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Britain and the European Union: Exit Now, Re-enter Later

Bharat Wariavwalla is an Honorary Fellow at the Centre for the Study of Developing Societies, Delhi.
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  • June 14, 2017

    Having voted to exit from the European Union (EU) in the referendum of June 2016, Britain’s foremost problem, domestic and foreign, was how to secure the best terms of exit. In one sense, the recent election was about this. The contestants, the ruling Conservative Party and the opposition Labour Party, fought this issue before the British people and the people gave a messy verdict. The Conservatives led by Theresa May gained 318 seats, eight short of a majority, and the Labour led by Jeremy Corbyn won 261 seats, 29 more than it had in 2015. This is indeed impressive. May, with over confidence verging on arrogance, and Corbyn, modest but doughty, fought in the market place of democracy. May lost and Corbyn won, not arithmetically but morally.

    May made the terms of Exit from the EU the only issue in the election. Corbyn talked about both the Exit and the state of British society and politics. This appealed to people who were more concerned with how their schools, health care, and transport are run rather than with the EU. May said that Britain needed a strong and stable leadership to negotiate the Exit terms with the EU. Corbyn said that a more prosperous and egalitarian Britain is as important as an Exit deal with the EU. People found Corbyn more appealing than May. The youth in particular found Corbyn’s ideas of a more egalitarian Britain and a more ecologically balanced world more appealing than May’s thumping declarations about British sovereignty.

    As many commentators have said, Britain will now negotiate with the EU with weak cards. Its ace card was strong support at home for a cheap exit from the EU. The cost of exit is now high because its protagonist knows that within Britain opinion is divided, and besides, the Prime Minister does not command strong support in her party.

    It is not just that Britain deals with the EU from a position of weakness but that the EU today is stronger. The turning point in the EU’s fortune was the decisive victory of a pro-EU movement in the presidential election in France last month. Emmanuel Macron is a firm Europeanist. The movement he leads, En Marche, is pro-market and in favour of European unity. Macron is also in favour of a strong alliance with Germany as well as German-French partnership to steer EU affairs. Both France and Germany want Britain to honour all its obligations to the EU. Which means, Britain’s huge dues to the EU. Theresa May prevaricates on this point and sometimes talks about linking the dues with Britain’s access to the EU’s single market. Britain heavily depends on such access. Over half its exports go to EU countries.

    At the same time, the EU also needs Britain. It needs the City’s (London) unrivalled status as a leading world centre of finance. A mutually advantageous exit agreement is, therefore, in the interest of both. A kind of agreement that Norway has – it is not an EU member but has access to its single market – could be a model for an EU-Britain agreement. Britain, with a USD 2.6 trillion economy, is the second largest in Europe and the fifth largest in the world. Neither the EU nor Britain can live in isolation of each other.

    Public sentiments against the integration of Europe are on the decline in European countries. The anti-Europe, anti-immigration, and racist parties lost the electoral contest to liberal, pro-Europe parties in Holland, France and Austria during the past six months. And Germany, the largest economy in Europe and the fourth largest in the world, is a well rooted liberal democracy and solidly in favour of European unity.

    Britain must accept the reality of the EU and negotiate with it on that assumption. Its isolation from Europe is accentuated by its isolation from Trump’s America. During the 2016 presidential election, Trump often said that NATO was obsolete and that he was going to lift sanctions against Russia, a country that wishes the death of the EU. After assuming power in January 2017, Trump slightly moderated his previous stand on these issues. But it is difficult to build a long term policy with Trump who is too capricious and impulsive to give American foreign policy a clear direction.

    Trump’s America has abandoned its long standing policy of a special relationship with Britain. Gone for good are the days of intimate relationships between Roosevelt and Churchill, Thatcher and Reagan, and more recently Blair and George Bush Jr. If Theresa May thought she could forge a close relationship with Trump, she was greatly mistaken. Her recent visit to America must have dashed any hope of such a relationship. It is such intimacy with America that gave Britain in the past an advantage in dealing with Europe. That’s now gone.

    In the Brexit referendum, Remain or Exit, out of a voter turnout of 73 per cent, 51 per cent voted for exit. Globalization and its consequences, unemployment, a sense of loss of identity, were some of the factors in the making of the exit vote. These factors are also there, of course, in varying degrees in all European countries that have had elections. In France, some 42 per cent were against the EU because the EU stood for globalization. In Holland and in Austria roughly the same percentage of people voted against the EU.

    In Britain, however, there is another important strand in popular thinking that is distinctly British: insularity. This is not the place to discuss whence this feeling of insularity emerged. Probably, the Glorious Revolution of 1688 which established democracy gave the people a feeling that they were distinct from the peoples of the Continent. But the feeling of being distinct is there and it expresses itself politically in Britain’s relations with Europe. Thus, Britain opposed the creation of the European Common Market in 1957 by setting up a European Free Trade Association. And when that did not work it sought membership of the EU in 1961. Subsequently, it opposed the creation of the Euro in 1999 and stayed away from other arrangements aimed at the political and economic integration of Europe. There were weighty factions in both the Conservative and Labour parties who called for Britain’s withdrawal from the EU. David Cameron, then prime minister, called for a referendum in response to a strong faction in his party braying for withdrawal from the EU. In short, Britain feels uneasy in Europe and secure behind the English Channel.

    Insularity or no insularity, Britain and the EU need each other. The British economy is the second largest economy in Europe, and the City is an unrivalled centre of finance and money. The EU needs Britain and Britain equally needs Europe. So, an arrangement that exists today between EU and Norway could well be a model for Britain. Norway is not in the EU but it has access to its Single Market, which is what would ideally suit Britain as well.

    Views expressed are of the author and do not necessarily reflect the views of the IDSA or of the Government of India.