The participants at this international workshop noted that the political situation in the UK has been confused and in many respects unpredictable in the immediate wake of the recent EU membership referendum. This is especially because the outcome of the vote caught many of the key players unawares in both the “leave” and “remain” camps. It was stressed, however, that despite the importance of the new internal political landscape struggling to take shape within the country (partly in response to challenges also being faced across the Continent), Europe must focus on its direct responsibilities and on what needs to happen next (institutionally and politically) with regards to the departure of a member state the size of the United Kingdom. Both governments and institutions in Brussels were urged to avoid insisting that the UK make a “speedy exit”, since that would mean distorting the provisions of article 50 of the Treaty of Lisbon (pursuant to which it is the member state itself that triggers the exit procedure), but even more so because a certain period of reflection and pragmatic debate might benefit everyone. Indeed, it is not inconceivable that this might bring about a further British referendum, albeit perhaps not in the immediate future.
One problem considered pressing by the participants was that of managing the risk of contagion, which is particularly serious in the Netherlands and France. However, it was acknowledged that this is a challenge facing all member states, which are experiencing widespread dissatisfaction with government authorities and the official approach taken to many socio-economic issues in recent years. Indeed, it was seen as hardly a coincidence that trongest anti-establishment sentiment has surfaced in two societies affected more than others by the combined effects of globalization – to wit, the United Kingdom, but also the United States, as the 2016 US presidential campaign has demonstrated. Moreover, as things currently stand in Europe, some of the failings being blamed on Brussels actually stem from domestic failure, i.e. from the limited effectiveness of national policies.
Bearing this in mind as well, it was thus suggested that the European Union should carefully consider whether to push on with greater integration in various key sectors (with the risk that this option might be roundly rejected by voters, thereby irreparably damaging the credibility of the EU approach), before engaging in a wide-ranging dialogue with the respective bodies of public opinion in order to better determine shared interests and strategies. It was viewed as equally evident that, especially in the eurozone, the resolution of a number of problems undeniably requires closer coordination or even a genuine centralization of certain powers. In either case, it was felt that the key criterion must be that of effectiveness, with particular responsiveness to the demands being voiced by the majority of citizens.
In terms of evaluating the EU’s potential future political and institutional arrangements, it was noted that there is growing interest in moving towards a confederal system – in view of the high price to be paid for any outright “dis-union” and the well-known difficulties of closer federal union. A number of participants expressed the view that the biggest mistake since 1989 has been the failure to apply – or, at least, to apply consistently – the principle of subsidiarity in setting Brussels’ powers.
There was general recognition, however, that the struggle between different visions for the future set-up of the Union could prove decisive well beyond its borders, impacting on the evolution of the entire liberal international order, with its Euro-American core rife with unprecedented tensions and a widespread sense of distrust towards the free market model of representative democracy. Political leaders will hence need to show a much greater ability to gauge the needs of voters and at the same time convey an understanding of the complex mechanisms at play in a modern democracy. It was accordingly submitted that parallel efforts on two fronts may become necessary, involving a re-examination of the institutional relations between EU bodies (especially with respect to legislative power), as well as a new political formula (yet to be devised) that moves beyond confrontation between the “establishment” and anti-systemic forces.
Turning to consider the economic aspects of the EU structure, it was seen as evident that the framework of the eurozone has suffered badly from the effects of the prolonged crisis, experiencing unemployment, rising inequality, increasing private debt, periodic banking crises, and sovereign debt. In addition, the entire economy of the Union – with the partial exception of Great Britain (which, however, has been hit by widely-felt phenomena of inequality) – is trapped in a low-growth phase. Some experts believe that in practice the basic rules of the game have now essentially been broken, superseded and made irrelevant or inapplicable both by a series of exceptions and emergency measures, and by a general lack of confidence in joint commitments undertaken. This scenario was described as devastating, especially for a European Union grounded in rules that has tasked specific bodies and precise procedures with the role of ensuring that these are adhered to.
However, there were diverging opinions as to how to respond to this situation. One view was that market mechanisms (especially those for debt restructuring and recapitalization of the banks) should be bolstered, while another assessment was that the authorities should intervene more in order to correct or forestall market dynamics (especially to protect those most vulnerable in society). No consensus was reached on this fundamental difference of approach.
There were also diverging opinions with regards to the utility of the principle of subsidiarity as an economic management tool. Some observers felt that externalities (starting with debt) represent a key obstacle to a straightforward application of subsidiarity. Sovereign debt was, in any case, considered the pivotal issue to resolve in order to ensure a sustainable underpinning for any agreed European restructuring. It was stressed that, in essence, this will also determine the degree of influence that the EU is able to exert on the world stage.
Another issue deemed central was that of the EU budget, judged as currently totally insufficient to ensure the proper functioning of all the policies necessary for such a highly-integrated yet varied economic area. It was concluded that a significant budget increase would go a long way towards making it possible to establish a European Treasury and to implement shared and effective fiscal policies.