February 9, 2016 1:23 pm

The battle over Brexit matters to the world

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Martin Wolf

UK needs a voice in Europe and the bloc would benefit too

©AFP

 

A letter from Donald Tusk, the president of the European Council, outlines a deal on UK membership of the EU to be agreed at the meeting of heads of government on February 18 and 19. There it will compete for attention with the even more vexed question of immigration. Maybe that will make it easier for the other members to accept the concessions — albeit limited — offered to David Cameron, the UK prime minister. But will they be enough to sway his forthcoming referendum in favour of staying in?

If anyone were convinced that the UK should leave the EU, this deal would not change their mind. It proposes a mechanism to protect the position of members who are not part of the economic and monetary union. But, notes Mr Tusk, this “cannot constitute a veto nor delay urgent decisions”. Once again, the heads of government are to “set out our commitment to increase efforts to enhance competitiveness”. The council has been committed to a similarly vague rhetorical aim at least since the launch of its Lisbon agenda in 2000 .

On sovereignty, the declaration recognises that the UK “is not committed to further political integration”. Few can have imagined it was. Finally, on benefits for migrants, the draft proposes a “safeguard mechanism”, but one the UK would be unable to implement unilaterally and whose details are yet to be decided.

In all, Mr Cameron has laboured to produce a mouse. His premise has been that the UK has a place only in a “reformed EU”. Eurosceptics will argue that, since the union is fundamentally unreformed, the logic of his own position is exit. They will be right.

Thus the negotiation has underlined the obvious: either it makes sense for the UK to stay in the EU as it is or it does not. Maybe, the deal will make it easier for waverers and careerists to choose the former option. But it does not change the intellectual arguments.
The background to the choice is also uncomfortably clear. The UK is a semi-detached member of the EU. The British do not feel they need the union to strengthen the legitimacy of their political institutions. They have no interest in joining the single currency. They (or, at least, the English) are mostly reluctant outsiders. That will not change.

At the same time, 44 per cent of UK exports go to the EU, against 17 per cent to the US. No less important, the political stability and prosperity of the continent is (and always has been) a vital British interest. We might sum up the attitude as follows: “We do not want to be in but we do not want to be out either. So please make an EU we would like.”

The continental Europeans are also torn on the British question. Given the existential challenges the EU faces, the last thing they need is protracted uncertainty over the place of this reluctant member. But it is hard to argue that the union would be better off without its second-largest economy and a country with a long history of democratic stability, close connections to the English-speaking democracies, an effective security establishment, a liberal attitude to commerce and a global outlook.
This, then, is an inescapably awkward relationship. But it has also been a workable one. That is why this referendum is such an unnecessary risk, however pressing the Eurosceptic threat may have seemed to Mr Cameron’s hold over power. If the vote is No, the country and the EU will face at least a protracted period of uncertainty. If the vote is Yes, but only marginally so, this uncertainty might endure for years.

Eurosceptics challenge the judgment that this has been a workable relationship. They argue that the EU has wrapped the UK economy in binding red tape. Yet analyses by the OECD consistently show that the UK economy is among the least regulated of all its members. The strong performance of the UK’s labour market supports this conclusion.

Many also insist that the City of London is stifled by regulation. Yet the financial crisis suggests that the problem was far more one of permissive regulation than the reverse. Many complain, too, of the immigration from the EU. Yet net immigration comes more from non-EU countries, than from the EU. (See charts.)
Nobody can credibly argue that EU membership has been a significant obstacle to UK prosperity. The main obstacles — poor education and low investment, for example — are home-grown. It is conceivable that the EU would become a significant obstacle in future. In that case, the UK should leave. But it is vastly premature to do so now.
At the same time, by participating in the EU, the UK has a voice in the affairs of its closest neighbours and, with them, those of the world. Yes, outside the EU, the UK (or maybe England alone) may decide its own laws. But it will lose that voice. The option of leaving the union while seeking to enjoy the present access to markets, even if it were feasible, would be the worst of both worlds: EU rules without a voice in the EU. A clean exit would be better.
In a campaign in which the Leave side is incapable of agreeing on alternatives, while the Remain side need only point to a workable status quo, the latter should win. The fact that the leaders of the main political parties and much of big business will be on the Remain side should strengthen that probability.
Yet many people greatly desire to give respectable opinion a good kicking. That makes the outcome highly uncertain. But it does not make it less important. Yes, this is a difficult relationship and, yes, a time may come when it no longer works. That time is not now.
The UK needs a voice in Europe. Europe also needs the UK to have
that voice. It is a relationship of the head not of the heart. But it is still one very much worth having. That is true for the UK. It is also true for its partners and allies.