30 June 2016
Predictions for Britain and the European Union
Britain has always been at arms length from the EU. Despite being a founding member, it has stayed out of the Schengen area and euro currency. It has resisted attempts at further integration, causing the European quest for federalism to be slow and difficult.
The whole idea of integration was thrown into doubt with Greece's financial crisis and the Syrian refugee problem, and many misinterpreted these problems as a failure of the whole idea of integration. Rather, both situations were the result of taking fearful baby steps instead of a confident leap. The countries integrated incompletely, making a recipe for disaster. The answer is not less integration, it is more.
Many economists bemoan the idea of a currency union (the euro) without a fiscal and political union. In the case of Greece there was no effective central bank, no European budget controls, no consequences for violating the fiscal terms of the treaty. So of course Greece went to an extreme, its budget and debt became unsustainable, and its fellow countries had to throw together an improvised bailout. Of course it happened, because there were no controls. Since the crisis, Europe has now created a more powerful central bank, a stability fund, and other fiscal controls that will prevent and recover from financial instability. They integrated further, but still not far enough.
Both of the crises could have been averted with more intentional integration, but they were both implemented in the 1990s when integration was in small steps through treaties between independent sovereign nations. Those small steps were successful in creating something much more like a federal system of states, but now in the 2010s further integration is badly needed. But there are two areas of federal integration that are totally lacking and need to be addressed. Those are military integration and a constitution.
The other step is a constitution. The EU attempted a constitution in 2004 that would have replaced a confusing set of treaties with a single reference for legal authority and created a system of voting to replace the unanimous agreement that is required for treaties. Somewhat ironically, it was never ratified because two countries out of 20 rejected it. This legal hump should be attempted again, as it is the surest way to create the authority necessary to fix some of the problems created by partial integration and avoid more problems similar to the Euro crisis (imagine a shared military without a central authority). Once the constitution is ratified, there should be a clear in/out among various nations with overlapping commitments. For example, Norway is part of Schengen but not an EU member, so it would likely be thrown out of the border deal unless it joins the constitution.
I predict that the UK's exit will do the opposite of what some leave campaigners were hoping. First, within 5 years of the actual exit, Scotland will vote again on independence and will likely secede from the UK, then negotiate entrance into the EU as an independent nation. It's also possible that Northern Ireland will do the same, which would cause the whole island to join Schengen. What's left would be a lonely England and Wales that are excluded from the benefits of the European market. Without Britain's obstruction, integration will accelerate on several fronts, and it will succeed while England fails. In the end, it will be a lesson in regional integration, not the harbinger of the end of the idea of federalism. Then England itself will try to join the United States of Europe.
Posted by Bryan Donaldson