1st May 2018

Brexit and the future EF

The British referendum on continued membership in the European Union, held on 23 June 2016 may lead to profound changes not only throughout the UK itself (largely very negative) but also much more importantly throughout Europe. EU and Britain cannot turn back the tide. It is now a damage limitation exercise for both parties. I do not believe that the EU would have collapsed under the pressure coming from the UK referendum result. However, EU could not afford to plough on at the current pace for some years being unable to form viable and well-functioning governance. That is a longer-term danger. Therefore, Brexit was a trigger for the remaining 27 countries to finally get their act together and do something significant to accelerate their integration processes, which for Britain was an unacceptable direction to follow.

It would be very easy to blame the UK as a country that made a deep wound in the European body. I believe Britain was right about the political weakness, centralist and bureaucratic tendencies in the EU. Britain was also right criticizing the uncontrolled economic migration from the poorer EU countries to those ones that offered higher wages and better benefits. Such a system was unjust and unsustainable.

Britain also wanted to regain sovereignty, as if in principle it would have ever been possible. I dealt with that subject earlier in the book. Therefore, it is enough to say, that sovereignty means the capability of achieving the country’s own goals in relation to the whole world. The effect of Brexit will be precisely opposite – the country will have far less impact on the world stage than before. The UK’s wish to control migration from the EU could have been achieved even today, if only Britain had seriously applied the available measures, which some EU countries have done for years. Anyway, the level of migration from the EU has drastically fallen already, so that becomes almost a meaningless subject.

Regarding the ability to do ‘deals’ with countries outside the EU and in that way compensate for the losses of not trading most effectively with the EU, is just a pure fantasy. About 45% of Britain’s trade is with the EU. We have already been trading with the rest of the world for centuries, so we are not starting from scratch. Any extra trade, theoretically possible will in no way compensate for the loss of trade with the EU or higher cost of trading with this organisation. Britain’s ability to increase trade in goods is really dependent on our productivity, which is one of the lowest among the G7 and quite low even within the OECD. Finally, trade in goods constitutes only about 20% of all British trade.

I have been a staunch supporter of the EU for all my life. No wonder I voted ‘Remain’ in the Brexit referendum. That does not mean that I believe the EU has been a shining example of an effective organisation. Far from it! After all, that’s what this book is about – how to reform the EU so that not only become a more effective organisation but also that it could take at some stage the role of de facto World Government. So, Britain was right that the EU was malfunctioning but to some extent it was Britain’s own fault, by delaying any significant reforms from the fear that it may lead to a closer integration. Simply, the way Britain wanted to turn the tide was utterly wrong. Similarly, the EU’s position to stick to its guns and not to be more flexible in the period of the negotiations before the Referendum was also wrong.

On 7 March 2017, three weeks before Theresa May’s government invoked article 50 of the EU Lisbon Treaty, which started formal Brexit negotiations I made 3 scenarios on how Brexit might end up. My key prediction was Scenario 1 with 90% probability: Great Britain will not exit the European Union in any meaningful form. I believe this is still the most likely outcome. We may know for sure perhaps even earlier than on 29th March 2019, if the Brexit negotiations must end with Britain’s formal exit from the EU.

It is neither in the long-term interest of the EU nor for the UK to be outside the EU. Neither it would have been in the interest of the Eurozone and the EU as a whole to expel Greece from the Eurozone in 2015. The situation with the UK is somewhat similar. Therefore, when the Brexit negotiations reach almost the point of no return and Britain does finally realize it cannot get what it wants then the EU Council should make the following resolution:

  1. The EU intends to significantly revise the existing Lisbon Treaty in the next few years, which may ultimately lead to a new Constitution
  2. It is quite likely that the new Constitution will be a big step forward towards the EU’s integration
  3. Without pre-empting the final wording of the relevant articles of the future EU Constitution it is clear that the overall direction of the EU will be to give the member states more flexibility in how fast, or how closely, they want to be integrated with the EU. It will be a policy of pulling new members towards a closer integration rather than pushing them
  4. To implement this policy, it will be necessary to have a multi-speed EU, i.e. a multi-zone European Union, giving the member states much more flexibility than they have ever had before in both the depth of integration and the speed of the integration process. It will be up to the member states what they choose
  5. One of the zones being envisaged is Zone 2, initially called the European Federation Single Market area
  6. The United Kingdom is offered the possibility of joining Zone 2 of the EU, which will have the following terms for all members:
  • Zone 2 members must sign an Amendment to the current Treaty of Lisbon that will apply only to this zone
  • Member states of this zone must be a member of the Single Market and Customs Union
  • Member states in this zone can have up to five opt-outs of the EU policies. They can change the opt-out that they already have for another one if they already have used all their opt-outs.
  • Representatives of member states in this zone will be able to participate in all debates at all levels of the EU structure, apart from those ones that require Treaty changes and the future shape of the EU. However, they will have no voting rights outside their own Zone
  • The member states of this Zone accept the ruling of the European Court of Justice, of which they cannot opt out
  • Any member state in this zone is allowed to implement its own benefits policy for other EU citizens that may differ from its own nationals. This will be done by putting a condition that the EU citizens may be only entitled to benefits in another EU country, if they have previously worked and paid taxes in that member state for a certain period. That period cannot exceed five years and does not have to be contiguous.
  • No member can have any rebates to his annual EU budget contributions
  • All other terms and conditions of the exiting Lisbon Treaty would apply to members of this zone
  • If the UK accepts these terms then Britain can return to the EU on the day of signing this Agreement and restore its membership.
  • To avoid a lengthy process of ratifying the amendments to the Treaty, the European Council unanimously confirms that this amendment will form part of the new EU Constitution.

Some of these proposals President Macron included in his 23 steps towards closer integration in September 2017, proposing “A multispeed Europe with Britain possibly re-joining a simplified version”. In this way, most of what Britain wants would fulfil almost all criteria of a “soft Brexit”, apart from the ECJ jurisdiction, i.e.: unfettered access to the Single Market, membership of the Customs Union (albeit no freedom to make its own trade agreements outside the EU), migration of labour only, and control of the benefits for the EU citizens by the government. It would also have part of its sovereignty restored since it would be up to the UK if it wants to integrate further with the EU (the shackle of ‘ever closer union’ will be removed). This would also allow the EU to move fast forward, because Britain will no longer have a vote on the future shape of the EU. At the same time, Britain would still be within the EU and would continue to provide an increasingly important strong support in the EU’s defence and the security area.

But what might happen, if Britain really stays outside the EU. As I said earlier, the EU has no other option than moving faster towards a closer integration, ultimately leading to a federal Europe. There are several reasons for that, which can best be illustrated in these hypothetical scenarios:

  1. EU disintegrates and each country trades on its own based on the WTA rules. In commercial terms it would have been a disaster for every country (and that is precisely what Brexit illustrates so well). Additionally, this would have stirred up muted disputes about the borders, such as the very current dispute between Slovenia and Croatia, potentially leading to wars.
  2. EU goes backward and becomes a purely economic co-operation area, each Eurozone country returning to its own currency. In this situation, its effectiveness and EU members’ external competitiveness e.g. towards China or USA would have been worse because, for example, of the lack of common currency. It would be an economic and political disaster, opening the door to Russia, which could then almost openly meddle in the European countries’ internal affairs and quite probably annexing the Baltic countries.
  3. EU stays as it is and ultimately all current EU members join the Euro. Then, as the recent events have so evidently shown, the Eurozone would have been in a permanent crisis because without a common fiscal policy and budgets, the fault lines between the richest and the poorest countries would ultimately lead to the breakup of the Eurozone and the fall of the EU.
  4. Therefore, the only way forward is to follow the route towards a closer integration. By that I mean Federation at a very shallow level i.e. defence, foreign affairs, common currency, budget, fiscal policy, and environment. At the same time there should be a repatriation of many current common policies that could (and should) be best dealt with, at a national or regional level. For most people freedom and democracy is best served at the lowest possible level dealing with matters that they can understand and appreciate best.

From the above it is clear that the EU has only one realistic option – to move towards federation.

By the time the European Federation comes into existence, Brexit may have become a long forgotten Odyssey of the British Government into the unknown. However, there will be a few lessons that the future legislators of the European Federation’s Constitution may wish to learn from the Brexit process, such as:

  1. A multi-speed, multi-zone EU is the only credible, safe and also the fastest route for the EU to integrate, ultimately becoming a federated State. One of the key conditions to achieve that is for the EU to give member states more flexibility in how fast they would like to move towards closer integration. It would make integration much “smarter”, more flexible and leaner.
  2. It is necessary to give the leaving country more than one alternative in its future relationship with the EF, after the member state would have left the Federation. The articles in this area should be much more precise, and yet flexible, which can be made possible by the creation of zones within the future Federation.
  3. It should be possible to suspend the membership of the member state in the Federation for a certain period, say up to 5 years, with very specific identification of the consequence both financial, as well as those related to various freedoms and market accessibility rights for goods and services. Such an option of suspension might apply to the member state, which wants to leave the EF temporarily, i.e. because of the incompatibility of its Constitution. It could be similar to the transition period that Great Britain may get if it exits the EF, i.e. it would have all the privileges and obligations except of participating in the EF decision making process, unless being invited.
  4. There should be a distinction between the rights of the leaving member state and the rights of its citizens, i.e. that the citizens of the leaving member state would still retain the citizenship of the EF.

Keeping the UK within the EU’s Zone 2 would become the first very concrete example of a new direction of the EU towards giving the member states more flexibility in how fast they would like their integration process with the EU to proceed. If a member state of Zone 2 changes its mind after some years and decides to join the federal EU, then such process would be much easier than if that country had stayed altogether outside the EU.

Next: EF Constitution

3 thoughts on “Brexit and the future EF

  • Brexit and the future of EF. This is a very interesting section with a solution that can potentially satisfy both Brexiters and Remainers.

  • What impact may Brexit have on the EU’s federalisation?

    I have already covered this subject on this website debating Brexit and the future of the EU here: https://sustensis.co.uk/brexit-and-the-future-ef/?preview=true. But why I raise this subject of Brexit on this website in the first place? Simply, because however it ends, it will significantly impact the EU’s travel towards becoming a European Federation. And those who have visited this website before, or read my book, know that of all available organisations, it is the federated EU, which has the best chance of becoming a de facto World Government. We urgently need such an organisation because it is the only way to mitigate global existential risks, including the development of Superintelligence. So, why is Brexit happening and how it may impact the EU integration, ultimately leadingto a federation?

    The origin of the UK’s hostility towards any closer EU integration, which is a codename for the EU’s federalisation, lies in its colonial past. That policy was best illustrated by Churchill’s view on the role of Britain in the world after the war. He saw Britain keeping a dominant role in the world, based on the concept of triangular relationships: Britain and its Empire (at that time about half ofthe world’s population), Europe and the USA. He saw Britain working with Europe but being its equal partner. Objectively, it was very difficult to think otherwise. After all, it was Britain that went to the Europe’s rescue at least three times: in 1815 – Waterloo, the first, and second World War. The empire is gone and the UK’s dominance in the world has been fading rapidly but that illusory view of being a dominant power equal the EU is still being perceived as real by many MPs. About 50 of them, mainly conservatives, have been pushing consistently for at least 30 years to get Britain out of the EU. Now theyhave nearly achieved their goal.

    One of the key arguments of Brexiters for exiting the EU is that it is a bureaucratic institution, which does not meet its own proclaimed values neither at a parliamentary nor at an executive level. I do not deny for a minute that the EU has a long way to go in upholding its own values. However, it is not a unique organization or a state that fails to do so. We, as individuals, or as nation states are not infallible. We all make mistakes and are inconsistent in what we do. The UK parliament is no exception, just look how some MPs (Johnson, Gove, Davis) behave and how the UK government ignored the will of the parliament (defying its request to publish a full report on the legal consequences of the UK leaving the EU, and as such being guilty of the contempt of the parliament). Additionally, we should remember that the EU’s key goal is to maintain peace in Europe and an economic convergence. Being a relatively young and very diverse organisation, EU must sometimes compromise in how fast it can ‘walk the talk’. EU has been changing over time in big radical steps rather than through the implementation of small improvements. A new big step is needed, and it is encouraging to see some concrete proposals (Macron and Juncker) e.g. on fundamental changes to the rules for electing the EU president and the new prerogatives for the Parliament. Generally, irrespective of some inconsistencies,the EU’s adherence to certain values and democratic principles lies at the verycore of this organisation, best expressed in the EU Charter on Human Rights.

    But what is the most important among those values? It’s the preservation of LIFE! That applies to preserving the lives of individuals as well as survival of all of us as humans, which in the first instance means avoiding wars. That requires all EU nations to work together to achieve that common goal which may require some limitation of their national sovereignty. Therefore, anybody that dreams about increasing his nation’s sovereignty, like most of Brexiters do, or personal freedom, must view that in the context of the EU’s foremost important goal – maintaining peace. To preserve peace and by extension LIFE itself, we need to mitigate imminent existential risks, which may require a further shrinking of EU nations’ sovereignty or personal freedom. After all, it happened in democracies before e.g. in the UK during WWII. As Humanity, we must begin to behave differently, if we want to survive. We should focus primarily on saving our life as a species, i.e. preserving Humanity andonly then on protecting an individual freedom.

    From such a global perspective, the UK’s potential exit from the EU is even worse. The next decade will most likely be the most severe period in the history of human species (see https://sustensis.co.uk/last-decade-for-humans-control/). And I am not talking about climate change, that could become an existential risk (literally) only by the end of the next century. I am rather talking about nine other existential risks, of which two: Immature Superintelligence and lab-generated super-bugs are the most imminent – see: https://sustensis.co.uk/risks/. That would require making fast decisions within hours on a global scale. For example, a malicious switching off the power supply in the Northern Hemisphere for three weeks in winter would cost 9 million lives in the USA alone. Dispersing a flu-type artificially modified bacteria by a ‘mad scientist’ may lead to pandemic of biblical proportions. Minimizing its spread would require closing all borders within a day or so. We must start behaving like a swarm guided by its Queen. Of all the nations, perhaps China and the Jewish nation have been cultivating best that instinct of self-preservation for over 2,500 years. But who would guide Humanity like a swarm to preserve its existence? We would need theWorld Government with effective supreme powers. That of course will not happen, as evidenced by the results achieved by the World Federalist Movement that has been trying to do that for the last 70 years. The only hope would be to adapt an existing organization that could take a partial role of a de-facto World Government, the subject that I cover in my book at length. The conclusion is that the best candidate would be the European Union gradually converted into a European Federation.

    Britain has not exited the EU yet and in my view, which I expressed over 2.5 years ago, it will not meaningfully exit that organisation. There are two scenarios here:

    Scenario 1: Britain will soon return as a full member of the EU. If the UK returns to the EU as a full member, it will have a profound positive effect on the EU and beyond. First of all, it will be one of the most powerful examples of what damage populism can do to a nation. It will also show that such processes, like wars before, start a period of activities going in the opposite direction (like peace building after the war). Therefore, the British re-entry into the EU might create a strong boost for the European integration, showing other nations thinking about following the UK’s example that after all it is better to be together than apart. The only unknown element in this scenario is the British attitude to the integration process itself. Most likely Britain would not join Euro immediately and its hesitance to drop its aversion to the ‘ever close union’ will still be there for another few years. However, to progress the Euro Zone conversion into a Federal Europe, the most natural way to convert the EU into a Federation, without being continually opposed by Britain, is the creation of the EU Zones (see https://sustensis.co.uk/e-federation-set-up/)

    Scenario 2: Britain will formally exit the EU but will stay very closely to its single market and customs union arrangement. This would be a kind of a parallel universe, where British trading and other relations (e.g. free movement of people) will be regulated by the EU’s legislation but where Britain will have no influence on the EU law creation, in return for ‘unconstrained access’ to the EU market. In this scenario, where Britain will be being outside the EU’s decision-making process, the integration of the EU might be accelerated by the absence of Britain’s veto on the EU’s integration efforts. On the other hand, the example of Britain being outside the EU and somehow surviving, might encourage some countries to resist further integration process and even follow the UK’s example.

  • The finale of Brexit ending in no Brexit

    9.11.2018

    Further to my earlier comment this week, I thought I would revisit my scenarios made over 2.5 years ago, just before the vote on article 50 in the UK parliament. My prediction then was that there will be no meaningful Brexit (70%), or the UK will exit the EU but for an average citizen the change will be hardly noticeable (20%), or there will be hard Brexit without any deal with the EU (10%).

    Today, on Sunday 9th December, the options are narrowing, and I would see the following two scenarios evolving:

    Scenario 1

    The vote on the current Theresa May’s deal planned for Tuesday is postponed. Theresa May will go to Brussels on Thursday, 13th December. She will then formally ask the EU Council to consider the UK exiting the EU but staying as an EEA member (as the UK is through the EUs membership of the EEA) with a full access to single market and customs union (Norway plus variant). She will return with an extended Political Declaration that envisages Britain adopting Norway plus variant.

    The Parliament will vote in the week just before Christmas on three options: the current Theresa May’s deal, the Norway Plus deal or staying in the EU. The first two proposals will not get the backing of the Parliament, but the third one will. The government will the formally revoke article 50, which will result in Britain’s staying as a full member of the EU with all the previous terms of membership (e.g. rebates) preserved. The government would have the constitutional right to do so, since the referendum was only advisory. This is, in my view, is the best and economically the least damaging way to end Brexit. The only disadvantage is that there could be stronger Brexiteers protests than if scenario 2 unfolds. However, since such a vote would take place just before Christmas, any protests would be subdued. I consider the odds for this scenario to materialize better than even.

    Scenario 2

    The vote on the current Theresa May’s deal planned for Tuesday goes ahead. It will fail and Theresa
    May will go to Brussels on Thursday, 13th December. She will then formally ask the EU Council to consider the UK exiting the EU but staying as an EEA member (as the UK is through the EUs membership of the EEA) with a full access to single market and customs union (Norway plus variant).

    That proposal will be voted down by the UK Parliament and the government will call a referendum with one option being to stay in the EU. The other options might be either Norway plus variant or hard Brexit. The voters will decide on the preferred option using Single Transferrable Vote. The result will give the UK government the mandate to revoke article 50 and thus keeping Britain in the EU.

    This scenario envisage that Britain may have to ask for the extension of the exit vote till summer next year, with the referendum taking place by June 2019. The odds of this scenario are higher than the first one. It would also be more acceptable to people who voted for Brexit.

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