The EU after the UK Referendum

invitation only · Kilta-sali · 14.06.2016 15:00 - 17:00

invitation only

The approaching EU referendum in the UK is destined to be decisive for the country’s EU membership. The outcome of the vote will also have major ramifications for the European Union. Available assessments of the Brexit suggest an economic and political turbulence in Europe, and also highlights the possibly of further disintegration. Then again deeper integration has also been envisaged as a way to secure the viability of the EU should the UK decide to leave. How would Europe and the EU look like after Brexit? Can the EU manage disintegration politically? What are the key legal options for and challenges of a UK exit? If the UK remains as a EU member, what kind of UK-EU relationship is likely to emerge?
Ian Bond, Director of Foreign Policy, Centre for European Reform
Nicolai von Ondarza, Deputy Head of Research Division EU/Europe, the German Institute for International and Security Affairs (SWP)
Jukka Snell, Professor of European Law, University of Turku, Professor of European Law, Swansea University
Juha Jokela, Programme Director, the Finnish Institute of International Affairs


Summary of the seminar

In his opening words, Programme Director Juha Jokela who chaired the event highlighted the strong implications of the the UK referendum for the EU and Europe as a whole. In the 1990s, as he started studying EU affairs, Europe seemed to be on a steady course towards unification which was thought to spill over into other regions as well, changing the world order. Nation states were no longer the only important factors. Yet now there is discussion of a possible disintegration in Europe, and the boundaries of globalisation are being discussed. Nationalism is on the rise, and western societies are polarised along globalisation winners and losers. The UK referendum could be seen as the tip of an iceberg of broader processes characterised by renationalisation, Dr Jokela remarked before giving the floor to the speakers.

Ian Bond began by describing the British campaign and the mood in London. According to the latest polls, the “leave” side has a narrow lead. If the polls are accurate, the result of June 23rd will show the serious misjudgement of Prime Minister David Cameron in 2013 when he committed to holding a referendum. He thought he could buy off the Eurosceptic wing of the Conservative Party and deal with the threat of UKIP. His first mistake was thinking that simply offering a referendum would calm down the Eurosceptic Conservatives – on the contrary, it only infused them. He perhaps believed he would still have a coalition with the Liberal Democrats after the 2015 general election, and that they would not let him have a referendum. But when support for the Liberal Democrats collapsed, there was no barrier between him and the referendum. His second error was overestimating the outcome of negotiations with Brussels, especially in the area of the free movement of labour. Third, he assumed that the political law of gravity did not apply to his government. The referendum is an opportunity for the people to kick a government they did not like.

Mr Bond described the campaign as “miserable”. On the Leave side, it consists of a series of lies that have not been effectively debunked. The payments the UK makes to the EU have been exaggerated, and it has been argued that there is going to be an EU army that will take over British forces, although in reality the UK has a veto on the formation of a common defence policy. Scare stories have been told that Turkey will join the EU by 2020, causing mass migration to Britain. The Remain side has been only marginally better, using exaggerated claims which have little support from evidence. A big threat that the government has realised is that Labour Party voters are not buying the arguments for remaining in the Union. Their leader Jeremy Corbyn is not truly pro-European, so he lacks conviction when he says his party is behind the UK remaining an EU member.

Assuming Britain decides to leave, Mr Bond argued the effect on foreign policy would be less significant than we perhaps think. Institutionally not much would change. Britain is not the only country that wants to keep the intergovernmental element of the Common Foreign and Security Policy. Still, the substance and the tone of EU foreign policy would change and not towards more activism. Despite its negative rhetoric about the EU, Britain has been one of the most active countries in using EU foreign policy to pursue its aims. No one, except perhaps France, is ready to take the role of driving EU foreign policy activity.

Policy towards Russia would change: Cameron was instrumental in persuading other countries to have sanctions. Without Britain, the others would not fight to keep the sanctions in place. Mr Bond did not expect Brexit would make a great difference for neighbourhood policy: the migration debate has made it difficult for the British government to argue for enlargement. The UK, a country which used to be the main proponent of enlargement, would not be championing the membership of Ukraine, Georgia, Moldova or Turkey – but neither would anyone else.

When it comes to Asia, the UK together with France, Germany, the Netherlands and Sweden has pushed for more cooperation with the US on Asia, including in foreign and security policy issues. Without one of the countries there would be less enthusiasm for such cooperation. With regard to the Middle East, very little would change according to Mr Bond. After the military operation in Libya, there is little expectation that the EU would be heavily involved there. In transatlantic relations, the UK has played the role of a bridge between Washington and Brussels, but lately the UK has backed away from influencing debates in Brussels, partly because America realised it needed more direct channels.

In defence, the implications are more significant, Mr Bond argued. The UK has always been ambivalent about the EU’s common defence, but has been keen on Europe doing more burden sharing or developing defence capabilities. If Britain withdraws, it will no longer be there to stop “vanity projects” such as the common headquarters or battlegroups that can never be deployed. Moreover, it won’t be there to make the defence market function better. Mr Bond was worried that if Brexit happens, Europe will be talking more about common defence, but finding it harder to muster the necessary capabilities.

Mr Bond concluded by saying that without the UK, EU foreign policy becomes less activist. When British Eurosceptics accuse the EU of imperial designs and meddling, it is ironic because more EU countries would like the world to leave them alone. Mr Bond hoped the new Global Strategy would be more ambitious, but was not convinced it would be. The Brexit option involves a risk of shrinking EU ambitions. A rush by the remaining 27 member states to make Federica Mogherini a genuine foreign minister seems unlikely. At a time when Europe’s southern and eastern neighbourhoods are on fire, the European role is needed to put out the flames, but Brexit could reinforce a tendency to think small and do less.

Nicolai von Ondarza brought a “message of nervous silence” from Berlin. Think tanks and officials are very worried, but in public the government is careful to stay neutral, not to give the Leave campaign a chance to say they are being threatened. The German newspaper Der Spiegel appealed to the Brits: please don’t go. At the same time, Finance Minister Schäuble said “out is out”: Britain would be treated as outside of even the single market.

Mr von Ondarza analysed the thinking on both sides of the question, as well as the reactions of Germany and of Brussels. If the UK stays in the EU, there will be a sense of relief in Berlin, but the relief will be followed by questions. Even as a member, the UK would not be a supporter of integration. They would still want a special status in the Union, not within Eurozone or Schengen. It would grudgingly support economic integration, but not further political integration. Secondly, the February pact with Cameron would have to be implemented. This would involve questions such as emergency brakes for social security and welfare for European employers in the UK. There would be parts of the package that Germans might want for themselves. Thirdly, even if the UK remains, Germany and other countries will have to deal with questions like the future of the Eurozone, populist movements, migration etc. Without the UK’s participation in the political integration, Europe will be centred on a core area of the Eurozone and Schengen. The fourth problem is that even as an EU member, the UK would only be half a partner; Mr von Ondarza remarked that the UK was rather passive in core issues such as the question of Ukraine.

On the other hand, if Britain decides to leave, many of the same questions will be asked, only with more urgency. Berlin and Brussels are not mentally prepared for Brexit. Officials believe that the British are pragmatic and vote to stay, and are afraid of influencing the vote negatively.

Continental Europe will be faced with difficult questions in case of a Leave vote. Before entering formal negotiations with the UK under Article 50 of the Treaty on European Union, should informal negotiations be held among the 27 or in smaller groups? The core funding countries will determine the first reaction, but they should keep the other states in the debate, or they will be sending the wrong signal. Germany has three competing interests. One is keeping the EU together, showing that integration will continue, but also showing that leaving will have a negative impact on the UK. However, another goal is maintaining economic ties to the UK, which is Germany’s third largest trading partner. Many British Eurosceptics say the Germans depend so much on the UK they will fight for an open relationship with the UK. Therefore, the German government will not punish the UK directly, but will rather work through market forces. It will demand that in order to have access to the single market, the UK must fully accept the rules including on free movement.

There will also be separate negotiations about the relationship among the 27 remaining members. Some in Brussels believe an exit vote should bring about more integration, but Mr von Ondarza was sceptical. According to voices in the German government, this would only encourage more referendums. We should respect the British vote while addressing Eurosceptic fears and focus on specific cases for moving forward.

Professor Jukka Snell discussed the legal aspects of Brexit and Bremain, which both involve important legal consequences. The right to vote is given to British, Irish and Commonwealth citizens living in the UK, as well as to UK citizens who have lived abroad no longer than 15 years. He pointed out that millions of people who are impacted by the outcome cannot vote: long-time expatriate Britons and Europeans living in the UK.

He described the withdrawal process based on TEU Article 50(2). First, the UK notifies the EU of its intention to withdraw. The timetable for the notification is unknown; delaying it in order to have discussions might prove difficult politically, and the process has strict time limits. After the notification, the European Council decides by consensus (without the UK) on what the EU wants from the withdrawal negotiations. The UK will negotiate the terms of the withdrawal agreement, probably with the Commission. Professor Snell remarked that no one knows what happens to Britain’s status in the Union during the negotiations – the country is scheduled to hold the EU presidency in 2017.

The agreement is adopted by a qualified majority vote in the Council, but it also needs the approval of the European Parliament, where UK MEPs would take part in the decision-making. A second agreement might also be needed for settling Britain’s relationship with the EU after the exit. This would probably take the form of an association agreement, entailing unanimity of member states and ratification in national parliaments, Professor Snell explained.

What would happen to the UK’s membership obligations? The tight two-year timeframe for the negotiations can be extended only through unanimity, and any member state can “blackmail” to get their views through to the contents of the agreement. Without an agreement, the withdrawal would happen anyway. A critical point which is absent from the Treaty is related to the acquired or vested rights of e.g. Finns living in Britain and vice versa. The withdrawal agreement will hopefully safeguard these rights. Without an agreement, the European Convention on Human Rights or the Vienna Convention on the Law of the Treaties may provide answers but this poses difficulties, according to Professor Snell.

If the UK decides to remain a member, the new settlement negotiated by the heads of state or government in February will take effect. This settlement would not be an EU act but an international treaty about new arrangements. Its legal force is based on the Vienna Convention on the Law of the Treaties. It is meant to merely clarify the treaties, but it would have real legal implications, not just for the UK but for all the member states.

The first issue in the settlement is economic governance. Discrimination between natural and legal persons based on the official currency of the member state is prohibited. There is also the possibility for countries outside of the banking union to delay decisions, in case the 19 Eurozone finance ministers start agreeing on a Eurozone position that the other member states have to accept.

The second issue is competitiveness. Everyone agrees, Professor Snell noted, that we should be more competitive, have better regulation and a sensible trade policy, but this is difficult to achieve in practice.

The third concern is about sovereignty. The new deal recognises that the UK is not committed to further political integration, the main goal of the treaties. There is also a red card option for national parliaments allowing them to stop EU law proposals. These may have far reaching consequences, but the real fight was in the area of social benefits and free movement, Professor Snell said. There is a worry that people move to have better social benefits in another member states, but the evidence is flimsy. As a response to this, old rules on free movement of workers and citizens will be interpreted more tightly. There are also changes to secondary law, in particular indexation of child benefits. Finally, there is a controversial safeguard mechanism allowing member states to deny migrant workers right to in-work benefits for up to four years.

This is an agreement between member states, and at least two important parties, the EP and the European Court of Justice which interprets free movement of workers were absent, Professor Snell pointed out. He finally noted that EU competences are nowhere mentioned in the settlement. The UK engaged in a thorough ‘Balance of Competences Review’ in 2012, and the result was that there is no need to repatriate anything.

The discussion continued in the form of a Q&A. Mr Bond answered a question on the relation between sovereignty of the people and sovereignty of the British Parliament. He said for MPs to ignore the referendum would mean the risk of losing their seat to UKIP. Cameron does not technically need the Parliament for initiating article 50, but will want as many fingerprints on the decision as possible. He also said Brexit would complicate EU-NATO relations. Mr von Ondarza did not think an immediate domino effect of referendums would occur, but Brexit would be seen as an example by some on the far right. The role of the European Parliament and of national parliaments if Britain leaves was also discussed. According to Professor Snell, the EP can prevent the agreement from entering into force. Mr Ondarza remarked that since many British MEPs are in fringe groups, Brexit would reinforce centre groups in the EP. The discussion also dealt with the Scottish issue, implications for Nothern Ireland, the future of the Conservative Party, and mistrust of the EU that is due to disinformation.



Presentation by Ian Bond
Presentation by Nicolai von Ondarza
Presentation by Jukka Snell