European Affairs

Bellicose rhetoric will be avoided on the banks of the Danube, as Angela Merkel, Germany’s chancellor and Europe’s leading statesman, tries to rally the EU’s 27 fractious remaining members in the wake of Britain’s unprecedented June 23 vote to end its 43 year association with the bloc. Britain will not attend the summit, though only impatient and unrealistic populists believe its “Brexit” uncoupling will prove easy to negotiate, let alone quickly without damage to both parties. Serious talks cannot even start until after next September’s uncertain German elections, a veteran Belgian Eurocrat pointed out yesterday.

“A mix of continued good will and utter bewilderment in equal measure” among Britain’s friends around the world is how the veteran Labour politician, Peter Mandelson, describes Britain’s unexpected decision, made by 51.9% to 48.1% on a referendum turnout of 72.2%. Others have been less measured. Some EU leaders are outraged at the perceived betrayal by an over indulged ally. Others are openly gleeful at the opportunity they think Brexit gives them to cherry pick better terms for their own nation at the expense of common rules painfully crafted over decades. Donald Trump seems to share the latter view, as does Britain’s Nigel Farage, populist leader of the UK Independence party, who shared a platform with the Republican nominee in Mississippi.

In his pre-summit “state of the union” speech to members of the European parliament (MEPs) Jean-Claude Juncker, the truculent former prime minister of Luxembourg who now heads the EU’s Brussels-based bureaucracy - the Commission - warned of “galloping populism” and an “existential crisis.” His own response is that Brexit must be turned into an opportunity. Removal of the familiar UK veto on greater integration, from banking and trans-EU investment programs to the perennial controversy over a non-Nato European defense force should provide a catalyst for progress. Nor could Juncker resist deploring the murder of an immigrant in Essex – as if such crimes do not happen everywhere.

Much as they did in Sicily when they founded the original “common market” in 1956, the leaders of Germany, France and Italy, Angela Merkel, Francois Hollande and Matteo Renzi, met on an Italian aircraft carrier in August to renew their symbolic solidarity. More recent EU joiners from the former Soviet bloc, Poles and Hungarians, have very different priorities, increasingly nationalist and authoritarian. Hungary’s hostility towards Muslim refugees (the Ottoman empire once occupied much of the country) warrants its suspension from the EU, some mutter. Attacks by Poland’s Law and Justice government on the press and the courts invited comparisons with Erdogan’s Turkey.

For Britain’s new Conservative prime minister, Theresa May, who rapidly emerged from the rubble of David Cameron’s referendum-collapsed career as London’s safest available pair of hands, the Brexit campaign sent the same message. Disaffected voters demanded a restoration of “sovereignty” free from Brussels regulation, budgetary demands and court rulings. For others the priority was immigration, as it is for millions of Americans; an end to mass migration from the EU - a million from Poland and its neighbors since 2004 - the Middle East and Africa of desperate people seeking escape from poverty and war in Britain’s flexible labor market where the 4.9% unemployment rate is half France’s, a quarter of Spain’s.

Mrs. May’s absence from Bratislava will spare her more of the awkwardness of her get-to-know-you summer tour of EU capitals (she was previously Britain’s interior minister) and of her first appearance on the global stage at the G20 summit in Hangzhou, China. Commentators there were quick to note her relegation to the margins of the official summit photo and the blunt warning from Japan’s normally bland foreign ministry that the UK must maintain membership of the EU’s “single market” agreement if Tokyo’s investment confidence is to continue. This matters. British made Japanese cars enjoy major sales access into Europe which could be threatened.

Many such weighty decisions bear down on the May government. After imposing an unexpected review, it has confirmed a partnership with France and China to build Britain’s first nuclear power station in a generation at Hinkley Point in Somerset, subject only to fresh security assurances. If May also ends years of dither over a third runway at London’s crowded Heathrow airport and the building of a High Speed train route to northern England - all the “three H’s” are highly controversial infrastructure projects - wary investors may start spending again.

After an initial post-Brexit panic on the markets the summer months have proved better for the UK economy than alarmists feared. Thanks to a Bank of England interest rate cut to 0.25% the feared recession was averted. Unemployment dipped slightly in August - now 0.5% below a year ago - and consumers spent cheerfully in good Olympic weather. Inflation has barely risen while the 10% drop in sterling takes its effect. Heady with denial, the pro+Brexit tabloids rarely miss a chance to denounce more sober rivals as “undermining Britain” for reporting any sign of problems ahead. The editor of the Financial Times was given the kind of roasting normally reserved for “love rat” footballers on the spurious grounds that he had been awarded the Legion d’Honneur by France and his “anti-British” paper is now Japanese owned.

Nominally in the Remain camp, Theresa May shrewdly sat out the referendum debate. She dominates but says little. Yet Cameron’s baleful legacy (having quit the premiership in June, he resigned from parliament in September) will eventually require her to square a circle which cannot be squared. It is to salvage as much unrestricted access to the EU’s single market as she can - manufacturers and the powerful City of London are adamant that she must to stave off economic disaster - while restricting the flood of Poles and Spaniards whose presence alienated older, less educated and more rural voters.

But free movement of people is one of the “four freedoms” which underpin the single market ideal which Margaret Thatcher embraced (she later reneged) in 1986. East European states resisting their share of Syrian refugees are adamant that Britain cannot keep single market access while keeping out their migrant workers. No “a la carte” deal, says Mr. Juncker.

May has appointed prominent Leave EU campaigners, “The Three Brexiteers,” to her cabinet, tasked with organizing the withdrawal. She has already had to reprimand one, David Davis, for saying Britain might have to abandon the single market in favor of World Trade Organization (WTO) trade terms and a second, Liam Fox, for claiming that UK business chiefs lazily prefer golf to exporting. The third, Boris Johnson, the louche-but-clever populist she appointed as foreign secretary, has kept an uncharacteristically low profile while May herself says she does not intend to provide a “running commentary” on her negotiating plans. “Brexit means Brexit,” is her one reassuring statement to the 51.9% who voted for it.

Three months after Brexit, it is clear the government does not yet have such a strategy and that the Three Brexiteers and their officials are noisily divided among themselves. Bookmakers have Fox most heavily tipped to resign first. Divided too are EU leaders, torn between driving a tough bargain and pragmatic conciliation with one of their best customers, all too aware of centrifugal forces in their own ranks.

The southern countries within the ailing Eurozone met this month in Athens to discuss less austere alternatives to German monetary domination. The Poles and Hungarians threaten a “cultural counter revolution” against Mr. Juncker and his interfering Brussels team. Merkel, who took a beating in regional elections in her own North German powerbase over her open door migration policy, is holding the show together. If she decides against seeking a fourth term as chancellor (she is 62) or is beaten next year, a power vacuum may be filled by more strident voices. France’s ineffectual Hollande looks doomed, Italy’s technocratic Renzi has his own reform referendum to win in November - or perish like Cameron.

What is slowly dawning on all but the most zealous partisans of Brexit is that “single market” access is not just about tariffs. EU membership provides paper-free “passports” into Europe and the wider world for all sorts of goods and services, that a stand-alone UK might spend decades renegotiating on its own at a time of growing nationalism. The World Customs Organization (WCO) also allows cross border traders to be “authorized economic operators” (AEOs), but Britain would lose that status if it left the single market: think trucks delayed at borders for inspection. There will be winners from Brexit, but also losers. Will Britain lose the HQ of the European Medicines Agency(EMA) as well as easy access for its drug exports? What about EU research funds?

As for immigration levels, where conciliatory EU leaders concede the Brits had a point (though the Italians get more refugees across the Med and Germany through the Balkans), the Australian points system for skilled workers was much touted by the Brexit campaign. But May has had to tell her followers that it is unsuited to British needs, not least because it usually increases migration.

In short, Europe is engaged in a peaceful version of the “phony war” which settled on the continent between Hitler’s conquest of Poland in September 1939 and his assault on the west in May 1940. Neither side knows what to do, no one knows what will happen. The wider world, which cares a lot less about Europe than it did in 1940, has pressing problems of its own. The EU 27 hope to celebrate the 60th anniversary of the founding Treaty of Rome next March in better shape. So does Brexit Britain.

But, beyond the citadels of breezy free market theory (“we’ll be fine”), well-grounded optimism is hard to find. Restoring the blue cover on British passports to replace the EU-wide burgundy one, as some suggest, is mere tokenism, offset by talk of having to pay for visas to visit France. Some people want dramatic action now, “hard Brexit” in the new jargon. If they end up feeling cheated the chances are they will get angry.

Michael White is a former political editor and Washington correspondent of the Guardian.