Friday, May 08, 2015

A five-point plan for Cameron to win an EU referendum

The politicians hardly mentioned Europe during the campaign, yet the most important consequence of Britain’s general election will be a referendum on EU membership. Prime Minister David Cameron plans to negotiate reforms to the EU and then hold an in-or-out referendum before the end of 2017. What does he have to do in order to win a referendum on keeping Britain in the club? What is he likely to ask for, in terms of reform? And what would be the impact of ‘Brexit’ on the rest of the EU?

The voters defied opinion polls and delivered a shocking result: the centre-right Conservatives performed much more strongly than expected in England, the centrist and pro-EU Liberal Democrats lost most of their seats, and the Scottish National Party (SNP) won almost every seat north of the border. The anti-EU United Kingdom Independence Party (UKIP) won 13 per cent of the votes but only one seat. The centre-left Labour Party – which according to the final opinion polls had a good chance of forming a government – finished almost a hundred seats behind the Conservatives.

At least three factors explain the Conservatives’ triumph: Cameron was a more convincing leader than Labour’s Ed Miliband; the economy’s recent strong performance strengthened the Tory reputation for economic competence; and in the closing stages of the campaign, the Conservatives played on fears that a Labour government propped up by the SNP would be bad for the English.

But although Cameron is the clear winner, he may face some of the problems faced by John Major after he – also in defiance of opinion polls that proved wildly wrong – won the 1992 general election. Major had a majority of 20, soon eroded by by-elections and deaths, which enabled his party’s eurosceptic right-wing to make his life a misery. Cameron’s majority is 12. For the past five years his Lib Dem coalition partners have given him a clear parliamentary majority, and thus some protection from Tory eurosceptics. But now they will be urging Cameron to make maximalist demands of his European partners; they will shed few tears if such demands cannot be met, since that would only reinforce their point that Britain should leave the EU.

Cameron will have to fend off the Conservative hard-liners if he wishes to keep Britain in the EU. He can face them down if he wants to: his surprise victory has given him considerable political capital. He does not need to consult backbenchers on the finer points of his negotiating strategy. If Cameron wants to, he can negotiate some modest improvements in the way the EU works. But he will need to be diplomatic and constructive. The British brand in the EU is much more toxic than many people in the UK appreciate. Here are five pieces of advice for Cameron.

First, do not over-bid. If Cameron tries to make fundamental changes to the way the EU works, he will fail. Britain’s partners have no appetite for treaty change: a new treaty would need to be ratified in all 28 member-states, some of which would have to hold referendums. The process of changing the treaties would take many years, and most governments – including Germany, which leads the EU – fear that reopening the treaties would be like opening Pandora’s Box. There is no chance of a new treaty being ratified by 28 countries before the end of 2017. The best that Cameron could obtain would be a promise of very minor treaty changes, to be ratified at some point in the future.

Second, make the case for EU membership. Cameron did so with his Bloomberg speech of January 2013 – but never followed up, because he did not want to annoy his party’s eurosceptics or potential UKIP voters. Britain’s partners will not take Cameron seriously until they see that he is prepared to explain to the British the benefits of EU membership – and thus be ready to make enemies in his own party. Cameron surely understands that during the referendum campaign the Conservative Party will inevitably split into two hostile camps – and that that may in the long term damage its unity (just like Labour’s EU referendum in 1975 presaged the split of 1981, when a group of pro-Europeans set up the separate Social Democratic Party).

Third, take initiatives in the EU and seek to lead in areas where Britain has expertise. One reason why British influence has dwindled in recent years is that it has often sat on the sidelines and appeared happy for others to lead. Britain’s EU partners would listen to it with more respect if it made concrete proposals in areas such as foreign and defence policy, co-operation on policing and counter-terrorism, climate and energy, or trade and the single market. Many other member-states would welcome a more pro-active Britain.

Fourth, work hard at building alliances and making friends. Cameron has very few close friends in the EU. When the European Council voted on Jean-Claude Juncker’s appointment as Commission president last June, only Hungary’s Viktor Orban joined Cameron in opposition. Angela Merkel is something of a friend, on a good day, but she and Cameron are prone to misunderstand each other (as in December 2011, when he wrongly thought that if he signed the ‘fiscal compact’ she would give him a protocol protecting the City of London). Other leaders tend to complain that Cameron is a very transactional politician who does not invest sufficient time in building relationships with them. Britain’s relations with several Central European countries have frayed in recent years, largely because of the Conservatives’ anti-immigration rhetoric. Of course, the problem is not just Cameron. Under the last Labour government, too, many of the EU’s smaller members complained that British ministers and officials seldom took them seriously, for example by making the effort to travel to discuss areas where they could work together.

Fifth and finally, a point that my late colleague Philip Whyte often made is that clubs have not only rules but also mores. British politicians tend to forget that their rambunctious style of domestic politics – involving confrontation, rudeness and a win-or-lose psychology – goes down badly in the EU. The EU works through long negotiations and compromises that end in everyone feeling that they have got something. Sometimes Cameron gets this: two years ago he worked patiently with Germany and other partners to get a good deal on the EU budget, shrinking its size. Sometimes he does not: prior to the appointment of Juncker, other leaders reported that Cameron had threatened to campaign to take Britain out of the EU if the Luxembourger was appointed. Such threats alienate potential allies.

Cameron has to take two decisions very quickly: when should he hold the referendum, and what should he ask for, in terms of EU reform?

On the first point, there is a strong case for bringing the referendum forward to the second half of 2016. The longer it is delayed, the more the climate of uncertainty will afflict the British economy and potentially deter foreign investment. Furthermore, newly-elected governments usually have more credibility and popularity than tired governments in mid-term. If the referendum happened at the end of 2017, some voters might vote against the EU only because they were fed up with Cameron. Then there is the electoral cycle of other key countries to consider: both Merkel and France’s President François Hollande face elections in 2017 and will be unwilling to make big concessions to the UK in the period leading up to them.

On the second point, Cameron’s EU partners will, of course, urge him not to ask for too much. Many in his own party – and the UK’s eurosceptic media – will tug him in the other direction, arguing that unless he extracts major concessions from other member-states, the British people will never agree to stay in the club. Cameron and his officials have given several hints of what Britain’s priorities would be in a negotiation with EU leaders:

* He will ask for limits on the in-work and out-of-work benefits available to migrants from EU countries. As my colleague Camino Mortera-Martinez has written, several of his demands would be difficult to achieve and require treaty change. See Cameron's migration speech and EU law: Can he change the status quo?

* He will try to shift the institutional balance in the EU, so that the Commission becomes less dependent on the European Parliament than it has been in recent years, and closer to the Council of Ministers. Part of this rebalancing would involve giving national parliaments a bigger role in scrutinising subsidiarity and proportionality in EU rule-making. See Not in front of the MPs: Why can't parliament have a frank discussion about the EU? by Agata Gostyńska.

* He will try to introduce safeguards for the single market. There is a potential risk that the 19 countries in the euro will club together, caucus and seek to impose their views on the broader 28-country single market. In fact such caucusing has not yet happened, but Cameron will ask for new mechanisms to ensure that it cannot.

* He will urge the EU to pursue British priorities on economic policy-making, such as negotiating more trade agreements, extending the single market into services and the digital economy, and improving the quality while minimising the quantity of regulation. In fact the Juncker Commission is doing most of these things already, but Cameron will need to dress this up as a triumph for his agenda.

* He also is keen to get some sort of opt-out from treaty language on ‘ever-closer union’. And he may seek radical changes to Britain’s relationship with the European Convention on Human Rights (though this is separate from the EU).

None of this would be easy to negotiate, but on most of these dossiers Cameron will find allies as well as opponents. So far, Britain’s partners have not taken the question of Brexit very seriously. They have been pre-occupied with the problems of Russia and Greece. Many EU leaders were praying for a Labour victory. They have not given much thought to the areas in which they could help Cameron to achieve some of what he wants. A successful British renegotiation will require moderation and constructive diplomacy on their part as well as that of Cameron.

Other leaders will now have to consider the impact of a British departure on the EU. Economically, the EU would lose its biggest champion of free trade and the single market (which is why some protectionists would welcome a Brexit). In terms of foreign and defence policy, the British – despite recent defence cuts, and their reluctance to become involved in the diplomacy over Ukraine – have serious capabilities; without the UK, the EU would find it harder to become any kind of power. If the EU lost one of its two countries with seats on the UN Security Council, other powers would take it less seriously.

And then there is the transatlantic relationship: though UK-US ties are weaker than they were, the British have so many economic and cultural links to the Americans that they can often explain the EU to them; and they can help continental Europeans to understand the US. For example, the UK has played a key role in forging transatlantic agreements on counter-terrorism. Finally, there is the German question. Germany’s weight in the EU often dominates economic decision-making, and is increasingly important on foreign policy, too. A Brexit would leave Germany even more preponderant, which would concern a lot of other countries – as well as a number of Germans.

Brexit is far from inevitable. Recent opinion polls in Britain suggest that more voters wish to stay in the EU than leave. But for a referendum to be won, Cameron needs to become more strategic and less tactical. And Britain’s EU partners need to help him to frame a deal that he can sell to the British people.

Charles Grant is director of the Centre for European Reform


Anders Åslund said...

Great comment, Charles. It is difficult to disagree with anything that you write.

However, one big point is missing. The tory party should rejoin the European People's Party. That is the easiest and best way of making the UK relevant in EU politics again.

Anders Åslund

David Broucher said...

Fully agree that the negotiations need to focus on a few modest things that are achievable, don't require treaty change and go with the grain of what partners are doing anyway. If the bar is set too high, the enterprise will end in tears.

Mark Tokola said...

There is a path to the UK remaining in the EU. On one of Charles' points in particular, strengthening the role of national parliaments, there is nothing to prevent member states from deciding on their own to have their governments consult more closely with their parliaments before Council votes. That would not require a treaty change. With a modicum of good will, a "reform" package should be possible.

Unknown said...

The problem with a "reform" package is that the British electorate will very likely reject it.

If there is a real reform package then it will probably be accepted. The EU-powers-that-be shouldn't underestimate the intelligence of the UK electorate. They are quite capable of spotting the difference between "reforms" and reforms.