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Wednesday, January 27, 2016

Simulating Brexit

Most people are fed up with the way television presents “big issues” – either short soundbites or spokesmen for two extreme positions lined up to bash one another over the head with platitudes..
The Eurosceptic website Open Europe offered a brilliant example yesterday of an alternative format – that of Wargames – in which people are given a role to play in a simulated exercise whose object is to identify weak points in one's own and “enemy” positions.

Yesterday’s Open Europe exercise was about Brexit – with the morning being devoted to the  current negotiations and the afternoon to the scenario that the British people vote for withdrawal from the European Union. Such events require good prior briefing – and this is Open Europe’s excellent 24 page briefing. A short summary of the key moments and exchanges is here  
And this is the full event - for those who have 6 hours to spare!

I am no friend of the European Union – despite (or rather because of) my two decades of working on its programmes since 1990. And I was an early visitor in the mid/late 1970s to the British Commissioners at European Commission HQ (eg ChristopherTugendhat) and helped establish in those days a high profile for Strathclyde Region in the EU …I was not one of the Labourites (like Tony Blair) who supported the 1983 Labour manifesto for withdrawal – although by then I was getting a bit testy about the claims Europe was making for its funding programmes (whose financial input the British exchequer was quickly deducting from its budgetary support to the Region).
My experience in the 1980s of a variety of European working groups also made my very impatient with the overblown rhetoric of not only southern partners but with that of the French….it appeared that we talked easily only with Danes, Dutch and Germans…..

Most British newspapers have fed their readers for decades with tales of European bureaucracy – to the extent that its citizens seem now incapable of a serious discussion.

Few British people therefore appreciate that a vote for withdrawal would still keep them effectively bound up in the same set of regulations they profess to revile – as part of the “competition strategy” on which Britain has, ironically, led the pack….. 

About a dozen key points emerged from the Open Europe war game yesterday - 
None of the UK’s reform demands are considered easy- With nearly all of the (British) press coverage of the UK-EU negotiations focused on the demands to restrict EU migrants’ access to welfare, there is a perception that the other demands are comparatively easy. However, our negotiations suggested this is to underestimate the complexity and political sensitivity of other key issues. Reaching a UK-EU deal in February may not be as straightforward as some assume.  In Britain, the debate about whether all member states should be subject to a centralising interpretation of ‘ever closer union’ is often seen as anachronistic, symbolic and abstract.
However, the emotional commitment of others to the integrationist ideal should not be taken lightly. As former Irish Taoiseach John Bruton noted, “Small countries like Ireland see the EU as community of law and mutual solidarity…Removing the commitment to ever closer union would be like removing EU's emotional cement.”    Meanwhile, former German Deputy Finance Minister Steffen Kampeter described the idea of a ‘red card’ for national parliaments to block EU legislation as “crazy”, pleading with Britain to “please take that off the table.”
Perhaps predictably, the UK’s demand for greater EU ‘competitiveness’ was the least controversial, although even this prompted a fierce debate about why the EU was seen to overregulate – is it the fault of EU institutions such as the European Commission or that of the member states who often demand greater regulation?
Some states are ready to discuss fundamental structural reform, but others are not It is tempting to see the negotiations as a battle between the UK and a cohesive EU bloc, and as the UK is the demandeur in these negotiations, there is much truth to this. However, our simulation highlighted that other member states have very different views of how the EU should develop in the coming years. Enrico Letta, the former Prime Minister playing Italy, saw the UK’s reform drive as an opportunity to establish a ‘two-circle’ EU with different rights and responsibilities for those countries that want to integrate further and more flexibility for those such as the UK that do not. He hoped Switzerland might be tempted to join an ‘outer circle’ and that the ‘inner circle’ would make progress on wholesale reform of the Eurozone.
 But others – notably Germany, the Netherlands, and (for now) France – were for various reasons unwilling to countenance such a radical shakeup of the status quo.  
UK ideas lost in translation?  In the reform session, our continental negotiators all stressed their willingness to be helpful and make concessions to keep the UK in. However, certain topics (migration and welfare in particular) revealed how differently the British see things to their EU partners. To understand the opposition that many EU states have to any form of ‘discrimination’ between UK and EU nationals on access to welfare, you just had to witness how many around the table were shocked that the UK considers the free movement of EU citizens as ‘immigration’ at all.
However, for the British, as Sir Malcolm Rifkind said, this is a political issue where pragmatism should prevail. He noted that EU states and recent EU court rulings had established that it was perfectly possible to discriminate between your own and EU nationals when it comes to accessing out of work benefits and that Denmark had been granted special dispensation to apply restrictions on (predominantly Germans’) purchase of holiday homes on its territory.

Today (18 February) a full report was issued of the event and some conclusions draan

Sadly, most British viewers will dismiss the event as yet more proof of how impossible the EU is - after all all the "actors" (bar Norman Lamont and Rifkind) - were prominent fans of the EU. But the simulation was important in giving real emotional strength to European arguments we too often hear through the prism of British editorial spin....Other important points were -
 Member states hiding behind the Commission and the EU Treaty - In the game as in life, there seemed to be a significant number of member states using the European Commission as a defence mechanism and hiding behind bureaucracy to avoid some difficult political decisions. This was particularly true on the issue of EU migrants’ access to benefits where the Commission insisted no discrimination is possible, despite the UK player highlighting that law and treaties can be changed if there is the political will – it is in the end a political decision, EU law is not holy writ.  
Some states hope this renegotiation will settle the issue - During the reform session the Irish player asked, “Can we be sure that you won’t be coming back looking for more in ten years’ time?” He went on to add that he hoped the matter “would not be reopened again…we can’t live with this sort of uncertainty.”
Given the nature of the negotiations during the game and in reality, as well as the tight result expected, it seems unlikely this referendum will settle the issue.
Furthermore, as was noted by others during the session, Europe is changing and the issue of reform is not a one shot deal. Therefore, demands by other states for this to be the end of the UK’s reform push or the end of questions around the EU’s structure are likely to be sorely disappointed.  
This is going to be emotional either way - Both the reform and the Brexit sessions roused passionate exchanges. “You were our best friend, and we had a marriage. Now we are divorced,” was how former Swedish Trade Minister Ewa Björling reacted to Brexit, lamenting the loss of a liberal, free-trading ally. We lost count of the number of times that Brexit was likened to a messy divorce.  The Netherlands’ representative, former Social Affairs Minister Aart Jan de Geus, noted that while the Dutch public might expect its politicians to be rational about Brexit, the politicians are likely to be irrational and this could result in ‘sub-optimal’ outcomes for all concerned.  
There was a sense that the rancorous response of continental negotiators was not simply driven by the shock and anger of being spurned by Britain. It also revealed the vulnerability of the EU post-Brexit. The Spanish player summed up the potential impact of British withdrawal on the EU as, “A tsunami would be a very small thing compared to what would happen with a Brexit.” The German player said, “There is no such thing as a free lunch. Brexit is something which does not only affect you but affects our country.” Furthermore, some of the resentment appeared to be due to the fact that other EU member states felt they had spent time and energy trying to reach a viable deal with the UK – but that deal had then been rejected by voters.  

The afternoon session contemplated the scenario of life outside the EU - with the UK player, former Finance Minister Lord Norman Lamont,suggesting the best approach would be to seek a comprehensive free trade agreement, citing the EU deal with Canada as a good starting point since it removes almost all tariffs on goods and agriculture. However, given the links between the UK and the rest of the EU, clearly things would be more complicated. This led him to propose a ‘Canada+’ style agreement which could see such a deal extended to cross-border services, including financial services, with the UK expressing some willingness to compromise by granting EU citizens access to the UK labour market and providing some contribution to the EU budget in exchange. Ultimately, the UK will have to figure out what it wants outside the EU, but Lord Lamont’s opening pitch was a strong attempt to lay out the potential terms of a new relationship, which the Leave campaigns have been reluctant to spell out so far.  
Sending a message not to follow the example of Brexit - One of the more revealing moments of the Brexit discussion was the message that the Polish player Leszek Balcerowicz, a former Deputy Prime Minister, wanted to send to others that might seek to follow the UK’s example. “The common interest of the remaining members is to deter other exits”, he said, and added, “This should have an impact on the terms Britain gets – they should not be too generous.” Lord Lamont responded that this was a strange reaction from what was supposed to be an organisation based on the premise of mutually beneficial cooperation.  
Brexit would add to the EU’s list of crises -While some players warned that doing a post-Brexit deal with the UK would not be a top priority – perhaps as a negotiating ploy – former EU Trade Commissioner, Karel de Gucht, playing the role of the EU institutions, disagreed, saying that in reality a new trade deal with the UK would become the EU’s “top political priority.” This did not mean the UK would get an easy ride though, he warned.  
Perhaps Enrico Letta summed it up best when he said that “We are discussing as though the European Union is the centre of the world. That is no longer the case. In case of Brexit, we risk having years and years of discussions and wasting energy, time and money when the rest of the world will run without us…We have to look at the big picture – the rest of the world is not waiting for us.” For an organisation dealing with the Eurozone and refugee crises, Brexit could provide another existential threat.

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