Vidya Ram

UK pushes referendum envelope

VIDYA RAM | Updated on March 12, 2018 Published on January 27, 2013

A possible referendum in UK on whether to quit EU smacks of short-term populism; UK’s interests may not be served.

It would be hard to blame continental European leaders for being spitting mad following last week’s pledge by British Prime Minister David Cameron to give Britain an “in out” referendum on EU membership by 2015. The region’s hard-fought-for strategy for getting itself out of the debt crisis it plunged into finally seems to be paying off: while 2013 is set to be a painful year for many, with jobless figures on the rise, and more austerity to come, there’s little doubt that the situation is a world away from the crisis year of 2012, when the very future of the Euro Zone seemed in doubt.

The European Central Bank’s decision last year to take the big leap and pledge to do “whatever it takes” within its mandate to save the Euro Zone through a programme of unlimited bond buying has also kept the lid on remaining uncertainties (will Spain ask for a bailout, and will the forthcoming Italian election result in a pro-austerity coalition?). It’s a moment when many are now preoccupied with other matters such as growth strategies. Not so in Britian where the big question has become whether to remain in the EU or not.

Reaction from the continent has ranged from the cautious (Italian Prime Minister Mario Monti expressing his hope that Britain would remain ‘in’) to the belligerent.

French Foreign Minister Laurent Fabius pledged to “roll out the red carpet” for businesses should Britain decide to leave the union – a cheeky dig at Cameron’s controversial quip about Britain being prepared to welcome high net worth individuals from high-tax France. Being part of the European Union was not an “ a la carte” menu, Fabius insisted.

Headlines across Europe expressed the frustration, fears and in some cases contempt of many of its citizens: “Will the Brits now destroy the EU?” asked German tabloid, the Express, while the usually moderate Spiegel magazine branded Cameron a “Scaredy Cat.”

An article in Spanish daily El Pais dubbed Cameron’s tactics akin to blackmail, while at the same time expressing fears that the loss of Britain would increase German influence over Spain even further.

CONTENTIOUS ISSUES

Business has been cautious in its response: Predictably, the most grounded reaction has come from German Chancellor Angela Merkel, who signalled her willingness to talk to Cameron about his “specific” agenda and find a “fair compromise”, while at the same time making it clear where she believed her and Europe’s priorities should lie – namely with budget planning, the “basis of growth” for Europe. A measured combination that makes Cameron’s demands look all the more petty.

Merkel is right to ask for specifics, as these were notably lacking from Cameron’s landmark speech.

While he did point to some of the common gripes in Britain – the power of the European Court of Human Rights and some of its recent decisions such as giving prisoners the right to vote, the multi-layered bureaucracy of European Commission, and its high spending levels, and European level regulations governing the labour market – he’s yet to unveil the kind of reforms he’ll be looking to push through before the referendum takes place (Cameron insists that pushing the date to 2017 leaves enough time for Britain to negotiate changes and give its citizens a fairer view of the Europe that they will choose to be part of, or not part of).

Some of those which he hinted at – his reference to the labour market is believed by many to signal his eagerness for Britain to be able to opt out of the EU’s Working Time Directive, which gives a right to work no more than 48 hours a week to individuals – are highly unlikely to succeed, given the strong support for them in countries with strong traditions of worker protection such as France (not to mention the competitiveness issues they would pose for the rest of Europe, should one country be allowed to opt out).

There are also a lot of “ifs” between now and a potential referendum – including a general election in 2015. Both Labour and the Conservatives’ coalition partner, the Liberal Democrats have stressed their opposition to an “in out” referendum. Cameron has repeatedly declined to comment on what would happen if the changes he is pressing for aren’t accepted by other member states.

Not everyone sees the British developments in a negative light: a recent piece on Danish broadcaster DR notes that elsewhere in Europe, where voices critical of the European project have become increasingly vocal, including in Denmark, the British debate could be a wake up call for pro-Europeans, prompting them to set out their case more clearly to the public.

Others hope that it will force Europe to confront some of the problematic aspects of the existing system: For example, the high spend of the Commission at the same time that nations are being forced to retrench their welfare systems, and introduce painful austerity measures.

DIFFERENCES WITHIN BRITAIN

In reality, despite the short-term political capital gained by Cameron domestically as a result of his referendum pledge (pressure from the increasingly popular UK Independent Party and members of Cameron’s own party left him with little room for manoeuvre) it is not the rest of Europe but Britain that will suffer the most, in the period of uncertainty that ensues.

British business organisations have been cautious in their response – recognising the need for reform while at the same time stressing that the single market will be crucial to Britain’s success.

In a letter to The Times, 55 business leaders, including London Stock Exchange CEO Xavier Rolet and Paul Walsh, the head of Diageo, also welcomed the attempt to wrestle reforms from Brussels.

The reaction of non-EU states, including the US tell a different story – President Barack Obama has been blunt in his message that despite the so-called “special relationship” between the two countries, it is a “strong” Britain in a “strong Europe” that it wishes to engage with. A result that Cameron may be counting on, but is far from guaranteed.

Published on January 27, 2013
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