07 April 2016

Europe’s Divergent Futures

There are two schools of thought on a potential British exit (Brexit) from the EU. Some observers believe that it will weaken and unravel the entire Union, while others contend that it may actually strengthen the “European core” by enhancing integration among a smaller group of like-minded states.

On June 23, British voters will decide whether the UK will remain in the EU. According to the EU Treaty, withdrawal from the Union is a basic right of every member, although no country has ever left. A Brexit is likely to generate economic uncertainty throughout the continent and it may also encourage other states to follow London’s lead.

There is a heated dispute whether a Brexit will damage or benefit Britain itself. Critics argue that it would undermine the economy and London would no longer have any say in European decision-making on a range of questions from trade and immigration to security and foreign policy.

British Euroskeptics contend that the country needs to reclaim its sovereignty from unelected Brussels bureaucrats. They believe that the UK is held back by the EU and could boom as a more open economy that will increase its global reach. They point to Norway and Switzerland as models for Britain, as both countries maintain open access to the Union market.

In stark contrast, pessimists assert that a Brexit would be damaging for all sides. It would disengage the world’s fifth-largest economy from its biggest market and weaken EU security by removing a significant defense spender and foreign policy actor. Instructively, while President Vladimir Putin is keen on a Brexit to weaken the EU and undermine the Alliance, President Barack Obama is strongly against it.

A disunited and less secure EU will seek to discourage other countries from following the UK. Paradoxically, opposition by Brussels for other capitals to negotiate any “opt-out” clauses may actually encourage them to head for the exit door in defense of their sovereignty. UK Foreign Secretary Philip Hammond has warned that a Brexit could lead to a domino effect by creating a template for other Euroskeptic parties elsewhere in the EU to become more mainstream.

Czech Prime Minister Bohuslav Sobotka has warned that a Brexit would encourage debate in several countries on whether to follow suit. It would make it politically acceptable for others to propose exits, even though only small fringe parties currently propose a full withdrawal. In addition, countries such as Hungary and Poland may take steps to weaken links with the EU and pursue their own “opt-out” clauses.

A contrasting assessment views an imminent Brexit as a valuable stimulant for the rest of the EU. Other waverers could follow the UK so that the remaining core can develop into a more integrated bloc through a fiscal union and an eventual political federation. Proponents of a “core Europe” argue that the policy of “opting out” from some EU provisions should be eliminated because it simply contributes to division and confusion. By attempting to accommodate the disparate positions of its many members, the EU has become timid and ineffective and unable to pursue deeper integration.

Indeed, keeping Britain inside the EU would make it more difficult for other members to implement the necessary reforms to repair the Union’s structural shortcomings. Once the UK and other obstructionist countries are allowed to leave, the original founding members, particularly Germany, France, and the Benelux three, can pursue more vigorous multi-national integration.

In Germany, the “core of the core,” sentiments are also growing against a large EU. In regional elections in mid-March in three German states, the nationalist Alternative for Germany (AfD) scored impressive results. In Baden-Wuerttemberg it captured 15% of the vote, in Rhineland-Palatinate 12.6%, and in Saxony-Anhalt it finished second with 24% and became the second largest party in the legislature. The three states have a combined population of some 17 million people, around a fifth of Germany's total. The AfD is now represented in eight of Germany's 16 regional parliaments.

AfD focuses on the allegedly negative impact of Germany’s EU membership. It appeals to the economically insecure as well as other politically alienated social sectors. AfD has demanded Berlin’s withdrawal from the euro and a return to the Deutsch-Mark, or the creation of a separate currency with Holland, Austria, and other financially stable economies. It proposes either the dissolution of the EU altogether or the emergence of a core Europe without the south European countries that are viewed as corrupt and mismanaged. It is unclear where the Visegrád and Baltic states fit into the AfD agenda.

Support for Germany’s coalition government and its established parties will further erode if the EU agreement with Turkey fails to stem the flow of refugees from the Middle East and North Africa. All eyes will then be riveted on the German federal elections scheduled for October 2017. If Europe's migrant crisis continues and anti-immigrant sentiments accelerate, AfD could enter the national parliament and present an even more direct challenge to Germany’s political status quo as well as the EU’s future.

Europe's Edge is an online journal covering crucial topics in the transatlantic policy debate. All opinions are those of the author and do not necessarily represent the position or views of the Center for European Policy Analysis.