How not to take back control - again

#CriticalThinking

Picture of Johnny Pring
Johnny Pring

Public Affairs Manager at McKesson Europe

The United Kingdom’s attempt to find a satisfactory way to leave the European Union presents unique problems, but its current approach is somewhat resonant of the 1950s and early 1960s. In particular, London’s moves during the early period of European integration provide valuable insights into the undercurrents of the Brexit negotiations. They show that, in certain respects, Britain’s fundamental outlook – and Europe’s – have changed little in 60 years.

When the six countries that went on to form the EEC (EEC6) first started negotiations in 1955, they very much hoped that the UK would join. But the British were instinctively opposed to integration with the resurgent continent: they believed this would jeopardise their continuing bonds with the Commonwealth, which then provided bigger (though declining) export markets. What followed was a series of misunderstandings and missed opportunities. The UK started by hoping the project would fall apart, and then tried unsuccessfully to promote an alternative, looser arrangement based on trade. When this failed, the UK belatedly applied to join the EEC – a move which the French vetoed in 1963. Eventually, the UK joined in 1973 – but during the years spent out in the cold it had foregone any claim to leadership in Western Europe.

Many factors are of course different now, not least that the British decision to leave has been driven by public opinion, backbench Conservative MPs and the popular press. These actors played little part in evolving policy in the 1950s, when ministers and senior civil servants took the lead. Nonetheless, an understanding of the original dynamic of European integration and the UK’s awkward attempts to deal with this could bring a greater focus to the current British approach.

The British were instinctively opposed to integration with the resurgent continent: they believed this would jeopardise their continuing bonds with the Commonwealth

Three lessons from the past still hold true.

First, the UK underestimates the common resolve of its neighbours. In October 1955, a civil service report to the Cabinet on the early moves towards European integration stated: “It is possible, if not probable, that it will never become necessary for us to decide on our attitude towards a European Common Market on its merits. The whole project may collapse, as so many other European schemes have collapsed…”. This misreading of the momentum of the EEC6 underpinned the government’s wait-and-see attitude at the time.

A modern version of this view – that the EU will soon fall apart – is common among many British Eurosceptics, though it has died down somewhat since the election of Emmanuel Macron as President of France. The subtler Brexiteer view – that the other member states can be divided during the negotiations – has also not held water. There has been remarkable unity to date among the EU27.

Second, the UK overestimates its bargaining power. The UK’s counter-proposal for a wider Western European free trade area in 1956-58 was undermined by the exclusion of agriculture and a lack of a political dimension – both essential points to the EEC6. London policymakers assumed that France and others would welcome greater British involvement as a counterweight to Germany’s influence. They failed to understand that the EEC6 had another motivation to strive for a common political future – which undermined Britain’s ability to secure a deal on its own terms.

A modern version of this conceit was the prediction in early 2016 by some prominent Brexiteers that the EU would offer the UK another, better, membership deal if it voted to leave. Instead, the reaction from Brussels and EU27 national capitals after the vote was to call for exit negotiations to start as soon as possible. Brexiteers have since pointed to the EU27’s trade surplus with the UK to conclude that “they need us more than we need them” – while ignoring the fact that the EU27 market takes a far bigger proportion of British exports than vice versa.

There are also parallels in British attempts to use security arrangements in negotiations. In the late 1950s, Prime Minister Harold Macmillan threatened to withdraw the British army from the Rhine if Germany was not more accommodating to British interests. German Chancellor Konrad Adenauer retorted that Britain’s military presence was for its own defence rather than Germany’s. Similarly, Theresa May wrote in her Article 50 letter that “failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened”. If her government takes this approach in the negotiations, it may well receive an Adenauer-like response.

The priority of the EU27 is to maintain the integrity of the EU, even if it hurts their economic relations with the UK

Third, politics trumps economics. The UK’s first application to join the EEC in 1961 was motivated more by political concerns over its standing with the United States than by economics: its trade with the Commonwealth outweighed its trade with the EEC6 until 1965. In the 2016 referendum, the economic case for remaining lost out to the charged issue of immigration.

And on the continental side, the original EEC6 saw integration as primarily a political and security project. When German Finance Minister Ludwig Erhard pushed for a wider Western European free trade area, he was overruled by Adenauer. Today, Brexiteers hope that the German car industry will ride to their rescue and insist on putting trade first. Yet the priority of the EU27 is to maintain the integrity of the EU, even if it hurts their economic relations with the UK – and German carmakers support this position.

Just as in the 1950s, the UK has been slow to grasp these three realities. Recently however, the British government has started to show signs of compromise, such as accepting the EU’s process for the negotiation – divorce terms first, then the definition of a new relationship. In her speech in Florence on 22 September, Theresa May acknowledged the need for a transition period of around two years after the UK leaves when “access to one another’s markets should continue on current terms” (i.e. following EU law). And the UK’s latest paper on security cooperation post-Brexit published on 12 September also takes a more constructive tone. The reality of its weaker position is starting to sink in.

Given these factors, the British government would be well advised to reflect. What is the best deal the UK can realistically settle for, and what cards does it have – and not have – to play? How can it approach a united EU27 other than by hoping that they will start arguing among themselves? And how did the UK get itself into this position in the first place?

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