The Leave side in the British EU referendum campaign has consistently accused its opponents of scaremongering. To be fair, the Remain side has good reasons for expressing concerns about Brexit.
Elsewhere I have argued that the economic costs to the UK of leaving the EU would be very significant over both the medium and long run. What makes the Leave side’s argument so weak is that it has not articulated a coherent and realistic vision of what life outside the EU would mean for the UK.
But we should also recognise the important and positive role the EU and its predecessor institutions have played in enhancing peace and prosperity for the UK and the whole continent in the last 60 years or so.
The then French foreign minister Robert Schuman, one of the founding fathers of the project, argued in his landmark Schuman declaration of 1950 that the goal should be to make war between historic rivals France and Germany “not just unthinkable, but materially impossible”.
The political leaders of the European Coal and Steel Community of 1951 and the European Economic Community of 1957 envisioned gradual political integration founded on economic solidarity and well-being. As made clear in the preamble of the Treaty of Rome which established the EEC, they sought “to ensure the economic and social progress of their countries by common action to eliminate the barriers which divide Europe…”
The treaty referred to the need to “guarantee steady expansion, balanced trade and fair competition” and to ensure “harmonious development by reducing the differences existing between the various regions and the backwardness of the less favoured regions”. As the Schuman declaration explained:
Europe will not be made all at once, or according to a single plan. It will be built through concrete achievements which first create a de facto solidarity.
The difficulty for the EU is that it abandoned this approach of placing the interests of its people ahead of the interests of its institutions. Some of this was well-intentioned, if rather unquestioning.
The EU created a single currency without the fiscal union and institutions to manage the growing imbalances in member states’ finances and trading positions, albeit in an era where global financial crises were seen as very unlikely. The difficulties this has caused in countries such as Greece has called into question the democratic nature of the EU’s institutions.
This is an area where Leave campaigners do quite a bit of scaremongering of their own. They falsely conflate leaving the EU with avoiding future problems of the eurozone and future EU enlargement.
The UK government’s renegotiation with the EU, which would be triggered by a Remain vote, addressed the first issue: the evolution of the single market and other decision-making within the EU will not now be driven by the eurozone economies, but will involve all 28 member states. The UK will also not be liable for any eurozone bailouts. As for the accession of any new member, it requires agreement from all existing EU members.
Yet a more powerful positive case can be made for reform which returns the EU to its early principles. Institutions matter greatly for economic outcomes. In their pioneering book, Why Nations Fail, the economists Daron Acemoglu and James Robinson show the importance of a strong social consensus in driving economic outcomes.
Their arguments are particularly relevant in a supranational grouping like the EU, where you need more inclusive institutions to mitigate the risk of continued social and economic progress being undermined by conflict. Indeed, I would argue this is precisely what the fathers of the EEC had in mind.
Blueprint for reform
So what might a future EU look like? One can begin to sketch out three major themes. First, dealing with the eurozone crisis. The Five Presidents’ report of 2015 sees deeper fiscal and economic union as the only answer for the countries within the eurozone to overcome the imbalances which threaten the euro.
Yet a group of economists has suggested you could avoid this further erosion of sovereignty in the short term by restructuring members’ sovereign debt. In tandem, you would reduce the exposure of eurozone banks to this debt and strengthen the existing European Stability Mechanism, the agency set up to lend money to struggling members and their banks.
A second change should be to give national parliaments a greater voice in future decision-making. The Cameron government renegotiations include the so-called “red card” procedure. This enables a group of 16 national parliaments to force a review of proposed EU legislation on the grounds it would be better handled at national level. This is tougher on the EU than the existing “orange card” and “yellow card” procedures since it has a reaction deadline of 12 weeks as opposed to eight and introduces the possibility of the legislation being dropped altogether as opposed to merely amended.
“Red card” could further be extended beyond its current restricted parameters, while the threshold could be lowered from the current 16 parliament/55% majority to the same 35% level as the Council of Ministers’ blocking minority vote.
Finally, a Remain vote could provide a platform for a more flexible union. It is not uncommon for countries in Europe to delegate different functions to regional or devolved tiers of government – for example in Spain, Italy and the UK itself. The UK has granted devolved powers to Scotland, Wales and Northern Ireland, for instance. In Italy some regions have statutes (“regioni a statuto speciale”) which grant them particular legislative and financial autonomy. A similar multi-level approach could be taken for the EU, with groups of countries adopting different levels of integration from other neighbours within the union.
The UK could play a major and important role in reforming the EU’s institutions from the inside. By voting Leave and sitting on the sidelines, it would be unable to influence these important debates and yet would still be affected by the economic spillover in a continent we will always belong to. It’s an argument for remaining that has nothing to do with fear.