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Analyses Last Updated: Jun 21, 2016 - 8:57:45 AM


After Brexit
By German Foreign Policy 2016/06/20
Jun 21, 2016 - 8:56:32 AM

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Initial outlines of Berlin's possible reaction to Britain's EU exit ("Brexit") are beginning to seep out to the public. According to a report, government circles, who themselves see no reason to fear the turbulences of the financial markets, are hoping that these will persuade a sufficient number of the British to vote in favor of "remaining." If this does not work, and the British opt for the Brexit, drastic measures should not be excluded. To avoid negative effects on the German economy, some members of the administration are pleading in favor of granting the UK an EU-associate status, similar to that of Norway. However, "a front should be established" to prevent other EU members from following suit and converting to an associate status. The transition to a "core Europe" remains an option and a discussion of it could be initiated at the end of this week. The foreign ministers of the six EU founding countries have planned an exclusive meeting to discuss the consequences of the British referendum.

Forecasts, not Advice

While Berlin continues to discuss adequate reactions to a possible Brexit, representatives of business and finance are seeking a last minute change of course. In Great Britain, advice from abroad is not at all appreciated, and threatens to have the contrary effect. Therefore, it should not be voiced. Hence, interested circles operate using forecasts. Martin Wansleben, Chief Executive of the German Chambers of Industry and Commerce (DIHK), for example, predicts that, in the case of a Brexit, three fifths of the German enterprises, currently active in Britain, would slow down their business. In turn, British companies, now active in Germany, could also encounter more problems.[1] However, British experts point out that Germany profits far more from trade with the UK than vice versa. Threats that common accords for prosperous economic exchange outside the EU would become impossible, should, therefore, not be taken seriously.

Desired Turbulence

Threats are also arriving from the financial sector. Andrea Enria, Chair of the European Banking Authority (EBA), announced that in the case of a Brexit, his institution would leave London. "If the British should decide to leave the EU, we actually would have to move to another European capital."[2] Berlin is taking note with satisfaction of recent turbulence on financial markets, just prior to the Brexit referendum. "The Brits will get a foretaste of what is in store after Brexit. Perhaps, they will reconsider," an unnamed member of the German government was quoted saying.[3] However, the German government is not really worried. Central banks in London and Frankfurt have taken all necessary precautions to stabilize the markets if needed. "A bit more panic" on the financial markets prior to the referendum would be welcomed, because it could possibly improve the perspective of a "remain" vote.[4]

Project Fear

However, the effects of these forecasts and threats to attempt to influence the results become dulled with time. The experience in Denmark is a confirmation. (german-foreign-policy.com reported.[5]) Also in Britain, these attempts have been dubbed "project fear" and are being taken seriously to a dwindling degree. Even if this time "project fear" would be effective, the EU establishment's possibilities for orienting future referendums are continuing to subside.

"Germanophobe Brexit Advocates"

In light of the uncertainties, as Thursday's referendum approaches, there is a possibility that an EU-level crisis meeting will be held. It has been reported that Chancellor Merkel has "prudently planned no public appearances" for Friday. In case there is a "remain" victory, she - for example, with her participation in the Bundestag - can "demonstrate business as usual."[6] In any case, a meeting of the foreign ministers of the six EU founding nations has been announced for Friday or Saturday, to make clear that the "European Project" still stands, according to reports. The fact that, at such a possibly decisive historical moment, the meeting will be limited to only six of the 28 EU countries is an indication of plans, which have not yet been officially made public. The reason given for keeping the plans under wraps is that "no one wants to provide additional arguments to Great Britain's Germanophobe Brexit advocates."[7]

Isolated Case

There are two aspects to the plan. On the one hand, according to the chancellery, it is not out of the question that, following Britain's exit, it still could remain in association with the EU - on a basis similar to that of Norway. This continuation of intact business relations with the United Kingdom would, in fact, accommodate Germany's massive economic interests.[8] However, that other EU countries also opt for a looser association with the EU, must be prevented according to the German Ministry of Foreign Affairs. "We must immediately establish a front under the motto, No Cherry Picking."[9] Any eventual EU association agreement with Great Britain would strictly be an isolated case.

Core Europe

On the other hand, some in Berlin's establishment - including Finance Minister, Wolfgang Schäuble - are currently calling for a change of course toward a "core Europe." Recently former Vice President of the EU Commission, Viviane Reding (Luxembourg) and, Jean Asselborn, Luxembourg's Foreign Minister, made declarations pointing in this direction. "We need a core Europe, this must be imposed quickly," Reding declared.[10] Asselborn was a bit more diplomatic in his formulation, saying that although "a core Europe, wherein a number of countries would be excluded, ... is not the ideal solution," nevertheless, "a debate on how we define solidarity among ourselves will in any case have to be held."[11] That debate could be initiated, when the six foreign ministers of the EU's founding member countries - Germany, France, Italy, Belgium, The Netherlands and Luxembourg - meet at the end of the week. With these six countries, the EU's innermost kernel of prosperity would be set. The broader point of orientation would be the Euro zone. However, those countries, that have not adopted the common currency, will be completely left out, and must comply with decisions handed down by the EU's core.
For more on this theme: The Brexit Summit Show, Project Fear, and No Social Europe.

[1] Deutsche Industrie fürchtet bei Brexit "gravierende Folgen". www.sueddeutsche.de 19.06.2016.
[2] Bankenaufsicht verlässt London, wenn der Brexit kommt. www.faz.net 19.06.2016.
[3], [4] Beim Brexit hat die Bundesregierung keinen Plan. www.welt.de 19.06.2016.
[5] See Project Fear.
[6], [7] Beim Brexit hat die Bundesregierung keinen Plan. www.welt.de 19.06.2016.
[8] S. dazu Die Profiteure der EU.
[9] Beim Brexit hat die Bundesregierung keinen Plan. www.welt.de 19.06.2016.
[10] Vor dem Brexit-Referendum: Führende Europapolitiker fordern Brüssels Neuanfang. www.zeit.de 16.09.2016.
[11] "Cameron hat mit dem Referendum einen Fehler gemacht". www.tagesspiegel.de 19.06.2016.


Source:Ocnus.net 2016

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