March 11, 2016

Britain’s Referendum Is Important for the Whole of Europe

Reuters/Scanpix
British Prime Minister David Cameron arrives at the EU council headquarters for a second day of a European Union leaders summit addressing the talks about the so-called Brexit and the migrants crisis, in Brussels, Belgium, February 19, 2016.
British Prime Minister David Cameron arrives at the EU council headquarters for a second day of a European Union leaders summit addressing the talks about the so-called Brexit and the migrants crisis, in Brussels, Belgium, February 19, 2016.

Britain’s upcoming referendum on its European Union membership matters to all of Europe for several reasons. Part of the answer lies in the history of the British democracy, nation-state, politics and economy.

It is important to remember that Magna Carta (written in 1215 and part of statute law from 1297) is the first known agreement that regulates relations between a ruler and individuals by stating that even the king is not above the law. No country in the history of the European nation-states has not protected its autonomy and tried to increase its sovereignty. However, the United Kingdom is definitely one of the European countries where the sovereignty of the individual has become the core of state sovereignty. It is even often interpreted that, if a country is not sovereign, its citizens are slaves. The British see international organisations establishing authority over individuals, enterprises and the state as a restriction of sovereignty, which in some cases might be necessary but which has to be authorised by the people, or at least by their elected representatives. Many Britons do not consider the EU sufficiently democratic because the sole right to propose supranational legislation rests with the European Commission, whose members have not been elected by the people.
The first UK referendum on whether to remain in what was then the European Economic Community took place in 1975. It was organised by Harold Wilson, the then prime minister and leader of the Labour Party, as a counteraction to the decision of the previous (Conservative) government to join the EEC in 1973. At the time, the majority of Conservative voters viewed European cooperation positively, while the Labour Party was divided; as a result, the UK stayed in. The current situation is almost the opposite. The majority of Labour voters and Scottish nationalists support staying in the EU, while the Conservatives are divided and the only political party to demand secession is the United Kingdom Independence Party (UKIP), which has gained increasing support in recent elections. Many public opinion polls over a decade indicated that, in general, the average number of EU supporters and opponents is more or less equal, and this has been confirmed by the most recent polls.1
David Cameron’s Conservative Party won a decisive victory in the last UK general election, and has 331 of the 650 seats in the House of Commons and holds an absolute majority. One of the cornerstones of the Conservative election platform was the promise to hold a new referendum on membership of the EU during the new parliament. With this, Cameron brought the EU back to the heart of the British domestic political debate. It also forced EU institutions and member states to take greater account of British interests, because none of them wants the UK to leave.
When it comes to wanting to change the EU’s relations with Britain, as well as the whole functioning of the Union, David Cameron is following in the footsteps of his predecessor Margaret Thatcher. She called for Europe to increase trade and economic freedoms and reduce pan-European bureaucratic economic regulation, reduced Britain’s participation in the Common Agricultural Policy, and was opposed to deepening European integration, especially in the area of defence and foreign policy.
Tony Blair, the leader of the Labour Party and prime minister from 1997 to 2007, also tried to change many aspects of the EU. He primarily supported extending European integration by welcoming new member states, increasing the EU’s competitiveness and changing the structure of the budget, significantly decreasing the money allocated to agriculture and even ending repayments to the UK, which Thatcher had fought for as compensation for British farmers’ relatively small participation in the EU’s agricultural and rural policy. Blair proposed a second chamber in the European Parliament based on national parliaments, which was supposed to increase the role of representatives elected by nation-states in leading Europe. However, all his proposals were firmly opposed, at least by the French. Blair promised British voters a referendum on the EU Constitutional Treaty, but this was unnecessary because the treaty was rejected in referendums in France and the Netherlands in 2005.
David Cameron’s task is no easier, not to say nearly impossible. On the one hand, he has promised to put the UK’s membership of the EU to a referendum but, on the other, he has promised to change the UK’s relationship with the EU in a way that allows Britons to vote to stay in. Over the past several years, the British prime minister has introduced his proposals and the reasoning behind them to the leaders of other EU member states and EU institutions. The basis of the proposals is his January 2013 speech on the future of Europe, in which he argued for the need to form a new model of EU cooperation that would guarantee more democratic governance of the EU, greater legitimacy and an increase in the competitive power of the European economy through market-economy based reforms. The speech was criticised for a lack of specific proposals.
In a letter of 10 November 2015 to Donald Tusk, President of the European Council, David Cameron submitted six key proposals, carefully considered in advance in order to gain wide support from other member states:
· members of the eurozone and the European Central Bank should not adopt decisions that directly disadvantage the economic and financial interests of non-euro members (i.e. especially London’s banking sector);
· a strong push towards the further development of a single market in new areas, such as services, digital technology, and energy;
· the volume of EU legislation should be reduced and decision-making powers given back to national parliaments in some fields;
· additional exemptions regarding EU legislation, e.g. to withdraw from the commitment to ever-closer union and the implementation of some plans that disadvantage the UK;
· national parliaments should be given more rights to veto EU legislation if they do not comply with the interests of member states;
· change the EU’s migration policy to end illegal “benefit tourism” to richer member states, reduce the initial benefits provided to refugees and extend the waiting period before immigrants are granted access to countries’ social security systems.
David Cameron introduced these proposals and looked for support first from Germany and Hungary, and then Poland, Slovakia and other countries where the views of politicians in power were similar to his own. On the basis of these proposals, on 2 February 2016 Donald Tusk produced a 16-page draft of a four-part decision for the European Council summit in Brussels on 18–19 February. This document was discussed in Brussels by the ambassadors and government advisors of all member states from 5 February.
The liveliest discussion and controversy was caused by the “migration brake” proposal, according to which various social benefit payments would be withheld for four years from migrants who had arrived in the UK from EU member states. In order to resolve the migration crisis, Cameron proposed that only those migrants who had contributed to social-security funds should be entitled to benefits. Several Eastern European countries opposed the restriction of benefit payments, arguing that it was discriminatory, but Western European countries countered that each EU member state had the right to shape its own labour market and budget because social benefits depended on the budget of each member state, not that of the EU.
In addition to the UK’s proposals, the EU’s new wider migration policy was also discussed at the summit on 18–19 February, chaired by the Netherlands. As both topics had been thoroughly prepared beforehand and the Dutch agreed with the UK on these questions, no new topics were raised and the summit’s decisions were, surprisingly, adopted unanimously and quickly on the basis of prior compromises. (This was despite the fact that, instead of a planned English breakfast, the agreement was celebrated at a later English dinner, so that Cameron could share his success with the whole world via the BBC.)
The Council’s decisions did not only mark acceding to the UK’s requests; they also ended Angela Merkel’s open-door migration policy, which has recently been strongly criticised, even in Germany. A convergence of opinion between the British and Germans may give the final push for quicker and more effective progress in many areas crucial to the EU.
The agreement between the EU and the UK in the Council not only deepens the special status of Britain in the EU, but also significantly extends the model of multi-speed European cooperation. This was illustrated by the informal meeting of the foreign ministers of the six founding members of the European Community (Germany, France, Italy, Belgium, the Netherlands and Luxembourg) on 9 February in Rome, at which they confirmed the wish to move towards closer transnational integration, and also by a meeting of the prime ministers of the “Visegrád Four”—Poland, the Czech Republic, Slovakia and Hungary—which called on other Eastern European EU member states to cooperate in protecting shared interests, particularly over migration policy.
David Cameron has for some time risen alongside Angela Merkel as an important influencer of European politics. The British prime minister’s strong statements and soberly calculated success is probably based on the fact that Britain has the strongest and most modern army in Europe and is the second most economically powerful country in Europe after Germany. The UK has managed to develop a high-technology industry, competitive services sector (especially banking) and one of the largest creative economies in the world. The UK has been relatively successful in overcoming the last global economic crisis and the population has grown faster in recent decades than in any other major European country.
However, David Cameron’s position in influencing and changing continental Europe has been weakened by the internal political situation in Britain, particularly in Scotland. The governing Scottish National Party is campaigning to remain in the EU, but the question of Scotland remaining in the UK may be put to a second independence referendum if the British majority votes to leave the EU but Scottish voters do not. The Conservative government will certainly not want to go down in history as the one that broke up the United Kingdom.
Naturally it would benefit the security of continental Europe, and especially the Baltic countries, if Britain remained in the EU, even though European security is mostly guaranteed by NATO. It has been said that Estonia should support Scotland in its efforts to keep the UK in the EU.2 It is difficult to imagine what this support could be. I tend to believe that Estonia should actively support Britain’s proposals to reform the EU’s leadership and modernise the economy. Estonia will benefit if David Cameron manages to become the frontrunner of reform in the European Union and if he is able to convince the British to vote in favour of remaining in the EU. The Scottish effort to keep Britain in the EU will probably have little effect compared to what could be achieved indirectly by the Germans, the French and the European Commission (i.e. Angela Merkel, François Hollande and Jean-Claude Juncker).
Unfortunately, numerous European—including Estonian—politicians, officials and journalists have repeatedly expressed the opinion that Britain hinders the deepening of European cooperation and endangers the success of the whole European cooperation project. This attitude is a sign of intolerance towards democratic debate and the principles of good governance, an open-market economy and reform of EU governance.
The current situation could instead be seen as a new opportunity and hope for the EU. In the difficult conditions of the economic crisis, David Cameron’s government won the support of a clear majority of voters. The UK could become the flagship for enhancing European security and, together with Germany, economic reform. It is not incidental that the warships that recently started patrolling in the Baltic Sea are from the UK, which is also the main partner of the US in NATO. A new Berlin–London axis could develop in EU politics, which would stop those powers eroding European cooperation from concentrating in Brussels and would form new, more democratic and effective institutions and policies of cooperation.
Former Swedish prime minister Carl Bildt predicted in an interview with CNN that David Cameron’s overwhelming election victory would have an effect on developments in the whole of Europe. The first indication of this could be seen in the referendum held in Denmark on 3 December 2015, in which the Danish once again voted against joining the EU’s legal and domestic policy pillar—in other words, the deepening of EU integration in this area. The leaders of EU institutions and several member states have started giving serious thought to ways of reducing intervention by Brussels in the economic, budgetary and other policies of nation-states while still stopping the EU from disintegrating, which the exit of the UK undoubtedly might cause. This is also why the leaders of EU member states eventually agreed to almost all of David Cameron’s proposals—they believed that only building new bridges would create the premises for the UK to remain and avoid the domino effect that its exit might cause.
It was not incidental that, in his speech as President-elect of the European Commission, Jean-Claude Juncker considered keeping the UK in the EU one of his most important tasks, and, alongside Donald Tusk, he has played a part in all the most important stages of reaching agreement in the EU Council. Juncker also understands perfectly well that the economies of many EU countries need extensive reform and that these will not be initiated without Britain’s support.
The European Parliament still needs to approve the decisions of the Council. But any significant delays are unlikely because David Cameron has already met the European Parliament’s president, Martin Schulz, and other influential politicians for this purpose. The only question that will probably remain unresolved is whether the special treatment of Britain and the reforms proposed by David Cameron will ever be included in EU treaties, to give them more legal weight, or will only be temporary measures.

Brexit Referendum

David Cameron must start to fulfil the promises he made to voters and perform the agreements reached with EU institutions. The UK’s new special status in the EU will only become effective if the result of the referendum is in favour of staying in the Union. The prime minister is trying not to waste any time and plans to hold the referendum even sooner than promised, leading the UK’s “In” campaign himself. The day after the so-called Brexit deal at the EU Council summit on 19 February, Cameron summoned his cabinet to a special meeting to discuss the next moves. According to The Guardian, only a couple of months ago the plan was to adopt draft legislation for holding the referendum in June 2016, and by September 2016 at the latest; now the referendum itself is to be held on 23 June. The “In” side are probably afraid that the longer the delay in the referendum following the successful summit, and the more signs of the migration and economic crises re-emerging in Europe, the more difficult it will be to win.
Many analysts believe that David Cameron’s toughest battles with his opponents and the voters still lie ahead. It must be considered that support for the “Out” campaign is probably stronger than it was during the 1975 referendum because it has the support of a big part of the cabinet (six ministers) and London’s popular mayor, Boris Johnson, several influential business leaders and many media outlets. For example, the well-organised pressure group Business for Britain has already published the voluminous and extensive research paper “Change, or go: How Britain would gain influence and prosper outside an unreformed EU”. A United Kingdom Independence Party donor initiated a new virtual cooperation network for Eurosceptics across political parties, Leave.EU, using the slogan “Love Europe—Leave the EU”. The fight for votes in the referendum began very emotionally and with different scare tactics from both sides. Hopefully, as the debate evolves, they will come round to weightier arguments and realise that, with enough preparation, a decision either way will not bring insurmountable problems—with comparisons to Norway and Switzerland, who are among the most successful European countries, regardless of their status vis-à-vis the EU.
The regular conferences of The Bruges Group, a think tank which was long patronised by Margaret Thatcher, not only discuss the mechanism for Britain to leave the EU but also analyse its specific financial benefits and losses, compile lists of EU legislation that would need to be repealed after leaving, and make plans for the creation of a cabinet position of minister of reform to develop new legislation independent of the EU—including signing a free-trade agreement with the US, which several other EU members are reluctant to discuss.
I have repeatedly experienced, both in London and in other parts of the UK, that many British politicians—but, above all, voters—are surprisingly selfish and pragmatic. They are not really interested in talk about common values and solidarity in Europe. They do not believe leaders of the EU and other countries when they say that everyone loses if the UK leaves. On the contrary, many Britons even believe that a friendly divorce would be in everyone’s best interests. The continent would be rid of a reluctant brake on deepening cooperation and the island nation would get back its treasured sovereignty and greater economic freedom. Perhaps most British Eurosceptics even feel that Cameron asked for too little from the EU member states and Brussels, and all he received was a cosmetic makeover in the EU’s operations that cannot really be called reform. The EU’s outdated governance model and several of its policies need much more extensive changes than were made possible by the latest agreement.
Before the referendum, voters’ opinions might be determined by some specific analysis that demonstrates the benefit or loss for each voter in the event that the UK gets more rights to decide on effective legislation in the country and does not have to pay its large EU membership fee, but loses a big part of the European market and investments. There is not room here to go into detail about the current balance of the economic pluses and minuses of Britain’s EU membership and the effect of leaving on security, the labour market, finance and the economy as a whole. In trade alone, Brexit would affect arrangements with more than 50 countries, and the value of the pound sterling, which began to fluctuate on the day the referendum was announced.
The campaigns of both sides, and even successful or unsuccessful elements in either campaign, cannot be considered trivial because the history of EU-related referendums has shown that results cannot usually be predicted. People have often voted contrary to the campaign of the party in power or its leader. On 23 June, a large number of Britons might be tempted to turn away from supporting David Cameron, who they feel has been in power for long enough.

What Next?

If the referendum determines that Britain remains an EU member state, its importance in EU policy-making may increase. Britain may become the spokesperson for increasing the competitiveness of European countries, reducing protectionism and bureaucracy, and developing cooperation with the US. It will continue to pursue the reduction of the influence of the European Commission, Parliament and Court, maintaining this only in areas where all partners think that cooperation is required or useful, and will actively propose reforming the EU’s fiscal policy and various other policies.
However, if the majority of voters think that the special status agreed by David Cameron in Brussels is not enough and the “In” campaign is weak, the outcome of the referendum might be to leave, David Cameron would resign and negotiations would start for the UK to leave the EU. This might take several years, and ratification procedures are also required.
The political and economic effects of Brexit on Europe and the world as a whole is a topic that would deserve a separate, thorough analysis. It would certainly bring a decline in trade with EU member states (especially Ireland), movement and work restrictions for EU citizens, and setbacks for several industries in the British Isles as well as on the continent. Meanwhile, the UK would further increase cooperation with the US, Canada, Australia, China, India and other countries outside Europe. In recent years, US direct investments in the UK economy have been greater than those in all other EU member states combined. A decision by British voters to leave the EU would undoubtedly cause problems in the peace process in Northern Ireland, and would facilitate the breakup of the United Kingdom.
Great Britain might become Little England and Scotland. The EU would lose some of its importance in the global economy and politics, and may change into east–west or north–south regional communities over time. But it cannot be ruled out that the UK’s departure will trigger the start of EU reforms with the current leaders towards a renewed federalisation and a “united states of Europe”.
On current plans, Estonia will take over the EU presidency in the first half of 2018, in cooperation with the UK and Bulgaria. Estonia should therefore also think seriously about new visions for Europe’s future and prepare corresponding proposals after the UK referendum together with its partners, which could be presented in 2018 as the Tallinn Charter, as Siim Kallas and the Reform Party have suggested.
This article draws on news at euobserver.com/institutional/political from January and February 2016. It represents the author’s personal views.
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1 Britain and Europe. Special Report. The Economist, 17 October 2015.
2 Heidi Mõttus. Scotland in the Whirlwind of the Referendum on Britain’s Membership in the EU. Diplomaatia, September 2015.