As Theresa May calls new elections in a blatant power grab in the UK and France goes to decide between centrist Emmanuel Macron and far-right nationalist Marine Le Pen, the future of Europe hangs in the balance. If Le Pen seizes the presidency in France and attempts to pull France out of the EU, the project that has been the basis of peace on the continent for 60 years may crumble. Because of this, European negotiators should drive as hard a bargain as possible with the UK and hope dearly that Emmanuel Macron comes out on top in the French Presidential election.
Since negotiators in Brussels have no power over the French election, there is no point in losing sleep there; what they should care about is Brexit. If the center holds in France, the main political concern for the EU is ensuring that other European countries understand that the European Union is better off together than apart. In order to prevent other countries from jumping ship, the EU should not allow Britain access to the single market. European negotiators should not try to hurt the UK out of petty spite, but to drive home the important reality that the economic benefit of the single market is tied to less popular elements, like the freedom of movement and judicial oversight from the European Court of Justice. Britain must not be allowed to create its own a-la-carte approach to Europe, participating where it wants and ignoring the tough decisions that make the whole operation possible. Should Britain get a cushy deal, with unfettered access to the European market, other nations might follow suit, which would likely spell the end of the EU. This nightmare scenario would be incredibly painful in several ways.
First, the collapse of the Euro would be hugely problematic in the short term. Although the currency was implemented with surprising efficiency, national redenomination might not be. Remember, when countries switched over to the Euro, they burned their old currency. If the common currency collapses, every individual nation will need to print and distribute its own currency again. This would also entail the revaluation of all goods, contracts, and wages into the national currencies and the re-establishment of all the drachmas, lire, and deutschmarks onto the foreign exchange markets. Debt-ridden states like Greece might intentionally push inflationary policies after a redenomination in order to effectively reduce their debt, destroying their citizens’ savings and ability to purchase imported goods.
Second, if the end of the European Union were to follow the end of the shared currency, new trade agreements would need to be negotiated between all the members. No European leaders are under any illusions regarding the popularity of free trade in the current zeitgeist. Considering the vociferous protest against the TTIP pact with the United States and the CETA agreement with Canada, any large multilateral trade deal in a post-EU world would be fighting against the political headwinds of populist, nativist sentiment. If no agreements could be struck, increased taxes on imports could make life harder for lower-income Europeans as prices rise and a decrease in cross-border trade could dampen prospects for export-dependent states like Germany.
Finally, the potential collapse of the EU would mean the end of a shared immigration policy to help deal with the difficulties of the current migrant crisis. As it stands now, the European Union has a system to register and relocate migrants coming in from the Middle East and North Africa. Were this shared system to fall apart, the German and Swedish publics might not be so generous anymore and might choose to tighten their borders and reduce the amount of asylum-seekers they accept. In this case, poorer, southern European countries like Greece and Italy would be left to deal with the massive influx of refugees without the possibility of relocation to the northern countries that are better equipped to rehabilitate and integrate them. This impact could be massive on the host countries, with increasing numbers of migrants straining the already threadbare social safety net, some of which is supported by financial transfers from other European countries.
It is obvious that the collapse of the European Union would be a divisive, painful event for every country on the continent. Although the United Kingdom is almost certainly past the point of no return, European negotiators must drive a hard bargain on the British in order to disincentivize any other countries from trying to make the same leap. It must be made clear from Brussels that access to the single market is inextricably tied with free internal movement and integration. Europe is stronger and safer together, but now the Union must ensure its future as it faces the hour of greatest peril.
First posted as an article in International Affairs Review. The original post can be found here.