Wednesday , May 23, 2018

EU Response To Brexit

EU Response to Brexit

Brexit and Populism: The Future of the “European Project” from a German Perspective

Dr. Celine-Agathe Caro, Senior Policy Analyst at the Konrad Adenauer Foundation, a German political foundation affiliated with the Christian Democratic Union (CDU), addressed a gathering in the fall of 2016 sponsored by the Eric M. Warburg Chapter of the American Council on Germany, to discuss the “European project” from a German perspective following the Brexit vote and the movement toward greater populism.EU_Caro_Celine

The European Union currently includes 28 member states with over 500 million people delivering almost 25 percent of the global domestic product. Dr. Caro’s remarks included the following, edited for brevity:

The outcome of the British referendum has created increasing pressure on the EU to reform itself to better respond to the expectations of its citizens. At the same time, the European member states will only be able to overcome common challenges like the refugee crisis, terrorist threats, or Russia’s aggressive foreign policy if they act together.

With its economic and political weight, Germany will play a key role in any further decisions regarding the EU’s future, but it needs partners to assume the leadership required to help navigate these crises.

I think it’s important to mention that from a European perspective, the European project is not only about crisis and about bad news, even if it’s what the media here in the U.S. and in Europe like to focus on. The European project is the project that since 1950 is giving Europe peace and stability and prosperity. That’s something we should keep in mind while talking about all these crises and these programs.

This prosperity, this freedom, this peace, that’s still something that is true today that we have from the European project. Think of the single market. Think of the common currency and of all these common laws and regulations and norms that make it possible to manage together 28 countries—28 countries that represent roughly 500 million citizens. It might be that’s only 7 percent of the world population, but that’s 25 percent of the world GDP and 50 percent of all social expenditures worldwide.

I will give you a quick overview of the different issues we are facing in the EU today. I would like to present five top challenges I think for the EU in the future, that influence also the quality of the trans-Atlantic partnership. These five top challenges are as follows: unity, solidarity, communication, leadership, and international responsibility.

 Unity

I will start with the first challenge—unity—the idea that we should stay together. That’s closely related to Brexit and to our British friends over there. The British referendum is a big backlash for the European project from a historical perspective because for the first time in the history of the European Union a member state will leave the union. For the first time in the history of the EU, the whole project will move backwards. That’s one for history and symbolically that’s bad news.EU3

Politically speaking, that’s not good news either because the EU will lose a major partner—a key member state, one of the biggest member states, and a key player for security and foreign issues. For the current German government, Berlin will also lose an economic partner since the British are traditionally an economically liberal partner compared to the South of Europe.

Officially the negotiations between the EU and the UK haven’t started yet because London needs to trigger Article 50 of the European treatise. Since the referendum, they haven’t done it; they are not rushing into it. That is the proof that the British government wasn’t prepared for this outcome on June 23rd, that they had nothing in their drawers to present to the British public and to the rest of the European Union.

At the beginning of the month, though, Theresa May, who is the current Prime Minister in the UK, said that she will trigger this Article 50 by the end of March 2017. From that time, the UK will have 2 years to negotiate its departure from the EU and the kind of relationship it wants to have in the future with the Union. That’s why if you listen to the media, you will hear that the UK will leave the EU in March 2019. That’s the agenda we have.

The British are facing a dilemma these days, because on the one side they want to control the European immigration. It was the major topic of the campaign before the referendum. They also want to stop contributing to the EU budget. They think they pay too much and they could use the money better on their island. But on the other side, they want to keep access to the single market. Economically speaking, it makes complete sense.EU_Trade_to_and_from_Britain_2014

To give you a statistic, just keep in mind that 44 percent of British exports go to the European single market. These exports represent 12 percent of the British GDP. The other way around, in comparison, the EU exports to Britain make up 3 percent of EU’s GDP. 12 percent of the GDP on one side versus 3 percent of the GDP on the other side. Bottom line, if you summarize, immigration, EU budget, and single market. The British would like to keep the advantages of the system without burden sharing and financial obligations.

Chancellor Merkel, as you might have heard, just the day after the referendum in June, made it very clear that this kind of cherry-picking is completely out of the question. She said that very clearly at the European summit following the referendum. If you know Angela Merkel, if you follow what she says and what she does in the media, you will know that she’s a tough lady. She says what she does and she does what she says. It’s likely that she will keep this line and keep this position.

Of course, the UK has been an important partner, so there are people worrying in Europe that she might want to accommodate the British better or be particularly nice to their claims. I went to the headquarters of the CDU party in Berlin last week; our headquarters are just on the other side of the road so it’s easy and we know them very well. One of my main questions was: what do you think? Will she keep this position regarding Brexit and the fact that there is no cherry-picking? So, no access to the single market if the British wants to control the border regarding EU immigration. The answers I got were quite clear. She won’t change her mind. She will stay on this line and she will follow it. Think of the refugee crisis. She said at the beginning, in fall last year, we cannot avoid it. We can make it. Since then she didn’t change her mind. Even if it’s difficult. Even if it’s expensive—for now, she keeps her words.

Why is it her position that cherry-picking is not acceptable? First, it’s a question of principle. You can’t have the advantages of a system without burden sharing and financial contributions. Second, of course, Angela Merkel and other European leaders don’t want to open Pandora’s box. If we start accommodating the British too easily, it will trigger claims everywhere in the rest of the EU in different member states. Cherry-picking would be the priority everywhere. That’s why Angela Merkel and other European leaders will probably adopt a very firm position during the negotiations with the UK once it starts, once they trigger Article 50 to start officially talking about that.

In this context, what we call a “hard Brexit,” is likely when it comes to Brexit. Hard Brexit means no access to the single market because they want to control immigration, because Angela Merkel and other states won’t bend. The other option would be a “soft Brexit.” It means that the British would keep access to the single market, but have obligations coming with that. The British would have to respect what we call “the 4 European freedoms.” Freedom of movement, for goods, for services, for capital, and for workers. It means open borders for the Europeans. That would be one first requirement. The UK would also have to abide by most of EU regulations. Then they would have to keep contributing to the EU budget. It’s not for free to have access to the European market.

On top of that, they would have no say in European legislation. For those of you that know our system in detail, that’s what we call the Norwegian model. Norway, Lichtenstein, Iceland, they have these relationships. They are not part of the EU, but they have access to the single market and these are the conditions. Norway is paying to have access to the single market. That might be a solution for the UK, but since they want to control EU immigration, we say that a hard Brexit is more likely. No immigration, but also no access to the single market.

A hard Brexit means a complete exit then of the EU, but also comprehensive negotiation of all treaties the UK is part of as an EU member. Think about it. For example, the UK is member of the WTO as an EU member. That’s something that they will need to renegotiate once they leave the EU. They will need to have another trade agreement with the EU. Hard Brexit, no access to the single market, okay. But what comes next? Which kind of trade agreement will we have together? That will be a second thing the British will need to negotiate urgently.EU4

Think of the 12 percent GDP with the EU. The British will also need to negotiate trade agreements with all the countries worldwide the EU has a trade agreement with—roughly 50 countries in the world. Trade agreement with the U.S., for example, they will need a mini-agreement for trade agreement with Canada. If they are not part of the EU, they will also need an extra global trade agreement. You see the list of the things they will need to do is very long. It’s not only about leaving the EU. It’s about renegotiating your trade partnership, your trade agreements with almost everybody on the planet.

If we take the example of a new trade agreement with the EU, for example, it means that all the member states including the European parliament and in some cases regional parliaments must agree to the new deal. Everybody has to sign that they agree to give these new trade agreements with the UK, otherwise standard international loads will apply again for trade relationships between the UK and the EU. It means standard pricing and tariffs.

If you’re cynical, you can say the financial future of this huge country, the UK, is in the hands of a country like Malta. They are 400 people. In the hands of a country like Luxembourg, also a small country with half a million people. Also, they will of course need the backing of the biggest of the big member states like Germany, France, Spain, Italy, countries that have no interest in giving hope to their own nationalistic movements, but something is a great idea to start.

I think it will be a very hard negotiation for the UK. It’s not about bashing the British for leaving us, punishing the Brits for Brexit. The British will of course in the negotiation for a new trade agreement be very tough and they will defend their national interests. That’s normal. But on the other side the other member states will defend their national and continental interests as vigorous as London will. That’s just how business works.

It will be a tough discussion, I guess, because you can see with what I just presented that the cards, I think, are better on the European side than on the British side. In my opinion, the UK is in a critical position currently and that might explain why their local currency, the pound, is plunging towards the Euro currently, why they have difficulties with investments currently coming from abroad, and why growth forecasts for next year have been reduced.

To give you a little bit of continental perspective on all of this—what is the current strategy of the EU? Currently, as I said, there are no negotiations with the British. We are waiting for them to trigger Article 50, so officially there are no talks about that with London, but the 27 members are already thinking about what it means for the future of the European Union. For that, they started in September what we called “the Bratislava process,” because the last European council in September took place in Bratislava in Slovakia. The goal of this process is to the organization—the future of the European Union without the UK. Most of all this demonstrates EU’s capacity to act and to come forward to show unity with the message that it’s not because the UK is leaving that the European Union is falling apart. That’s the message the heads of state and government would like to communicate.

It’s a big challenge, though. It’s easy to say, but it’s harder to implement, of course. The idea is not to say, “Everything is fine. We’ll just ignore the fact that the big member state is leaving.” No. It’s a way of acknowledging that we have a crisis and we need to come forward and of course it’s hard with all the nationalistic trends that we have in different member states. The goal concretely is to prove or to show to the citizens that the EU is still the European project—EU is still a good idea and something that brings the citizens advantages in their everyday life, economically speaking, or in terms of security or culturally.

For now, the strategy is to focus on very concrete issues like national security, international security, counter-terrorism to prove that the citizen understands that we have the whole narrative of the EU. Peace, prosperity, freedom, but we also have these very relevant narratives currently of security. So, if we work together, we can improve the security and that’s what Europeans want to show now, to improve currently.

They also want to do more to support economic victims in the EU, people that are suffering because of global trends. For example, in unemployment. So, they want to help also these people to feel better, to avoid having these guys go to the extremist, euro-sceptic parties.

All these must be done without any treaty change. As soon as we have a new crisis in the EU, one first reaction from one capital or from someone is to say, “We need to change the EU treaties. If we change the treaties, everything will be better.” That’s not currently the discussion that we are having at the European level because the people who are in favor of more EU integration think that it’s not the right time to do it. That if we start opening these other Pandora’s box, that won’t work and indeed, even the opposite might come that we will end up with less integration. So, nobody’s talking about treaty changes for the time being. As a matter of fact, the treaties are offering different mechanisms we are not using currently. We can do more than what we are doing now based on the current European treaty. The idea is to try to use what we have instead of saying we need to change everything again.

For the German government, this Bratislava process is going in the right direction to show unity, to try to work concretely on different very important issues the citizens are currently confronted with. Especially for Chancellor Merkel, it’s very important to maintain EU’s unity with 27 member states. Maybe you are aware of this discussion that comes back regularly also, but maybe it might be better to have a core Europe. a smaller group of member states that could come forward and maybe the rest will follow or not. Currently that’s not the strategy in Berlin, in the Chancellery. The idea is more that the other 27 should stay together in a global world, in a multi-polar world. Angela Merkel thinks that the Germans and the Europeans in general are better off if they try to speak with one voice and if they try to articulate their different interests together.

Solidarity

My second challenge in this context is solidarity. That’s a challenge that is currently connected to the ongoing crisis in the Euro-zone, but also to the refugee crisis. I will focus on this refugee crisis for this presentation, but I would be happy also to talk about the Euro-zone later if you would like. The word solidarity in the middle of these discussions regarding the refugee crisis, because as you might know, thousands of people came to Europe since the beginning of last year in the wake of the Syrian war, conflict over land and over sea. Thousands of Syrians, but not only Syrians. We also have a lot of people from Iraq, coming from Afghanistan, and from Africa, especially from the horn of Africa. That’s a mix of refugees, people fleeing their home because of war, and economic migrants like many Africans who think that they could have a better future in Europe.

To face this challenge, last year in May 2015, the European commission came with a new resettlement mechanism to make sure all member states will participate and help to find solutions for all these waves of migrants because the problem in the EU is that’s very imbalanced. Most of the migrants are in Greece and in Italy—these are the points of entry when you try to enter the EU, the main points of entry. Then they are in Germany and in Sweden, countries that are particularly generous with their welfare systems, so they hope that they can start a better life quickly. The German chancellor’s very generous attitude toward the refugees has also helped a lot of people to decide to go to Germany.

But because of lack of solidarity and load sharing, the member states didn’t implement the resettlement. It was a good idea on the paper, but concretely it doesn’t work because for some reason. Different member states for different reasons don’t want to take in refugees or migrants in general. We are still facing a lot of tensions and dramas, especially in Greece and in Italy where the are still way too many people waiting for resettlement. Also in Sweden or for Germany, it’s quite a challenge to find schools and to find homes and apartments for everybody.

Nevertheless, I think it’s important also to say that the situation has improved since last fall. Especially because if the Europeans couldn’t agree on a resettlement program, at least they could agree on the fact that we need to protect EU’s external borders a little bit better. We are doing that, for example with the Frontex agency, and as a matter of fact, now it’s harder for the migrants to enter the European Union. One major factor in this Frontex is also the fact that the so-called Balkans route is now closed. It was one of the main land routes to access the European Union.

Over the Balkans, over Turkey, Greece, and then Macedonia, Serbia and Hungary, or Slovenia, Bulgaria. Bulgaria’s another situation, but if you went to Hungary, for example, then you’re free to go everywhere because Hungary is a member of the Shengen coastline area, so once you’re there, there is no border controls anymore, so you are free to go to Germany, to Austria, and to the other countries. The Hungarian government was very committed to change this and they changed the border in cooperation with Austria, for example. Now it’s very difficult to enter the EU this way and it makes it in general more difficult to access the Shengen area.

The situation is better in general from the perspective of the member states. Less people are coming, but this lack of solidarity and burden sharing is for sure something that is still in the room during European meetings and that’s still a source of tensions between the member states. It also has political consequences.

Communication

That brings me to my third challenge I call communication. I think that communication between the political elites and the population in general is a huge challenge currently in the European Union. That’s not something the media are talking a lot about. Every day it’s more about Brexit and the refugee crisis and terrorist attacks. But as a matter of fact, with all these different challenges, these different crises, populist, Euro-sceptic and nationalistic movements, nationalist movements are growing bigger in many member states. You’re aware of UKIP in Great Britain, the independence party that played a key role in the campaign for Brexit before the referendum.

If you think of France, we have the Front National over there. That’s an old party that was created in the ’80s but they are very successful currently and we will have general elections next spring and experts or polling institutions agree on the fact that they might become between 20 and 23 percent of the vote for the first round of the presidential elections. They might end up being the first party of France. Even if it’s very likely that they lose, then the run off, the second, it’s a source of concern that’s almost one quarter of the population is willing to support the Euro-sceptic and nationalist party.

Talking about elections, in the Netherlands, we will have general elections there in March. This tall blonde guy, Geert Wilders, is a very popular nationalist candidate so the election might be tough there, too. We have nationalist and often xenophobic parties that are very successful also in Austria, in Denmark, in Finland. Since 2013, in Germany, we also have the AfD, the alternative to Deutschland. The alternative for Germany. That’s a new party that was created before the last parliamentary election in September 2013. They set up the party a couple of months before. Their major topic at the beginning related to the Euro-zone crisis. It was all about leaving the Euro-zone and coming back to the mark, leaving the common currency. That’s what they focused a lot on in 2013, so Euro-sceptic, if you want.

Now it’s all about the refugees, the migrants, so it’s an anti-immigration party and they were very successful. They have been very successful at the regional level. All experts agree on the fact that they will probably enter the German parliament next year in September when it comes to the general election. Their leader is a woman named Frauke Petry. There was a long article about her in the New Yorker two weeks ago, I think. In my opinion, it’s a quite positive article about her that was written. Once again, a strong lady in Germany. It might be worth reading if you want to know more about her.

These parties in France, in the Netherlands, in Finland, in Germany, everywhere, are exploiting fears in the population. They are offering simple solutions that probably won’t work. But the problem is that for now that they are appealing to a lot of people who feel overwhelmed with all these crises and international issues and insecure in the global context. There are some parallels between what is happening in the U.S. and in the EU, I think, in this regard.

That’s why I wanted to make this point. I think we need good communication about facts, about policy, to make sure that people understand what is going on. The European level is for sure difficult to understand. That’s one of the problems of this project. We have the European council, which is completely different in its work from the council of the EU. How do you make sure that the people understand the differences between these instances? Everything has the same name.

What does it mean for the normal citizens that are not dealing everyday with the European council? It’s a major problem that we have in the EU. It’s complicated. We have different mechanisms. It’s difficult to understand why it’s democratic, so it’s easier to say it’s not democratic and that’s something that we need to do better in the future, to communicate about these projects and how it works and why it’s worth continuing this path.

Leadership

This giant is connected to my fourth challenge, leadership, as I said. You have a message, you need a strong leader to deliver the message and to communicate about that. That’s something that is also a huge challenge in the EU currently. We need people that are willing to stand up for the European project, to present why it’s in the interest of the Europeans to continue. As I said, peace, prosperity. That’s also projected a good new narrative because peace it sounds boring for young people. Yeah, of course peace, yeah. Everybody takes it for granted.

One of the new narratives, something we are promoting a lot in our foundation is to say, “You know, at least it gives us a little bit more leverage at the international level to try to speak with one voice.” Germany is a big country. But compared to China or to the U.S. or to India, well as the Chinese were in Germany. I’m not sure it will have the right understanding … I tried. They know where the Eiffel Tower is, but more than that they don’t know. They don’t make the difference. A lot of people don’t. That’s why it’s one of our narratives to say, “for international negotiations with big partners like China and the US, it’s better if we try to do it together. At least 28 countries, that’s something. A little bit more significant than just one country like Portugal and just France or just Germany.”

We need a strong leadership to do that because it makes sense for the European project in general. Just to give another current example—the refugee crisis—most of the experts agree on the fact that we can make it in the EU, that we can absorb these newcomers. In Germany, for example, we are talking about 1.2 million people that came since January 2015. These are the last official numbers that came out two weeks ago. It’s not about 1.5 million or 2 million like they mention are going up and up. We are talking about only 1.2 million people for 2015. 890,000 people and then it means much less for this year. Germany has a population of 82 million people. 82 million on one side. 1 million on the other side. That’s a little bit more than 1 percent on top. It should be doable.

Economically speaking in the country where the population is aging, it’s even smart to do it. Maybe now it’s difficult and it costs money, for sure. It’s a challenge regarding integration issues and German language and everything, but down the road, in 10 years, in 20 years, in 30 years, these people will contribute to German growth. Roughly one third of the refugees in Germany are kids. These young persons will learn German and integrate if they are part of the system. That is something that is doing, but of course, for now we have general election in Germany in September next year. It’s easier to say, “We can’t afford to have all these refugees. It’s too expensive. Let’s do something else.” They are quite successful with this message and that’s why we need strong leader that can explain why the picture is a little bit more complicated than that. And a little bit more positive.

International Responsibility

The last challenge is international responsibility. I wanted to mention that to open the discussion to the trans-Atlantic partnership. Be sure that the Europeans are aware of discussions taking place here in the U.S. about the fact, for example, that there are free riders in the NATO alliance. That they don’t contribute enough financially for the security that the NATO alliance gives them. No matter who will win the election in November here in the U.S., it’s also quite clear that the Europeans will need to do more in the future for their own security in the EU and in the neighboring countries. That could be also interesting for the trans-Atlantic partnership.

As a matter of fact, all bloody attacks that have taken place in Europe in the last month, especially in Belgium, in France, but also in Germany, are wake-up calls that we need to do more in terms of national security, international security, counter-terrorism, international affairs, and development aid. It’s also clear that it should be or it would be in the interest of all member states to coordinate their different policies a little bit better, their different actions better.

For the external part of the security policy, the European Union has a mechanism. In 2001, the EU started to develop what’s called the common security and defense policy. The idea is to work better together on security issues worldwide. This Italian lady, Federica Mogherini, is our high representative of the European Union for foreign affairs and security policy. She’s the person in charge of coordinating the action of the different member states. As you can imagine, it’s very difficult for 28 member states to agree on a topic like this.

When it comes to security, of course all European capitals want to make sure that’s exactly as they want to have it. They are wary of giving sovereignty to a supra-national level. Also, for good reason. It’s serious. If we have states, if we have national governments, that’s first of all to make sure that people are safe in the country. Working together at the European level on these issues is not something simple for member states and governments. When you think we are doing nothing and we are way too slow, think about what it means to cooperate with 27 other member states. Progresses are there, but very slow.

To mention Germany briefly, I think it’s fair to say that Germany is a cautious partner in the efforts to establish more common security and defense policy for obvious historical reasons. It’s still difficult to imagine that soldiers, German soldiers, can be active abroad and in the country. They are very reluctant in Germany to play an important role in this area. Once again, if you think that nothing is happening and that’s annoying, keep in mind that things are changing, but only with small, small steps.

From a German perspective, for example, the fact that president Gauck, in January 2015, started the debate on this issue is a big deal. President Gauck said that Germany needs to take more responsibility at the international level and to engage more in zones of conflict. For Germans, it was a big deal. There were a lot of talks about that. There have been a lot of talks about that since then.

In July, this year, the current defense minister, another strong lady, Ursula Von der Leyen, published a new white paper about security policy in Germany and the future of the Bundeswehr, the German army. This paper also reflects that the mentality is changing a little bit in Germany currently regarding this question of taking more responsibility at the international stage in zones of conflict or to help fix conflicts. The road is still ahead. There is still a lot of progress to make, but things are changing. Traditionally, France and the UK are more active at this level, but Germany is also getting there step-by-step. It’s important to mention it.


Celine Agathe CaroEU_Caro_Celine

Dr. Céline-Agathe Caro is a Senior Policy Analyst at the Washington office of the Konrad-Adenauer-Foundation (KAS), a German political foundation affiliated with the Christian Democratic Union (CDU). Dr. Caro is in charge of monitoring U.S. think tanks and universities with a special emphasis on U.S. foreign and transatlantic policy, U.S. positions on key international issues, and the American perceptions of current developments in the EU. Between 2010 and 2015, Dr. Caro was the Coordinator for European Policy in the headquarters of the KAS in Berlin. In addition, in the spring and fall of 2013, she was a visiting lecturer at the Université Sorbonne Nouvelle in Paris and at the Ecole Normale Supérieure (ENS) in Lyon, a French grande école. Dr. Caro attended the Université Sorbonne Nouvelle, where she obtained a master’s degree in German Studies as well as a joint Ph.D. in German and French Studies in cooperation with the University of Dresden.

University of Dresden.

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