Politics Special: Brexit?

A few weeks to go until Britain decides whether to stay in the EU or leave. Recently, an undecided Facebook Friend bemoaned that the two campaigns shout at each other, while another bemoaned that the same sets of facts are being used by both sides to make opposite arguments. Basically, it's a nebulous mess, not helped by the fact that both campaigns are run by politicians who seem more interested in their own egos and potential future leadership races than reality.

So, as EU citizen living in the UK, I thought I'd throw my two pence into the ring.

Here's the big question you will be asked (if you are a Brit) in June:

"Should the United Kingdom remain a member of the European Union or leave the European Union?"

What will your answer be?

Uncertainty

One thing is pretty obvious: no one really knows what will happen if Britain leaves the EU. Both campaigns speculate, the Brexiters painting a lovely utopia of having "the best of both worlds" while the Breuropeans imagine a vengeful EU which will set out to crush Britain and turn the UK into an isolated pariah state. Neither outcome is realistic.

So, let us speculate as to what the likelier scenarios would be, and how the UK would be affected. 

Status Quo

Before starting the discussion, we need to look at what the EU actually is, and what it is not. UKIPpers, tabloids and Eurosceptics love to rant about "Europe" as if it were one thing. It is not. In fact, Britain is currently part of various European supra-national organisations:

• The Council of Europe - which runs the European Court of Human Rights and is in charge of the European Convention on Human Rights. This is the court in Strasburg which tabloids rail against whenever a villain or migrant tries to assert their human rights. 
• The European Economic Area (EEA) - which is broadly, EU + EFTA (European Free Trade Area). As with most European things, there is an exception: Switzerland is part of EFTA but not of EEA, but has negotiated treaties that effectively replicate EEA membership. The difference is almost rhetorical: if Switzerland scraps any one of the treaties, they are all nullified (they call it a Guillotine Clause). The reason for all these complications? The Swiss have repeatedly voted in referenda that they don't want to be part of EEA, so the Swiss politicians & negotiaters came up with a creative solution to adhere to the referenda while still getting the benefits of EEA membership. 
• The European Union. At last. The thing the referendum is about. If you look at the structure of the EU, you'll notice it includes the European Council, the Council of the European Union, the European Parliament, the European Commission, the Court of Justice of the European Union (in Luxemburg, not to be confused with the human rights court in Strasburg), the European Central Bank, and the European Council of Auditors. 

Want a laugh? Count how many different organisations have both "Council" and "Europe" in their title. No wonder most people are confused. 

Here's a neat chart from Wikipedia:

Britain's Grievances

It's not just British people who are a bit frustrated with the EU, but Britain seems the most overtly scathing about Europe. Let's have a look at what the issues are.

• Human Rights (and the Human Rights Act). British governments (and tabloids) get annoyed when people they deem undesirable try to assert their human rights, even though the European Convention on Human Rights was originally drafted under the leadership of a British Lord (David Maxwell Fyfe, 1st Earl of Kilmuir). It's been in effect since 1953, but became a bone of contention after Tony Blair's Human Rights Act, which does nothing more than apply the convention that had already been in effect in the UK for decades - basically, this act allowed it to become a party political matter by moving it from the background to the foreground. Funnily enough, this is actually a matter of the Council of Europe, not the EU. Any nation wishing to join the EU has to first sign up to the European Convention on Human Rights and join the Council of Europe, but it's a pre-requisite, not a part of the EU. Leaving the EU on its own would not have any effect on Human Rights cases.
• Migration (and the Free Movement of people). The free movement of people is a pre-requisite not just of the EU, but of the European Economic Area. So leaving the EU would not necessarily allow the UK to put any limits on migration - to do so, the UK would have to leave the EEA and Common Market as well.
• Cost. The EU costs a lot of money. 
• Policy Cost: especially the Common Agricultural Policy. One of the EU's roots is the Common Agricultural Policy. (It was built on common mining and steel policies, too, but these have long ago faded into obscurity). CAP's raison d'etre is to preserve traditional farming. France, especially, is horrified by the idea of US-style super-farms. For farmers with modest land holdings to be able to make any sort of living, the industry has to be subsidised, and CAP does this by setting prices. As a consumer, that means our food is more expensive. Effectively, everything produced in the EU is akin to a Fairtrade product, and this has been the case for decades. It irks Britain (and many Europeans) that the choice to not support farmers has been withdrawn from us. At the same time, farmers protest that even with CAP, getting by is a struggle (e.g. UK milk farmers ranting abut supermarkets).  
• The Common Fisheries Policy sets catch quotas, which means UK fishermen can't maximise their catches. This is an EU policy, not an EEA one, so Icelandic and Norwegian trawlers are not bound by the same restrictions. The EU set the quotas because of fears over fish stock and the risks of over-fishing, but the imposition grates in the UK. 
• Operational Costs: The EU is a juggernaut, employing thousands of highly paid civil servants. All those organisations have cushy salary schemes, generous pension schemes, superb health insurance for their staff - basically, EU technocrats are paid very, very well. And, as it's built on political compromises, the EU organisations are often woefully inefficient. The most visible example of this silliness is the European Parliament, which has its offices in one country, but its debating chamber in another, so all the MEPs get shipped by special trains to the debating chambers whenever the European Parliament has a session, and back afterwards. 
• Red Tape, regulation and bureaucracy. A lot of EU legislation is about standardising and regulating conditions in the common market. From environmental regulations to food safety ones, from classifying bananas according to their curvature to limiting the amount of hours an employee can be made to work per week, or the amount of rubbish that should be recycled, the EU is constantly working to create common conditions for the common market. More importantly, as it's run largely by technocrats, the EU sometimes creates rules and regulations that national parliaments would struggle to pass. There is something slightly paternalistic in this attitude: EU lawmakers feel they can create rules for the good of the people, even if the people wouldn't want those rules. Rules about rubbish and recycling make life more hassle than before. Rules about lightbulbs and energy efficiency deprive consumers of choices. The technocrats would argue they are necessary to protect the environment and make our lifestyles more sustainable, but the truth is, if citizens were to get a direct vote on such matters, many of the rules would not pass. The difference between the UK and other European nations is that, by and large, the other countries support EU decisions publicly. UK politicians, on the other hand, prefer to paint the EU as bogeyman and point the finger at Europe. "Europe is forcing us to recycle or we'll be fined", the local councils moan, and only as an afterthought does "but recycling is the right thing to do" come into it. 
• The Democracy Deficit and Paternalism. Of the EU institutions, only the Parliament is elected by its citizens. All the rest get their leaders appointed by national governments. The Parliament, meanwhile, can only vote on laws and rules that the other organisations (Councils and Commissions) propose. On top of that, the Parliament is quite young, and its powers have grown very slowly. The EU is fundamentally a paternalistic institution: politicians have long ago come to the conclusion that sometimes, the people can't be trusted to know what's best for them. When the Democracy Deficit became too glaringly obvious, the Parliament was created, in the hope of eventually giving it more power. Unfortunately, many people across Europe seem to be using MEP elections to vote for the nutters and outliers who'd never be elected to their national parliaments, which means the 'mainstream' political parties and alliances are joined by fringes of Nazis and Communists, so, perhaps unsurprisingly, the EU has never gotten around to give the Parliament more powers. 
• Sovereignty. A lot of the other issues are often combined into one big grievance: can the UK claim to be a truly sovereign nation if it does not have absolute control over its borders / migration, the rights of its citizens, the rules its businesses and organisations have to abide by? It's a bit of an emotive topic. It's also a topic laden with a certain degree of hypocrisy - the same people who are Eurosceptic are often pro-TTIP and other trade deals, which have an equal or greater impact on sovereignty. When people bemoan the loss of sovereignty, my impression is they bemoan the instances where some condition is locked in by a multinational agreement that they disagree with, while often being just as keen to lock in a different condition through multinational agreements to give them longevity. So pro-business, anti-environmental-protection people are keen to surrender UK sovereignty in ways that benefit corporations, but hate any surrender of sovereignty in matters that restrict what corporations can do, and pro-environment, pro-socialism, anti-competitive people feel the opposite way. The EU is made up of enough nations that it will probably never be all-right-wing or all-left-wing. On the big matters, every nation can veto. (Incidentally, this is why TTIP is certain to fail: I can't imagine all EU member states ratifying it). The EU is the most centrist of organisations - it is all about compromise, it will never be right-wing or left-wing, and it will always be a break on the ambitions of far-left or far-right parties. This dooms Europe to be somewhat boring. Whether or not it detracts critically from the sovereignty of a country depends rather on how off-centrist its policies are. If the EU were a UK politician, it'd be Tony Blair.

Britain's Benefits

As the popular press is essentially Eurosceptic, the entire debate is framed in terms of Brexitter arguments. The Breuropeans, meanwhile, run a campaign based on the fear of uncertainty, without really putting enough effort into highlighting the benefits EU membership has brought.

The biggest benefit is free trade, prosperity and jobs. Aside from that one, here are some that are worth noting. 

• Developmental Subsidies. For the past few decades, the EU has put a lot of money and energy into Regional Development. Back in the 70s, CAP ate up almost the entire EU budget. Now, about half the EU money goes into supporting projects that are meant to help poorer regions of Europe develop. If you live in Wales or Northern Ireland, you probably walk past a dozen 'European Regional Development Fund' project logos every day, without noticing them. Colleges, Universities, leisure centres, infrastructure, heritage -without EU money, many developments would have required a sympathetic UK central government to put in cash. Arguably, Wales and Northern Ireland might be stuck at the same levels of deprivation as they were in the 1980s if it weren't for the EU.
• Livelihoods. Without the EU, the number of people able to make a living in agriculture in the UK would be much smaller.  CAP may exist because France would veto any attempt to scrap it, but without it, it's not just French farmers who'd find themselves out of a job, but the vast majority of British ones, too.
• Emigration. Hundreds of thousands of British pensioners have chosen to retire in the sun, in Spain, Portugal and other nations with a warmer climate. Thousands of Brits have become entrepreneurs and started businesses abroad - every time I visit a tourist hotspot, I find travel offices and tourist services staffed and owned by Brits. The UK has seen more immigrants than emigrants, but there are those who have made the most of the Free Movement of People, even from Britain. And, if you happen to have children, the best thing you could do is encourage them to learn a foreign language: university education in the Netherlands and Germany, for example, is free. They could save themselves £30,000 of tuition fee debts by going to university abroad.
• Environmental Protection Measures. OK, this is a controversial one. I think working towards sustainability and protecting the environment is fundamental to preserving our standards of living and should therefore not be a party-political issue, but I know that unfortunately, short-term-thinking is rampant in certain political circles. That said, restrictions on pesticides which are suspected of being responsible for bee colony collapses, and protection measures for air quality, seem like pretty sensible policies to me. If only the EU could be convinced to ban fracking... 
• Ease of Travel. Reducing hassle in terms of currency exchanges, and reducing the cost of roaming, may be small fry to some people, but they do make a difference. So does the EU policy on air travel compensation - as Europeans, we're the best protected people in the world when it comes to flight cancellations and long delays. European Health Insurance Cards, a common emergency telephone number that works across Europe (112), open skies agreements which let a British airline (Easyjet) and an Irish one (Ryanair) become Europe-wide juggernauts, two of the biggest airlines on the continent. 

Brexit Scenarios

So, let's think through the effects of different scenarios. Unfortunately, as the referendum question relates only to the EU, we can't know what the UK's negotiators would implement if the vote was for Brexit, but let's look at the options.

Britain leaves the EU, but stays in the EEA (by joining EFTA)

This would put Britain in the same category as Norway and Iceland.The big picture:

• Britain would reduce its contribution to EU running costs. 
• Britain would be out of CAP, so either British farmers would struggle to get by, or the UK would have to find a way to subsidise its farmers that would not bring it into conflict with the EU. (Funnily, free trade agreements are incredibly pernickety about what governments can and can't subsidise, and the EU is fiercely protective of its own farmers).
• Britain would be out of the Common Fisheries Policy and could catch more fish.
• However, to stay in EEA, the Free Movement of People provisions would continue to apply - no change to migration.
• Also, EU regulations would apply - Britain would no longer be able to influence the regulations, but it would have to accept them to continue staying in EEA. Red Tape reduction minimal.
• No change with regards to Human Rights and the European Court.
• To stay in EEA, Britain would have to start paying money to poorer European regions to help their development, under the Norway Grants scheme. As Britain's GDP is bigger than Norway's, Iceland's and Liechtenstein's (the other nations who have to pay into this), then the UK would allmost certainly have to pay more than those countries. None of it would go to Wales and other underdeveloped regions in the UK - it would go to Southern and Eastern Europe. 
• Addendum: Switzerland does not pay into the Norway Grants. However, I think it's likely the UK would have to. My reasoning is this: there's a set list of countries which receive Norway grants. If the UK tried to negotiate a Swiss style agreement with the EU, then all of those EEA Grant recipient countries would have a strong interest in opposing any deal that does not include sizeable UK contributions to Norway grants. Worse, as the UK's departure would reduce the EU's overall income, it would reduce the EU budget available for regional development, so unless the UK would be forced to put a good sum of money into the Norway grants, those recipient countries would lose income that they can currently count on. Countries like Greece, which narrowly avoided a Grexit by making painful concessions. Would the EEA Grant recipient countries be willing to effectively pay for Brexit? No way. So we're back to the Swiss option being a red herring for Britain: Europe would insist on UK contribution to regional development funding as much as it would insist on the free movement of people being a part of the single market.
• I can't put numbers on the cost - I guess the UK would pay less into Europe than it does now, but I personally don't see how the savings are worth losing the ability to shape European policies and veto those which the UK does not want. Also, those UK regions currently reliant on EU funding would have a hard time convincing a London-based government to replace the lost revenue.

The Switzerland option, by the way, is essentially the same as the EEA option. While Swiss politicians insist on describing theirs as bilateral agreements with the EU, they fully replicate EEA rules (including Swiss adherence to changing regs when the EU changes them), so it's in my opinion a red herring.

Britain leaves the EU but joins the Deep and Comprehensive Free Trade Area

This would put the UK in the same category as Georgia, Moldova and Ukraine. Essentially, this is EEA-light. It offers partial access to the Single Market (with trade quotas), but the requirements on nations are much lower, too. So, no free movement of people, less red tape.

The problem with such an approach is that the ball would be entirely in the court of the EU: all member nations would have to agree and sign it, so UK interests would effectively be outnumbered 25-1. It'd take just one nation to be angry with the UK's intransigence to scupper any possibility of a good deal for the UK. 

Imagine, for a moment, putting the UK's fortunes to a Eurovision voting process: how well would the UK fare? 

Britain leaves the EU but seeks an Association Agreement under the ENP

The EU has a number of Association Agreements with nearby countries as part of the 'European Neighbourhood Policy'. This would put the UK in a similar position, in terms of its links to Europe, as Morocco, Egypt, Israel and Jordan for example.

This would, again, put the UK at the mercy of EU goodwill, in terms of the terms it would get. This is where Michael Gove and George Osborne are having their punch-up: Gove believes Europe would offer a superb deal on a platter because of the trade benefits to Germany, France, etc. Osborne believes that they would apply punitive terms because every single nation would effectively have a veto over the UK's fate. 

Imagine, for a moment, how Romania and Bulgaria would respond to giving the UK a great deal, after the UK's efforts to make Romanians feel unwanted and discouraging them from coming to Britain. Or Greece, after the UK's insistence on not contributing anything further to bailouts. Or Spain, which isn't exactly delighted about Gibraltar... 

My best estimate is that, if the UK didn't opt for outright EEA / EFTA, the EU would offer the UK a deal so close to EEA as to be almost indistinguishable, or very little, if anything, at all. 

Basically, free movement of people would be a pre-requisite for access to the Single Market. Why? Because EU nations have hundreds of thousands of their citizens living in the UK, so they'd have to look after the rights of their existing ex-pats.

Facit

The likeliest future for a brexitting UK is something similar to EEA membership. This wouldn't reduce migration, it wouldn't reduce human rights cases, and it wouldn't reduce red tape. On the other hand, it would save the UK money, remove fishing quotas and almost certainly bring about major changes to UK agriculture.  It would also make it impossible for the UK to influence the rules it would have to abide by. Personally, I struggle to see how the financial savings and increased fish catch would be worth the loss of influence.

There is little middle ground between an EEA-like settlement and a huge distancing. As the UK's relationship would have to be agreed by all EU member nations, and as the timescale for exit would be short in EU terms (two years), the UK government would be forced to decide between an EEA-like arrangement (and therefore only a small increment of change to the current status quo), or a potentially disastrous distancing from Europe. I simply don't believe the UK would risk going it alone.

Other Consequences

Regardless of the big changes to trade and rules, there are some things which I believe Brexit would almost certainly affect.

• Loss of Regional Development Funding will make impoverished UK areas much more reliant on Westminster for their prosperity. This could make development much more cyclical, if different political parties take different stances on investment into developmental projects. 
• Some industries would suffer. For example, I strongly believe that Airbus Group would relocate its UK manufacturing facilities elsewhere. (E.g. the wings of Airbuses are produced in Wales). This wouldn't even be about trade and free trade. While Airbus is a private company, it is still incredibly political at heart, and very, very invested in the idea of Europe. Take Concorde for example: Airbus had been continuing to support and produce parts for the plane while both Air France and BA operated it. When Air France announced the retirement of its fleet, Airbus announced it would no longer support the plane. (Even if other companies bought Air France's fleet). The talk was all about financial sustainability, but really, it was a decision of (inter)national pride - Airbus would not support Concorde if only the Brits still flew it. If Britain votes for Brexit, I'm pretty sure Airbus would decide to remove itself from the UK - not for pure business reasons (although I'm sure they'd talk of the risks of further distancing & potential future impact), but because its corporate culture would not allow it to stay invested here. This could of course have a knock-on effect on other suppliers...
• Some stock market fluctuation and pain, across Europe. Stock markets don't like unpredictability or instability. For at least the two years of Brexit negotiations, the stock markets would be very volatile. (To be fair, they'd probably be even worse if Trump got elected in the USA). This doesn't have a huge immediate impact on regular folk, except of course, all our pension funds these days speculate on the stock market, so getting the annual reports might well be a bit of a tense affair for most of us! It's possible that some companies (all around Europe) would fold if their pension fund deficits become too big as a result.  

On the other hand, there are some things which would not change:

• Terrorism & security. Honestly, the idea that all the spy agencies would stop talking to Britain's, or, conversely, that leaving the EU would make Britain safer, is the silliest red herring of them all. That won't stop politicians and the media from implying or outright stating that there are security risks to staying/leaving, but they are vastly overstating any impact. 
• Existing Migrants. There would be no mass exodus of EU migrants living in Britain or British migrants living in the EU - certainly not while the Brexit negotiations were ongoing, and, assuming that sanity prevailed and the UK chose the EEA-style outcome, not thereafter. Of course, if UK severed itself from the common market entirely, then all bets are off.
• Most trade-reliant industries would not dis-invest radically from the UK. There would be a few exceptions, such as Airbus and other companies where the corporate culture is deeply invested in the European project. Again, the assumption is that the UK would remain more or less an EEA member. (Of course, if it didn't, then the effect would likely be catastrophic for the UK economy and cause quite big industrial departures - that's why I am fairly sure that the UK government would go down the EEA route)

My Recommendation

Predictably, I would encourage all my British friends to vote for staying in the EU. I don't think being an EFTA country instead of an EU country would really offer the UK the benefits that some people strive for. It would mean the UK would have to abide by EU policies without being able to affect them.

(Norway and Iceland are too reliant on their fisheries to join the EU, and Switzerland's politicians settled for the best they could achieve while their electorate kept voting against membership in referenda). 

I don't think the UK would opt for something very different from EFTA / EEA membership, because the EU simply would not put any amazing offer on the table, and access to the single market is too important. After all, if Swiss politicians and Norwegian politicians go as far as they can into Europe without violating their respective referenda directly, it seems extremely unlikely UK leaders would choose a different path. (Swiss referendum was about EEA membership, Norwegian referendum was about EU membership. In both cases, the population voted against membership, so Swiss leaders negotiated their EEA equivalent treaty which applies all the same rules & freedom of people, while Norwegian leaders stayed in the EEA - Norway was already a member)

Of course, this leaves a small but not entirely insignificant risk that, post-referendum, Britain's government might be sufficiently deluded and incompetent to throw the baby out with the bathwater (a Boris/Gove combo just might - though Boris Johnson is clearly not nearly as eurosceptic as his current speeches), which is why some senior Tories are already advocating that Cameron should stay & lead the negotiations if it came to a Brexit. I have no idea who will be governing Britain post-referendum, regardless of its outcome. But I'd wager that free movement of people, over-regulation and money flowing towards Europe are here to stay.

[edited 5th June 2016]