The rest of Europe can be forgiven a little schadenfreude as they look across the Channel. So far, the decision to quit the European Union appears to have bought nothing but political instability and economic uncertainty to Britain — while the eurozone economy appears to go from strength to strength. But is the EU being too complacent about the risks of a botched Brexit?
The EU already faces increasingly conflictual relations with two of its biggest neighbours, Russia and Turkey. Some in the UK government fear that the EU is underestimating the risk that Brexit creates an increasingly conflictual relationship with a third. Both sides claim to want a deep and special partnership and to maintain the closest possible relation. But if the EU overplays its hand in the divorce negotiations — and even some Brussels officials believe that some of the demands made by member states are excessive — it risks poisoning future relations. One senior adviser notes how the perception that the EU had treated Britain unfairly over access to fisheries when it joined the bloc in 1973 loomed large in the Brexit referendum more than 40 years later.
Some pro-European ministers cling to the hope that an enlightened EU will make a pragmatic offer of a deal that preserves much of the present co-operation, while relaxing the insistence on the right of free movement of people as a condition of full single market access. Indeed, Tony Blair, the former prime minister, and Nick Clegg, the former deputy prime minister, have said they believe that some such offer is being contemplated.
But the idea that the EU might ride to Britain’s rescue seems highly optimistic. First, it assumes a capacity to act strategically that the EU doesn’t possess. There may be individual governments that may be willing to contemplate the EU adopting a more pragmatic approach, but the EU is a community of 28 sovereign nations underpinned by a common body of law. It is by necessity a legalistic, technocratic organisation whose complex decision-making processes exclude bold political steps. Indeed, what capacity the EU may have had to act strategically in the past has been further weakened by the recent rise of populist politics. This can be seen in its approach to other countries in its neighbourhood whose stability is vital to the European security. In the past, the EU, with strong support from Britain, considered it vital for its security to offer a path to EU membership for countries in central and eastern Europe. Yet the EU is unable to offer similar paths to Ukraine and countries in the western Balkans. Last week, the Dutch government vetoed an EU statement that would have recognised the possibility of long-term Ukrainian membership.
More fundamentally, the EU won’t ride to Britain’s rescue because it doesn’t believe it should. Senior EU officials argue that it is up to Britain, as the country that wants to leave, to set out what future relationship it wants with the EU. So far, Britain has been unable to do so for the simple reason that it has been unable to resolve the dilemma that lies at the heart of Brexit: if Britain wants the closest possible trading relationship with the EU, it inevitably will need to become a rule-taker, most likely still subject to the European Court of Justice, even if only indirectly via some other supranational arrangement. This approach would minimise economic disruption in the near term but leave the UK vulnerable to future EU rule-making that was harmful to British commercial interests. But if it wishes to regain the right to set its own rules — and enjoy maximum flexibility to enter new trade deals with other countries — it will face new barriers to trade with the EU, leading to serious economic disruption. In practice, many firms might be obliged to continue to comply with EU rules to maintain access to the European market.
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From the EU perspective, the fact that some in the UK government are starting to show signs of a anxiety about Brexit is a welcome sign that reality is finally intruding into the UK debate: a reflection of the growing realisation that there is no way of avoiding this decision — that there is no “have your cake and eat it” middle way. Nor can the decision simply be deferred until the end of a long transition period, because business is demanding clarity now and, in any case, the government needs to secure an agreement on the framework of its future trading relationship as political cover to pay the exit bill. Yet what European governments fear is that this may be a decision that Britain is no longer capable of taking, given the deep splits in the government, parliament and the country, raising the risk that Britain crashes out of the EU with no deal. That would be deeply damaging to British-EU relations. But the EU cannot make this choice for Britain: it can only sit and watch.
Simon Nixon is the chief European commentator at The Wall Street Journal.
Twitter: @Simon_Nixon