The British government has officially started the
"divorce" procedure from the European Union. This procedure must be
completed within two years. In April 2019 the UK will cease to be a member of
the EU.
Most divorces are painful affairs mainly because an agreement
has to be found on who pays whom. The same will be true for the divorce of
Great Britain and the European Union. The European Union intends to present a stiff
bill to the British Government. According to some estimates this could go up to
60 billion euros. The hard line in the Conservative government of Theresa May does
not want to pay a cent. These are the people who during the referendum campaign
promised that Brexit would create massive budgetary means to be used to save
the National Health Service from bankruptcy.
Between 0 and 60 billion there are many numbers waiting for a
possible compromise. But the latter will be very difficult because the hard
camp in the British government considers each number above 0 as an act of
treason to the British people.
The Brexit Ministers continue to repeat that a new trade
agreement between the UK and the EU is easy stuff and can be completed in two
years, at least if the Europeans are "reasonable". If they are, they
will see that it is in their own interest to meet British demands. If they
don’t it will be proof of their vindictiveness.
The British demands are derived from the very successful
referendum slogan: "to take back control of our borders, our laws and our
money." This means full control over immigration; the end of the jurisdiction
of the European Court of Justice on British soil; and not a penny more for
Europe. The prime minister has made it clear that the first two demands cannot
be negotiated away. About the third one a compromise is possible but no one
knows how much negotiating space the British prime minister has.
These UK demands imply that the UK excludes itself from the
internal market. The UK government, as the representative of a fully sovereign
nation, will therefore have to negotiate a new trade agreement. And like any
trade agreement this will drag on for years. As a result, one can say with
great certainty that in April 2019 there will be no trade agreement between the
UK and the EU.
What is striking in this drama is that under the spell of
nationalism the British government has based its policies on a big illusion. It
is the illusion that, as in the past when Britain ruled the waves, it can be
fully sovereign and freely trade with the rest of the world without having to
accept rules that are decided elsewhere. This was possible when Britain was the
master of the world and decided about the rules that the other nations would
have to accept to trade. Today, however, Britain is a small country. Its GDP is
only 15% of the EU’s GDP. If this small country wants to trade with the
European Union it will have to accept the rules that are decided on the
European continent, not in Britain. If it wants to trade with the rest of the
world, it will also have to accept rules drawn up elsewhere. It will be a
painful awakening for the British who have been misled by their government into
believing that they can have free trade and full sovereignty.
For the EU Brexit creates a window of opportunities. When the
British joined the European Community in 1974 their intention was not to make
Europe stronger. On the contrary, the British strategy was to weaken the
European integration effort from inside. Since their accession the British
governments have opposed attempts to apply majority rule in the union, and
instead have tried to force an inter-governmental approach where each country
maintains a veto power. The British entered the European house not to
strengthen it, but to halt its further construction and even to deconstruct it.
The fact that Britain now leaves the house creates new
possibilities to take steps towards further integration. In the tax field, for
example. This is an area where, at the
insistence of Britain (but not only Britain), veto power of national
governments has been maintained. As a result, multinational companies have
exploited the lack of coordination in setting corporate income taxes to
blackmail individual governments. This has led to a race to the bottom where
major multinationals pay almost no taxes, although they profit from public
goods provided by European governments. This problem can only be solved by
jointly deciding about corporate income taxes. This will not be easy, as there
are other countries that benefit from not having a common approach to taxation
(Ireland, Luxembourg). But at least the major obstacle to a common policy will
have been removed.
Thus the decision by the UK government to leave the European
house should be welcomed by EU-member states instead of being deplored. It
creates a window of opportunities for further integration on the European
continent. This window of opportunities, however, can only be exploited if the
EU makes her negotiating position clear. This should be one in which the EU
recognizes that the UK wants to be fully sovereign. The EU therefore should
make it clear that this makes UK access to the internal market impossible. This
is not a choice of the EU but the logical consequence of the UK’s quest for
full sovereignty.
Business lobbies both in the UK and the EU will
push for a different outcome. One in which the UK will be allowed to enjoy
exceptions to the rules governing the internal market while maintaining access
to it. The EU should resist these lobbying efforts. Failing to do so will open
the door for other nations to do similar “cherry-picking”. This would undermine
the integrity of the union and would contribute to its disintegration. 