January 22, 2013 | 1000 GM
"United Kingdom Moves Away from the European Project"
By Adriano Bosoni
"United
Kingdom Moves Away from the European Project is republished with
permission of Stratfor."
British Prime Minister David Cameron will deliver a speech
in London on Jan. 23, during which he will discuss the future of the United
Kingdom's relationship with the European Union. Excerpts leaked to the media
suggest that harsh EU criticism will figure prominently in the speech, a
suggestion in keeping with Cameron's recent statements about the bloc. But more
important, the excerpts signal an unprecedented policy departure: renegotiating
the United Kingdom's role in the European Union. London has negotiated
exemptions from some EU policies in the past, even gaining some concessions
from Brussels in the process; this time, it is trying to become less integrated
with the bloc altogether.
Cameron has pledged to hold a referendum after 2015 on the United
Kingdom's role in Europe. He has also said he would reclaim powers London surrendered
to the European Union. While they no doubt reflect similar anxieties across the
Continent, such statements are anathema to the European project, and by making
them, Cameron could be setting a precedent that could further undermine the
European Union.
Cameron's
Compromise
Cameron's strategy
partly is a reaction to British domestic politics. There is a faction within
the ruling Conservative Party that believes the country should abandon the
European Union entirely. It was this faction that pressed Cameron to call a
referendum on the United Kingdom's EU membership. Some party members also fear
that the United Kingdom Independence Party, the country's traditionally euro-skeptic
party, is gaining ground in the country.
Such fears may be well founded. According to various opinion
polls, roughly 8-14 percent of the country supports the United Kingdom
Independence Party, even though it received only 3.1 percent of the popular
vote in the 2010 elections. These levels of support make the party a serious
contender with the Liberal Democrats as the United Kingdom's third-largest
party (after the Labour Party and the Conservative Party). Some polls show that
the United Kingdom Independence Party already is the third-most popular party,
while others suggest it has poached members from the Conservative Party, a
worrying trend ahead of elections for the European Parliament in 2014 and
general elections in 2015.
Its growing popularity can be attributed to other factors. Beyond
its anti-EU rhetoric, the United Kingdom Independence Party is gaining strength
as an anti-establishment voice in the country, supported by those disappointed
with mainstream British parties. Similar situations are developing elsewhere in
Europe, where the ongoing crisis has weakened the traditional political elite.
The debate over the United Kingdom's role in the European Union
is also causing friction with the Conservatives' junior coalition partner, the
Liberal Democrats. Party leader and Deputy Prime Minister Nick Clegg has
repeatedly criticized the Conservatives' push for a referendum, arguing that
the proposal is creating uncertainty in the country and by extension
threatening economic growth and job creation. Several of the country's top
businessmen share this belief. On Jan. 9, Virgin Group's Richard Branson,
London Stock Exchange head Chris Gibson-Smith and eight other business leaders
published a letter in the Financial Times criticizing Cameron's plan to
renegotiate EU membership terms.
British citizens likewise are conflicted on the subject. In
general, polls have shown that a slight majority of Britons favor leaving the
European Union, but recent surveys found that opinion was evenly split.
Conservative Party voters particularly support an EU withdrawal.
Given the issue's sensitivity, Cameron has sought to please
everyone. He said there would be a referendum, but it would entail the United
Kingdom's position in the European Union, not British membership. Despite his
criticisms of the bloc, Cameron has said he does not want to leave the European
Union outright; rather, he wants to repatriate from Brussels as many powers as
possible. Cameron believes the United Kingdom still needs direct access to
Europe's common market but that London should regain power regarding such
issues as employment legislation and social and judicial affairs. Most
important, the referendum would take place after the general elections of 2015.
London's
Costs of Membership
London also
believes that the United Kingdom has surrendered too much of its national
sovereignty to supranational EU institutions. The United Kingdom is a net
contributor to the European Union, and London feels that the costs of
membership exceed the benefits. The Common Agricultural Policy, which
subsidizes agricultural sectors in continental Europe, does not really benefit
the United Kingdom, and the Common Fisheries Policy has forced the United
Kingdom to share its fishing waters with other EU member states.
Yet the United Kingdom is a strong defender of the single market.
Roughly half of its exports end up in the European Union, and half of its
imports come from the European Union. While the United States is the United
Kingdom's single most important export destination, four of its five top export
destinations are eurozone countries: Germany, the Netherlands, France and
Ireland. Germany is also the source of about 12.6 percent of all British
imports.
Some critics suggest that the United Kingdom could leave the
European Union but remain a part of the European Economic Area, the trade
agreement that includes non-EU members, such as Iceland and Norway. However,
the country would still be required to make financial contributions to
continental Europe and adapt its legal order to EU standards, but it would not
have a vote in EU decisions. According to Cameron, the United Kingdom must be
part of the common market and have a say in policymaking.
The issue points to the United Kingdom's grand strategy. Despite
an alliance with the United States, the United Kingdom is essentially a
European power, and it cannot afford to be excluded from Continental affairs.
Throughout history, London's foremost concern has been the emergence of a
single European power that could threaten the British Isles politically,
economically or militarily. Maintaining the balance of power in the Continent
-- especially one in which London has some degree of influence -- is a
strategic imperative for the United Kingdom.
The United
Kingdom's Strategic Dilemma
The United Kingdom's
push to renegotiate its status in the European Union threatens the European
project. In the past, the bloc granted special concessions to the British, such
as allowing them to keep the pound sterling during Maastricht Treaty
negotiations. These concessions inspired other EU members to ask for similar
treatment -- most notably Denmark, which also managed to opt out of the euro.
However, this is the first time that London has openly demanded
the return to a previous stage in the process of European integration. At no
other time has a country tried to dissociate itself from the bloc in this way.
The decision not only challenges the Franco-German view of the European Union
but also makes a compromise extremely difficult and risky between France and
Germany and the United Kingdom.
Most important, Cameron is framing his proposals not in terms of
national sovereignty but in terms of social well-being. In doing so, he
acknowledges the social implications of the European crisis. Cameron has even
said that the European Union currently is hurting its citizens more than it is
helping them. According to leaked portions of his upcoming speech, he believes
that there is a "growing frustration that the EU is seen as something that
is done to people rather than acting on their behalf" and that the issues
are "being intensified by the very solutions required to resolve the
economic problems."
The excerpts also cite Cameron as saying "people are
increasingly frustrated that decisions taken further and further away from them
mean their living standards are slashed through enforced austerity or their
taxes are used to bail out governments on the other side of the
Continent." This rhetoric could become highly attractive in Europe, where
people from Germany to Finland believe that taxpayers' money is being used to
bail out inefficient peripheral countries. And many Greek, Spanish and
Portuguese citizens probably would sympathize with the notion that austerity is
worsening their quality of life. Cameron's rhetoric suggests that he is
positioning the United Kingdom to be the leader of a counter- narrative that
opposes Germany's view of the crisis.
But this strategy is not without risks for the United Kingdom. In
recent years, the country's veto power in the European Union has been reduced
substantially. With each reform of the European treaties, unanimous decisions
were replaced by the use of qualified majority. Even in cases where unanimity
is required, Berlin and Paris have managed to bypass London when making
decisions. For example, Cameron refused to sign the fiscal compact treaty in
2011, but Germany and France decided to proceed with it, even if only 25 of the
27 EU members accepted it.
Moreover, the "enhanced cooperation mechanism," the
system by which EU members can make decisions without the participation of
other members, increasingly has been used to move forward with European
projects. Currently, the EU's Financial Transaction Tax is being negotiated
under this format. In recent times, London has been able only to achieve
exemptions without real power to block decisions.
Meanwhile, the ongoing crisis has compelled the European Union to
prioritize the 17 members of the eurozone over the rest of the bloc. This has
created a two-speed Europe, where core EU members integrate even further as the
others are neglected somewhat. London could try to become the leader of the
non-eurozone countries, but these countries often have competing agendas, as
evidenced by recent negotiations over the EU budget. In those negotiations, the
United Kingdom was pushing for a smaller EU budget to ease its financial
burden, but countries like Poland and Romania were interested in maintaining
high agricultural subsidies and strong development aid.
The dilemma is best understood in the context of the United
Kingdom's grand strategy. Unnecessary political isolation on the Continent is a
real threat to London. The more the European Union focuses on the eurozone, the
less influence the United Kingdom has on continental Europe. The euro-zone
currently stretches from Finland to Portugal, creating the type of unified,
Continental entity that London fears.
For the British, this threat can be mitigated in several ways, the
most important of which is its alliance with the United States. As long as
London is the main military ally and a major economic partner of the world's
only superpower, continental Europe cannot afford to ignore the United Kingdom.
Moreover, London also represents a viable alternative to the German leadership
of Europe, especially when France is weak and enmeshed in its own domestic
problems. And even if the United Kingdom chooses to move away from mainland
Europe, its political and economic influence will continue to be felt in the
Continent.
The United Kingdom's grand strategy has long been characterized
by balancing between Europe and the United States. Currently, London is not so
much redefining that grand strategy as it is shifting its weight away from
Europe without completely abandoning the Continent.
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