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Brexit

How the EU Can Avoid Fracturing Further After Brexit

David Cameron's two-tier vision wasn't actually a bad idea.

Now that Britain has formally notified the European Union of its intention to quit the bloc, it's worth revisiting the path that led to Brexit. In short, the EU's own role in blowing hot and then cold on the need for reform makes efforts to demonize former Prime Minister David Cameron for naivety, foolishness or hubris unfair. In particular, recognizing that there was merit in one of the U.K.'s key criticisms of how the EU operates could have averted Brexit.

Brexit

Cameron had spent years preparing the ground for the U.K. plebiscite on EU membership. In June 2012, he wrote in the Sunday Telegraph that he was "not against referendums on Europe." Speaking to BBC Radio 4 in October of that year, he said securing a "fresh settlement" on Europe would be "the cleanest, neatest and simplest way of doing things." A week before making his referendum promise, Cameron defended his decision to raise the question of Britain's EU membership, in an interview with the British Broadcasting Corp.:

This debate is happening anyway. We have a choice as politicians: do we get out there, lead the debate, make a choice that I think will be right for Britain and right for Europe, or hide your head in the sand?

I was in the audience on Jan. 23, 2013, when Cameron delivered the speech at Bloomberg's London office promising to hold a referendum by late 2017. I commented to a colleague that what we'd just witnessed was either a political masterstroke that would silence the euroskeptics in Cameron's party once and for all or a dangerous gamble with Britain's EU future. I was agnostic on which.

At the time, though, polls by YouGov found about 40 percent of respondents saying they would vote to stay in the EU compared with 34 percent who'd vote to leave, in line with what they'd shown the previous year. So the risk of losing the vote looked minimal.

More important, other EU leaders including German Chancellor Angela Merkel had led Cameron to believe that they would back him in seeking treaty amendments that would resolve the increasingly fractious relationship between the 19 members of the euro and the rest of the EU. Ivan Rogers, the U.K.'s former envoy to the EU, told lawmakers last month that Britain thought it had "a cast-iron guarantee, as we saw it, which would lead to the sort of two-tier vision" Cameron was seeking.  

The testimony Rogers gave to the U.K. Parliament's European Security Committee on Feb. 1 is very instructive about the EU backdrop to Cameron's promise of a referendum. Rogers, whose January resignation letter accused the government of "muddled thinking" on Brexit, acknowledges that the EU was unlikely to bend on the issue of immigration, with the U.K.'s efforts to impose benefit restrictions on incomers likely to be viewed as discriminatory. But on the broader issue of the relationship between the core countries and the rest of the EU, Rogers suggested that Cameron was most of all a victim of changing circumstances outside his control:

At the time, he was talking to Chancellor Merkel and others about the possibility of some specific surgical Eurozone treaty changes in conjunction with U.K.-related treaty changes. That looked quite an optimistic prospect in 2012/2013. She tried on the euro zone side, I won't bore you with the details, in various European councils in 2013, but it became increasingly evident that the time was not right in 2015/2016 for a major German or other push in conjunction with anybody for surgical strike euro zone treaty changes. So the appetite in other capitals, and in the key capitals and in the institutions for any sort of permanent institutional treaty change before the end of 2017 disappeared. So that was what the prime minister was faced with after 2015, having nevertheless in his manifesto given a commitment that there would be an in-out referendum.

In a March 2015 interview with the Financial Times, two months before winning a Conservative majority in that year's election, Cameron summarized his immodest ambitions:

Cameron says he hopes to be remembered as the prime minister who resolves the country's two existential questions in the first part of the 21st century. "One is, does the United Kingdom want to stay together? Yes. Secondly, does the United Kingdom want to stay in a reformed European Union? Yes."

With Brexit now a reality, and Scotland's Parliament voting this week to seek a second referendum on independence, Cameron's legacy is in tatters. He resigned immediately after the Brexit result. Speaking in Ukraine this week, he defended his decision to hold a vote, saying "I thought it right to hold the referendum because this issue had been poisoning British politics for years."

While his attempt backfired, one of the key issues he tried to get the EU to agree to reform on -- what Rogers defined as "not a two-speed Europe where you're trundling on a slow train to the same destination, but a two-tier Europe where you say we're happy with a market-based membership living on the outer tier but we don’t want to be a member of a significant chunk of the rest" -- is becoming mainstream thinking. Here's European Commission President Jean-Claude Juncker speaking earlier this month:

In order to save the substance, we should try to imagine a system where some member states are making some progress because they are sharing the same ambitions and they want to reach the goals they agreed upon. Others will join later. That’s not my favorite scenario. But having a look at what is happening in the European Union, I can hardly see that all the 27 member states -- and later on more than 30 because the Western Balkans will join the EU some day -- we have to become used to the idea that we are no longer doing everything together, although I would like us to do everything together.

It's too late to keep Britain in the EU. But if the bloc wants to safeguard its future, it needs to embrace the multispeed approach Cameron espoused, with an outer coterie of countries enjoying the benefits of frictionless trade while an inner circle of euro members embraces common bond sales, a centralized European treasury and ever-closer union. Otherwise, Britain may simply be the first in a series of EU exiters.

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:
    Mark Gilbert at magilbert@bloomberg.net

    To contact the editor responsible for this story:
    Brooke Sample at bsample1@bloomberg.net

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