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The U.K. and the EU: Irreconcilable Differences?

By Clive Crook
January 08, 2013 6:30 PM EST

The European Union is a remarkable achievement that now faces its most threatening crisis. The reason for both is the same: Its insistence through the years on combining ambition and ambiguity.

Theoretically dedicated from the outset to “ever-closer union,” member governments never settled on what that might mean, or bothered too much about whether their citizens would want it, supposing they knew what it was.

The euro crisis raises this core question of the EU’s final destination with fresh urgency. I wouldn’t bet against its leaders finding a way to swerve around this reckoning yet again -- their ingenuity in evading tough questions seems boundless -- but it’s going to be harder than before.

For one thing, the U.K., ever the reluctant European, is getting ready to insist on answers. Prime Minister David Cameron has promised a speech later this month that will set out goals for talks on a new European treaty, together with plans for a referendum on any subsequent “new settlement.”

Opinion polls in Britain show majorities in favor of withdrawal. That’s why Cameron, an instinctive pro-European, talks about repatriating powers already ceded to the European center in Brussels. He wants the U.K. to stay in, but the country’s mood is hostile.

Eroding Sovereignty

If the EU’s response to the current crisis is a great leap forward toward full political union, the U.K. won’t go along. It’s already chafing under the present dispensation, and would hardly welcome a new one that further erodes its sovereignty and hollows out its domestic political institutions.

Fiscal union is now widely seen as a logical requirement for the preservation of the single currency. (What a shame the euro’s designers didn’t think of this before.) The logic is questionable, in fact, but Britain needn’t accept it, because the U.K. wisely chose not to join the system in the first place.

The nine other members of the EU that don’t use the euro are in the same position. You could say they’re already halfway out of the union. The question is whether semidetachment will continue to be possible.

Britain’s uncompromising euroskeptics believe their country should never have joined in the first place and want nothing more to do with the project. British pro-Europeans say that leaving the EU is unthinkable; some even say it’s wrong to suggest repatriating powers already transferred to Brussels, as though stepping back violates some immutable law.

Both these extremes are wrong. The U.K. would be crazy to ignore (or try to ignore) the rest of Europe: It has a compelling economic and geopolitical interest in the partnership. Equally, though, the terms of that partnership should be up for debate, and they should be revisable in both directions.

In the end, outright withdrawal from the EU would be an unfortunate outcome, but shouldn’t be dismissed as an unthinkable one. Everything depends on the details of the new settlement. The agreement Britain should press for -- and that France, Germany and other core countries should accept in their own interests -- is an officially acknowledged, properly worked- out, permanent two-tier union.

Europe’s present constitutional design, if you can call it that, upholds the principle of one size fits all -- one European Union, one EU body of law -- then violates that principle in practice. Many countries have various “opt-outs” from EU laws. Britain, for example, has opted out of the euro.

Constitutional Anomalies

In each case, however, the opt-outs are constitutional anomalies: They typically create complications that have to be addressed through ad hoc adjustments. In maintaining the presumption of one EU, one law, subsequent treaty revisions have to work around these complications.

The result is a constitutional fog that leaves everybody complaining and steady pressure for a closer union for all, regardless of what citizens may want.

Until Europe’s economic crash, the thinking was that one day all EU members would adopt the euro, even Britain. If countries that haven’t already joined the currency aren’t having second thoughts about that idea, they should be.

The new settlement needs to break with the idea of Europe’s manifest destiny. It should sanctify the idea of an inner EU of countries in the euro system, and an outer EU of countries that may never choose to adopt the single currency.

The inner countries can then debate closer political union -- as an end in itself, to facilitate the working of the single currency or both. The outer countries, not driven by the demands of euro membership, can jointly or severally choose looser political ties. They would be constrained, under common EU law, by the demands of the single market, though not by the heavy additional demands of euro membership.

This is a radical departure from the model that has guided European integration up to now. Yet it is no more than an acknowledgement of facts on the ground.

The European project is in trouble because the model -- of a single, ever-closer union -- has moved so far away from the reality of what people want and economies can stand. The answer is to formally embrace a two-tier design, not as a stop-gap measure as current doctrine dictates, but as a permanent constitutional settlement.

If Britain makes this case in the right spirit, it will probably find allies across the EU. Suppose, however, it loses the argument and eventually has to choose between remaining as part of a closer political union or leaving the EU altogether. What then?

Under those circumstances, Britain’s exit would be desirable for all concerned. The U.K. shouldn’t get in the way of countries that wish to dissolve what remains of their national sovereignty and press on to create a United States of Europe.

Similar Relationship

Outside the EU, it could remain part of Europe’s common market as a non-EU member of the European Economic Area (like Norway), or it could negotiate a bilateral trade agreement with the EU (like Switzerland). In that event, it would be choosing a relationship similar to the one Canada has with the U.S.

On balance, a closer partnership with Europe than Canada’s with the U.S. is still in Britain’s interests. As a member of the EU -- and a big, influential one -- the U.K. has a voice in shaping European policy, even if it can’t always get its way. That’s a big plus. A friendly separation, though, would hardly be the end of the world.

Unthinkable? Canadians seem to find the Canadian alternative viable. Divorce shouldn’t be out of the question.

(Clive Crook is a Bloomberg View columnist. The opinions expressed are his own.)

To contact the writer of this article: Clive Crook at clive.crook@gmail.com

To contact the editor responsible for this article: Max Berley at mberley@bloomberg.net

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