Blimey.
Now what?
Some quick thoughts (in the order I think them) on the ensuing negotiation with EU partners as London markets bounce back from the early shock.
First and foremost, this is a magnificent momentous day in the global history of democracy. It represents a strong majority of one of the most powerful countries in the world defying its on political/media establishment and saying that they do no consent to the UK’s current relationship with the European Union (and perhaps to that Westminster establishment too). Regardless of what happens next on the UK/EU front, the consequences of this vote will ripple on down the decades, in Europe and far beyond.
Second (and accordingly), every EU leader will now be looking nervously over his/her shoulder at what voters really want. There has been far too much smug we-know-best elitism for years in the way the EU runs itself as an arcane cabal that only a few self-selected high priests can understand.
Third, the real European decisions in the weeks and months ahead will come not from the Commission or the ghastly European Parliament, but from national leaders as they alone feel voters’ hot breath on their necks and see their own markets rocking. They face painful choices. What to do? How to do it? What timescale makes sense? Who does it? Is this a job for an EU inner core of some sort – maybe the Founding Six? But then what about Poland and all the others?
The formal procedure if an EU member state wants to leave the EU is TEU Article 50. Earlier analysis here. And the full text of Article 50 here:
Article 50 – Treaty on European Union (TEU)
1. Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
3. The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2, unless the European Council, in agreement with the Member State concerned, unanimously decides to extend this period.
4. For the purposes of paragraphs 2 and 3, the member of the European Council or of the Council representing the withdrawing Member State shall not participate in the discussions of the European Council or Council or in decisions concerning it. A qualified majority shall be defined in accordance with Article 238(3)(b) of the Treaty on the Functioning of the European Union.
5. If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.
Note that there is nothing to say when Article 50 is triggered by the country concerned. That’s why David Cameron has wisely left it to his successor as Prime Minister to decide that in a few months’ time. Likewise it’s up to the country concerned to ‘decide to withdraw’; the others can’t throw a member out.
Once Article 50 is triggered, there is up to two years (or more if all concerned agree) to negotiate a new agreement between the withdrawing state and the EU.
Therefore what?
The smart thing now as I have argued at length here and elsewhere is for key European leaders to st down calmly but with some new urgency and consider what new arrangements as between the EU/UK and for the EU itself are going to be credible and sustainable with voters. Whatever happens the EU treaties now have to change in the coming years. It’s highly unlikely to be possible or desirable politically simply to have everything else continuing as before but with the UK not in the EU club.
In other words, the legal forms are important but they don’t matter. What matters is answering the key strategic questions. Then you find the legal language to make it all happen.
It follows that the key negotiations can be conducted and concluded in a couple of years without Article 50 being triggered at all. Or, perhaps, Article 50 will be triggered only when the clear outlines of a New Deal have been identified, with the Article 50 process kicking in to launch the legal formalities needed to finish things off.
In short, all sorts of options are possible. So don’t panic if no one option quickly emerges.
+ + + UPDATE + + +
Boris Johnson has just said that there is no need to invoke Article 50. Strictly speaking that’s (maybe) right, but I can’t imagine how we might end up in a good position without going through at least some A.50 formalities.
Fourth, on substance. The least disruptive result for everyone in procedural terms is some sort of Norway Plus option, ie the UK joins the EEA. What, you’ve never heard of the EEA (or for that matter EFTA)? Here’s a handy summary. We’d withdraw from participation in many key parts of EU life (CAP, ECJ, European Parliament etc and so on) as the price we pay for not having a say in setting Single Market rules. But even then there are ways to have a reasonable say indirectly. We’re a huge market for EU stuff and it’s in everyone’s interests to keep things ticking along as far as possible.
The political problem with this for the Brexiteers is that the UK stays with the Single Market and so continues with free movement of people, ie MIGRATION. But at least for now the EEA option is a reasonable compromise. The more so if a parallel fundamental process emerges to renegotiate Europe 2.0, where the outcome is that some countries stick with the stern Eurozone disciplines and others opt for a lighter Free Trade space.
Fifth, it’s possible that we won’t formally leave the EU for several years to come. Or, perhaps, at all. Who knows if something else will happen leading to a new referendum on a different EU with a different question and a different result?
It’s also possible that we’ll formally leave the EU and eg join the EEA/EFTA in only a few months’ time IF London and key capitals decide that this is the swiftest safest way to get things stabilised.
Between those two possibilities – we leave the EU within months, or never – lie all sorts of sub-options. Don’t take any notice of anyone saying that X or Y or Z ‘must’ happen. There is no ‘must’ here. Just choices that we know now, and choices that may not yet exist but will start to exist as the talking starts.
Sixth, who has the ‘upper hand’ when the UK/EU sit down to talk? Won’t they have to punish us for rocking the boat?
All successful negotiations involve from Positions to Interests/Needs. All negotiations are basically about Security, Resources, Control, Reputation and Time/Risk.
Back to where we started. Yes, all other EU member states have their own interests. Above all, their respective leaders are keen on survival. So they have to make some fine choices between ‘punishing’ the UK for giving its revolting voters a voice, and making sure that their own voters are kept happy.
This is why EU HQ in Brussels is already pressing the UK to make its proposals ‘quickly’. But as we have seen, nothing much specific will come from London until after the summer break and we have a new PM to drive the process ahead. Other national EU leaders in capitals will want to get into quiet informal discussions with London asap to start drawing up a Plan that can be developed later this year.
In this situation neither ‘side’ has the upper hand. As this morning’s storms on world markets have shown, the planet’s investment money is not interested in European leaders bickering. It wants ‘stability’ and there will be huge pressure on all leaders to project ‘stability’ and act responsibly.
NB that as EU HQ has already emphasised this morning, the UK’s membership of the EU continues until it doesn’t. We continue with all the benefits and obligations of membership until we are no longer members. That means that we retain all the levers we already have for thwarting any major moves to ‘punish’ us for this decision. The more so since many EU capitals who might want to give us a good spanking will now have to reckon with their own voters clamouring for some of that old-fashioned British democracy. What? Punish UK voters for actually voting? Are you out of your minds? Quick – dust off those tumbrils!
Conclusion?
Momentous. Huge. Unfathomable. Pick your adjective.
Take a deep breath.
Let’s start building Europe 2.0 together. The only way forward now is to talk sensibly and accept that We Now Have Something Completely Different.
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"Pick your adjective": I would plump for your description of "magnificent". Once again the British people are at the forefront in the struggle for liberty and democracy, providing a shining example not only for their European neighbours but the whole world.
Charles, you have provided a great service to your readers with your deep understanding and balanced analysis of this difficult, complex and critical process. Having got us over the main hurdle, we look forward to your wise words through the next stage of the process. Today's fine post indicates our hopes will not be in vain.
Brexit is not the cause of this potentially traumatic period ahead of us, it is Maastricht.
We need a new Magna Carta to deny Parliament the right to assign British Sovereignty to another Power without the consent of the British people. If that had prevailed in 1992 we would not be in this critical situation now.
Well it occurred sooner than I thought. You're right on the future being uncertain, but I still maintain that events are going against the establishment in the West and will do so for a decade or more. Those who think it will be easy will be disappointed. The establishment isn't going to just say "heck we were wrong and so we'll change", they will fight and fight hard.
It was wonderful, I got to give it to you guys for around a thousand years regardless of how convoluted of a situation or how much fur flies you all always seem to get it right.
I’ll begin by saying “good”.
However, “this is a magnificent momentous day in the global history of democracy” causes me to ask a few questions.
Magna Carta is rightly cited as one of the beginnings of what we understand to be English democracy. I have not uncoincidentally been reading it and about it, and although it contained some novel and crucial legal protections, by far the greater part of it is taken up with maintaining or restoring the power of a privileged few.
I wonder how illusory democracy is? For the same forces that wished us to stay in can now set about keeping their assets in trim from without. You can see this in the reaction, today, of the money markets. Specifically, that money people bet on outcomes, and what we are seeing is not a true reflection of our fiscal state, but a reaction to gaming activity. I well remember a city friend who made thousands on Black Wednesday. He told me that money was there for the taking.
For an example closer to home, in fact my home town of Boston – now known as the murder capital of Britain – what have been the causes of civil and social strife there? It is easy to blame the immigrants, and yes, they appear in court with depressing regularity and in numbers far above their proportion of the population.
However, I am fairly aware of how feudal Lincolshire is. In my lifetime, I have become aware that local government and their enforcement agencies do the bidding of the landowners and business people. It is so ingrained that it is hardly remarked upon.
Migrants have flocked (can I say “flocked”?) to Boston because, firstly, Bostonians were too lazy or too comfortable on benefits to work, and secondly because land owners and businesses are happy to cut corners and offer low pay and dodgy conditions if profit is at stake. This left a vacuum, which impoverished citizens from other countries were happy to fill. It was and is conveniently symbiotic. When I was in my teens, on dole days in the town, a van would be waiting to take people to the fields after they had signed on. The local police could be and were bribed. (I was told this by my now deceased step-father who, as an illegal bookmaker would hand out the cash.)
I believe we have removed a layer of the illusion of democracy; the corruption, the unaccountability, the secrecy and the avarice of one class. This is encouraging. We shall need all the democracy we now have to reform our indigenous political class and reel in our home-grown barons.
I have this bad feeling that people who voted to exit the EU do not realise that the majority of problems causing their anger is actually deeply embedded in the UK's political system which has mastered the political correctness ad keeping up appearances well above the EU standards.
The EU has, and causes problems no doubt, but UK had enough power and influence to change things around, but I think no one from the current elites is capable of doing it.
The result might be, when they finally say good bye to EU, people will find, the problems have not gone away and they need to take the matter into their hands as there will be no one to blame anymore.
PART 1 of 2
Charles and the world, including UK BREXITers, all seem somewhat swept off their feet in surprise. Well, I like this wonderful event and my surprise is only very modest.
As Charles writes, the important thing is what now; that does not look to me to be going quite well enough: so here are some suggestions.
Firstly, David Cameron made a speech on 24th June in which he stated firm commitment to honouring the BREXIT decision. On this, I feel inclined to trust his sincerity (mostly). His action was to declined to personally push the Article 50 exit button. Secondly, he half resigned – by saying he would do it later. This future-resignation position makes some sense for the Parliament, the Conservative Party and for him personally. However, it makes only poor sense for the UK and for the rest of the EU (as they have said). Something definite on BREXIT does actually need to be done now. Mr Cameron should note that actions speak louder than words.
Secondly comes my suggestion on what actually needs to be done immediately. My suggestion is that the Prime Minister should appoint a moderate BREXITeer to be Deputy Prime Minister – with full responsibility for doing the right something. That thing should be to immediately press the Article 50 exit button and to deliver up to the EU, a brief outline position for where the UK eventually wants to be WRT the EU (of which more below). Now to who should be appointed at Deputy PM. My suggestion is the Rt Hon Peter Lilley MP. [Aside: do note I have not asked him whether he would want the job or, more importantly, do it!] He has been an MP for 33 years; has over 10 years experience as a government minister, most of them at Cabinet rank – plus a few years in the Shadow Cabinet, including Deputy Leader of the Conservative Party. He favours BREXIT. At close to the age of 73, his personal ambitions must be automatically curtailed. He cannot be labelled as, in any way, either populist or geeky.
Thirdly, comes the UK position on its future relationship with the EU. Here I can only give my personal opinion as to why I voted 'Leave'. Unlike a great many commentators, and also clearly opinion-polsters, I cannot see into the hearts and minds of my fellow voters. My main wishes for change from the status quo are: (i) full return of political sovereignty to the UK peoples through their parliament; (ii) removal of all foreign courts of law having any jurisdiction over the UK in its own territory; (iii) the re-instigation of full responsibility for immigration policy to the UK government. What should remain unchanged is free movement of goods and free movement of capital (the latter being something we have with many other nation states, so not special to the EU). Also, surely obviously, settled migrants both ways should have their current status preserved and not be required to return to their countries of origin. New rules should not prevent the ongoing labour of seasonal migratory workers (eg in agriculture and tourism). There should be sensibly pragmatic (so automatic) visa-waiver rules between the UK and EU for tourists and for those currently with second (or more) homes.
PART 2 of 2
Now, on immigration, we must note that the EEA/EFTA route (Norway, Iceland, Liechtenstein) requires members to provide totally free movement of labour (with only trivial exceptions). Thus this cannot be a satisfactory long-term arrangement for UK/EU relations. The EFTA (only) route (Switzerland alone, with many supplementary bilateral agreements) also has a demand from the EU side for free movement of labour. However, the Swiss peoples have instructed their government (Swiss February 2014 Referendum) to move away from this within 3 years. The EU objected and resolution of this issue is pending.
One of the simpler ways forward for both Switzerland and the UK, WRT the EU on migration, would be for the EU to drop from ETFA (but not from EEA/EFTA) the requirement for free movement of labour. This would solve 2 problems with 1 policy.
There are a couple of issues on which I personally need further information and thought. These are however both more detailed issues on which only a holding position needs to be given in any statement of position delivered now by the UK to the EU. These are: (i) free trade in services – this should be preserved as much as is practical given constraints on free movement of labour; (ii) the position on the legal courts with respect to EFTA rules; here it looks as if ECJ rulings (on which the UK then and Switzerland now, have no representation) would continue to affect, to some extent, UK/Swiss and EU trade relations – this is less than desirable, so probably a different and compromise arrangement needs to be introduced.
Doing things with no or an inadequate broad-brush long-term plan and through intermediate positions (as suggested by Dr Richard North and colleagues in his Flexit document) is less than helpful. It would drag things out over half-decades. This is against the real interests of all citizens involved, in the UK and in the rest of the EU.
On UK Parliamentary approved, my view is that this would be very problematic. If the BREXIT issue were put to Parliament and they rejected that position, there would have to be a general election – with all the dangers that involves for further reducing political and economic stability, and dragging out the instability. Thus the view of the current Parliament on the issue is not relevant! Accordingly, the Government should act: having asked the people the question and got the answer, the Government already knows how it should act.
I hope this provides useful food for thought: even action this week!
Best regards
It is worth pointing out aspects of the wording of Article 50. Under (2), an obligation is created on the remaining countries to "negotiate and conclude" an exit treaty. That obligation is only terminated when the exit treaty is concluded, unless otherwise agreed by all parties. That is, it subsists even after the two year guillotine period expires.
The Article specifies the conditions required for an exit treaty to be approved – a majority vote in Europarl and a QMV vote in Council, which concludes the treaty on behalf of the EU. There is no requirement for unanimity among member states, who would be forced to accept any treaty if they are in a sub-blocking minority who are against it. Not mentioned, but it ought to be obvious – no treaty can be concluded without the agreement of the seceding state: terms cannot simply be imposed, and we can carry on negotiating until we find terms are acceptable.
Under 218(3) it is clear that the power to decide who negotiates on behalf of the EU really resides with the Council. That is going to be a big disappointment for the Commission, whose power base is threatened in more ways than this by the negotiations, as it is likely that other states may prefer the UK option to the EU option in several areas of negotiations.
(3) is an emergency exit cord, not a sword of Damocles hanging over the head of a seceding state – especially one that is a substantial net contributor to the EU budget. If the issue were Grexit, with the Greeks motivated by trying to leave the Euro, even at the expense of losing EU contributions to their economy, it would be the point at which they could decide to restore the drachma and possibly quite legally repudiate their debts to the ECB if those can be considered only an obligation arising out of "the Treaties". In the case of the UK, it is far more likely that the other 27 would wish to extend the deadline, and thus our funding obligations, and obligations on employing EU citizens etc. In practice, the more likely outcome is that both sides will have agreed interim arrangements that cover the most important mutually beneficial ground if the final exit treaty is not in place. This is particularly true if the role of the Commission is minimised. The only substantive hazard of a guillotine exit is that in accordance with (5) should we wish to rejoin it would require an approach under Article 49 – however, we would be very unlikely to wish to rejoin on those terms. Any further extension of membership would be on very different terms, and the result of some substantial changes in the EU treaties.