The United States and China should intensify their campaign to keep the E.U together!

 

 

During his recent visit to England Xi Jinping made perfectly clear that he strongly wishes Britain to remain within the EU. This appeal follows similar earlier pronouncements by President Obama. It should therefore come as no surprise that David Cameron is challenging vigorously the “Out” campaigners to demonstrate the advantages of leaving the Union. This renewed advocacy for remaining “In” is bolstered by a stern warning that an “Out” vote will be definitive, closing the door to any post referendum horse-trading.

 

This firm “pro EU” stance taken by the PM should be interpreted with care: rather than representing a strong belief in the merits of the Union (he has repeatedly claimed to be neutral on the subject), this change of course is, more likely, a sign of panic in the face of the dual dangers of the isolation of England and the breakaway of Scotland. Being a reasonably adept liar’s poker player, the PM hopes to parlay a very weak hand for significant concessions as a reward for his pro EU posture. He banks on the weakness of his partners because they are divided: the recent victory of the Polish Eurosceptic right wing party and the anticipated inroads of the National Front in next December’s French poll, reinforces his belief that he can have his cake and eat it too.

 

The EU negotiators should not fall into this trap! The EU certainly needs reforming.

“Pre-referendum” commitments to amending existing legislation or future treaty changes should, however, be limited to matters that are in the interest of all Member States; they should categorically exclude any “protocol” or other such agreements that would pre-empt reforms to be enshrined in future treaty changes. Granting the UK rights to exonerate it from certain treaty obligations (along the Danish model) is tolerable (though unwise), but conferring on it rights to prevent other Members to exercise their full sovereignty is inadmissible.

 

The EU should therefore fully take on board the weakness of the British hand which stands to be the ultimate looser in case of Brexit, as has indirectly been admitted by the PM. Contrary to rumours circulating, the task force preparing the talks should not only refrain from attempting to side-line the European Parliament in this process but should actively promote its full involvement. The multiplication of lines of fracture between Member States, whether caused by Brexit, the immigration crisis, the governance of the Eurozone, the climate agenda (opposed by Poland’s new Government), terrorism, or any of the other many geopolitical conflicts (Ukraine, Middle East, Africa, etc.) has demonstrated the imperative need for further integration. The EU cannot afford to treat these challenges as if they were not interdependent.

 

In this context, rather than pander to the British, the EU has a unique opportunity to convince David Cameron that his best course of action is to join EMU instead of seeking the protection of an “unacceptable” binding agreement that would stifle any future attempts at EU integration (an ever closer Union) and be the premise of its ultimate and unavoidable breakup. As an EMU member, the dominance of the UK over European the financial markets – including the future “Capital Markets Union” (a project that then begins to make sense) - would become unassailable based on its superior competitiveness. The UK could also assume quite naturally the preponderant role it aims for in the development of the Chinese – EU relationship and comfort its status as the natural bridge in the transatlantic partnership.

 

Such an outcome would clearly be in the interests of both the United States and China securing their own access to a market of 550 million people which remains currently the wealthiest of the planet. China needs desperately a strong partner at the other end of its pharaonic “new silk road” project; the United States, already heavily invested in the EU since the Second World War, fears more than anything else the fragmentation of the market that would inevitably follow the EU’s implosion and would jeopardise the viability of number of its investments.

 

A glimpse of what might be in store in case of Brexit was given by Goldman, Sachs’s intimation of shifting part of its London operations to the continent. Such a move would however only be conceivable if the remaining 27 partners moved towards closer integration making indispensable a stronger presence of the dominant American investment banks within EMU. If, on the other hand, Brexit became a precedent enticing other Member States to leave the Union, then in the face of a progressively increasingly fragmented continent with the reinstatement of national borders and currencies, Goldman, Sachs is more likely to repatriate its entire European operations to New York, focussing its international operations on the Asia-Pacific area towards which the United States has been already leaning heavily.

 

China and the United States have thus a vital interest in promoting an integrated EU both as a major trading and political partner on the world scene. A dismemberment of the EU would cause a world economic cataclysm far worse than the 1930 depression and the 2008 financial crisis. The reinforcement of the EU in a multipolar world has enormous implications for the world economy and direct consequences on improving the security and wellbeing of its population; its breakup has diametrically opposite consequences.

 

In light of the manifest tensions among the 28 EU members, stakeholders in the United States and China should not limit their efforts to preventing Brexit but should actively promote further European integration in their own self-interest. This kind of outside pressure would be a powerful force in combatting the regressive national-populist movements that are flourishing in an ever growing number of Member States and which constitute probably the most potent force leading ultimately to the EU’s implosion.

 

Lorgues, October 27th 2015

 

Paul N. Goldschmidt

Director, European Commission (ret.); Member of the Steering Committee of the Thomas More Institute.

 

 

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