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Post-Brexit EU Unity May Not Hold

Posted by hkarner - 26. Mai 2017

Date: 25-05-2017
Source: The Wall Street Journal By Simon Nixon

The biggest surprise of Brexit has been the remarkable cohesion of the remaining 27 EU members. But it may not last.

The biggest surprise of Brexit so far has been the remarkable cohesion of the remaining 27 members of the European Union. In fact, no one has been more surprised by this unity, which manifested itself immediately after the referendum and has solidified since, than the EU itself.

The 27 nations have resisted the British government’s diplomatic efforts to pry them apart. Even a whistle-stop tour of European capitals by Prince William’s wife, the Duchess of Cambridge, couldn’t stop EU leaders from agreeing to their hardline Brexit negotiating guidelines in just four minutes.

The bad news for the U.K. is that this unity is likely to hold when formal negotiations begin. That’s partly because the interests of the EU27 really are aligned.There is unanimity on the need to protect the long-term rights of EU citizens in the U.K. Above all, there is a determination across the EU to preserve the integrity of the single-market rule book from British efforts to cherry-pick its mandates.

The EU’s unity also is clear in the case of the bloc’s budget: Both net contributors and net beneficiaries are determined that the Brexit deal shouldn’t create any shortfall in the current EU budget that would force them to choose between increasing contributions or scrapping projects that have already been approved.

But another reason why the EU is likely to remain united over Brexit is that the other 27 countries have already moved on. There are still those in the U.K. who remain convinced that the rest of the EU is determined to stop Brexit. But if this was ever true, it ceased to be so months ago.

From Berlin to Brussels, Warsaw to Madrid, Helsinki to Rome, Brexit has largely dropped off the political agenda. National governments have outsourced Brexit to the European Commission, which will negotiate on their behalf. Meanwhile, the anguished debates that took place across Europe last year on whether Brexit would trigger the disintegration of the EU have given way to urgent debates on how to reform it.

Indeed, it is here that the real risk to EU cohesion lies. As the bloc debates its post-Brexit future, new tensions and fault lines are already emerging. Some of these inevitably relate to the next EU budget, which will come into force in 2020.

Some countries such as Poland that currently benefit from EU spending want to preserve the existing size of the budget even if that means paying in more; others such as Austria have made clear they think the budget should shrink to reflect the departure of the U.K., so that no country faces higher contributions than they face today.

Another source of tension is likely to be the future commercial policy of the EU, particularly following Emmanuel Macron’s election as French president. His calls for tougher EU action on “social dumping” by those he argues are gaining an unfair advantage through easier fiscal, social and environmental policies have alarmed some of the bloc’s newer members such as Poland, which fear they will be discriminated against.

These fears are heightened by big shifts in the post-Brexit EU balance of power: Under the EU’s voting mechanism, which weights votes according to population size, the remaining big countries—France, Italy and Germany—will gain power at the expense of smaller countries; southern countries will gain at the expense of northern ones; and the eurozone will gain at the expense of the eight remaining non-eurozone members.

Perhaps the biggest risk to EU unity is the thorny issue of eurozone reform. Here the divisions concern not just what to do—Should the eurozone have its own budget? How should it be funded? How would it be deployed?—but how to do it.

Should any reforms be implemented via changes to the EU treaties, which would require the consent of all 27 members but would trigger referendums in several countries?

Or should the eurozone opt instead for a new intergovernmental agreement involving only those countries that use the common currency, as it did when it established the European Stability Mechanism, its common bailout fund?

And if the latter, how can the interests of the non-euro countries be protected? Would the creation of a eurozone budget come at the expense of the wider EU budget, putting non-euro countries at a disadvantage?

The outcome of these deliberations—far more than the Brexit negotiations—will shape the future of the continent for decades to come.

The implications for individual countries could be momentous, particularly for those outside the eurozone. Mishandled, as Agata Gostynska-Jakubowska and Christian Odendahl note in a new report for the Centre for European Reform, this process could increase divisions between members states and even lead to further disintegration.

Ordinarily, the U.K. would consider it a matter of vital national interest to have a seat at the table when decisions that could determine the stability of Europe are being discussed. This time, of course, the U.K. won’t even be in the room—though the Duchess of Cambridge will no doubt still be welcome.

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