Will Britain and Germany Get a Divorce?
In the friendliest possible way, German Chancellor Angela Merkel made it clear this week that she and U.K. Prime Minister David Cameron have essentially incompatible views about the future of the European Union. This wasn't much of a surprise: After all, the same goes for the country's respective electorates. The question is whether these incompatibilities can be tolerated, or whether they'll force a divorce.
Cameron haspromiseda referendum in 2017 on the U.K.'s membership in the EU -- membership on new terms, he hopes, to be negotiated if he wins re-election next year. He has said he wants fundamental reforms that would move some of the powers previously granted to Brussels back to national governments. Merkel, addressing both houses of the U.K. parliament, offered no reason to think this will happen. "Some expect my speech to pave the way for a fundamental reform of the European architecture which will satisfy all kinds of alleged or actual British wishes. I am afraid they are in for a disappointment," she said.
Germany wants the U.K. to remain in the EU and play a central role, Merkel added, and she undoubtedly meant it. She and Cameron are both politicians of the center-right and natural allies on many aspects of policy. Maybe there's scope for flexibility in the application of certain EU directives to Britain -- or so she's been interpreted as saying. But the big rethink of the EU's constitutional arrangements that Cameron says he wants isn't in the cards.
That's a pity. The EU's constitutional arrangements are a calamity. Europe created a monetary union without the popular support or the fiscal and constitutional architecture necessary to sustain it, and the results have been disastrous. A new constitutional blueprint is needed to rebalance the distribution of powers. To make the monetary union work, members of the euro area need closer coordination (meaning less national sovereignty) on the macroeconomic aspects of fiscal policy; in other areas, the reach of EU policy-making needs to be reduced in order to restore the democratic connection between voters and the people who wield power over them.
The tension between those two principles is obvious. Whatever happens, resolving it won't be easy -- but it would at least be possible if the constitutional design could be revisited with open minds. However, now that it has 28 members, each with the power of veto over treaty changes, the EU is too big and unwieldy to embark on that exercise willingly. It's a can of worms most governments -- maybe all except Britain's -- just don't want to open.
Aside from being in a minority of one, Cameron has suspect motives as well. Europe understands that he isn't guided by the desire to fix the EU's design, even though he's right that it needs fixing. His purpose is more prosaic: With domestic politics at the front of his mind, he's trying to manage therift in his own party between pro-EU and militantly anti-EU factions. Politicians in the rest of the EU are entitled to ask, "So to help him do that, Europe should reinvent itself?"
It won't. Chaotic muddling through -- the characteristically European approach -- will be the way forward. To be clear, this needn't mean economic collapse or enormous political upheaval. Something less dramatic is more likely: With its fundamental defects unaddressed, the EU will stay prone to crisis and continue to underperform.
Whether Britain should remain a member of this chronically dysfunctional group is a close call. On the plus side, the U.K. opted out of the euro system, sparing itself the consequences of that egregious error. In addition, it has a lot to lose from quitting the union if the other members decide to punish the rebel, for instance by withdrawing its trade privileges. (Of course, that would be against the EU's interests too -- but that's a frail basis for optimism.)
Nonetheless, it's a close call because the long-term drift of political power in Europe is likely to be toward, not away from, Brussels, and that's something the British will resent. Historically, entrenched bureaucracies gather power rather than relinquish it. Also, further centralization -- "integration," as it's called -- is the natural implication of repeated ad hoc policy fixes, whether voters like it or not. If the Brits don't care for the EU today, they'll like it even less 10 years from now.
If the EU is no longer capable of standing back to ask where it's headed and whether it wants to go there -- and that's what Merkel said, in so many words -- it's moving in a direction that the U.K. won't like. At some point, the only remedy for irreconcilable differences is divorce.
(Clive Crook is a member of the Bloomberg View editorial board. Follow him on Twitter @clive_crook.)
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