Brexit: breaking the fall

The people have spoken: they voted to leave the European Union. The margin was far from large, but it was clear – too clear to blame on people who changed their mind after the vote, or people who thought Remain would win anyway, or poor weather in London. My country has, however narrowly, turned its back on a union in which I passionately believe. It is by far the most personally devastating political defeat I have ever experienced.

I cannot pretend that I think this is anything other than a terrible misjudgment on a historic scale. The impact on our economy will be profound, as we can already see; a deeply-divided kingdom will be riven further; our influence in the world is in free-fall, our allies either alienated or bemused; and we have dealt a grave blow to one of the key pillars of security and stability on the continent of Europe. Britain is currently the pariah of the Western world. It is a damning indictment of our political leadership that we have reached this point.

However, disastrous as it may be, Brexit is now the reality with which we will have to grapple. The mendacity of the Leave campaign does not mean the verdict can be overturned: the electorate may have been misinformed about the details and the facts, they may have been lied to repeatedly and on a grand scale, but they made a judgment and will not take kindly to politicians trying to overrule it. A second referendum would be a case of ‘once more, with feeling’: a government which tried to ignore the one we’ve held would be crucified by the voters. Britain is leaving the EU. We will have to try and contain the damage.

The price of rejectionism

The first step is a cold, clear-eyed recognition of the position in which we find ourselves. Our EU partners believe (whether you agree with them or not) they went as far as they could to accommodate British exceptionalism. They feel the UK has had a special deal for decades: a special rebate, opt-outs from the euro and Schengen, the ability to pick and mix on justice and home affairs and so on, augmented further by the deal Cameron negotiated.

Very understandably, they now feel the British electorate has just slapped them in the face, egged on by the politicians who encouraged them to vote themselves out of Europe. They noted the rhetoric and the tone of the Leave campaign. They heard when people exulted over a potential collapse of the EU. These are now the people whose goodwill we need – and partly as result of voting Leave and partly because of the tone of the campaign, we are currently very short on goodwill. If you doubt that, you need only watch a few of Monday’s speeches in the European Parliament.

Further, the EU’s priority will (rightly) be preventing the unravelling of the whole EU. Britain cannot be seen to benefit from a special deal where it secures everything it wants from the EU and nothing it dislikes. The whole EU bargain relies on a common corpus of rules and institutions to deliver a common good. This is not vengeance: it’s self-preservation. If the deal breaks down, so ultimately does the single market, the EU as a whole and one of the chief pillars of the European order. We will not secure a deal as good as the one we just rejected: we will pay a price.

If the next UK Government wishes to serve its country, it will recognise this as soon as it can. We are supplicants to a Union we have just spurned and which holds almost all the cards. Nationalist delight had better give way to hard realism, and to a hefty dose of humility, very quickly. We need to build bridges as best we can and choose our priorities. And if Boris Johnson actually believes we can secure single market membership, an end to free movement and an exit from the body of EU law, things are even worse than I thought. All we can be sure of is that we will not secure everything we want.

How to start

It is now for Britain to trigger Article 50 of the Treaty on European Union: our EU partners will not begin formal or informal talks until we have done so. Clearly, the UK is in no position to do this now due to our more or less total lack of political leadership, and we must hope the turmoil in both major parties will be an opportunity to clarify what kind of arrangement the UK seeks – but it is not in our interests to be truculent about it. If we need more time, our best hope is to allow passions to cool and hope it can be granted in as constructive a spirit as possible in 2018/19.

The next UK Government should also, as a priority, state that a successful, prosperous European Union with which it would continue to work closely remains a vital UK interest. One of the things which especially enraged other EU governments (who are much more conscious than the British of the depths to which Europe once descended) was the casual references by too many British politicians to unravelling the EU or – utterly irresponsibly – ‘liberating’ the continent. This kind of language plays into our neighbours’ deepest fears; it intensifies the incentive to ensure we pay the heaviest possible price for our departure; it refers to an event which not even sane Brexiters should want to see, namely the disorderly unravelling of Europe; there should be no more of it.

Finally: the terms of UK exit have to be approved by an enhanced qualified majority of the other EU members and by the European Parliament. But if the UK wants to secure either single market membership via the European Economic Area or, at the very least, a deep and comprehensive free trade deal which addresses at least some non-tariff barriers, it is very likely that some or all of the required treaties will be ‘mixed agreements’ and need to be ratified by all EU member states. Norway, Iceland and Liechtenstein would also need to ratify EEA membership.1 We cannot afford to neglect a single EU or EEA member state: in fact, we will have to conduct the most intensive charm offensive ever mounted by the Foreign Office. If you want a sense of how prepared we currently are, consider this: we don’t actually have an Embassy, or even an honorary consul, in Liechtenstein.

Markets or migration?

Some Brexiters now claim the Leave vote was not fundamentally about immigration. Few Remain campaigners will take them very seriously: some of the polling may well show sovereignty as the number one reason for voting Leave, but immigration is the salient policy area substantially affected by EU membership. Leave’s surge came very shortly after it abandoned the economy and went for an outright anti-immigration pitch.

However, there is no escaping the trade-off. It was quite clear before the referendum, however much Vote Leave tried to deny it: free movement comes with single market membership. Britain’s decision does not change that. Switzerland’s access to the single market only extends to de facto membership (more or less) for goods, its links to the EU are looser than the EEA, and yet free movement remains the price of access. The free movement of goods, services, capital and labour go together: the EU will not disentangle them to please the country which has just plunged it into crisis. And leaving the single market will do far more damage to working people than immigration ever would (even if you believe the overall level would reduce radically, which I don’t).

It follows that I believe the EEA is the least-worst option now available to us. EEA membership of the single market is less comprehensive than EU membership. It involves new barriers, because the EFTA countries aren’t in the customs union: they negotiate their own trade deals, which means customs checks between Norway and Sweden. We know these new barriers will do significant economic damage, but they’re unavoidable, given that the EU will no longer negotiate trade deals on our behalf in any scenario.2

Can it be sustained politically? Quite apart from free movement, I suspect it will be very difficult indeed. The EEA entails accepting most EU laws relating to the single market: ‘bendy bananas’ were always a lie from the anti-EU press, but the lie won’t become any harder to spread. Unlike now, we will lose our vote on those laws: the notional right to decline to apply them is accompanied by an EU right to suspend single market access in the relevant areas (though for the centre-left, the EEA thus preserves EU social rules and stops Conservative governments from initiating a race to the bottom). Consultation is time-limited; Norway finds its influence is generally very limited; and even though Britain is a much larger country, the EU will not, as a point of principle, allow it to exert anything like the influence of a member state.

However, EEA membership does allow us to pursue our own trade deals (in reality, we get better trade deals via the EU, but Leavers have always said this is what they want); the UK would leave the Common Agricultural Policy and the Common Fisheries Policy, always eurosceptic bugbears; our budget contribution might be somewhat reduced (our budget rebate would almost certainly go, but the budgetary imbalance for which it compensates arises in large part from the CAP); and we would be released from co-operation outside the single market unless we struck separate agreements with the EU (as Norway has).

The EEA is an existing arrangement, which is in some ways easier to negotiate than a bespoke deal, and it could be defended as an option in line with our divided country. 48% of voters chose to remain in the EU. Leave won a clear victory, but it was far from overwhelming. Norway’s EEA membership operates as a compromise between its pro- and anti-EU camps; if at all possible, the next British Government should take the same approach. If we cannot, the economic damage to our country will be far greater.

Can we secure that from the EU institutions and all EEA states? Again, how the UK Government conducts itself will be critical. To put it at its mildest, it is not currently obvious to our partners that we are capable of co-operating amicably with the EU institutions within any framework. The EEA does, as Leave campaigners occasionally pointed out, afford non-EU members a theoretical right to decline to implement EEA directives, in response to which the EU can suspend single market access for the relevant area for that member. Norway has only made use of this once (temporarily): Britain may well be less co-operative. Others could have very serious reservations about whether or not UK obstructionism could destabilise the EEA Agreement, with serious consequences for the EEA members as well as the EU (which has quite enough headaches from the Swiss bilateral approach and will not particularly wish to give itself more via the EEA). We have a great deal to prove.

There is one thing which could, at least, help address voters’ concerns on migration without reducing single market access even further. Rightly or wrongly, it is not just the British electorate which is profoundly antagonistic to the idea of free movement to and from Turkey. EU-watchers have known for years that Turkish membership is not really on the cards; the Cyprus dispute (making both Cyprus and Greece insurmountable blocks to unanimous agreement), the opposition of the French and German centre-right, Austria’s clear hostility and the Turkish drift away from Europe and towards authoritarianism have all reduced accession to the status of a pipe dream. We do not say so for geopolitical reasons, linked partly to Turkey’s role in NATO and partly to its importance in the Middle East. But the issue is corrosive throughout Europe. We have, of course, now given up our say on this: but in the interests of appeasing the electorates of the other 27 members, the EU should probably find an appropriate time (itself a difficult task) to admit that this ambition has run its course. This could help calm the debate in Britain too.

More than markets

Remain argued, rightly, that there were many other areas where the UK’s EU membership benefited the country. Leave campaigners have said, too, that the UK will continue to work with the EU on a whole host of issues. The UK must now look at areas where it wishes to continue co-operation. Again, it will not necessarily be easy, and the cards are in the EU’s gift rather than ours. But some examples follow.

The EU is a major international actor on climate change, and the UK has in the past taken a leading role here via the EU. Clearly our current Government is rather less interested in this than its predecessors, but a future UK Government should wish to preserve its membership of the EU’s Emissions Trading System. At present, all EEA countries are members; the UK has major potential in renewable energy if it cares to use it, which would be to its benefit in an ETS context; and our pro-market (and ideally pro-single market) ruling party should surely be supportive of market-based mechanisms for emissions reduction.

Leaving the EU means losing the European Arrest Warrant, which is bad news for UK law enforcement. (If you doubted our role in this area: the head of Europol is, for now at least, British.) However, Iceland and Norway are effectively in the process of joining most aspects of the EAW: it would seem sensible for the UK to look into whether it could do something similar. (Again, the Foreign Office needs to ensure its EU charm offensive includes EEA members.)

One crucial priority for the UK must be Northern Ireland’s relationship with Ireland. It remains astonishing to me that a Northern Ireland Secretary could advocate Brexit and retain her position. Even an EEA-style relationship with the EU would involve customs checks between Ireland and Northern Ireland, though they can be spot checks. An urgent priority for the UK must be to ensure an open border is retained if at all possible, in close coordination with the Irish Government, along with continuing reciprocal rights for UK and Irish citizens, whatever the future status of other EU nationals. Accepting the EEA and thus free movement would make this much more feasible: if the UK insists on leaving the single market for this purpose, we face a fundamental challenge on our only land border.

Once we’ve left

We cannot excise ourselves from our continent, however much Nigel Farage might want us to: we will remain, to some degree, a European power. The EU and its members need to be a crucial part of UK foreign policy going forward, as important as our relations with the US: forfeiting our vote in the EU both diminishes our ability to wield influence and makes it more important. We will, if anything, have to work harder at it than before.

That means the UK Representation to the European Union needs to be maintained in full force. Other forums in which European states meet – NATO and the Council of Europe in particular – also become all the more important for us. We should resist the Conservatives’ attempts to undermine our signature to the European Convention on Human Rights (the Council of Europe’s greatest instrument) as a matter of foreign policy as well as human rights principles.

One of the few areas in which UK-EU negotiations may be rather more equal, in fact, is foreign policy and defence. For all its self-imposed isolation, the UK remains one of the two major defence powers in democratic Europe, with one of its best diplomatic networks around the world and a major role in Western security. The anti-Europeanism of much of the Conservative Party didn’t prevent strengthened Franco-British co-operation in defence outside the EU framework: we should pursue and intensify such efforts, as well as our emphasis on NATO, both before and after Brexit.

Finally: Brexit damages our trading and other links with the world at large, not just with the rest of the EU. The Leave campaign claimed it would help us build our links: now the next UK Government will have to try and make good on their promises. As a market of 65 million rather than 500 million starting from scratch, we will inevitably be further to the back of the queue, and we will have plenty of pre-existing deals to negotiate: if Whitehall isn’t working on recruiting some trade negotiators right now, it should be. (If countries are willing to replicate our current EU trade deals on a ‘like for like’ basis, that is a fantastic deal we should seize with both hands. Don’t hold your breath, though.) We should be thinking hard about who to prioritise: but again, we will need a hefty dose of realism. We have less than a fifth of the EU’s GDP: of course we can in time strike deals, but we have less clout and will need to concede more than a market of 500 million.

Looking forward

I believe we have made an awful mistake, which will damage both Britain and the whole of Europe and which historians will judge harshly; I cannot pretend otherwise. But the people are politically (even if not legally) sovereign, and their choice must be implemented in the least painful way possible.

If we want to contain the fallout, we will need to ditch sentiment very quickly indeed. We will need to prioritise, recognise the Leave campaign’s fantasies cannot be delivered and choose which of their promises we will break, because some will have to be broken. But if we can secure single market membership, rebuild our tattered relations with EU allies and other EEA members, preserve co-operation in some key areas, protect the position of Northern Ireland, invest serious effort in our foreign policy towards the EU, preserve some voice in our continent’s counsels through the other organisations we’ve joined and do what we can to build links elsewhere, then we can contain the damage.

It is a very tall order. I have little confidence that the next UK Government will achieve all or even most of it. But we have to try.

1Added 14 August 2016: In order to join the EEA, the UK would also need to be a member of the European Free Trade Association, which also includes Switzerland. We therefore also require its consent on the way to the EEA.
2 Added 14 August 2016: Some commentators have speculated that the UK might wish to remain in a customs union with the EU, on the Turkish model. But then we couldn’t negotiate free trade deals with third parties except a) insofar as the EU has one or b) in areas not covered by the customs union, and we’d still have to provide tariff-free access to countries where the EU has a deal. Turkey has negotiated trade deals with some of those countries – but very obviously, if our markets are already open to them, we’d have a very weak negotiating position indeed. Since one of the key arguments made for Brexit was an ability to pursue an aggressive free-trade strategy, I believe this is too politically unviable to take seriously.

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