Britain, Euroscepticism

The discrete charm of EU referendums

The recent commotion about the possibility of a British referendum on EU membership raised an important question: When are referendums a good idea?

At first it might be hard to see any argument at all against a referendum. After all,  in a democracy the public should be allowed  to decide the course of policy, especially when really important issues, like European  integration, are at stake.  Surely, whoever is against a referendum is just scared from the outcome.

It is a  bit more complicated, however.

First, in a referendum your choice is limited to a small number of alternatives (usually two – ‘yea’ / ‘nay’ ). Formulating and narrowing down the alternatives can be more important than  the selection between them, and it is  a process in which the public has no say.

Second,  the method of selection matters. The proposed British EU referendum had three options (stay, leave, re-negotiate). But this is prone to a voting cycle. It could very well be that there is a majority that prefers  leaving to staying, a  majority that prefers staying to re-negotiation, and a majority that prefers re-negotiation to leaving at the same time and amongst the same group of people. How do we choose then? We could use  plurality rule (whichever alternative from the three  has the most votes wins) to decide, but why plurality is any better than pairwise majority voting? Obviously, the power of the one who determines the options and the selection method looms even larger. Why not include a fourth alternative? Going down that road, why not offer people a list of policy areas for which they can express a desire to ‘Europeanize’ or keep at the national level? In fact, why not let people fill-in which issues they want to delegate to the EU and  which ones to reserve for the state?

The third, and most important problem is the meaningfulness of the alternatives being offered. Let us first consider the option of re-negotiation of the British relationship with the EU. How realistic is this option (and what does it imply) given that the outcome of negotiations necessarily depends on both sides? I would certainly choose, if offered the chance, to re-negotiate my mortgage rather than  keep paying high interest or defaulting, but how likely is that my bank would agree to the proposal? Why do the British Conservatives assume (and offer the option to the people) that the EU will agree to their terms of engagement? The EU might very well refuse the UK (or any other country) to unilaterally pick and choose from the integration menu because of the spillovers and externalities of economic integration. For example, if I allow you to sell all your goods  and services in my country, I can demand some  minimum standards on, say, protection of the environment and/or work safety in your country to avoid social and environmental dumping. Integration a la carte is envisaged to some extent in the Treaties (enhanced  co-operation and opt-outs) but is clearly, and for good reasons, subject to limitations (and the consent of the other Member States). Sure, having the constraint of a national referendum at home gives you a powerful negotiation advantage to secure better terms for yourself, but at the risk of compromising the entire bargain resulting in worse outcomes for all sides. Britain’s threat of leaving the Union unless re-negotiating its relationship  is a bluff that might very well be called by the EU.  (I assume Britain would still want access to the single European market but the opposite would surely be an economic suicide).

What about the option of leaving the EU  altogether? After all, Norway and Switzerland all seem to be thriving without being part of the EU. Again, I still assume that the UK would want access  to the internal market even if it leaves the EU. Access to the market without being an EU member, however, comes at a price.  First, there are  regular financial contributions to EU programs (for example Switzerland was required  to pay about €645 million for projects in the new member states and Norway pays more than 150 million each year).  But the bigger price  comes from having to implement EU rules  without having influence over their preparation. Norway and  Switzerland still have to apply the vast majority  of EU  legislation (all Internal Market-related  rules) and policies even  though they do not have a say in their making.  Britain, and Cameron in particular, already felt how painful this can be when told to keep their opinions on the euro-crisis to themselves. I don’t think that the British public fully realized the implications of leaving the EU without leaving the single market.

Referendums only make sense if the options being offered have consequences which are reasonably clear and, above all, realistic. This is definitely not the case with the recent proposal of the British Conservatives. At the same time, one cannot and should not ignore the growing negative public sentiment towards the EU in the UK (and beyond). The EU needs to be politicized beyond the false dichotomies of membership/ no membership. The opinions of British (and Dutch, and Slovakian, and Maltese) citizens should be heard and taken into account when making European policies. And their preferences should be respected  in refraining from making common European policies as  well. But all this needs to be accommodated  through the regular channels of political contestation and representation rather than incidental and manipulable forums of direct demockracy.

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