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The Brexit precedent

Published in The National Business Review (Auckland), 2 February 2020

This Friday, the 31st of January 2020, is a historic day. After 47 years of membership, and with 1,317 days passed since the 2016 referendum, the UK is leaving the European Union.

Though Britain and Brussels still need to sort out the arrangements of their future relationship, today’s formal Brexit is a dramatic milestone. It means that Brexit can no longer be halted or reversed. There will not be a second referendum, no revocation of Article 50, no ‘soft’ Brexit.

Tonight, Brexit will finally mean Brexit. Britain will be out by midnight Central European Time. There is no going back.

Understandably, most commentary around Brexit will focus on what it will mean for Britain. There are so many implications, one could fill libraries with it: There is the Scottish independence question; the Northern Irish peace process; the future Anglo-American relationship; and the role of London in financial markets. These are only a few high-level examples.

However, it is perhaps even more interesting to reflect on what Brexit means for the EU and its remaining 27 members. Maybe Brexit will have an even greater impact on them than it will on the UK.

The European project never had a reverse gear. Right from the start, the goal of the EU was a widening and deepening of European integration. Its most well-known expression sits right at the beginning of the preamble to the Treaty of Rome, the 1957 founding document of the European Economic Community: “Determined to lay the foundations of an ever-closer union among the peoples of Europe …”.

The dictionary definition of ‘determined’ is “having made a firm decision and being resolved not to change it” – and that is what the Treaty of Rome meant. There was to be no change of direction towards a deep and deepening union. Meanwhile, ‘Union’ is not a loose cooperation, not a reconciliation of interests, not a means to some end. No, the European project was both the means and the end. And not just any union but an ‘ever-closer’ union.

The European project was a one-way road. A frequently used image compares European integration to riding a bicycle. As long as you are pedalling, you move forward. The moment you stop pedalling, you fall over. In a similar way, EU politicians told themselves that integration would fall apart if it ever stopped.

Over its history, the EU always proceeded in this way. Only on a few occasions it happened that some countries did not go along with the others in further integration. For example, Denmark received opt-outs in 1992 when the Danes voted against the Maastricht Treaty in a referendum. Similarly, Sweden has not introduced the Euro, and indeed Britain had opt-outs on the Euro and the Human Rights Charter. But even when some countries did not follow the others, integration proceeded regardless. It never went backwards.

No single major policy area would have ever been returned to the nation states after taken over by the EU. And, of course, there had never been a country leaving the EU having previously joint it. No country, that is, until Brexit.

The one-way nature of European integration was so well-established, European law did not even contain provisions to leave the EU. That option, Article 50, was only introduced with the EU’s Lisbon Treaty in 2009. Before then, some legal scholars even held that no member could unilaterally withdraw from the EU (questionable as that idea was under general principles of international law).

Even in 2009 the possibility of voluntary withdrawal was not thought realistic. Just as the whole idea of Brexit would not have been regarded as a real option.

Even in Britain, with its long history of Euroscepticism, complete withdrawal from the European Union did not become a strongly held position until the Brexit referendum campaign. Take the Eurosceptical think tank the Institute of Economic Affairs (IEA) as an example. Though the IEA had long argued its case against the EU, in its 1996 report Better off out?, the IEA explained why EU membership did little for Britain and still stopped short of recommending to leave the EU.

So if not even a bastion of Euroscepticism argued for Brexit, we can imagine how unlikely the withdrawal of a member state would have appeared.

But now the unthinkable is happening and Britain will leave. So what does this mean for what is left of the EU?

It means that disintegration is no longer a taboo. That will be true even more so if Britain makes a success of Brexit.

The chances of that are not too slim. Continental Europe is economically and politically troubled for a variety of reasons. Britain, on the other hand, may now leave the worst of the Brexit uncertainty behind. It has a new government with a big majority for the next five years. It may also find new opportunities for favourable trade deals – and a currency which can depreciate as a buffer to any Brexit wobbles.

In other words, Britain may fare well over the coming years – at least relative to continental Europe. But if that happens, would not other EU members ask themselves if they might not also be better off out?

If Britain conducts its affairs well over the coming years, it would be a constant encouragement to anti-EU parties in other European countries. Think of what that would mean to French populist Marine Le Pen, the Orbán government in Hungary or the Alternative for Germany party.

As important as Brexit will be to Britain, its real impact will be felt across the Channel for years to come.

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