Editor's note

International Internet Magazine. Baltic States news & analytics Tuesday, 19.03.2024, 11:03

Brexit: effect for the EU and the Baltic States

Eugene Eteris, BC, Brussels, 27.06.2016.Print version

The last ten days in June 2016 will go into the EU’s history: almost completely unexpected results of the UK’s referendum proclaimed the country’s exit from EU. The so-called Brexit will have a far-lasting effect on both the rest of the EU and on the three Baltic States. The latter have a solid chance to develop a common position to defend their common interests in the EU-UK process of negotiations.

The referendum results have been, generally, unexpected: nobody could say for sure whether it would be “Brexit” or “Bremain”, i.e. whether Britain would leave EU (hence, Brexit) or remain in the EU.

 

The result has been disastrous for the EU’s supporters in all of Europe: with a very small margin the exit/leavers part has won. Official referendum’s results have been the following: “to leave the EU”- 17,4 mln votes (51,9%); “to remain in the EU” – 16,1 mln votes (48,1%). Less than 1 million votes out of the total of 34 million votes have decided the fate of Britain-European future. See: http://www.bbc.com/news/live/uk-politics-36570120.

 

The UK vote to leave the EU marks the first-ever case of this process; during the EEC-EU’s history it was constant enlargement (from initial 6 to the EU-28).

 

Quite notable: the “Bremain” supporters have been dominating before the referendum: even bookmakers predicted 78 per cent chances for Britain’s “yes” at the referendum…    

“Clean divorce”

The UK, the global fifth’s economy and Europe’s second largest has been a strong driving force in the EU’s “family”; now, the announced divorce is felt damaging in various aspects of now EU-27 family’s life: economic, political, financial, etc.  

 

Commission president J. – C. Juncker already promised during the week-end (25-26.06) in a German tabloid Bild a “clean divorce”.

 

Besides, the European Commission president focused on some new aspects in European integration: building a “better Europe” and not a larger one and mentioned that he would miss Britain’s “pragmatic approach” to the EU’s issues.  

Time is a good healer

The present EU Treaty (art. 50 TFEU) sets out the procedures to be followed if a EU member state decides to leave the European Union.

 

Therefore, the EU leaders are being ready to launch negotiations swiftly with the United Kingdom regarding the terms and conditions of its withdrawal from the European Union.

See, e.g.: http://europa.eu/rapid/press-release_STATEMENT-16-2329_en.htm

 

However, until this process of negotiations is over, the United Kingdom remains a member of the European Union, with all the rights and obligations that derive from this. According to the Treaties which the United Kingdom has ratified, EU law continues to apply in full to and in the United Kingdom until it is no longer an EU member.

 

Below is a first sketch on the effect of UK’s exit on some of the most important aspects in the Baltic States’ perspective development.

 

= Organisationally, the first effect is already visible: the competences of the resigned British Commissioner Jonathan Hill responsible for EU financial services and capital markets union (he resigned on 25.06 with effect from July 15) will be added to the work of Valdis Dombrovskis, the commission vice-president from Latvia who is in charge of the euro.

 

J. Hill felt that with the European financial services being so critical to the U.K.’s future relationship with the EU, that it would be a conflict of interest to continue to administer these issues from the EU’s side of affairs.

 

British exit would affect the whole decision-making process in the numerous EU institutions as well with fewer votes, first of all, in the Council of Ministers.

 

The Baltic States –if united- could exert some additional influence there in the socio-economic spheres of common interest.

 

= Reforms’ perspectives. The Baltic States shall formulate common position on issues the solution of which would be most progressive for region’s socio-economic development.

One of such issues is the EU Single Market’s perspective with deeper and more reformative character. See, for example: Modern approach to structural reforms in the EU member states, Baltic-course.com

 

Free movement of goods and services has been the EU success story in years. A little bit less successful has been people/workers’ free movement policy; since the Baltic States joined the EU in 2004, it seems that all who wanted to leave have already settled down in the Britain and negotiations in that sphere would hardly influence the Baltic States’ agenda.

 

Quite different are perspectives for EU’s assistance for structural reforms and cohesion process: the available funds will be smaller due to lack of the UK’s financial share in the EU budget.

However, the effect of these changes would be felt only after 2019, i.e. in the new EU financial programming period. Hence, the Baltic States shall not be worried of the amount of the financial support from the EU.   

 

 = Europe’s federalism. It seems that everyone among EU’s political elites (from bigger and smaller states) is already aware that the federalist dream is now dead. The new key words among EU officials are “better Europe, not more”, because populism and nationalism is a “constant irritant” in the pipes of European governance.

Two main results could be expected: steady rise of government-to-government dealings as the governments look to work together in the now visibly dysfunctional European political system; and, echoing the fundamental economic disagreements over the euro-zone, a near-constant state of muddling through is expected.

 

Each EU state is up to protecting the best national interest during the UK-EU negotiations.  

An active and prospective common Baltic States’ government policies would be a certain advantage as soon as these states’ future resides in the EU and within the European integration process. Besides, the European Union is a better place to protect Baltic States’ interest in the world.

 

However the UK’s critical positions would definitely lead to changes in the EU’s economic policies; here again an active and common Baltic’s position shall be formulated.

Main European issues are those of social and human nature rather than those of mobility and free trade: people not markets shall be that ultimate aim of all EU policies.

 

= Other changes. The Baltic States have to develop a common approach to changes in the EU studies. Education and training in these issues shall take account of the reforms and changes instigated by the UK’s exit. For example, courses on EU economic integration shall be both more globally and nationally oriented.

 

But in this regard, “the capitalist’s stand” of development shall be clarified: the question is, whether a capitalist society can be democratic, and vice versa? Modern development is showing that the two things are contradictory: capitalism’s aim is to increase economic growth and profit, which breeds wealth (generally for quite a few in a society).

 

Democracy’s aim is to equally “distribute” the growth assets by available means with a due respect for the less privileged. Endless economic growth is impossible: constant crisis proves this and capitalist know it perfectly well.

 

Hence, more equal “distribution” of wealth cannot proceed indefinitely, whatever development model is chosen. Therefore, the EU’s main political (“ever closer union”) and economic (“social market economy”) directions shall be re-assessed according to the UK’s direction of criticism.

It’s still to be seen, what is the UK government’s ultimate “reforming requirements” and what Britain is being actually against in the present EU governance structures.

         

We have to remember that modern nationalism has become the strongest trans-European “culture”, which has been grown from decades of EU’s socio-economic integration…   

 

Of course, it’s difficult to say in detail which consequences the UK-EU negotiations would have on the Baltic’s economy; we have to wait until the UK’s claims are revealed in the exit-application. However, the affected countries shall be ready to defend their interests: in particular, at the EU-27 summit (now without the UK) at the last day of June.   

 

However, the joint statement of the EU leaders postulates: “The Union of 27 member states will continue. The Union is the framework of our common political future. We are bound together by history, geography and common interests and will develop our cooperation on this basis. Together we will address our common challenges to generate growth, increase prosperity and ensure a safe and secure environment for our citizens. The institutions will play their full role in this endeavour”.

http://europa.eu/rapid/press-release_STATEMENT-16-2329_en.htm

 

Note: During the UK-EU negotiation process, which is expected to last from two to seven years, the Baltic Course Magazine will cover its outcomes and results. The Magazine’s staff will follow the most important aspects of these negotiations. 





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