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Politics

L'Union européenne ne doit pas sanctionner la Grande-Bretagne

Jan 31, 2017 Hans-Werner Sinn

MUNICH – La Première ministre britannique, Theresa May, l'a confirmé : le Royaume-Uni va sans l'ombre d'un doute quitter l'UE et négocier un nouvel accord commercial. Reste à savoir ce que l'UE est prête à accepter en terme d'accord.

May l'a exprimé clairement, la Grande-Bretagne ne veut pas d'un accord comparable à celui qui existe entre l'UE et la Suisse ou la Norvège, car cela supposerait que son pays fasse des concessions en matière d'immigration. Elle exclut également de se soumettre à la juridiction de la Cour européenne de justice accusée par les dirigeants britanniques de favoriser des intérêts particuliers.

Mais l'UE n'est pas disposée le Royaume-Uni en faire à sa guise, en tout cas pas sans en payer le prix. Les dirigeants de l'UE ne sont pas disposés lui accorder un accès libre au marché unique s'il se refuse à la libre circulation des personnes. L'entêtement des Européens tient en partie à leur crainte de voir d'autres pays quitter l'UE si l'accord final est trop favorable au Royaume-Uni. Mais leur volonté de punir les Britanniques, ne serait-ce que pour dissuader d'autres membres de l'Union de suivre leur exemple, entre aussi en ligne de compte.

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Hans-Werner Sinn

Writing for PS since 2002
110 Commentaries

Hans-Werner Sinn, Professor Emeritus of Economics at the University of Munich, is a former president of the Ifo Institute for Economic Research and serves on the German economy ministry’s Advisory Council. He is the author of Casino Capitalism: How the Financial Crisis Came About and What Needs to be Done Now (Oxford University Press, 2010).

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jagjeet sinha Feb 2, 2017

TIME FOR GENEROSITY IS OVER - GENIUS HAS ITS LIMITS
After having created An Architectural Wonder - it is perhaps more appropriate to test the tenacity.
1945 - 2015 is 70 years in which the generosity of The Anglosphere enabled peace n prosperity in Europe.
But Megalomania of The Masterminds is both Centennial and Unlimited.
Having challenged The Anglosphere every 100 years, why suggest generosity again.
Time to interject history with Zero once again - for the Road to Infinity requires the Zero periodically.
The Truth triumphs every time - like The Lion, it defends itself.
You get to throw a stick at A Lion only once, not periodically every 100 years.
Genius has its limits, 70 years perhaps the maximum.
Stupidity is Infinite.
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Mauricio Duran-Loriga Feb 2, 2017

@ Jan

Your take has been correct until today at least. But look, while today Germany is achieving world records in trade surplus, southern countries (except Greece) have only managed to halt the 2008 induced free fall, although at the expense of trespassing their future capabilities of debt repayment. As you said, youth is yelling. And populist movements are solidly on the rise. Unfortunately.

Right at the onset of the next crisis, all hell will break loose in an erratic, violent and unpredictable way. Just because people will have enough of the same old lies presented by the same old corrupt elites, who by the way, will have no credibility left.

It is a certainty that all central banks will launch gargantuan desperate efforts to contain the damn from catastrophic failure. Bonds and stocks will be bid as if there was no tomorrow.

Problem is that in all likelihood the currency itself will have lost all credit and it will have almost no bids in forex markets. That will make the real difference.

Next crisis won't be about banks going bust. It will be about a collective assumption that the dream of the Union was in fact a night terror. And we all want to exit nightmares asap, whatever it takes, right?

27 members. Just one pulling off the Union in response of domestic civil unrest awakening, and nothing will stop the falling knives.

In Europe, the anger against Germany is far greater than its achieved trade surplus.
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j. von Hettlingen Feb 2, 2017

Hans-Werner Sinn advises EU leaders to be "generous" to Britain, saying it may seem "counter-intuitive," but letting Britain go "on generous terms" would be the "only way to keep the EU together." It's true that "no relationship can flourish if its members feel trapped." But a divorce settlement needs to be mutually acceptable, and that requires two parties to know their limits and be rational. The other problem is that even if leaders want to be magnanimous, their constituents may not let them.
Britain will leave the EU and seek to negotiate new trade deals with the bloc. Theresa May will not go by the precedents of Norway and Switzerland, as Britain wants to regain control over its borders. As she is so eager to ditch EU laws, Britain will not be in the jurisdiction of the European Court of Justice. The question is whether the EU will accept these terms, which it sees as cherry-picking.
Ideally Britain wants access to the single market without accepting free movement of EU citizens. Yet the EU will not let it happen, fearing it would encourage other members to follow suit. The author says this "approach is all wrong," explaining that "free trade with the EU does not have to be accompanied by free movement of people." His theory is that, "the economic effects and welfare gains resulting from free trade are substituted, not enhanced, by those of free movement of labor."
If a country doesn't let in immigrants. wages are "more likely to arise" which would affect prices. The author says: "these differences increase gains from trade," which is what trade is about - "exploiting such differences." He thinks "if the EU refuses to sustain free trade with the UK, its citizens will suffer as much as the British." And he doubts whether other countries would follow Britain's example, should it leave the EU, while getting what it wanted with impunity. He says there are "two types of political community."
The first denotes a distribution of wealth such that any redistribution or other change beneficial to one individual is detrimental to one or more others. This "pareto optimality" gurantees more solidarity and a sense of belonging.
The other community relates to the "redistribution of resources...... by majority decision-making," which creates "winners and losers." It's not gains that matter, but securing the majority rule at all costs. In the course of action the pie gets "smaller," leaving some unhappy.
The author says such a community tends to be unstable, "because the losers tend to opt out. The only way to keep them in is to make leaving even less appealing – say, by punishing them."
To be more specific, the EU is actually "sending the message that it is a union in which some members are bound to lose," - a narrative that Trump loves to espouse, one that lent his support for Brexit, predicting more countries to leave the bloc.
The European project could be saved - according to the author - should the EU be able to "transform itself from a redistributive union ruled by the majority to an optimal and voluntary union ruled by unanimity – one that conforms to the Pareto principle." To start with there should be no "common EU finance minister at the head of an authority with autonomous taxation powers. The next is to offer the UK a mutually beneficial free-trade agreement."
The EU "could end up suffering the fate of the Soviet Union," if it can't be flexible and consensual. But it will be difficult to keep everybody happy. Even in a family there are members who are happier than others. Parents sometimes face a daunting task of keeping the family together. It is true that "penalties and other coercive measures" don't win hearts and mind. Discontent and apprehension remain, which hang like a sword of Damocles over the welfare of the family, with "its members vulnerable to exploitation."
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M M Feb 1, 2017

Which of the 28 EU countries is the most diplomatic and with true democratic institutions, on a scale of 1 to 10?
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Rocio L. Barrientos Feb 1, 2017

Brillant! This article is a "must read" for policymakers, students, academics and the general public.
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Christine Constable Feb 1, 2017

Well Hans, this is the first real sense I have read on the subject. Equally the UK does not in fact OWE the EU anything. Having bankrolled the project for 40 years and expended more than its fairshare on military assets and personnel in defence of the EU and made such huge sacrifices in two world wars to restore Peace in Europe the British have paid more than is fair and any attempt to impose a punitive leaving charge will be met with the contempt that deserves.
Germany has done very nicely out of the EU and the Euro and operation of EU as a "captive" market for German products is a perfect model which suits Germany but does not suit many of the rest of us. To coin your analysis Hans, the British have seen that there is not much in Europe to entice us to stay, particularly given the export deficits and reluctance to allow UK services to be allowed in Europe.

Germany (sadly) has not given up designs of becoming a "super power" that which it could not do by itself it seeks to do by building Europe in its own image - it is not surprising that the UK would not want to be a part of this and certainly this was not the deal the British signed up to all those years ago.

It would be best for Germany; the stability of Europe and for the UK to simply accept that the UK was never going to kow tow to Germany and whilst there may be many weaker EU economies happy to have their financial budgets approved by Berlin the UK was never going to be one of them.

A sensible and far sighted view would be to allow the UK to do its thing and grow as it can with a friendly eye to Europe and a far sighted hand to the Anglosphere and the rest of the world and become a bridge to an insular Europe. The British (contrary to popular belief in Europe) do not have any designs on a new Empire or grandiose pretensions, we have been there, done that and have the T shirt and huge on going costs that foray created. Rather we want a quiet life, we want to remain a stable and respected power, keen on free trade, but jealously guarding our laws and independence. We have issues no other EU country has to deal with because of our history and our military involvements and one size does not fit all.

It is better for all to make peace with the UK, recognise that full membership of the EU Junker wants to see was never going to happen, and for our 40 years of European investment have the UK as a satellite EU associate country, whose role is to link the EU with the rest of the world in a measured and managed way.

The UK isn't going anywhere geographically and "punishing" the UK will finish off the EU of that I can be sure.

I agree with the author - let it go and remain friends and do a sensible mutually beneficial deal.
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Emre Berkay Feb 1, 2017

Ironically, that photograph with Erdogan raises a counterpoint. Should the EU be generous to deceptive right-wing populists that make forging alliances with illiberal leaders&dictators first order of business? How far should the EU go in compromising with opponents of liberal democracy then?
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Mauricio Duran-Loriga Feb 1, 2017

The EU was purposely designed as a wealth drilling camp where Germany acts as the authoritarian savings extractor and the other countries act as concentration camps filled with modern slaves, where the (Jewish) yellow badge has been replaced by the entrampment mechanism of a home mortgage.

Britain will leave the EU as quick as possible without making any concessions on its way out. You first read it here. What generosity would you ask to the burning fire you are desperate to escape? Seriously...

The EU, sorry, Germany indeed, has far greater worries immediately ahead. Namely Donald Trump fiscal policy. Expected US corporate tax reform will be tantamount to a humongous public subsidy for most sectors of America's economy.

Foreign competing agricultural-based countries will endure pain, famine, and civil war as a result. America First gentlemen.

But the butter is in the high value-added manufacturing sector, and Germany is the world champion, and a coveted prey. German manufacturers, already chattering teeth, will suddenly face a major blow and the country will see its world record trade surplus shrink at the speed of light.

This in turn will unleash a steep round of German-induced authoritarian austerity in European serf countries. That will be the nail in the coffin for several EU members to quit the Union, slamming the door on their way out.

Exiting members will transform euro-denominated debt into debt denominated in the new currency of choice. Both at public level (ECB's Target 2 and remaining bilateral debts with foreign countries) and at private level (mostly at interbank lending).

By then, Great Britain will have regained its former role as a world financial hub between Eurasia and America. Keeping its democracy intact. Other exiting members may not be as lucky and will endure harsh populist governments, or worse.

Unwinding German-imposed slavery and throwing the disproportionate welfare state to the gutter will cost us dearly.

But hey, the writing is on the wall.
- Jan Czaja Feb 1, 2017
  
  Mauricio,
  Although I agree with you on the flawed design of EU which essentially serves as a mechanism for German export machine, I disagree with you regarding the break up of the union. My opinion is based on Greek crisis. Here was essentially a perfect example of Eurozone's shortcomings, and a country which essentially begged for a currency devaluation in order to turn around its economic situation. Yet, through cowardice of bought and paid for Greek politicians and sheer single-mindedness of northern Europe creditors, the country is still in Eurozone and still suffering an outright economic depression. Sure, I can imagine that going back to drahma would be painful, but based on what's been happening for the past five years, I'm not sure about that anymore.
  
  The same scenario will play out with rest of the Eurozone as well. The southern Europeans will pretend that everything is OK while the northern Europeans will inject some new cash now and then and keep the whole thing on life support. The sad part is that the youth will pay the price for this madness. Primary example is Italy with a lower GDP now then when it joined the Euro back in 1999...we're talking about almost 2 lost decades.
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Ariel Tejera Feb 1, 2017

Actually, the EU (minus de UK), is in obvious need of restructuring in multiple areas, induced by Brexit, Greek & Italy implosion, refugees, slow growth, NATO dilution, local populism, weak leadership ... quite a mouthful. Additionally, the EU likes to go slow. It is thus, shocking, to see the lack of initiatives confronting this new epoch, seeking opportunities, creating them. Maybe the UK has voted itself into irrelevance, but the EU hasn't ... yet.
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Charles Villette Jan 31, 2017

A political community characterized by unanimius decision-making and no financial transfers is also known as an anarchy (or "golden liberty" in historical Poland), whereas a political community characterized by majority decision-making and redistribution is also commonly known as a Republic. Sure, anarchy may often be preferrable to certain powerful members or to outside powers; but it is not always a guarantee of stability, and examples show that republics can sometimes be stabler.
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L'Union européenne ne doit pas sanctionner la Grande-Bretagne

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