20 April 2014

The UK needs a plan in the event of a Remain vote

If the UK votes to stay in the EU in the upcoming referendum, it will need a vision and plan for its role within a changing EU, something Remain campaigners and the UK Government have yet to set out. The UK-EU negotiations made clear the UK Government’s desire not to be bound by ‘ever closer union’ and David Cameron has said that “there is still more to do” to reform the EU, so how can this best be achieved if the British public votes to Remain?

Open Europe has therefore published a joint report together with the Freedom Institute, a leading Polish think-tank, setting out Polish and British visions for the future of the EU. The report identifies areas of consensus and mutual interest which could form the basis of a common British-Polish agenda for further EU reform in the event the UK remains a member. Poland is already an important player within the EU and as the second largest non-Euro member state, it ought to be a particularly important EU partner for the UK.

This report is not an endorsement of Remain, but an attempt to prompt debate about the broader strategy the UK should try to pursue in the event of continued EU membership in order to maximise the economic benefits, while safeguarding its interests as a non-Euro member. As such, this report is a natural counterpart to our liberal, free market Brexit guide setting out the policies we believe the UK would reasonably have to adopt in the event of a Leave vote.

A more flexible EU to manage differentiated degrees of integration and divergent national democratic preferences

Poland and the UK both recognise the need for ‘variable geometry’ – different levels of integration – in the EU. The UK will not join the Eurozone and has declared it will not be bound by ‘ever closer union’ within the EU. Poland will not join the single currency for some time, although it wants to retain this as a long-term option. Differentiated integration has become reality, and it would be counterproductive to enforce artificial unity among the member states. The real challenge therefore facing the EU is to learn how to live with these differences and how to manage them effectively instead of trying to eliminate them.

Poland and the UK share an interest in a stable and prosperous Eurozone and this is likely to entail its further political integration. At the same time, this cannot happen at the expense of the best interests of the single market which remains the glue that holds the wider EU together. We identify the financial, capital and labour markets as potentially most crucial areas and the most vulnerable in terms of relations between Eurozone und non-Eurozone countries. Hence a more inclusive form of decision making is needed in these areas.

If the EU does not address its crisis of democratic legitimacy, it will not be able to emerge from the economic and social crises it faces. However the Eurozone develops in the near future, countries outside of it will require a different arrangement. This new arrangement will need democratic approval, a form of contract between national electorates, their governments and the EU institutions. The emergence of a flexible, ‘multi-form’ EU is the best hope of reconciling the inevitable comprises of national sovereignty entailed in European cooperation with national democratic consent.

Safeguarding and expanding the single market

Not only does the integrity of the single market have to be protected, more needs to be done to exploit its full potential in areas like energy, digital, and above all in services. This is a dynamically growing area within national economies, but there are still too many barriers to cross-border EU trade. At the same time, it is important to remember the single market is built on a range of national economic and social models. There should be no attempts to force one-size-fits-all policies in areas like labour market regulation. Such an approach would not only recognise national democratic preferences, it would also facilitate innovation and allow examples of best practice to spread throughout the EU naturally through national competition.

This European Commission has made some progress in reining in the flow of new regulations, however more needs to be done to remove unnecessary red tape and there needs to be an even greater focus on rolling back growth-hampering regulations  on SMEs and microenterprises.

An EU budget for the future, not the past

The EU budget remains poorly designed with far too much money invested in relatively low-productive areas of the economy. EU spending needs to be overhauled with a greater focus on areas decisive for the sustainable development of the single market. Obviously some member states will still use funds for the needs of their agricultural sectors.  Such interests cannot however dominate the next financial framework. We need an EU budget for the future, not the past. The design of the budget should closely reflect the real development needs in countries like Poland and other Central and Eastern European member states where better infrastructure is key to being better able to compete in the single market. Research and innovation should also be a priority – this is an area where the UK is particularly strong, and which is extremely important for countries like Poland to put its economy on a path towards a more independent and sustainable form of development.

A secure Schengen area and a realistic foreign and security policy which does not seek to usurp the role of NATO

For Poland, the border-free Schengen area is perceived as an essential benefit of European integration. This makes its future one of the most vital interests of Poland’s EU policy. A stable and functioning Schengen area is important not only to ensuring the security of its members, but also of countries that are not taking part directly in the project, including the UK. However the precondition for this is the ability and willingness to restore full control over the Schengen area’s external borders, a task the UK could potentially assist in.

When it comes to foreign and security policy, the EU cannot replace nation states and neither should it attempt to by institution-building for its own sake. Neither should it seek to usurp the role of NATO in terms of military security. However, the EU can add value when it serves as forum for member states to address competing interests and to try to formulate joint approaches to common challenges such as Russia’s aggression in Eastern Ukraine or the migration crisis.

In the past, the EU has successfully used enlargement as a foreign and security policy tool to bring stability and increase prosperity in its neighbourhood. However, in view of enlargement fatigue, the traditional model of enlargement has reached its limits. The EU therefore needs a new, more realistic alternative to its ‘all or nothing approach’ which entails greater market access and political co-operation alongside some level of financial assistance but without the rights and responsibilities that come with full membership. This could complement the emergence of a ‘multi-form’ EU and be a solution to the EU’s engagement not only with the likes of Ukraine, Turkey and Northern Africa, but also richer and more developed states such as Norway and Switzerland which have decided against EU membership.

If you cannot see the PDF reader below, please see here for the full report. 

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