Professor Laura Henry Analyzes Next Brexit Step

Kicking off International Week at Bowdoin, professor Laura Henry gave a talk Monday evening about what to expect now that British Prime Minister Theresa May has officially began the process of splitting the United Kingdom from the European Union.

Henry is Bowdoin’s John F. and Dorothy H. Magee Associate Professor of Government and an expert on Russian politics and the European Union, among other subjects.

After laying out a foundation of the United Kingdom’s long and vexed relationship to Europe and to the European Union, Henry turned her attention to what happens after Brexit.

On March 29, 2017, May invoked Article 50 of the 2009 Treaty of Lisbon to trigger an exit from the EU. The article had never been invoked before, and the process of leaving the EU is complicated and unpredictable. From this day forward, the UK has two years to negotiate its separation. Article 50 lays out a minimal mechanism by which a country can leave the EU, leaving it up to current officials to figure out the details of this complex process. The deadline can only be extended beyond two years if all EU nations agree.

While May’s initiative has made things official, and set a deadline, it has not been followed by a rush of activity. “The clock is going tick, tick, tick. The days are going by,” Henry said, adding that nothing of substance will likely happen until after the German elections occur next fall, further reducing the short period for the disentanglement.

What will the future relationship relationship between the UK and EU look like?

If no deal is reached — perhaps because the exit terms aren’t favorable enough for the UK — May has threatened to default to World Trade Organization rules, Henry said. But this would be economically traumatic, worse than most of the deals that have been envisioned. “People who voted to leave the EU didn’t vote to be poor,” Henry said.

Although May has said she wants to engage in respectful and cooperative talks and to put citizens first, the UK will likely play hardball during the negotiations— at least at first. As will the European Union.

“Theresa May is choosing a path that people call hard Brexit, and on the other side, the EU has to in some way disincentivize the exit path,” Henry said, so that other EU nations are not tempted to follow Britain’s example.

A hard Brexit would put an end to the free movement of labor and the UK’s contributions to the EU budget. It would also disrupt Britain’s access to the EU single market. A soft Brexit, on the other hand, would prioritize the UK’s continuing access to the single market with the concession that it allow the free movement of laborers (unpopular with many British voters) and continue to pay into the EU budget.

Taking a tough line, President of the European Council Donald Tusk has informed Britain that it cannot simultaneously leave the EU and negotiate a new trade deal at the same time, which May had requested. “Tusk said, absolutely not, that it wouldn’t fit into two years,” Henry explained. “The EU has to make this Brexit a painful lesson for other states, for what if Britain ends up being better off outside the EU? That would be terrible for the EU.”

The EU also will likely demand an exit fee of 20 billion to 70 billion euros for financial commitments it made before its people voted to leave. In addition, it will ask the country to continue paying into the pension endowment since the EU civil service — which include some British workers — are “multinational.”

Other difficult areas to negotiate will be determining the status of British nationals living in the continent (about one million people) and EU nationals living in Britain (roughly 3.2 million). Britain has promised some of the foreigners within its border that if they can prove they had been living in the UK for five years before the Brexit vote, they can stay.

Another problem will be negotiating the border between Northern Ireland and Ireland, which has been open since the 1998 peace accord. People travel easily from country to country for work or to shop, and to disrupt that would be “terribly damaging economically,” Henry said, and could also erode the good will between the historically antagonistic countries.

Furthermore, it’s likely that Scotland — which voted overwhelmingly to stay in the EU — will hold another referendum on whether to leave the United Kingdom. Times have changed since Scotland last voted on the question in 2014. “When they had a referendum last time, the price of oil was around $100 a barrel and now it is in the low $50s, and they had a budget surplus of 6 percent to 7 percent,” Henry said, referring to Scotland’s lucrative oil resources in the North Sea. “Now they are barely breaking even on their budget. It’s a much less favorable time to leave.”

How will the EU survive in this age of populism?

“People are concerned about this of course,” Henry said. To try to counter populist European agendas that promote nationalist, isolationist tendencies, EU members are toying with the idea of creating a “multi-tier” Europe,” with inner and outer corps.

“Is it really possible for 27 states to march in lockstep together when they are so different in scale of economy, in wealth and in poverty?” Henry questioned. “Maybe if there had been an outer corps, Britain would have remained.”

Another idea is to establish a “variable geometry” to allow nations to come together on select issues, essentially allowing member states to opt in or out on certain policies. “People call this Europe à la carte, rather than prix fixe. It was the prix fixe that the British couldn’t abide,” Henry explained.

In these scenarios, which favor the wealthier countries, it’s even possible the UK might try to reenter the EU, Henry suggested. “One economist did an analysis and said 2032 could be the year Britain applies to renter,” she said.

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