of accession negotiations with Turkey and resists opening key EU markets in order to deepen economic ties with its North African neighbours.
At the same time, other than the UK and France, most EU members focus more effort on creating new European security institutions than on investing in meaningful defence capabilities. This feeds the traditional British narrative that only NATO can protect Europe.
Laying the groundwork for compromise
EU leaders need to recognize that those of their British counterparts who argued for Brexit have justifiable complaints about the EU’s performance and objectives. Similarly, those British politicians who will determine the UK’s future relationship with the EU need to set aside their campaign rhetoric and recognize the inconsistencies in many of their own positions.
A positive UK−EU compromise will only emerge if it is rooted in a better understanding of each other’s concerns and is built on a greater sense of empathy than currently exists on either side.
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