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The U.K. Doesn't Have a Plan, But the EU Does

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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It's not clear at this point whether the winners of the Brexit referendum have any kind of plan for ending the U.K.'s membership of the European Union and starting a post-divorce life. None of the "Leave" campaign leaders has taken responsibility for the vote's consequences, including Boris Johnson, the leading candidate to be the next Prime Minister. He claims everything will be as before, except the U.K. won't be subject to EU laws and it'll get to keep the money it has been paying into the European budget. By contrast, the EU has defied its reputation for waffling: It does have a plan, as well as people willing to put their signatures to it.

QuickTake Why Britain is Leaving

The three days since the vote have been enough for Jean-Marc Ayrault and Frank-Walter Steinmeier, the foreign ministers of France and Germany, to come up with a nine-page document proposing a post-Brexit path for the EU. Clearly, there was more contingency planning in Paris and Frankfurt than in London ahead of the U.K. decision.

The two-speed response in the U.K. and in Europe may reflect the relative weakness of the EU's position and the relative strength of the British one. Until the U.K. triggers Article 50 of the Lisbon treaty to begin the formal exit process, the EU is a lame structure: Many of its decisions require the consent of all members, and the U.K. has veto power without any of the responsibility that comes with it. Johnson appears to be willing to use this, while EU leaders are urging the U.K. to move quickly and start formal talks. A chief negotiator for Brussels has already been appointed -- Didier Seeuws, a former spokesman for Guy Verhofstadt, Belgium's ex-prime minister and one of the staunchest European federalists around -- but there's nothing to negotiate until the U.K. gets a new prime minister and implements the referendum's decision.

Regardless of the U.K. situation, however, the EU can essentially refound itself as a closer union of like-minded nations. That appears to be the essence of the Steinmeier-Ayrault proposal, which starts by acknowledging that Brexit is a watershed moment for the EU and a chance to stop the rot eating through its foundations:

"The British case is unique. But we must also acknowledge that support and passion for our common project has faded over the last decade in parts of our societies. Neither a simple call for more Europe nor a phase of mere reflection can be an adequate answer. To prevent the silent creeping erosion of our European project we have to be more focused on essentials and on meeting the concrete expectations of our citizens. We are convinced that it is not the existence of the Union that they object to but the way it functions. Our task is twofold: we have to strictly focus our joint efforts on those challenges that can only be addressed by common European answers, while leaving others to national or regional decision making and variation. And we must deliver better on those issues we have chosen to focus on."

This suggests a willingness to allow more devolution and a concentration on a few issues that EU nations can resolve better together. Yet the content of the ministers' proposals amounts to an invitation to move toward a federation. Those EU member states that do not share that goal are told they can stay on the sidelines -- the project is only for the willing.

Ayrault and Steinmeier singled out three areas in which France and Germany would pursue a joint course of action: Security, a common border and immigration policy, and a fiscal union for euro area nations.

The document talks of giving the EU an ability to plan and conduct military operations through a "permanent civil-military chain of command." A standing EU maritime force and "EU-owned capabilities in other key areas" are proposed, as well as an EU intelligence-sharing framework. Given that France and Germany are derelict in fulfilling their commitment to the North Atlantic Treaty Organization to keep military spending above 2 percent of economic output, they show a surprising determination to create a costly parallel defense structure alongside NATO.

The two ministers propose giving Frontex, the EU border agency, a permanent staff and all the necessary equipment to serve as the common border police force. They also want to adopt common immigration and asylum laws, including a European Immigration Act "that clearly states what the legal options are when it comes to working in Europe, taking into account the different states of national labor markets in the EU."

Steinmeier and Ayrault said France and Germany would undertake a joint initiative to turn the euro area into a closer-knit union by harmonizing regulation, oversight and corporate tax schemes. The end goal is a fiscal union, which would start to "support investment in the member states most severely hit by the crisis" by 2018. The ministers propose that the Eurogroup -- currently a conclave of euro area finance ministers that develops policy decisions -- gets a full-time president who would be accountable to a special parliamentary body, comprised of European parliament and national parliament members. 

All told, this amounts to a superstate with a kind of elected parliament and a government with a broad economic and security mandate. At a time of unity erosion, this doesn't sound like a realistic way to proceed -- except the proposal stresses that dissenters will be able to opt out of these state-building efforts. 

On a common refugee policy, the statement says, that "if necessary, Germany and France stand ready to proceed on this matter with a group of like-minded partners." And as far as a fiscal union goes, the two countries are willing to start with bilateral agreements to set an example for others.

The proposals are no milquetoast call for unity in tough times. They are an exhortation to EU partners to grow up and build a real union as a response to the U.K. abandoning the European project. The document doesn't quite suggest that the biggest of the union's founding members will pursue this course regardless of whether others agree with them; it isn't a "whoever's not with us is against us" declaration. Yet, given the circumstances under which it appears, it does signal a willingness to move forward as a smaller group, perhaps a smaller one than the EU-27. 

In the Brexit case, the EU is the jilted party. The hurt of being left can be a constructive force, as anyone who has gone through a divorce will know: It can strengthen one's resolve to make tough decisions and stop being nice to those who are holding back one's progress. If the leaders of France and Germany have the guts to follow through on the two ministers' plan, Brexit will have contributed to the EU's strengthening. It's time for smaller and less economically powerful nations to decide whether this is the path they should take, sacrificing more of their sovereignty for the promise of more economic support from the bigger economies.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:
Mark Gilbert at magilbert@bloomberg.net