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Don’t Expect the EU to Ride to the U.K.’s Rescue

Posted by hkarner - 20. Juli 2017

Date: 20-07-2017
Source: The Wall Street Journal By Simon Nixon

The bloc is neither equipped nor disposed to toss Britain the post-Brexit lifeline the country hopes for

The rest of Europe can be forgiven a little schadenfreude as it looks across the English Channel. So far, the decision to quit the European Union appears to have bought little but political instability and economic uncertainty to Britain—while the eurozone economy appears to go from strength to strength. But is the EU being too complacent about the risks it could face from a botched Brexit?

The EU already faces increasingly conflictual relations with two of its biggest neighbors, Russia and Turkey. Some in the U.K. government fear the EU is underestimating the risk that Brexit creates an increasingly conflictual relationship with a third.Both sides claim to want a deep and special partnership and to maintain the closest possible relations. But if the EU overplays its hand in the divorce negotiations—and even some Brussels officials believe some of the demands made by member states are excessive—it risks poisoning future relations. One senior adviser notes how the perception that the EU had treated the U.K. unfairly over access to fisheries when it joined the bloc in 1973 loomed large in the Brexit referendum more than 40 years later.

Some pro-European ministers cling to the hope that an enlightened EU, realizing the risks, will at the right moment offer a pragmatic deal that preserves much of the current cooperation while relaxing Brussels’ insistence on the right of free movement of people as a condition of full single-market access. Meanwhile, former Prime Minister Tony Blair and former Deputy Prime Minister Nick Clegg have said they believe some such offer is being contemplated.

But the idea that the EU might ride to the U.K.’s rescue seems highly optimistic. First, it assumes a capacity to act strategically that the EU doesn’t possess. There may be individual governments willing to contemplate the EU adopting a more pragmatic approach, but the EU is a community of 28 sovereign nations underpinned by a common body of law. It is by necessity a legalistic, technocratic organization whose complex decision-making processes exclude bold political steps.

Indeed, what capacity the EU may have had to act strategically has been further weakened by the recent rise of populist politics. This can be seen its approach to neighboring countries whose stability is vital to European security. In the past, the EU—with strong support from the U.K.—considered it vital for its security to offer countries in Central and Eastern Europe a path to EU membership. Yet the EU is currently unable to offer such a path to Ukraine and countries in the Western Balkans. Last week, the Dutch government vetoed an EU statement that would have recognized the possibility of long-term Ukrainian membership.

More fundamentally, the EU won’t ride to the U.K.’s rescue because it doesn’t believe it should. Senior EU officials argue that it is up to the U.K., as the country that wants to leave, to set out what future relationship it wants with the EU.

So far, the U.K. has been unable to do so for the simple reason that it can’t resolve the dilemma that lies at the heart of Brexit: If the U.K. wants the closest possible trading relationship with the EU, it will inevitably need to become a rule-taker, most likely still subject to the European Court of Justice, even if only indirectly via some other supranational arrangement.

Such an arrangement would minimize economic disruption in the near term but leave the U.K. vulnerable to future EU rule-making harmful to U.K. commercial interests. If it wishes, however, to regain the right to set its own rules—and enjoy maximum flexibility to enter new trade deals with other countries—Britain will inevitably face new barriers to trade with the EU, leading to serious economic disruption. In practice, many firms might be obliged to continue to comply with EU rules in any case to maintain access to the European market.

From the EU’s perspective, the fact that some in the U.K. government are starting to show signs of anxiety about Brexit is a welcome sign that reality is finally intruding into the debate, a reflection of the growing realization that there is no way of avoiding this decision over what kind of future relationship with the EU to seek.

There is no “have your cake and eat it” middle way, nor can the decision simply be deferred until the end of a long transition period. Business is demanding clarity now and in any case the government needs to secure an agreement on the framework of its future trading relationship as political cover to pay the exit bill.

What European governments increasingly fear is that this may be a decision that the U.K. is no longer capable of taking, given the deep splits in the government, parliament and the country, raising the risk rises that the U.K. crashes out of the EU with no deal at all. That would certainly be deeply damaging to U.K.-EU relations, and to the bloc itself. But the EU cannot make this choice for the U.K. It can only sit and watch.

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