The vote by the British people to leave the European Union has presented the EU with an unprecedented challenge. What happens next remains shrouded in doubt. A series of negotiations – both formal and informal – are now unfolding. A great deal of what happens next will depend on how the other 27 EU member states and the EU’s institutions respond. But what positions might they now take in negotiating Brexit? Between April and June the LSE’s BrexitVote blog ran a series of overviews of the possible negotiating positions from each of the EU’s member states and the EU’s institutions. Compiled by me and written by authors based at universities and research institutions, the overviews set out what positions each country and Brussels might take. The series was summarised in my LSE IDEAS Strategic Update ‘Brexit: what happens next?’
The series ran as follows:
- Introduction – Understanding the negotiations (13 April)
- I - Denmark, Italy, Netherlands, Slovenia, Spain (21 April)
- II – Croatia, Estonia, Ireland, Lithuania, Romania (29 April)
- III – Bulgaria, Cyprus, Luxembourg, Poland, Portugal (6 May)
- IV – Austria, Czech Republic, Finland, Greece, Malta (27 May)
- V – Belgium, Hungary, Latvia, Slovakia, Sweden (14 June)
- VI – EU institutions, France, Germany (20 June)
See below for each national view, listed in alphabetical order.
INTRODUCTION: Understanding the Negotiations
How might the rest of the EU respond to a British vote to withdraw? Tim Oliver begins a series for LSE BrexitVote in which researchers based in the other 27 EU member states set out what positions their governments may take should exit negotiations be triggered. As he makes clear in this introductory piece, while this is a very speculative exercise it will shed light on a side of the debate so far overlooked: the way the EU will shape what happens after a vote to withdraw.
Amongst the many April 1st joke articles were a few claiming the EU was drawing up contingency plans for a British exit. Ideas included a ban on BBC period dramas to protect European cultural heritage and the adoption of American English for EU documents. But some of the ideas, such as refusing to negotiate a free trade deal and isolating the City of London, were not ones easily laughed off.
The rest of the EU will be thinking about a British exit, albeit behind firmly closed doors. With polls showing neither side in the referendum campaign has a clear lead, the rest of the EU would be acting in a perfectly rational way by thinking about what to do if the British vote to leave.
Not only does the rest of the EU need to think through how to handle a UK exit, the British public need to appreciate what positions the remaining EU might take up in the series of negotiations that would follow a vote to leave. The UK government and institutions such as the Bank of England and private companies have also been urged, most clearly by the Leave campaign, to prepare contingency plans.
The referendum debate has so far focused on what exit deal would be best for the UK. That ignores that the deal the UK gets will also be one that meets demands set down by the EU, and it is this side of an exit that remains largely overlooked. What conditions might the remaining EU (rEU) of 27 member states and the European Parliament (who will have to sign off on any deal) place on any exit deal and post-withdrawal relationship with the UK?
Over the next few weeks the LSE BrexitVote blog will be publishing short comments from researchers based in all of the other EU member states in which they will set out what issues their government may prioritise in an exit negotiation. The series builds on the work of previous series on UK-EU relations run by the LSE’s EUROPP Blog and the DGAP. There have also been surveys into how the publics of other EU states view the UK’s debate and a growing range of analyses that look at the potential economic impact a Brexit would have on various EU states.
The biggest problem facing such an exercise is secrecy and an unwillingness to discuss this issue. Governments – including the UK – are unwilling to discuss their possible positions openly in case it is taken as an indication that they consider a vote to leave to be likely or inevitable. No doubt some will interpret this exercise in such a way. Alternatively, they might not want to admit that they are doing no contingency planning and banking everything on a vote to remain; something the UK government has been accused of doing. To be fair, the rest of the EU may also view preparation as pointless given it will be for the UK to make the first move by putting forward an exit proposal.
This does make this exercise a highly speculative one. But we believe that beginning to map out how the rest of the EU might respond to an exit is important for the UK’s debate because it can help show what Britain could expect if it leaves. If governments are not prepared to discuss this topic privately then this exercise can also serve as a way by which ideas for handling a UK exit can be discussed openly and set out.
Before we can speculate on what the rest of the EU will set down as their negotiating positions for any UK exit we need to clarify the process that would handle a withdrawal because this is in itself contested.
The EU does have a withdrawal clause, Article 50. Introduced during the attempt to create a European Constitution, and done so by former British diplomat Lord Kerr, the article is untested although there is a growing literature about it.
Article 50 gives the rEU control of the process. It includes a requirement to negotiate an exit within a two year framework, extendable only through unanimous agreement with the rEU; and the 27 remaining member states and the European Parliament have to agree to any exit and post-withdrawal relationship.
Neither of these requirements is to be casually dismissed. In fact, they pose such obstacles for the UK that some Eurosceptics (as explained here in a critique of this view by Alan Renwick) argue the UK need not follow Article 50 and instead follow another process entirely.
Some Eurosceptics also claim the two year timeframe can be neutralised by the UK delaying notification of its intention to trigger Article 50 – and thus start the two year timeframe – until a later date by which most of the negotiations will have been concluded.
Both claims are highly suspect. The rEU will not casually ignore its own treaty requirements and is unlikely to follow some other process because it strengthens the UK’s negotiating position. Victorious Eurosceptics are unlikely to react positively to waiting around for several years for the British Government to submit its formal declaration to withdraw from the EU.
The negotiations that do take place will be led on the rEU side by a team from the European Commission reporting to the European Council. Who will lead the UK’s negotiating team is unclear because of the uncertainty hanging over the future of David Cameron. He has said he intends to stay on as Prime Minister even if the UK votes to leave.
If this is the case he may not be in the strongest position to negotiate, throwing a shadow of doubt over the entire process. Cameron’s occupancy of 10 Downing Street may also overshadow how the UK handles its own complex series of internal negotiations over a EU exit and in any negotiations with countries outside the EU.
The EU side
A British exit will trigger several sets of negotiations on the rEU side: UK-EU, EU(UK) and EU(EU). They each overlap, but we must take a step back to view them as separate ones that will influence each other.
On Monday 25 January 2016 the think tank Open Europe ran a Brexit war-game in which during the morning they played out a simulation of the then ongoing attempt to renegotiate the UK’s current membership and in the afternoon simulated a UK-EU exit negotiation. In the afternoon’s exit simulation former Chancellor of the Exchequer Lord Lamont, representing the UK, presented an offer to the rEU of a new relationship that included aspects similar to the Canadian-EU trade deal and a budgetary contribution to the EU similar to those paid to the EU by Norway and Switzerland.
The rEU – played by nine former heads of government or senior policy makers (representing Spain, France, Germany, Italy, Poland, Ireland, Sweden and the EU institutions) – then debated the merits of the offer put forward by the UK. The negotiations were not pretty. Robert Colvile, writing for CAPX summed up the morning and afternoon simulations: ‘The first half was a debate. The second was a lynch mob.’
Representing the Irish Republic, John Bruton, former Irish Taoiseach, declared that the Irish government interpreted the British vote as an ‘unfriendly act.’ None of the other representative had much by way of positive comments to offer. As Colvile neatly summarised their approach: ‘After a Brexit vote, [the other member states] will put themselves first – informed not by a spirit of vengeance, but basic political logic.’
What the simulation turned into was a UK-EU to and fro about the UK’s initial offer. What could have happened (although limited time meant it would have been difficult) after an initial exchange of positions was for Lamont to withdraw leaving the rEU to discuss amongst themselves what to do and what to offer to the UK. Lamont could have returned at the end to discuss whether any offer then put to him by the rEU was acceptable.
The EU is notorious for presenting offers with little room for compromise because the offer is in itself a compromise worked out between 28 member states – with attention also paid to the opinions of the European Parliament and ECJ – which the EU is loathe to unpick. Whether the rEU can reach such a compromise on what to offer the UK will be the focus of a great deal of the negotiations and play a significant part in deciding what form of deal the UK can expect.
Article 50 states that the UK remains a member state until a withdrawal has been agreed. Until then it is entitled to partake in all EU business and meetings except those that relate to its withdrawal. This does not mean the UK is banished entirely from the EU’s negotiations about a Brexit. It does, however, mean that the rest of the EU will have the right to discuss the UK exit without the UK’s presence.
As it did with the renegotiation, the UK will put on a concerted diplomatic effort to shape the positions of various member states and EU institutions. Unlike the renegotiation, the UK cannot assume it will automatically have the right to sit in on all EU level meetings on the matter.
How the EU – collectively or as individual member states and EU institutions – responds to a Brexit will depend on five Is: Ideas, Interests, Institutions, International and Individuals. The biggest tensions will be between balancing ideas and interests. Will the rEU prioritise ideas of integration and cooperation to protect against the potential damage a Brexit could do to the ideas of European integration? Eurosceptics frequently point out the EU is a political project. Will it therefore be the ideas behind this project that shape the EU’s response?
Or will it be national interests that win out thanks to pressure from the likes of German car manufacturers, Irish farm exporters or consideration of an EU trade deficit with the UK that in 2014 hit a record high of £61.6 billion? This is not to suggest that interests and ideas are mutually exclusive. But which will shape the negotiations most?
Institutional limits such as WTO rules and the EU’s own rules limit what the EU can and cannot do to punish the UK or offer it in terms of a new special relationship. International pressures may help convince some EU member states to seek a quick agreement with a country that still packs a punch internationally.
We should also not overlook the individuals involved. Will individual leaders such as Merkel or Hollande be in a position to offer much given they face difficult domestic elections in 2017? A Brexit will not have a uniform effect on the rEU (at least economically), meaning some leaders will take the issue more importantly than others. It will be these individual leaders who will need to rebuild trust between the UK and the EU. A Brexit would make worse a relationship where trust has been lost thanks to the renegotiation and UK indifference to the crises in the Eurozone, Schengen and Ukraine.
Negotiations over a British exit will take place at the same time as the rEU is negotiating how to change itself internally to reflect the disappearance of the UK. The clearest changes will be over allocation of votes under QMV, national distribution of MEPs, changes to the EU’s budget and spending (which will depend to some extent on whether as part of an exit deal the UK agrees to contribute in a similar way to Norway), staffing changes, perhaps even rules to use American English in EU documents…
These changes will be fought over because of the wider change to the rEU’s balance of power and direction that a British exit could shape. These are changes that will add to a union already in a state of flux thanks to the continuing fallout from the crises in the Eurozone and Schengen. There are a myriad of potential outcomes. Some see a Brexit potentially strengthening Germany and the Eurozone; it may tip the EU’s centre of gravity further east and southwards; the EU’s political economy could move away from an ‘Anglo-Saxon’ one towards one that is more inward looking; the EU’s attempts at cooperation in foreign, security and defence policy (with potential implications for EU-NATO/Atlanticist relations) could be transformed.
Such changes will emerge over the course of several years, but the opportunities and dangers will not be far from the minds of EU leaders. It is also in these internal negotiations that we will see played out responses to any disintegration pressures a Brexit brings about. If other member states seek new deals or hold withdrawal referendums then the EU’s internal debate about how to change will take on a whole new meaning with potential knock-on implications for the UK-EU negotiation.
A fourth series of negotiations may be necessary if a British exit changes the relationships the rEU has with other non-EU states such as Norway, Switzerland, Lichtenstein, or Turkey. Should the new UK-EU relationship involve the European Economic Area (EEA) or European Free Trade Area (EFTA) then there will be discussions primarily with Norway (EEA) and Switzerland (EFTA) about how the new UK-EU deal affects relationships that have in the past been largely tailored to their needs. Should the UK secure some new form of relationship then these other states may be minded to request changes to their own relationshipsto replicate the UK deal.
While all this is going on the UK will remain a member of the EU, able to vote and conduct business in the way any member state is entitled to do. There will be some unease within the rEU as to whether the UK should vote or make decisions on matters that will shape the rEU’s policies post-UK exit. There may be some pressure for the UK to withdraw from such discussions.
Mapping out the rEU’s Responses
What then might be the concerns, red-lines and negotiating starting points for the remaining 27 member states and the European Parliament? In providing their short comments we have asked our 28 contributors to think about the following questions:
- What for your member state/institution might be the most sensitive issues – economics, immigration, security concerns, or political issues such as preventing further withdrawals – in a UK-EU exit negotiation?
- What red-lines might your member state/institution have for any exit deal the EU offers to the UK?
- What might be the cost or gains for your country/institution from a UK withdrawal?
As noted above, the answers to these will be very speculative. As we approach the 23 June we may see the UK’s official leave campaign set out reasons tailored to each of the other 27 EU member states and the European Parliament as to why it will be in their national, institutional and collective interest to adopt any exit deal the Leave campaign puts forward – if the leave campaign can agree on what deal they would seek, something that is in itself far from certain. This series will give us some idea as to how the rEU might respond and go some way towards filling a gap in the UK’s referendum debate.
Dr Tim Oliver is a Dahrendorf Postdoctoral Fellow on Europe-North American relations at LSE IDEAS
AUSTRIA: Making use of UK-EU tensions for domestic purposes
So far public debate in Austria about Brexit has been very limited. This is very much due to the fact that Austrian domestic politics attracts more media and public attention than the question of whether or not the UK should remain in the EU. Whenever the Brexit issue is raised, it is often from a British perspective rather than one that analyzes the potential impact on the EU in general and on Austria in particular. That said, tensions in UK-EU relations have created opportunities for changes in Austrian views and approaches to the EU.
In general, Austria favours continued membership of the UK in the EU. When it came to the UK-EU renegotiation earlier this year, the official Austrian position was best described as support for whatever might improve the quality of the European integration process without changing its core pillars. For this reason Austria supported efforts to curb benefit tourism and improve the EU’s economic governance. In economic relations the impact of a Brexit would be much higher for the UK than for Austria due to the low levels of trade between the two countries. As a result, the negative effects of a Brexit on the Austrian economy would be limited and there would be new possibilities for the small number of Austrian enterprises who would need to make up for any loss from reduced trading links with the UK.
The strongest support for a Brexit comes from Eurosceptic and anti-European parties who use the referendum debate as they did the UK-EU renegotiation: to support their argument that the European integration process needs to be re-adjusted and that more power should be given back to Austria and other Member States. This can clearly be seen in Austria’s current presidential debate in which the anti-European candidate repeatedly makes references to the way the UK is dealing with EU issues and that Austria should follow this example. So it is not surprising that a possible Brexit would give new impetus to existing critical public opinion in Austria on EU matters. This would not necessarily lead to another exit debate but would definitely redefine Austria’s position within the EU. At the same time, the pro-European government and pro-European parties also view the whole Brexit debate as a possibility for re-adjusting certain policy options in the EU and in Austrian-EU relations as a means to tackle rising popularity and support for populist and Eurosceptic opposition parties.
Dr Arnold Kammel is the director of the Austrian Institute for European and Security Policy, Vienna.
BELGIUM: Support for the UK staying in the EU, but European integration has priority.
In historically pro-European Belgium, part of the population is concerned about a possible Brexit, while others are seizing the UK referendum as an opportunity to appeal for reform of the EU. Belgium has always expressed its support for UK membership within the EU as a strong and central Member State. However, as we saw during the negotiations at the February meeting of the European Council 2016, Belgium is also a strong partisan for a more integrated EU. Indeed, Belgium was one of the more enthusiastic supporters of the term ‘ever closer Union’ as well as freedom of movement as one of the pillar of European Integration.
In the event of a Brexit, one of Belgium’s priorities will be to continue on the path to greater integration – even if the EU has to simultaneously negotiate the withdrawal of the UK.
Belgium will not accept any ‘Plan B’ for the relationship between the EU and the UK. For the Belgian government, the UK has to be either out or in but cannot choose any ‘third way’ envisaged by some Member States. One thing is sure from the Belgian perspective: in the event of a Brexit, Belgium will not accept the creation of any ‘special status’ for the UK in order to save face. This is because of a fear of triggering a domino effect that sees other EU Member States demanding the same privileges.
Belgium’s position is clear: if the UK government sends an official letter to the president of the Council announcing that the UK intends to leave the EU, the only possible next step is to initiate the procedure outlined in Article 50 of the Treaty on the Functioning of the European Union (TFEU). Moreover, it will be complicated to negotiate a trade agreement between the UK and the EU and at the same time negotiate the UK’s withdrawal. Indeed, the Belgian position is to negotiate the exit first and a new trade deal second.
Whether the UK leaves the EU or not, Belgium wants to continue the integration process – especially at the Eurozone level. It is important for Belgium that any withdrawal negotiation undertaken with the UK does not block deeper integration. Indeed, the Belgian Government would see a Brexit as a possible opportunity to clarify the design and the finality of the European Union. In the same vein, Belgium places a lot of trust in ideas developed among the group of six founding Members States on the future of Europe.
The above is despite the fact that if the UK decides to leave the EU, Belgium will be one of most exposed EU Member States in economic terms. Belgium would suffer a particularly significant impact due to its exports and cross-investment with the UK, with an increase in business failures from 1.5% to 2.5%. Belgium is the UK’s fourth largest customer and its fourth largest supplier, exporting more than €17 billion in 2014. Britain is also the fourth largest provider for Belgium, with €11.9 billion of imports. The country has one of the largest trade surpluses with the UK, equal to 1.8% of GDP in 2013.
Fabian Willermain is a research fellow at Egmont, the Royal Institute for International Relations, Brussels. The opinions expressed by the author do not reflect the views of the Egmont Institute.
BULGARIA: Brexit would be like UEFA without England’s national team and Wayne Rooney’s goals
After almost 10 years of EU membership Bulgaria continues to keep a low profile on EU issues and policy making. In Politico’s recent ranking of Europe’s leaders and ambassadors (including the 28 Member States and 5 candidate countries) effectiveness and influence, Bulgaria was ranked 28. Only Luxembourg and Croatia were given a lower ranking.
In the run up to the February EU-UK deal Bulgaria was not expected and didn’t deliver any strong showings, not even on the potential implications of measures intended to curb social benefit payments for EU migrants in the UK – the hot issue for all Central-Eastern Europeans. Leadership by Poland’s Beata Szydlo, Chechia’s Bohuslav Sobotka and the four Visegrad countries in general, as well as some coordination with them, meant Bulgaria did not open a front on its own in the difficult negotiations prior to and during the February European Council.
Should British citizens vote to leave the EU on June 23 and the British government trigger the procedure under Article 50 of the Lisbon Treaty on negotiating UK’s withdrawal, Bulgaria cannot be expected to come up with any red lines on its own. Instead it will share many other countries’ political concerns about an eventual domino effect of withdrawal referenda elsewhere and a serious weakening of the EU.
Regardless of UK official assurances that the referendum will have no impact on the UK’s EU Presidency of July-December 2017, there will be no doubt some impact on the presidencies that follow, including that of Bulgaria who in July-December 2018 will takes over the presidency from Estonia (January-June 2018).
With regard to the general framework for future EU-UK relations, Bulgaria can be expected to align its stance with the big and powerful players, foremost Germany. With regard to specific Central-East European concerns it would probably continue coordination with Eastern partners.
Cooperation in security and defence issues, quite central for UK-Bulgarian relations, is organised rather on a bilateral track. From the Bulgarian point of view NATO will continue to provide a framework for strong UK involvement, but would certainly not be enough to compensate for the UK’s role in the shaping of a common European foreign and security policy, nor the UK’s leverage with regard to the much aspired role for the EU as a global player.
In terms of trade, the UK ranks 12th on the list of Bulgaria’s export destinations and 17th on the list of Bulgaria’s import partners. In 2011 Bulgaria achieved for the first time since 2000 a trade surplus in its relations with the UK, but given the relative small scale of trade an eventual British withdrawal from the single market cannot be expected to cause a major economic shock. However, even if the number of Bulgarian workers in the UK is rather low in comparison to other Central-East European countries (the UK Office for National Statistics estimates that 65,000 Bulgarian-born immigrants were resident in the UK in 2014 – compared to 170 000 Romanian-born and 790 000 Polish-born), Bulgaria would be interested in keeping the UK as part of the Single Market with its freedom of movement. Furthermore, as the poorest country in the EU, Bulgaria would be interested in a Norwegian type settlement for the UK that sees a full financial contribution to the EU budget.
Continued UK membership remains the preferred scenario for Bulgaria. To conclude on a playful note, as Minister of Foreign Affairs Mitov at a discussion on “The Future of the United Kingdom in the EU” on 9 February 2016 in Sofia: “A European Union without the UK would be like the UEFA European Championship without England’s national team and Wayne Rooney’s goals.”
Antoinette Primatarova is Director of the European program of the Center for Liberal Strategies in Sofia, Bulgaria.
CROATIA: a strong desire to see the UK stay
The potential terms of any agreement with a UK leaving the EU are not discussed in Croatia. Croatia hopes the UK will vote to stay. Prime Minister Oreskovic, speaking at the EU Council meeting in February, spoke of only one solution: the UK remaining in the EU. Any compromise which would safeguard that desired outcome was preferable to a UK withdrawal.
As the newest member of the EU, the preservation of the Union is very important to Croatia. It sends a message that the effort invested in the accession process was worthwhile, that membership pays off despite ongoing difficulties, that closing the ranks among partners make each stronger. The Croatian view is, therefore, more symbolic and normative than issue-based. The total of Croatian exports to the UK is just 2%. The UK extended restrictions on the mobility of Croatian workers until 2018, with a possible further extension for another two years after that. Short of a thick bilateral agenda between the two countries, Croatia has little incentive to discuss any red-lines in case of the EU negotiating a UK exit.
If indeed the UK decides to leave the EU, only then will discussion on new terms begin. The political establishment hopes there will be no need for this. Discussing it in advance is viewed as speculative, undesirable and risks sending a signal that the leave scenario is viewed as likely. Nobody wants to anticipate such a scenario or do anything that could encourage it.
It is to be hoped that bilateral relations will adapt to any new situation and that cooperation within NATO will remain and be unaffected. However, a British exit will further undermine the already weakened EU enlargement policy to which Croatia subscribes and it will open discussion in Croatia about its realignments within (and outside) the EU.
Dr. Senada Šelo Šabić, Institute for Development and International Relations, Zagreb.
CYPRUS: A sensitive approach
The Republic of Cyprus’s long-standing pro-European stance means that the Government, as a matter of principle, does not favour any development (such as the withdrawal of a member state) that might entail the weakening of the EU.
Though on the one hand, one might expect pro-European states such as Cyprus to opt for harsh terms on those deciding to leave the EU, so that a favourable precedent is not created for states potentially wanting to exit in the future, in the case of a UK exit the Government of Cyprus will likely be more sensitive and flexible. Given the special relationship between Cyprus (a former British colony and member of the Commonwealth) and the UK, the Government will definitely seek to control any adverse effects stemming from a possible British exit and try to make this development as smooth as possible.
This desire stems in no small part from the fact that commercial and financial ties between the two countries are of vital importance to the economy of Cyprus, and the number of Cypriot nationals living in the UK (and vice versa) is significantly high. As a result, Cyprus will want to see the UK remain within a European free trading area that also includes free movement of people, so that existing ties that have been further strengthened after Cyprus’s EU entry, will not be jeopardised in any way. Such an arrangement will secure that Britons and Cypriots will be able to move freely between the two countries while also the provision of financial, commercial and other services will continue to develop seamlessly. Furthermore, a smooth exit will guarantee, at least to some extent, the stability of the exchange rate (Euro-Sterling), a vital variable in maintaining the high level of economic transactions taking place between the two countries.
At a political level, the close relations between the two countries will not be affected extensively. The UK retains two sovereign military bases on the island and is also one of the three countries responsible for guaranteeing the independence of Cyprus. Consequently, it has a direct involvement in the ongoing negotiation process and the attempts to reach a peaceful settlement that will reunify the island. This direct relationship is not dependent on the European position of either of the two countries.
Dr Adonis Pegasiou is an adjunct lecturer at the University of Cyprus.
THE CZECH REPUBLIC: A united Europe is the priority
The overall aim of Czech EU policy is set out in the official EU strategy of the Czech government: “An Active and Intelligible Czech Republic in a United Europe”. The Czech government fears that a Brexit could open a Pandora’s box of similar intentions in other EU member states, including the Czech Republic itself. At a time when citizens’ trust in the EU is very low and Eurosceptic parties and movements are on the rise, Brexit would demonstrate that something hitherto considered inconceivable is possible. That said, while the Czech government will seek to protect European integration from the fallout from a Brexit, it will also be conscious of several other factors linking the UK to the EU and Czech Republic
The Czech Republic and the United Kingdom share similar opinions on many areas of EU policies, such as completion of EU single market, liberal trade policy, and reducing administrative burdens so as to increase the competitiveness of the European Union. As the UK’s role in Czech foreign trade has been increasing for years and the British export market was the fourth most important for the Czech Republic in 2015, Brexit could potentially have a negative impact on the Czech economy. Therefore, if the UK votes to leave, it would be crucial for the Czech Republic to seek the UK’s close cooperation with EU countries not only in the area of the internal market, but also in international trade policy. Moreover, the UK’s withdrawal would negatively influence EU regional policy. As a net beneficiary of EU money from structural funds, it would be key for the Czech Republic that the EU-UK agreement be similar to the arrangement with other non-EU members in the European Economic Area.
The Czech Republic as well as the UK have been keen promoters of a strong transatlantic link in the EU’s Foreign and security policy. Therefore, the Czech Republic would seek to establish close relations with the UK in this area in order to maintain effective cooperation between the EU and NATO.
There are an estimated 45,000 Czech citizens living in the UK. Hence, in negotiations over the UK’s withdrawal, the Czech government would insist on guarantees of non-discrimination of Czech workers in the UK.
Despite the above, it is worth making clear that the Czech Republic has always regarded the United Kingdom as one of the most important EU member states and partner of the Czech Republic. It therefore strongly supports its continued membership in the EU.
Vladimír Bartovic, Director, EUROPEUM Institute for European Policy, Prague. Zuzana Kasáková, Assistant Professor, Faculty of Social Sciences, Charles University, Prague.
DENMARK: Quiet but clear support for a close UK-EU arrangement
Denmark has been one of the staunchest supporters of the UK’s demand for renegotiation of the British terms of membership. The current Danish government which was elected in June 2015 has been supportive of the substance of the British demands and, in a more fundamental sense, the UK’s basic approach strikes a chord with the Danish government. The reason for this has historical roots as expressed by the Danish foreign minister, Kristian Jensen, in the Folketing on 29 March 2016:
Denmark and the UK have a close historical relationship, … we entered the EU at the same time… we have been accompanying each other and we have had joint priorities on the way in the struggle to ensure that the EU was … efficiently managed … with a focus on competitivity [and] job creation, and we often see eye to eye….from a Danish point of view an EU without the UK will be a different EU, a weaker EU…without the same cultural plurality… and …political impact.
On the same a day a significant majority in the Folketing gave its support to continued UK membership of the UK in a resolution supported by the government. The EU-critical Danish People’s Party abstained (because they wanted a more EU-critical resolution) but made clear that they also wanted the UK to stay in the EU where the UK would continue to fight for reform.
However, there are no signs that the present Danish government would seek more opt-outs than Denmark already has, and thus follow the UK. There are no plans for a similar referendum (even if the left-wing Unity List and the right-wing Danish People’s Party would like to see one). Under the present government, one would expect Copenhagen to seek as many cooperative agreements with the UK as possible. Danish governments since the Cold War have attempted to get as close to the EU core as possible given the Danish exemptions, thus leaning more towards the EU core countries rather than maintaining the traditional orientation towards the UK. But with the new trends in Europe, the current Danish government’s significant change in its political course, and the general popular skepticism towards the EU (as expressed in the Danish no vote on 3 December 2015), Copenhagen has been leaning more heavily towards London. Together with the traditional reasons for being close to UK, this is likely to lead to strong support for keeping as many political and economic links as possible to the UK in the event of a Brexit.
Although the UK’s position in Danish exports has fallen from the first (at the time of EC membership) in 1973 to the third position, just above the US in 2016, one would expect Danish support for an arrangement which would facilitate UK trade with the EU. Given the significant overlaps in views on the value of free trade, Denmark would presumably seek UK’s close involvement in the internal market. It would also argue for close cooperation between the EU and the UK on international trade issues. A European Economic Area (EEA) style arrangement may be an aim. Although less likely to be possible, Copenhagen would also support a say for the UK on issues relating to the implications of Euro-zone legislation for non-Euro countries.
Denmark and the UK both have a strong Atlantic inclination. Denmark will no doubt seek substantial UK involvement in the foreign and security policy of the EU; it will aim to institutionalise close political consultations at least as strong as in the relationship between EFTA and the EU. It will also promote close British association with the ESDP, even if Denmark will have less clout in this field due to the Danish defence exemption. Copenhagen will also continue to stress the importance of a good relationship between the EU and NATO. This has always been the Danish line, but will be even more relevant with the UK outside the EU but in NATO.
One area in which Denmark may take a tougher stance towards the UK is on fisheries. Here Copenhagen will see that UK access to the Danish/EU parts of the North Sea fish stocks are matched with an equivalent access to British fish stocks in a quid pro quo.
It will still be part of Copenhagen’s overall approach to the EU to prevent further withdrawals. The dominant Danish view is that the EU is essential for Denmark for economic and political reasons even if little European mythology is explicitly expressed. So the general attempts to keep the UK as closely involved with the EU as possible will be balanced against concerns for keeping the EU as a working political and economic structure in Europe. The Danish support for a close UK association with the EU if the UK leaves the EU is therefore likely to be clear but have a low profile – not unlike the Danish stance in the UK renegotiation process up until now.
Henrik Larsen is a Professor in the Department of Political Science, University of Copenhagen.
ESTONIA: Practical questions for the Estonian EU Presidency
For Estonia the withdrawal of the UK from the EU would have an immediate practical question in the form of the EU’s rotating presidency. The UK is due to fill the EU Presidency in the second half of 2017. Estonia is supposed to be presiding over the EU just after the UK in the first half of 2018 (at the same time, Estonia will be celebrating the centenary of the Republic of Estonia). A UK focusing on exit negotiations would leave it little if any time to focus on its Presidency. However, when I asked the Estonian Foreign Minister Marina Kaljurand what would happen, she replied that her British colleague, Philip Hammond, had assured her that the UK would do its duty and preside over the EU in the second half of 2017. It may be that Estonia and Malta (who hold the presidency in the first half of 2017) will have to step in to informally lead on many issues.
The second question is broader, of course. The UK withdrawal will change the essence of the EU. It is not about reshuffling the seats in the Council or the European Parliament and seeing how a redistributed QMV works. Rather it is about the question of whether the European Union would be able to function in general. A British exit would confirm that the current referendum logic is negative (Denmark, the Netherlands, the UK) and poses more seriously than ever the fundamental question of how to combine the democratic process with the functioning of the EU. The UK’s referendum may give a straightforward answer to that question that these things cannot be combined. The Estonian Government has opted to not make any statements on the issue and so let the democratic process decide the result.
However, should the UK vote to leave, Estonia would find itself faced with difficult questions which it will need to make its position clear on, not least because holding the EU’s Presidency means it will need to lead on such matters. These will include whether it would agree to an EU-UK deal that allows the UK continued access to the Single Market, whether it would expect freedom of movement as part of some UK membership of the EEA, and whether (and how) the UK could be involved in EU cooperation on security matters relating to Russia.
Erkki Bahovski is the Editor-in-Chief of Diplomaatia, foreign and security policy magazine in Estonia.
FINLAND: Seeking good EU-UK relations, but the EU is the first priority
Viewed from Helsinki, a Brexit would result in substantial economic and political costs which are difficult to quantify. The UK’s traditional support for reducing intra-EU trade barriers and promoting free trade arrangements with third countries have made the UK a natural ally of Finland. Finland also values the UK’s emphasis on pragmatic EU decision-making in Brussels. No gains for Finland or the EU have therefore been identified in the political and expert discussions in Finland about Brexit.
Should the UK decide to leave, and exit negotiations commence, a constructive and pragmatic approach will probably emerge in Helsinki. Yet any agreement is likely to be assessed vis-a-vis existing arrangements of economic and political association with the EU as well as what is compatible with the EU Treaties.
Although slowly decreasing, the UK’s share of Finnish foreign trade is significant. Avoiding disruption to trade and economic links more broadly will be a Finnish priority. Finland would also aim to find pragmatic solutions to questions about Finnish-UK migration. Given the small numbers involved this should not be a difficult question.
In terms of the EU’s foreign and security policy, the UK’s departure would be seen as a setback. Yet Brexit is not seen as likely to change the UK’s and other NATO members’ fundamental security priorities. As a non-NATO member, Finland might also hope that the UK remains supportive of efforts to further develop the EU foreign and security policy, although the UK’s doubts about developing EU structures in this field are known in Helsinki.
Finnish positions would also reflect an assessment of the broader economic and political implications of a major member state leaving the EU. In this regard, Finland would most likely attempt to strike a balance between a good and well-functioning EU-UK relationship, and unity and cohesion among the remaining EU27.
Finland has invested a lot politically and economically in the European Union. This includes stabilization of the single currency of which Finland is a member, unlike the UK and other Nordic EU members. The EU is also seen to have positive (yet largely in-direct) security implications for Finland in an increasingly challenging security environment. Thus the viability of European integration will more than likely be the first priority for Finland in the event of UK exit.
Juha Jokela is the programme director of the EU research programme in the Finnish Institute of International Affairs
FRANCE: Brexit or not, the EU shall not recede
Should “Leave” be the outcome of the upcoming referendum in the United Kingdom, France will be faced with a series of questions. Is it an opportunity for further EU integration or is it the beginning of the much feared “détricotage” (unravelling) of the EU?
The Franco-British relationship within the EU is marred with difficulties and only rare glimpses of intense cooperation. No need to go back decades to see the fraught relations. At a European Council in October 2011, then President Nicolas Sarkozy told David Cameron that he ‘lost a good opportunity to shut up’ when the EU leaders were discussing the Eurozone crisis. On occasions, opportunities for a fruitful cooperation between the two countries have emerged, notably for the creation of the European Security and Defence Policy at the Saint-Malo summit in 1998. Yet, even then, they had short term common interests but not long term ones.
Their bilateral relationship has been mostly defined outside the EU, as illustrated by recent agreements, such as the Touquet agreement in 2003 on the issue of migration and the Lancaster House treaties in 2010 on strategic affairs. Whatever some may have said, even ministers sometimes, none of those two agreements would be jeopardised in case “Leave” wins.
France has become increasingly uninterested in the UK’s role in the EU. Having shunned all mechanisms the EU implemented since the beginning of the crisis, the UK rarely features in French plans. Indeed, when France thinks about the future of the EU, its focus is entirely on the Eurozone – explicitly paving the way for differentiated integration. A few voices have even argued in favour of Brexit and the French are often perceived as the most ambivalent toward the UK membership. However, French leaders have overwhelmingly said that they do not want a Brexit.
Many reasons can explain the French support for “Remain”. The fear of contagion is a strong one. There is indeed a growing fear that if the UK leaves, it could weaken the EU’s cohesion and lead other member states to follow suit. It could also boost the far-right Front National and support for a Frexit. While the former is possible, the latter seems overblown. The French are indeed very ambivalent on the EU, but it seems far-fetched to imagine a scenario in which an in-or-out referendum in France – a growing possibility – could lead to France leaving the EU.
The current government has been adopting a position of principle on the Brexit. Whatever the UK citizens decide on June 23rd, the EU needs to move forward. In other words, the French, in close cooperation with the Germans, want to put forward proposals for further integration. The timing is unclear and the content even more. It seems that the first proposals would primarily address closer cooperation in security and defence, as it is, oddly enough, perceived as a less thorny issue than other kinds of integration. Afterwards, there would be proposals for further integration within the Eurozone. The government has limited room for manoeuver, because its popularity is low and presidential and parliamentary elections are scheduled for next year.
If the UK leaves, it is very likely that France will take a hard line in the exit negotiations. An area of particular attention for the French will be on the access to the single market, especially in the services sector. Some in France hope that a Brexit could lead to firms moving to Paris – instead of Frankfurt or other places in Europe. At this stage, this is so theoretical than any posturing should be taken with a grain of salt.
Vivien Pertusot is the head of the Brussels office of the Institut Francais des Relations Internationales.
GERMANY: Thinking less about the UK and EU-UK relations, and more about the EU as a whole
The German government hopes the “Bremain” campaign will succeed. Berlin has been among the strongest supporters of Britain remaining an EU member, with Angela Merkel herself (albeit in a carefully calibrated way) sending signals to the British public that London is a valuable partner at all level within the Union. During the negotiations over the UK’s reform treaty, Germany was ready to accommodate to a certain degree British positions. The formula that Angela Merkel and her negotiators used was that of “a strong Britain in a strong Union”. This formula suggested that Britain was to be kept as a strong partner, but not under concessions that would undermine the Union as a whole (in particular in EMU governance and over a fundamental pillar of the Union such as free movement of people).
Having said that, the thinking in Berlin a week ahead of the referendum rotates less around the future of the UK and of EU-UK relations, but around the Union as a whole. There is a realisation that a Brexit vote would be yet another blow to an already fragile Union, and the risk of contagion is seen as a real danger. At this point in time there are discussions about the right balance between a signal towards a constructive future engagement should the third largest member leave, and a signal that discourages others to push their luck with concessions in the months ahead. Germany will therefore respond to a possible Brexit vote in a way that both communicates with the British government and people and to other EU members. While Angela Merkel has been playing a more accommodating role, federal minister of finance has been taking a tougher stance, suggesting that should the UK leave it was far from certain that it could benefit from single market access: “in is in, out is out”.
The main German reflex when discussing the future of the Union at large is to first work with Paris, but there are questions about what a strong Franco-German alignment on a Brexit could look like in substance. There is some thinking in Berlin that the time is not yet ripe for another push to deepen integration, but that the EU’s wider reform agenda, and in particular that of the Eurozone (such as economic reform and debt restructuring), remains clear. The problem with any big new initiative lies in implementation, partly because of a Franco-German set of disagreements. Berlin is well aware that even within the wider coalition of founding members it is currently difficult to get a sense of togetherness on major questions. There is a risk that a Franco-German initiative would only contribute to more rifts within the rest of the Union.
When it comes to the process of handling a Brexit, Berlin will stick to article 50 of the EU treaties, i.e. the government will wait until the domestic political situation in the UK settles and Britain invokes the withdrawal clause. While some supporters in the UK of leaving don’t appear to care about the procedures for leaving, Berlin will seek to ensure a Brexit is dealt with through article 50 and so cements the EU’s treaty procedure in an orderly way for years to come in case another EU member embarks on a similar path.
In a nutshell, what we are likely to see the morning after the referendum is a German declaration that expresses this country’s commitment to the Union rather than a fully-fledged initiative for moving further along a path of European integration. Berlin will be ready to get back to what it considers the EU’s core business – one that is messy, but still worth protecting and fighting for.
Almut Möller is a senior policy fellow and the head of the Berlin office of the European Council on Foreign Relations (ECFR).
GREECE: Concerns about the unity of the EU and Eurozone
The fundamental position of Greece is that the UK should stay in the European Union. This is grounded on Athens’ concern that if British citizens vote ‘NO’ in the referendum and no new compromise is found at the EU level, the structure of Europe will completely change and more countries might want to leave or could be expelled either from the EU or the Eurozone. Although the successful completion of the first review of the third Greek bailout in May 2016 removed renewed fears for a Grexit, a Brexit can open the Aeolus bag. Disagreements between the Eurozone and the IMF on a final settlement for the Greek debt might in the future fuel new crises between any Greek government and its creditors.
As a matter of principle Greece is not particularly satisfied with the nature of the EU-UK deal and Donald Tusk’s proposals on economic governance as well as on social benefits and free movement. In July 2015, for instance, Britain contributed to Greece’s bridge loan and such a possibility will not be feasible in the future. Additionally, restrictions in social benefits and free movement harm EU values and might generate an extreme European debate that could turn against Greece in a period during which several countries close their borders blocking the Balkan corridor and challenging the idea of European solidarity.
Greece played no active role in negotiations between the EU and the UK which led to the compromise of February 2016. The country is not expected to significantly influence any exit negotiations after 23 June. Its main priority, however, will be to push for guarantees that Greek employees in the UK will not be disadvantaged as well as to preserve the harmonious economic co-operation between the two countries. In parallel, the Greek government will have no alternative but to carefully proceed to the implementation of necessary remaining structural reforms in the framework of the third bailout in order to show to its partners that it remains committed to an ever closer union and seeks to be in its core.
Dr George Tzogopoulos is based at the Hellenic Foundation for European and Foreign Policy (ELIAMEP) and the Centre International de Formation Européenne (CIFE).
HUNGARY: Seeking a quick exit deal
In the case of a leave vote on June 23, 2016 Hungary would be interested in quick negotiations with the UK on the conditions of an exit. Presumably the UK would seek to maintain access to the single market (through EEA membership), preserve the privileged position of the City of London and its financial services in the territory of the EU. At the same time, we must also consider the possibility that the UK government, led by a new Prime Minister, could introduce new laws to accommodate populist political overtones regarding immigration.
The Hungarian perceptions towards a negotiated British exit from the European Union can be approached from three perspectives:
Primarily Hungary is part of the EU and shares a common negotiation platform with other EU member states – the general conditions of accessing the single market for the UK would be decided in that framework. Although Hungary alone is just a low-middle size member state regarding the voting rights in the EU, she would be on the side of the negotiation table consisting of 444 million people. And although the UK should have to negotiate an agreement with the EU, in practice the agreement should be reached with 27 different member states. A common EU position on the accessibility of the single market would not be easy without addressing the concerns of individual countries or block of countries.
Secondly Hungary along with the Visegrad 4 countries (Poland, Slovakia, the Czech Republic, Hungary) were very strong opponents of the UK’s attempt to limit the free movement of labour, and to cut the in-work and out-of-work benefits for migrants coming from the EU during Cameron’s renegotiation with EU member states in February 2016. Any further limitation would face strong resistance. Hungary’s primary aim would be to ensure that the Hungarian community living in the UK would not be further discriminated and future job seekers would enjoy the same conditions as far as possible. Approximately 300-500,000 Hungarians currently live in the UK, with the share of emigrants significantly increasing over the past five years. If the EEA model would be negotiated then Hungary and the V4 countries are expected to insist that the EEA membership rules should not be loosened – so accepting the free movement of people and contribution to the EU budget must remain intact. Comparing the current net budgetary contribution of the UK towards Hungary (keeping in mind that the British rebate has a significant negative impact on that) to the expected budgetary contribution from the outside, the latter could end up at somewhere the same level.
Thirdly, Hungary enjoys good but not outstanding trade relations with the UK. Nevertheless, Hungary would seek to ensure that any European level agreement should provide the same level of trade benefits for both countries. The UK ran a trade deficit with with Hungary (goods and services) in 2014, exporting £ 1.8 billion (0.8% of total export) while importing £ 3.1 billion (1% of total). The export includes mainly machinery and transport equipment (although the share of trade this makes up has fallen significantly in recent years), manufactured goods, chemicals and related products. Hungary main export markets are Germany and Austria, with the UK standing at 9th place with 3.6% of total exports. When it comes to imports the UK is not in the top 10 countries. As for financial and banking sectors, and the interests of the City of London, Hungary is dependent on credit from abroad, especially credit provided by the Eurozone. Hungary is not part of the EMU, but nevertheless a stable European fiscal and monetary environment is its primary interest. That is why a flexible agreement between the EU and the UK regarding the financial services market would get the backing of Hungary.
Dr Zoltán Gálik is an Associate Professor at Corvinus University of Budapest, International Studies Department
IRELAND: An exercise in damage limitation
As the UK’s nearest neighbour, and the only EU country with which the UK shares a land-border, Ireland arguably has more at stake in a Brexit negotiation than any other Member State.
It is hoped that the British public will vote in favour of the status quo on 23 June, but Ireland’s own experiences of EU referenda will only serve to instil doubt, and a “Plan B for Brexit” will not be far from Irish minds.
But such a plan is unlikely to make for pleasant reading. For Ireland, there are inherent negatives, of varying severity, in every conceivable Brexit scenario, be it on the basis of EEA or EFTA, or more likely a UK-specific free trade arrangement.
A protracted negotiation, and a UK outside the customs union, common commercial policy and/or single market, leaves Ireland with any or all of the following outcomes: disruption to investment arising from market uncertainty; trade disruptions and restrictive tariffs on agricultural goods and other produce; the certain return of a customs regime between Ireland and Northern Ireland; and the possible return, however unlikely, of passport controls at the Northern Irish border, which could have knock-on effects for the fragile Northern Irish peace settlement.
The ideal for Ireland would naturally be an agreement that preserves critical aspects of today’s mutually beneficial relationship, and it is not difficult to divine two broad Irish priorities here: preserving the Common Travel Area (CTA) between the UK and Ireland, currently protected by a joint British-Irish opt-out of the Schengen zone; and limiting disruption to the €1billion weekly trade flows across the Irish Sea, particularly with respect to the agri-food industry, which accounts for about a third of Irish exports to the UK.
In light of the political sensitivities, a convincing case could be made for the continuation of the CTA, though the practicalities of this unprecedented arrangement, especially in light of current attitudes towards migration and security, are quite another matter. Protecting the trade relationship and the interests of the Irish agri-food sector, meanwhile, would be a challenging task, and may amount to an exercise in damage limitation.
There is, in general, significant overlap between Irish and British policy priorities, and if this were a bilateral negotiation it would be a short and amicable one. In a European Council setting, however, the varying interests – and dispositions – of 26 other Member States would have to be accounted for. Out of self-interest, enlightened or otherwise, some would see little incentive in giving the UK a favourable deal. By extension, it is deeply uncertain whether Irish interests could be protected against the disruptive impact of a Brexit.
Andrew Gilmore is a Senior Researcher at the Institute of International and European Affairs, Dublin.
ITALY: Supports EU Integration with or without the UK
In a UK-EU exit negotiation, Italy might well adopt a pragmatic attitude and pursue its national interests, leaving aside other political considerations. The Italian government will want to avoid any deal that limits British access to the single market and which could negatively affect economic relations between the two. Indeed, Italy is the UK’s seventh largest supplier and trade relations between the two have been extremely positive, with Italian exports increasing by 7.6% in 2015. Yet, Italy will not overlook how the UK is also interested in maintaining positive economic relations with the single market. In this situation, Italy might ask to trade British access to the single market with concessions from the UK in the fields of security and migration.
Certainly, a Brexit deal has the potential to carry major political and economic challenges. The major political risk that the Italian government envisages is a domino effect, which would see other countries follow the UK by asking for a renegotiation or withdrawing from the EU. There might be some internal political repercussions as well. Indeed, if the EU agrees to a generous exit-deal, it could make Brexit a valuable choice in the eyes of Italian citizens, whose hopes for a brighter future as a member of the EU have been declining. Moreover, Italian Eurosceptic parties could exploit any such deal to acquire political legitimacy at a national level, by criticizing the government’s incapacity to pursue, like the UK, more flexibility in managing national economic and security policies.
Nevertheless, Italy could also benefit from a UK withdrawal. Although Prime Minister Renzi has been maintaining that there cannot be an EU without the UK, he might use the British exit to advocate the need for comprehensive reforms to the European political and economic system such as those envisaged in the recent plan for the future of the EU drafted by the Italian government. Moreover, in February 2016, in a meeting with the six founding countries of the EU, Italian Minister of Foreign Affairs Paolo Gentiloni underlined the need for differentiated integration among member countries which could allow a core group to integrate more at political and economic levels. Without EU membership, the UK will be unable to stop any integration project. Moreover, anti-EU positions held by other eurosceptic countries, which traditionally found in Britain a valuable ally when it came to blocking or delaying plans for integration, will be weakened. Similarly, Italy could push the EU to abandon many political actions backed by the UK, which were to its disadvantage. For instance, without UK support, the recognition of the “market economy status” of China, which is considered extremely dangerous for Italian businesses, could be delayed.
To sum up, from an Italian point of view, a Brexit might certainly hamper the already fragile European political and economic stability. Yet, since there is little that can be done to block such eventuality, Italian input to a potential UK–EU negotiation would be based on national interests to maintain good relations with the UK while also boosting European integration. Indeed, any potential European institutional crisis caused by a British exit could be advantageous for Italy as it might allow a much-needed set of political and economic reforms that revamp the process of EU integration.
Eleonora Poli is a research fellow at the Istituto Affari Internazionali, Rome.
LATVIA: Safeguarding the EU project
The Latvian government has not (at least in public) carried out an in-depth risk assessment of the potential impact of a Brexit on Latvia. This is mainly because there is a strong belief (and hope) that the UK referendum outcome will be that of staying in the EU. If the UK does vote to leave then the Latvian government would face several major concerns in regards to UK-EU exit negotiations:
First, regarding the security issues, Latvia considers the UK to be one of its most important security guarantors. This is a foreign policy priority, especially since the annexation of Crimea and war in Donbass. Latvia would therefore be worried about the loss from the EU of one of its major foreign, security and defence players.
Second, in relation to migration and the economy, the UK’s decision to leave the EU would have a heavy impact on Latvian citizens. The UK is among the most popular destinations for Latvian migrants, many of them residing in the country permanently (but not necessarily with a permanent resident status). Free movement is among the most popular advantages of the EU in Latvia, and there is a fear that Brexit might result in considerable limitations to this. The same applies to the economic benefits for intra-European trade, although the UK is not among Latvia’s main trading partners.
Third, politically Latvia is still strongly pro-European. And there is considerable fear that Brexit might trigger a domino effect in other eurosceptic countries. This reflects back on the Latvian security perception, with Latvia seeing EU membership (in addition to NATO) as a crucial security guarantee against potential Russian aggression.
It is important to stress that the Latvian government has sought to accommodate the UK to keep it in the EU, for example by agreeing to UK exceptions from European integration. And Latvia would not oppose some say for a UK that is outside the EU on some individual matters of mutual concern for both the EU and UK. However, the government insists that any changes to the current structures of cooperation should be done in accordance with EU legislation and should be based on mutual interests and ways that safeguard the EU project.
Ilvija Bruģe is a researcher at the Latvian Institute of International Affairs.
LITHUANIA: Brexit could have a hazardous impact on “ever closer union”
A Eurosceptic victory in the UK’s referendum could cause severe economic and political damage to EU integration and the future of the Union. Although the question of the UK’s EU membership is very sensitive, it has not been widely discussed in the Lithuanian press. It is, however, clear that despite criticism of the UK’s EU renegotiation, Lithuania supports keeping the UK in the EU.
Before the agreement on renegotiating the UK’s EU membership was reached in February granting the UK a “special status” to, amongst other things, limit some EU migrants’ benefits, Lithuania’s President criticized such claims stating that no discriminatory policies should be applied to European citizens because freedom of movement is a core principle of the Union. Lithuanian eventually agreed to the deal, but not without reservations as to where this would take the EU.
The UK’s membership of the EU is of a great importance for Lithuania. Both countries have long-standing economic ties. Furthermore, with more than 100,000 Lithuanian citizens living in Britain the country remains among the top emigration destinations for Lithuanians. The UK’s withdrawal could leave them outside the Single Market, thus excluding them from commonly shared principles and rights. Their rights and standing in a non-EU UK would be a central concern for Lithuania.
Britain’s withdrawal from the EU is related not only to negative economic or social aspects for Lithuania. It could also seriously affect the political unity among the remaining EU member states. Any new UK-EU relationship could create a precedent for further such cases, especially at a time when new dividing lines have opened up across the EU because of the migration crisis. The refugee crisis, the terrorist attacks in Brussels and Paris, and ongoing problems in the Eurozone mean the EU is facing both political and security crisis which requires cohesion more than ever before. The likelihood of such cohesion would be thrown into doubt by a Brexit, a development Lithuania would not welcome. As Lithuania’s ambassador to the EU noted, the EU is unimaginable without the UK both because of the political and economic issues an exit would cause.
Živilė Vaicekauskaite is based at the Institute of International Relations and Political Science in Vilnius University.
LUXEMBOURG: Protecting European Integration and Financial Services
Luxembourg’s foreign policy is based on multilateral international cooperation. If the EU becomes weaker internally and as a global player, Luxembourg becomes weaker too. The Luxembourg government is therefore concerned on almost all fronts with the implications of a UK withdrawal from the EU (except perhaps immigration). The most sensitive issue is financial services. Luxembourg would insist that the UK would keep most of the EU acquis in order to maintain the free access to the single market for its goods and services. It would be worrying for Luxembourg if the UK were to establish more competitive/ less regulated rules in financial services. On financial services, especially the fund industry, Luxembourg would expect the UK to show equivalence of the rules and potentially accepting a certain degree of regulatory cooperation to be able to continue trading.
A Brexit would open the door to great uncertainty about how cross border investments could continue with the EU. “A Brexit would potentially mean that the right to distribute and sell financial products in the European Union for firms regulated in the U.K. – so-called passporting – would be lost. The EU may enact legislation to force all euro transactions, including derivatives, to be settled in a euro zone country where the European Central Bank has daily monitoring powers. An ECB attempt to impose this was rebuffed by the European Court of Justice [in 2015], but it’s possible the European Commission would be more sympathetic if Britain were to leave. Some of the City of London’s finance specialist jobs would move to the U.S., while others might relocate to European capitals.” Luxembourg is a strong contender, along with Ireland and Frankfurt. This might become an opportunity to strengthen its position in asset management. Clearly, Luxembourg has an important bargaining chip here: it can insist on the UK respecting the acquis and EU financial regulations, or else threaten with lobbying the rEU and the Commission that all euro transactions be settled within a euro zone country.
Luxembourg governments are almost instinctively pro-integration and pro-free trade due to the small size of the country. The current government is very concerned about the possible ripple effects of a UK withdrawal from the EU, and sees the EU endangered on many fronts, with the euro crisis, the Schengen crisis and the migration crisis. Damage limitation and adaptation are therefore the key words. The government has realised that there are countries who do not want to proceed with EU integration and is willing to accommodate those within the EU framework. However, talks have been held in parallel on a “core EU”. Luxembourg participated in the meeting with Belgium, the Netherlands, Germany and Austria to have exploratory talks on a mini-Schengen in November 2015. In February 2016, the foreign ministers of the founding six member states came together to discuss the current and future state of the EU.
Luxembourg could be rather accommodating on most other fronts if the UK wanted the maximum option of free trade. It would try to work out the most comprehensive trade deal with the UK, but would insist on respecting the acquis. EEA membership would possibly be the preferred option. Currently, 6000 UK citizens live and work in Luxembourg. It is highly doubtful that visas would be required for them. However, and especially if the UK were to be difficult on reaching agreement with the EU over movement of people, UK citizens could find themselves treated as third country nationals and be subjected to the same procedures to get a residence permit and a work permit. The “preference rule” would not apply to UK citizens anymore, and employers would first have to demonstrate that no EU citizen could be found to do that job. This is a significant disadvantage for UK citizens, as their competition from French, Belgian and German commuters would be stiff. That said, financial service regulations would probably be the most important issue for Luxembourg. If the proposal on the table were unsatisfactory for the government, it would probably draw a red line over this issue.
Dr. Martine Huberty, IASGP Coordinator, ECFR Associate Researcher
MALTA: One of the countries likely to be most affected by a Brexit
A Fitch Report of 16 May named Malta as one of a group of EU member states which are most likely to be negatively affected by Brexit. According to the report, the most exposed countries would be Ireland, Malta, Belgium, the Netherlands, Cyprus and Luxembourg, all of whose exports of goods and services to the UK are at least 8% of GDP. EU countries could gain from the shift of some FDI from the UK to the EU. However, countries such as Luxembourg, Malta, Belgium and Germany, with a large stock of FDI and financial assets in the UK, would suffer losses in the euro value of those assets in the event of a permanent depreciation of sterling. The assumption is that Brexit is most likely to trigger economic uncertainty and drive the value of sterling down. But what about the euro? Would uncertainty about the effects of Brexit not cause a downward pressure on the euro?
A weak sterling would also hurt Malta’s tourist sector by making it more expensive for Britons to travel to the island. In 2015, 1.8 million tourists visited the island which has a population of 425,000 leaving an estimated €1.6 billion in the economy. Of these, 526,089 or 29.4% of total arrivals came from the UK. This is by far the largest group of inbound tourists by nationality.
But there are other more ominous threats that may affect Malta negatively in the event of Brexit. Take EU tax harmonization where decisions are taken by unanimity. Britain has so far slammed the breaks on harmonization and Malta’s tax regime has benefitted from this. But were Britain to leave the Union, it is unlikely that Malta will have the power and influence to successfully oppose further tax harmonization. Tax harmonization is strongly opposed by Malta in the Council of the EU and for good reason. It is considered as one of the factors that help attract foreign investment to the island particularly in financial services, online gaming and more.
Former Prime Minister and MEP Dr Alfred Sant has repeatedly warned that EU tax harmonization hurts Malta’s interests. What he has in mind is that harmonization to counter tax evasion and tax competition, ends up hurting peripheral countries and islands which have few other economic endowments to spur on their economic growth. Dr Sant argues that smaller and peripheral EU countries should not be denied the flexibility that they still enjoy in tax matters.
During the membership negotiations, Malta succeeded in negotiating a temporary derogation from the EU VAT Directive permitting it not to charge VAT on food and medicines. Ireland and the UK enjoy a similar permanent derogation. Malta’s derogation was due to expire in 2010, but in 2009 the island succeeded in prolonging it indefinitely on the basis of a declaration which had been attached to the Accession Treaty stating that “Malta’s acceptance of a transition period until 1 January 2010 for the maintenance of its VAT 0% rate instead of the standard rate of 5% on the supplies of foodstuffs and pharmaceuticals is based on the premise that the transitional period referred to in Article 28(1) of the Sixth VAT Directive would expire on that day.”
In the event that the UK leaves the EU, it may prove difficult for Malta and Ireland to successfully fend off attempts to end this derogation.
Apart from these tax related issues, there are several others which merit attention. For historic reasons, UK universities are the most popular amongst Maltese citizens seeking further study abroad. The Maltese pay the same level of fees as UK and EU citizens – and not the much higher ones reserved for third country nationals. But this is unlikely to continue once Britain leaves the EU – unless of course measures are taken to safeguard it as part of an eventual EU-UK Association ( or whatever) agreement.
Similar arguments can be made in the case of health. A reciprocal health agreement between the UK and Malta allows UK citizens, particularly expats settled in Malta, to access the health services and Maltese citizens to obtain treatment in UK hospitals beyond what is offered under the EU’s European Health Insurance Card (EHIC) scheme. There are also close links between the Maltese and UK health professions and several Maltese health specialists work in the UK Health system and / or obtain their specialist training there. These ties could be seriously jeopardized if Brexit leads to Maltese citizens beginning to be considered as third country nationals. In the meantime the number of UK citizens applying to join the Medical course in Malta has been rising steadily in recent years without the need of much advertising since EU citizens do not pay university fees in Malta. Brexit could also slam this door shut, in which case the pressure building up on Malta’s Medical School would ease to the detriment of potential British applicants.
The possible effects of Brexit have not sunk in the Maltese mind set which remains blissfully oblivious to the possible shakeups that it might provoke in Maltese society – depending of course on what kind of exit agreement Britain manages to negotiate. However, the authorities are well aware of the pitfalls and a strategy is probably already in place on how to deal with the most ominous of them.
Professor Roderick Pace holds a Jean Monnet Chair and is Director of at the Institute for European Studies, University of Malta.
NETHERLANDS: Helpful, but no blank check
The Netherlands is concerned about the implications of Brexit for economic and political reasons. The UK has a trade deficit with the Netherlands and Brexit could lead to new trade barriers with the single market. So Dutch exports could suffer following a vote to Leave. An additional negative effect is that much of Britain’s trade with the EU transits through the Netherlands (en route to Germany or beyond, and vice versa). The UK is also the third largest source of FDI in the Netherlands. Taken together this suggests that The Hague would be interested in offering the UK access to the single market.
But this would not be a blank check. The Dutch government would likely demand Britain pay in to the EU budget in return for market access. Furthermore, the Netherlands would welcome Britain’s trade in goods, but services might be viewed differently. Changes to the European services landscape post-Brexit could benefit the Dutch: Brexit could push business services from the UK to the continent, including to the Netherlands. It could also lead to UK-based firms deciding to relocate (part of their operations) to Amsterdam or Rotterdam, cities that compete with the UK’s professional services trade.
In a withdrawal negotiation, the Netherlands would push for guarantees that Dutch workers in London and elsewhere would not be disadvantaged. But the Dutch government might be more lenient than other member-states and allow for some British restrictions on the freedom of movement of workers. It is a concern The Hague shares with Westminster.
Politically, the Dutch government favours British EU membership to help check statist or protectionist tendencies in the EU. Historically it also relied on London’s help to balance against a German-French caucus. The Hague was a fierce proponent of British EU membership in the 1970’s and so it might welcome the UK’s continued involvement in EU politics. But in a withdrawal negotiation, the Dutch would be wary of setting a precedent for ’a Europe à la carte’, and rewarding a British Leave vote with London’s ability to cherry-pick those parts of the Union it likes. As it faces a rise in eurosceptic sentiment at home, The Hague would want to avoid giving ammunition to those that seek a Dutch referendum on EU membership.
Ultimately, Brexit would cause European countries to reposition themselves, and with Britain’s withdrawal the Netherlands would start to lean more towards Germany. Berlin, more than London, would shape how the Dutch approach the withdrawal talks.
Rem Korteweg is a Senior Research Fellow at the Centre for European Reform.
POLAND: Going the extra mile for Britain but not at all costs
The Polish government, formed by the Law and Justice party following a landslide electoral victory last autumn, sees London – rather than Berlin or Paris – as its key ally in the European Union. This does not come as a surprise: Law and Justice and the Tories belong to the same political group in the European Parliament: the European Conservatives and Reformists. Just like the British government, the new Polish leadership wants the EU to focus on completing the single market rather than on transforming European integration into a fully-fledged political union.
A Brexit would be a blow to the Polish government and its vision for Europe. The Law and Justice party needs friends who would defend its domestic reforms in Brussels. It pushed through legislative changes, among other things, to media law and picked fights with the Constitutional Court; Brussels has worried that this could weaken democratic checks and balances and opened a rule of law procedure against Poland. When in March 2016 the European Parliament’s President, Martin Schulz lectured the Polish prime minister on the rule of law at the European Council meeting, it was reportedly Britain’s David Cameron and Hungary’s Viktor Orbán who stood up against Schulz’ intervention.
The Polish government would likely go the extra mile to help the British prime minister negotiate a good deal on its future relations with the EU. The Law and Justice party may also think that if it offers the UK a helping hand in the withdrawal negotiations, ‘post-Brexit’ Britain would subsequently return the favour. Warsaw has repetitively called for the permanent presence of NATO troops in Central Europe; would a ‘post-Brexit’ UK be willing to support these calls? But Poland also has an economic interest to keep Britain in the EU’s single market. In 2015 Polish exports to Britain amounted to around EUR 12 billion, making Britain the second largest importer of Polish goods and services. A Brexit would put it at risk.
But Britain should not expect a free ride from Warsaw either. Poland is the largest beneficiary of EU funds whereas Britain pays more to the EU budget than it gets back. Were Britain to leave the EU, other net contributors could be reluctant to share among themselves the amount that Britain puts today into EU’s purse. The Polish government would most likely expect Britain to carry on with payments into the EU budget, albeit perhaps at lower levels, in return for the access to single market.
But the single market is not only composed of free movement of goods, capital or services but also of free movement of workers. Unlike Britain, Poland sees the latter as one of the EU’s major successes, and would be reluctant to compromise on this principle if ‘post-Brexit’ Britain wanted full access to the common market. Poles make up the largest group of EU nationals living in the UK, with estimates surpassing 853,000 people. Some of them, those who have been in Britain for five years or more, would be eligible to apply for permanent residence if they wished to stay in ‘post-Brexit’ Britain. It is unclear, however, what would happen with the rest of the Polish citizens or their families should they want to come to the UK too. Warsaw would surely attempt to mitigate this legal uncertainty for its citizens, and would urge other EU member-states to make the protection of rights of EU citizens living in the UK a priority in the withdrawal negotiations. Here, the EU-27 would hold strong cards: around 1.2 million British citizens live elsewhere in Europe. Britain would struggle to obtain any legal protection for them if it did not offer the same for EU citizens residing in the UK.
Agata Gostyńska-Jakubowska is a Research fellow at the Centre for European Reform, London.
PORTUGAL: balancing a centuries-old alliance with a modern commitment to the EU
As politicians and diplomats like to point out, for more than six centuries Portugal and Britain have been allies and have more recently been close partners within the EU. It was after the UK first applied to be a member of the European Communities in the 1960s that Portugal decided to tone-down a bit of its historical Atlanticism and start moving closer to Europe. While Portugal has followed a more integrationist path than its old ally within the EU (embracing both its economic and political dimensions), the two countries share an open and outward-looking attitude. Among Portuguese elites, the UK has often been perceived as key to balancing more continental views and so nurture wider relations across the globe.
The economic and social ties between the two countries have been significant over the years. The UK is one of Portugal’s top trading partners, accounting for around 8% of its total exports (equivalent to 2.6% of GDP in 2013) and although Portuguese investments in the UK are small, more than 2,600 Portuguese companies operate in the country. Moreover, financial links between the two countries have traditionally been important. In recent years, the UK has even become the main destination of Portugal’s large emigration flows, with estimates pointing to between 120,000 and 350,000 Portuguese living currently in the country. In turn, around 2 million British nationals visit Portugal every year and more than 70,000 British citizens have their principal or secondary residences in Portugal.
While a British exit could potentially favour greater EU (economic, social, political) integration and external coherence in line with Portuguese preferences, it would also entail significant costs and risks for the Iberian country. A recent study identified Portugal as one of the EU member states that would be more exposed in such a scenario. Beyond the possible disruption in economic and social relations, as a net recipient from the EU budget Portugal could suffer from the withdrawal of an important net contributor. Lisbon would also lose a counterweight to balance other European powers and an important partner to promote more liberal and Atlanticist initiatives internationally. More generally, Portugal would be affected by the damage that Brexit would do to the standing and prestige of the EU globally.
Although this is highly speculative, in the context of a UK-EU exit negotiation Lisbon is likely to adopt a broadly positive and facilitating stance. Portugal would most probably push for close ties between the remaining 27 and the UK, namely allowing British access to the single market and freedom of movement to continue. In fact, economic and social aspects were key issues for Lisbon during the renegotiation of Britain’s membership of the EU, with freedom of movement of people and non discrimination presented as questions of principle. In that sense, Portugal would possibly want to see minimal disruption for those areas and so push for a European Economic Area (EEA) style of arrangement with the UK. Moreover, Portugal would most likely seek substantial British involvement in the foreign and security policy of the EU, while continuing to emphasize the importance of a good relationship between the Union and NATO.
At the same time, Lisbon would be reluctant to grant the UK any special privileges, particularly out of fear of feeding greater Euroscepticism and disintegration dynamics in Europe. While Eurosceptic political forces in Portugal have remained marginal, the Troika years have produced a more attentive and critical public opinion towards the EU. Moreover, there were some signs of irritation in the national media directed both at London and Brussels, in view of the “special status” granted to the UK earlier this year. Finally, it should be emphasised that a negotiation under the current Portuguese centre-left minority government (supported in Parliament by smaller parties on its left) would probably lead to a more vocal stance than usual on any social issues.
Dr António Raimundo is a postdoctoral researcher at the University of Minho and an Assistant Professor at ISCTE-University Institute of Lisbon.
ROMANIA: Continued free movement to the UK will be the ultimate redline
Bucharest is very alert to the fact that the consequences of the overlapping economic crisis, migrant flows and consolidation of protracted conflicts in Europe’s Eastern neighbourhood may pave the way for a more inward looking political transformation of the EU. It is this situation – and especially that surrounding migration– that will frame how Romania views a UK vote to withdraw from the EU. Even if the UK’s referendum does not lead to an exit, more negotiations between London and the rest of the EU over further opt-outs are likely, which would represent a major issue of concern for Romania. The strengthening of Eurosceptic movements across the EU represents a challenge for Romania, for whom the deepening of economic and political processes associated with European integration has exerted an overall positive influence on the dynamics and quality of Romania’s internal politics. So far, official positions have been limited to supporting Britain’s continued EU membership, while conditions envisaged by Bucharest would focus on certain provisions regarding subsidies for immigrants.
Even before the onset of the migration crisis, with its consequences for the future of Schengen, Romanian authorities and analysts were concerned with the need for a clear differentiation between migrants from the Middle East and EU based workers moving inside the EU. The issue of free movement of Central-Eastern European workers continues to poison significant parts of the media and political debates in both Romania and the UK, given the fact that it was used by some political figures such as UKIP MEPs toquestion the right to free movement but also by mainstream politicians committed to reducing the numbers of migrants heading to the UK.
From a Romanian perspective, it is very worrying that calls for restrictions of fundamental EU rights have become a core part of the Brexit debate, largely through the discourse of mainstream parties. For Romanians, the main concern is that such arguments seek to restrict Central-Eastern Europeans from moving to the UK for work or studies and open up room for further modifications of what is considered a core EU right. This means free movement will be a redline for Bucharest, should the coming referendum see victory for the Leave camp and lead to break–up negotiations between the UK and the EU. Continued free-movement as part of some new UK-EU relationship that sees the UK remain in the EEA, will be something Romania will push hard for.
At the same time, Romanian is aware that crises in Europe’s South and East and the subsequent flows of migrants are an issue which may divide even more states into competing camps, with a core group calling for strengthened border control within the EU. Continued free-movement to a UK outside the EU would therefore form part of this wider EU debate. EU policy planning on security issues is also likely to be changed, although cooperation between NATO and the UK in the defence sector is expected to continue. British influence in security crises such as Ukraine and the potential to support further pressure for sanctions against Russia, also as part of the transatlantic relationship, matter immensely for Romania as it searches for long-terms allies committed to the effective implementation of the Minsk II agreement with Moscow. Given existing divisions among Central and Eastern members on the sanctions issue, it is essential for Bucharest to partner up with like-minded states within the EU which are better positioned to support this policy inside the Union. A Britain outside of the EU would surely lose part of its political weight, in spite of its perceived close relationship to the US.
Agnes Nicolescu, Public Policy director, Aspen Institute, Romania.
SLOVAKIA: Quiet anticipation at the helm of the EU Council
If British voters decide to leave the EU, negotiations over London’s exit are likely to take at least a couple of years. Slovakia’s immediate concerns with a possible UK departure are therefore confined to consequences for the Slovak EU Council Presidency commencing on 1 July 2016 and ending on 31 December.
Slovakia’s worries relate to planning and execution of its presidential roles in Brussels. Brexit is the one known variable that could seriously derail intra-EU communication, agenda-setting and the political calendar. While Slovakia’s six-months rotating Council Presidency will inherit most legal dossiers from the current Dutch Presidency, a UK decision to leave the EU would sideline discussion on many issues in the legislative pipeline.
One area that will be disrupted are the planned negotiations on revising the existing multiannual EU financial framework until 2020. Slovakia’s Council Presidency would need to find a way to manage talks on future EU outlays without knowing what contributions and demands to account for from the UK. Should the EU still budget for any UK officials in Brussels by 2020? Questions, which might seem technical, will suddenly become political. Even routine calculations may cause headaches and delay decisions among member states.
Because the EU does not have a template for dealing with the exit of a member state, the Slovak EU Council Presidency has decided to delay presenting its priorities until 29 June in order to account for the UK’s decision and the need to develop an initial message and strategy after a Brexit decision. In the event of a vote to leave, the European Council meeting on 27 and 28 June would delineate basic parameters for future negotiations between Great Britain and a Union of 27 member states. The outcome of the June summit will help set more tangible ambitions and limits for Bratislava’s first EU Council Presidency.
A Brexit vote will make, EU politics more complicated. The EU Council is likely to be consumed by the consequences of a UK divorce. Existing divisions on policy questions are unlikely to disappear among an EU of 27 countries. On the contrary, a British decision to stay in the European club could help create political support for adopting swift decisions on the digital single market and capital markets union or steps towards a workable banking union. Instead, the UK’s good-bye to the European Union would become another variable for Slovakia’s juggling act in crisis management tasks inside the Council in Brussels. In Bratislava, therefore, many football fans watching England play Slovakia on 20 June are going to cross their fingers for a resounding YES in the UK on 23 June.
Vladimír Bilčík, Head of the EU Program at the Slovak Foreign Policy Association and Lecturer at Comenius University
SLOVENIA: Hoping for a remain vote
The Slovene government wants the UK to stay in the EU. Firstly, a Brexit would have direct negative implications for the Slovene economy. Even though bilateral trade is not substantial, Slovenia has an important trade surplus with the UK. In addition, Slovenia could also be negatively affected through intermediate trade, e.g. in the automotive sector. A British exit would also send negative signals to the capital markets. Even if an immediate EU-UK agreement on trade followed an exit vote, economic relations would still suffer from temporary instability. In the renegotiation process, political blockades could occur. As a small and open economy, Slovenia would be relatively more exposed than others.
A Brexit would also have political effects. During the UK-EU renegotiation, the Slovene government, run by the centre-left coalition under the leadership of Miro Cerar of the ‘progressive liberal’ Modern Centre Party, demonstrated understanding for the position of the UK’s Prime Minister David Cameron. But it did not want to state openly its views on Cameron’s EU reform proposals due to the negative attitudes of the Slovene public which perceived Cameron’s arguments as anti-European and populist. When the proposed renegotiation agreement was published, Cerar adopted a more proactive policy, arguing in favour of the need to make a reasonable compromise to keep the EU together, thus trying to demonstrate his ability as a player in the European diplomatic field, and preparing terrain for the renegotiation deal to be accepted at home in Slovenia. The deal was largely considered acceptable. The renegotiation did not create additional political blockades to further economic and political union, and the proposed restrictions to the social rights of EU citizens are yet to be fully defined. There was even some support in Slovenia for strengthening the powers of national parliaments in the EU’s legislative procedures.
From the Slovene perspective, it is now essential that the result of the referendum is a vote to remain. If not, the Slovene government worries the perceived strength of the EU will be called into question. The negative consequences of the political crises the EU has faced during the past few years are already showing in the loss of the attractiveness of the EU in the Western Balkans. The credibility of the EU is essential for stability and development of this region that is strategically important for Slovenia, not least from an economic perspective.
Due to its relatively small size and asymmetric relationship with the UK and other large EU powers, in the process of resetting EU-UK relations Slovenia would be in a weak position. It would be shaped by the positions of the UK and other large member states. However, negative public opinion of the UK in Slovenia would strengthen. This would put the Slovene government in an unfavourable position towards granting concessions to the UK.
Marko Lovec is a research fellow at the Centre for International Relations of Faculty of Social Sciences, University of Ljubljana
SPAIN: Brexit will be seen through domestic politics
Although a slow and fragile economic recovery seems to be gaining pace, political uncertainty after the results of General Elections held on 20 December 2015 is keeping Spain locked in an inward attitude towards the future of the European Union, with or without Britain. Except, that is, on the issue of migrants.
On the one hand, Spanish workers living in Britain are concerned about their rights as regards social benefits and free movement. During the European Council meeting held in February, Spain’s care-taker government had only one goal in mind: to limit the restrictions of access to social assistance to new workers and avoid any retrospective measure effecting the EU (Spanish) migrants currently in Britain. Even though this was agreed, it will only be applied if the UK remains in the EU. Otherwise, the Spanish government will have to renegotiate migrants’ rights in Britain as well as reciprocity in both social security systems.
At the same time, Britons living on the sunny Spanish coasts are more worried than Spaniards about the direct implications of a British EU exit on their daily lives. Over a million Britons, most of them retired, live regularly in Spain and have access to healthcare, public services and even unemployment benefits, thanks largely to the guarantees provided by EU law. If Britain leaves, then Britons resident abroad will not be able to presume that their rights are guaranteed anymore under the same conditions.
Last but not least, economic relations will also become a hot topic in the event of a Brexit. While Britain is the first country of destination for Spanish foreign direct investment, Spain is the tourist destination par excellence with more than fifteen million visitors annually. Spain will never defend a ‘less Europe’ strategy for itself, but if Brexit becomes a reality any Spanish government, whether led by a grand coalition, a left-wing coalition of parties or even a Conservative government under Prime Minister Mariano Rajoy, will have to defend Spaniards’ economic and migration interests.
However, citizens and party leaders in Spain are today only concerned with domestic political and economic affairs. The only date on the calendar for Spain’s future is not 23 June but 26 June when Spain will most likely face fresh national elections.
Laia Mestres is a postdoctoral researcher at the Institut Barcelona d’Estudis Internacionals (IBEI).
SWEDEN: Prioritising geopolitics and cultural proximity with the UK
On June 23rd, as Swedes pickle their herring for this year’s midsummer festivities, they will follow closely the results from the UK referendum. Sweden is one of the member states with most to lose from a “Brexit” and support for the “Bremain” side is substantial. The reasons are pragmatic: Sweden and the UK tend to agree on issues such as free trade, the further development of the internal market and modernization of the EU budget. Adding to this, Sweden has strong bilateral ties to the UK with 8 billion euros worth of exports yearly. But perhaps most important, the UK offers shelter for life outside the Eurozone, a position swedes are keen to remain in. Without a big member state fighting (some) of its battles it will no doubt be more difficult for Sweden and other non-euro EU-members to balance the members of the common currency. Finally, as a non-member but ever closer partner of NATO, Sweden appreciates the role of the UK as a constructive actor in this realm. In case of Brexit, cooperation between the EU and NATO might suffer and the security policy orientation of the UK, Germany and France might deviate even further which would be highly problematic for Sweden as geopolitical tension is heating up in the Baltic Sea.
For these reasons the Swedish government was rather supportive during Cameron’s renegotiation and hopes to see continued UK membership in the EU.
If Swedes wake up on the 24rd and find that the British had voted to leave, the calculus will more or less stay the same and Sweden can be expected to play a constructive role during the ensuing exit negotiations. This does not mean that Sweden does not have interests of its own to secure: the city of Stockholm might try to attract some of London’s financial industries and step up the game in the competition over headquarters for global enterprises. On a political level, it has been argued that Sweden should play hardball in case of Brexit and deny the UK too sweet a deal, fearing that would unleash a domino effect and perhaps attract Swedish EU-sceptics as well. But geopolitical turbulence and perceived cultural proximity would likely trump these fears in a withdrawal negotiation. Sweden would still aim for a close bilateral relationship with the UK, a close relationship between the EU and UK and a UK that is engaged in European security. So if the Swedish midsummer festivities are followed by international brinkmanship – expect Stockholm to blink rather quickly.
Björn Fägersten is Senior Research Fellow and Head of Europe Program at the Swedish Institute of International Affairs.
EU INSTITUTIONS: EU first and looking forward
If on 23 June British citizens vote to leave the EU, all eyes will quickly turn towards Brussels. Such a decision would obviously shake the EU. The key question is whether this would be a wake-up call or one that is a first step towards disintegration. Major determinants would be to what extent the EU institutions would remain functional and how they would respond in the following months. Much of their attention would turn to dealing with the aftermath of the British vote and negotiating a Brexit, but also to how to take forward the Union so as to ensure it does not break-up.
The European Council has already postponed its usual meeting that should have started on the same day as the referendum. This gathering of all the EU Heads of State and Government will now take place the following Tuesday and Wednesday (28-29 June). Several issues are already on its provisional agenda (migration, country specific recommendations and European semester, EU-NATO cooperation) but the results of the British referendum will surely be on top of it, especially in the case of a leave vote. Any contingency plans would be taken out of the safe deposit boxes and the European Council would have to decide on the first emergency measures. The first thing would be to provide some general guidelines for moving forward and the European Commission would be mandated to conduct the negotiations following these terms.
The European Commission would proceed as requested but would not hesitate to use its central negotiating role to shape the process. As illustrated by a comment made by Commission President Jean-Claude Juncker on the treatment reserved to “deserters”, the line of conduct would be tough. The European Commission is likely to uphold its role of promoter of the general interest of the Union by taking the steps it thinks will keep the rest of the EU together. Being conscious that there is no other way than activating article 50 of the treaty on European Union, the Commission would try to isolate as much as possible this earthquake in order to prevent aftershocks and spill-over effects. The Council would be entitled to reach a deal through a qualified majority. However, the consensus rule might in this case remain the preferred option in order to avoid any further division among the remaining 27 member states. A strong voice might come from the European Parliament (EP), which would have to give its consent at the end of the exit negotiation process.
In addition to these roles in the negotiation process, EU institutions would quickly have to adapt themselves in preparation for the UK’s withdrawal. They would have to decide how to deal with the British Members of the European Parliament (MEPs), representatives and civil servants. While the British MEPs would probably be side-lined, they are likely to stay until the end of their mandate. The issue would, however, be much more complicated to decide on for the thousands of British employees in EU institutions and agencies, especially for those occupying senior positions.
Beyond these aspects of dealing with the immediate situation, what would be the position taken by the EU institutions towards this unilateral decision?
The EU institutions have until now adopted a conciliatory stance to help David Cameron convince British citizens of the merits of continued EU membership. This willingness to compromise would suffer a backlash if the British voted to leave. Faced with fears of disintegration, the EP and the Commission might want to respond by looking forward towards some new way of encouraging further integration. It should be remembered that making progress through crises has long been a modus operandi of the European integration process.
The EP is likely to look for opportunities to help push forward integration in a new way. Its own internal evolution would facilitate such an attitude. As Simon Hix explains, the “Eurosceptic coalition” in the EP would be considerably weaker without the British and thus the “integrationist coalition” would be reinforced.
Several reports are currently being discussed and drafted that could represent an attempt to move forward: a report on a “budgetary capacity for the Eurozone”, another one “on the possible evolutions and adjustments of the current institutional set up of the EU”, and finally one on “improving the functioning of the European Union building on the potential of the Lisbon Treaty”. Due to mutual interests, economic issues would be at the centre of the UK-EU exit negotiations. On one side the Commission would then be looking for a new economic relationship with a departing member, while on another side the EP will be making proposals to further strengthen its economic core. These different concerns might complicate the inter-institutional dialogue.
These initiatives might also suffer from a lack of enthusiasm from the Member States. Previous failed attempts to further structure the Eurozone, a poor appetite for institutional reforms and short term views due to electoral deadlines could lead national leaders to look for alternative options. Security and defence issues are already high on the European agenda, not least thanks to the imminent publication of the German white book on security strategy and rumours of European plans to re-launch the idea of a European military and cooperation structures. An attempt could also be made to use this area as a way forward in developing new relations with the UK, a country that has often been at the forefront of efforts in this area.
It is clear that multiple variables will determine the road taken by the EU after Brexit, a road which promises to be bumpy. Each proposal risks creating new tensions and divisions within the remaining Member States and their regions. The leeway would therefore be minimal, but in front of a chaotic existential crisis, the status quo will not be an option for the EU.
Dr Yann-Sven Rittelmeyer is a Policy Analyst at the European Policy Centre in Brussels