Brexit and the Shape of EU Power to Come

How is Britain’s vote to leave the UK going to affect the EU and its weight in the rest of the world?

30/06/2016 five questions to Claire Demesmay, Stefan Meister, Jana Puglierin, Julian Rappold, Henning Riecke, Eberhard Sandschneider, Gereon Schuch

Category: European Union, United Kingdom

What will the effects of Brexit be on the balance of power within the EU, particular between Germany and France? How have the Visegrad States responded? Does Brexit Represent a Victory for Putin? What does Brexit mean for security cooperation between the US and the EU? And what about China? We asked DGAP experts to weigh in.

Rocked by the results of its vote to leave the EU, British citizens are now seeing their political establishment tear itself to pieces, their currency drop precipitously, and their country become considerably less united. Our DGAP experts, looking beyond the UK’s own borders, share their thoughts on how the vote is already changing the balance of power within the EU and affecting its weight in the rest of the world. We asked seven experts at the DGAP for their medium- and long-term assessments.

What will the effects of Brexit be on the balance of power within the EU, particular between Germany and France?

Claire Demesmay: There is a fairly common opinion in France that the UK’s withdrawal will now make it possible for the EU to set a new course. President Hollande, though he did equate Brexit with an earthquake, immediately noted that he also saw it as an opportunity for France to make its voice heard and to strengthen its role in European policy. It had been impossible for him to fulfill his 2012 campaign promise of creating an “other Europe” – and the French left continues to rub his nose in this. Now he feels his time has finally come. Holland is calling for closer cooperation in European security and defense policy (CSDP), for more investment to promote growth and job creation as well as for a harmonization of fiscal policy. Not least, he is hoping the UK’s withdrawal will bring some symmetry back to the Franco-German tandem.

Brexit, however, actually tips the balance even more. This is because the United Kingdom in the EU, by loudly insisting on a liberal course in European policy, had given the French and the Germans solid grounds for sticking together, which indirectly encouraged the integration process. Germany was able to push with France for political integration within in the EU because it had an ally in Britain in terms of deepening the common market. It is unlikely that a post-Brexit Franco-German tête-à-tête will achieve a great leap toward integration, particularly because the two countries have such starkly diverging interests at the moment.

Jana Puglierin and Julian Rappold: The British exit will of course have enormous economic and political consequences for Germany. The UK is Germany’s third most important trading partner. Lack of clarity on the country’s future relationship with European common market will damage British-German trade relations and impede German economic growth. Moreover, Germany is going to have to make up to a large degree for the missing British contribution to the EU budget, some seven billion euros a year.

Even more difficult is the fact that Germany will lose an important ally in terms of speaking on behalf of free markets, deregulation, and cutting down on bureaucracy. The British decision changes the balance of power in the ECOFIN Council to the advantage of those states in favor of introducing a more state-led and interventionist economic policy. The pendulum looks like it will soon swing from German Ordnungspolitk (Ordoliberalism) back toward French interventionisme. In terms of European security and defense policy, the pressure will continue to mount on Germany both to take on more responsibility and show more leadership.

Expectations are high that Germany must hold the rest of the EU together. At the same time, many member states regard German dominance as part of the problem rather than an appealing solution.

What has been the response of the Visegrad States – Poland, Hungary, the Czech Republic, and Slovakia?
Certainly, we have heard a lot of criticism of the EU coming from this quarter.

Gereon Schuch: Warsaw and Budapest, too, are concerned to see the UK’s exit, for it signals a shift in the balance of power toward Germany. These capitals consider London to be an important counterweight to German pressure for greater European integration. This is why Hungarian President Viktor Orban took out an ad in the British press in which he personally appealed for a “Remain” vote: “I would like you to know that Hungary is proud to stand with you as a member of the European Union,” read his ad in the Daily Mail – a notable instance of a foreign leader taking a direct position on a national referendum.

Poland’s president, Andrzej Duda, expressed clear regret over the results of the vote. And members of the Czech government showed no happiness about it either, even if they do see the British vote as a vindication of their own calls for EU reform. The question now is whether the Visegrad states will be able to forge a constructive and unified position on the future of the EU. Unity would give much more weight to their voices.

On top of this there is real and present concern in the Visegrad states about the status of their nationals currently living in the UK. The eastern expansion of the EU and the free movement of workers brought about considerable labor migration to England; currently there are three-quarters of a million Poles working alongside some 200,000 Hungarians in the UK.

Overall, the EU’s eastern member states are not greeting Brexit with cheers but with great concern and unease – even as it gives new momentum to voices claiming that something in the EU must change radically in order to revive the people’s appetite for the European project.

Does Brexit Represent a Victory for Putin?
Stefan Meister:
The idea that Russia had a hand in the outcome of the British referendum has been for the most part exaggerated. So has the presentation of the significance of the vote for Russian policy toward the EU. This is not an active “victory” on Putin’s part, but it could turn out to have some indirect advantages for the Russian leadership. For one thing, EU member states – and Germany in particular – will have fewer resources available for addressing the crisis in Ukraine. Managing the EU’s internal crisis is going to take precedence here. Secondly Russia is seeing the departure from the EU of a country that has pushed very consistently for and vigorously supported a policy of sanctions against Russia – for a hard line against Moscow. Thirdly, the UK because of its close ties to Washington was one of the EU’s most important countries in terms of security guarantees.

Brexit is going to improve Russia’s negotiating position toward the EU with regard to the Ukraine crisis; for one thing because it will such up the resources that member states could otherwise use to deal with Russian leaders. This may result in less visibility for Ukraine as well as in a greater interest in finding some kind of modus vivendi with Moscow. At the same time, British withdrawal appears to confirms some of Russian propaganda’s most paradigmatic messages: that the EU can no longer serve as a useful model for Russia, that it has no future, and that only Putin can guarantee stability.

But none of this is due to Moscow actively destabilizing the EU. Brexit was self-inflicted, caused by member states’ failure to reform, an irresponsible political elite, and society’s growing alienation from political life. In this instance, it is simply wrong to make Russia partially responsible.

What does Brexit mean for security cooperation between the US and the EU?
Henning Riecke:
Despite US assurances about continuing its “special relationship” with the UK, Brexit will bring a real loss in relevance for the Brits. Now, if it wants influence in the EU, the US will have to concentrate much harder on Germany, possibly also on France. The UK’s withdrawal undermines the EU’s ability to present itself as a unified, legitimate actor in foreign and security policy as well. A union from which members are free to walk out hardly looks like a strong union. Apart from the question of how the UK will participate in future EU security and defense missions, this is going to dampen even further any expectations of Europe’s ability to “export stability” or manage crises. This is most certainly going to have an affect on what Europe means to the US.

In European circles, the UK always represented the member state with the clearest idea of what a military role in foreign policy should be. In this respect, we are going to see changes in how the EU reaches compromises in its security and defense policy. It is now possible to imagine the creation of new structures, such as an operational headquarters (something the British were always eager to block); but the country’s absence as a catalyst for action is going to be felt as well, particularly when it comes to specific operations. All in all, Britain’s exit from the EU is going to mean a more modest direction for the EU’s Common Security and Defense Policy, with a more civilian than military dimension.

As for NATO, Brexit could well precipitate the change in mood that is already underway. The US has for years been expressing its frustration about the unfair burden sharing and military inefficiency on the part of the Europeans. Donald Trump of course has already threatened to pull out of the alliance completely and leave those freeriders in the EU to their own devices. The EU can probably expect a tough line from Hillary Clinton as well. It is possible that the British may throw their weight behind the Americans here – which won’t help the EU’s efforts to mend fences with NATO.

How will China see the EU now that the Brexit vote is in?
Eberhard Sandschneider:
For year, Chinese policy toward Europe has happily and successfully consisted of a strategy of “divide and conquer.” The British decision to leave the EU will not do very much to change this. London is of course perceived as an important financial center, as shown by President Xi Jinping’s visit there last year. But from the Chinese point of view, Berlin is at least as important as the British capital. The Chinese are not alarmed by the prospect of Germany taking on a larger role in the EU with the departure of the UK.

Two things are strategically important for China: fostering economic exchange with Europe – including a stronger role for Chinese investments as part of an effort to connect European technology to Chinese companies – and maintaining the EU as a whole so that it can counterbalance US power. Looking beyond the temporary troubles in the financial markets, both of these goals appear manageable from the Chinese point of view.


 

 
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