In June, voters in the United Kingdom of Great Britain and Northern Ireland will go to the polls to decide whether to leave the European Union — an option dubbed “Brexit” — or stay in. Polls so far suggest that UK voters will — narrowly — vote to stay in. But in a sense, the fact that Britain is having this debate at all is as big a threat to the EU’s long-term viability as the possibility that the UK might opt out.
The EU was created in 1993 under the slogan “ever closer union.” European leaders hoped to gradually transform Europe from a collection of sovereign nations into a single European superstate. But that process has slowed over the past decade, leaving the EU awkwardly straddling the line between being one nation and many.
The EU has become too economically and politically integrated for its member states to function as truly independent nations. Yet it lacks the kind of continent-wide financial and political institutions — like a strong executive and the authority to levy taxes independent of member governments — that would allow it to act as a single integrated country. As a result, the EU has a tendency to become paralyzed by infighting and indecision during crisis moments like last summer’s Greek financial meltdown.
If Britain leaves the EU, there’s a danger that it will embolden other EU nations to follow suit, leading to the gradual disintegration of the EU. The prime minister of the Czech Republic has already warned that “Czexit” could follow close on the heels of Brexit.
But even if UK voters decide to stay in the EU, it wouldn’t be such great news for the European project. British voters have made it clear that they don’t like European elites’ vision of “ever closer union,” and UK Prime Minister David Cameron has leveraged voter dissatisfaction with the EU to extract a promise that the UK wouldn’t be forced to join the euro or surrender greater sovereignty to Brussels.
But that could leave the EU’s current, dysfunctional institutions in place for the foreseeable future — which could prove even worse for the EU, in the long run, than losing the UK.
The European experiment hasn’t been going well
It will create some big headaches for European leaders if the UK votes to leave the European Union. They’ll have to negotiate a new relationship with the Brits while simultaneously worrying that other countries will follow the UK’s lead.
But over the long run, the British vote is more a symptom of the EU’s broader challenges than it is a source of problems in its own right.
To see why, it’s helpful to think back to last year’s Greek crisis.
The Greek economy was suffering from a severe economic downturn caused in part by a Europe-wide monetary policy that was insufficiently stimulative for Greece. The downturn worsened Greece’s already large deficit, which meant that Greece needed to ask European leaders for more financial aid. But European leaders were reluctant to provide it, because they worried it would establish a precedent and encourage other countries to engage in reckless spending in the future.
If Greece were an independent country with its own currency, it could have addressed the crisis by devaluing its currency and stabilizing its debt with depreciated cash.
On the other hand, if the EU were a single, sovereign nation like the United States, it would have a nationwide, federally funded social safety net, which would have meant that a local economic downturn would not have been as devastating to Greece’s budget.
Instead, Greece was stuck with the worst of both worlds: It didn’t have the autonomy to deal with the crisis itself, nor were there EU-wide institutions powerful enough to address it effectively.
Europe hasn’t developed a unified political culture
Every year, the US federal government taxes rich people in Massachusetts and Connecticut and uses the money to fund government benefits for poor people in Mississippi and West Virginia. Few Americans see that as a problem, because we identify as Americans first and citizens of Massachusetts or West Virginia second.
But Europe’s political culture hasn’t made the same leap. People still see themselves as Brits, Germans, or Greeks more than Europeans. So when circumstances call for shared sacrifices, things tend to get bogged down in arguments about which European nations should bear the biggest burden.
These kinds of problems are likely to crop up every time the continent has an economic or political crisis, generating resentments that will make people even more reluctant to support further integration. British taxpayers weren’t on the hook for last year’s Greek bailout, but observing the bitter conflict between Greece and the rest of the eurozone can’t have made British voters more enthusiastic about eventually joining the common currency.
The Brexit debate, then, is a sign that the European political experiment isn’t going very well. Whether or not they decide to pull out now, it’s clear that British voters don’t want to see the integration process go much further. And if further integration isn’t on the table, it’s not clear how the EU can gain the legitimacy it will need to survive over the long run.
British opposition to the EU is strongest among right-wing populists
Britain’s participation in the European project has always been controversial within the United Kingdom. In recent years, opponents of Britain’s membership in the EU, known as Euroskeptics, have been concentrated in the more populist portions of Britain’s political right.
The strongest Euroskeptics in Britain have a lot in common with conservative populists in America such as Donald Trump and Pat Buchanan. Just as Trump argues that the US has gotten a bad deal from recent trade deals, so British Euroskeptics contend that Britain is getting a raw deal from its membership in the EU.
In the past few years, the debate over Britain’s EU membership has increasingly become a debate over immigration. Britain did not sign on to the Schengen Agreement, which established de facto open borders among many EU members on the continent. But the EU’s rules still require Britain to open its labor markets to citizens of other EU nations and to offer them certain government benefits.
The EU’s liberal migration rules are unpopular on the British far right.
The United Kingdom Independence Party, founded in the 1990s with an explicit goal of opposing British membership in the EU, has gained supporters in recent years by focusing on an anti-immigrant platform. The party won 12 percent of the vote in the 2015 election — good enough for third place.
The Syrian refugee crisis has created a political environment in which anti-immigrant and anti-EU politics can find broader support. Few Syrians have made it to British shores, but the flood of Syrian refugees into other EU nations and last year’s terrorist attacks in Paris have raised fears about border security more generally.
While Cameron has endorsed EU membership and has induced most members of his leadership team to do the same, he still faces significant opposition within his own party. The most prominent critic is London Mayor Boris Johnson, who announced that he favored a “leave” vote earlier this week.
Johnson’s case against EU membership focuses on the growing regulatory burden imposed by the EU and the corresponding erosion of British sovereignty. “EU law is likened to a ratchet, clicking only forwards,” he writes. “We are seeing a slow and invisible process of legal colonisation, as the EU infiltrates just about every area of public policy.”
“It was one thing when that court contented itself with the single market, and ensuring that there was free and fair trade across the EU,” Johnson adds. Now, however, “the European Court of Justice has taken on the ability to vindicate people’s rights under the 55-clause Charter of Fundamental Human Rights, including such peculiar entitlements as the right to found a school, or the right to ‘pursue a freely chosen occupation’ anywhere in the EU.”
Cameron and business groups say Britain is better off in the EU
Grassroots agitation to leave the EU has given David Cameron leverage to seek changes to the EU’s rules. This week, after months of negotiations, Cameron announced a new deal with EU leaders that confirms Britain’s right to remain permanently outside the common currency and gives the UK new rights to control immigration and to limit government benefits to EU citizens who move to the UK. This deal will be the centerpiece of Cameron’s campaign to stay in the EU, as he argues that it addresses critics’ major concerns with EU membership.
And Cameron’s allies in the business community argue that EU membership has major economic benefits. The EU operates as a massive free trade area, and its standardization of national regulations make it easier to do business across borders. This makes it easier for British businesses to sell their products in countries from Spain to Poland. The EU also makes it easier for people to move between European countries to find work, allowing British business to draw on a continent-wide labor force.
EU advocates say these benefits are economically significant. One major business group estimates that being part of the EU provides Britain with a net benefit of 4 to 5 percent of British GDP — or roughly $1,500 per British person. And they emphasize that Britain’s net contribution to the EU’s budget, 0.4 percent of GDP, is comparatively small.
Of course, not everyone sees the EU’s efforts to harmonize regulations in a positive light. Critics see the EU as foisting unwanted and unnecessary regulations on the British economy, and they argue that leaving the EU — and repealing many of those regulations — could provide economic benefits.
Of course, a lot depends on what kind of relationship would replace EU membership if Britain were to leave the EU. The deep ties between Britain’s economy and the rest of the EU means that both sides would have strong incentives to cooperate. David Cameron might be able to strike a deal that salvages many of the benefits of EU membership while enhancing Britain’s autonomy. Indeed, Boris Johnson has argued that leaving the EU could allow the UK to enjoy most of the benefits of EU membership with fewer costs.
On the other hand, European leaders might decide to drive a hard bargain in order to make an example of Britain and discourage other countries from following its lead. There’s a risk that Britain’s exit from the EU could lead to higher trade barriers with the continent, putting UK businesses at a disadvantage compared with German and French firms trying to do business in the European market. Some companies have hinted that a British exit could cause them to move their offices from London to continental capitals to keep them within the EU.
The only way to find out for sure would be for voters to endorse Brexit. And Cameron argues that’s too big of a risk to take.