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Analysis
Seizing opportunity from EU crisis

Seizing opportunity from EU crisis

Consequences of Britain’s Russian roulette

by Ernst Welteke in Frankfurt

Mon 18 Jul 2016

With his ill-considered referendum on European Union membership, David Cameron, now departed as British prime minister, played Russian roulette – and lost. But the list of losers extends much wider. Underlined by Thursday’s renewed terrorist atrocity in France and the attempted Turkish military coup, Europe faces a rising tide of challenges on many fronts. The remaining 27 EU members must treat the referendum result as a wake-up call for Europe-wide renewal, with the aim of improving the EU’s content, institutions and transparency in all its fields of action.

Britain’s vote to leave was a setback for a united Europe of peace, democracy and prosperity. Through culture, history and the spread of its language, the UK incontestably belongs to Europe. But there are two sides to every coin, and crisis yields opportunity. Now is the time to seize it.

By acting together, Europe can overcome the myriad tests of globalisation that are beyond individual nation states’ capacity to resolve. The UK has been a notorious opponent of European initiatives and legislative proposals. Without London’s braking influence, the rest of us can make more rapid progress.

Britain itself faces a host of self-inflicted problems, including its possible disintegration. A majority in parliament does not share the voters’ wish to depart. The referendum has laid bare deep fissures between young and old, town and country, England and Scotland. Bridging these divides is an enormous task for Theresa May, Cameron’s successor.

The Leave campaign did not expect to win and plainly had no idea what to do when it did. Boris Johnson, the former mayor of London and prime Brexiteer, appeared to depart the political front line following the vote, but in a surprising development has returned as foreign secretary.

May perhaps has appointed Johnson in the expectation he will fail. He starts with the major handicap of a devil-may-care image that does not go down well in foreign capitals. Unless he can repair quickly the damage of past thoughtlessness, he is unlikely to be a success.

I must admit, though, that the other 27 countries, too, were ill-prepared for the 23 June outcome. The leaders of Europe must make it much more than a continent of free movement of capital and goods. Benefits have to accrue to citizens, tangibly and recognisably. There is a vast agenda to tackle: reducing youth unemployment, solving housing needs, improving health service access, preventing pensioner poverty, protecting the environment.

Europe must be made more democratic by strengthening the European parliament. The European council of heads of government can no longer continue as the prime decision-making body. The council is not answerable to the European electorate; its members are far more concerned with shoring up their domestic positions and winning re-election. There is a mismatch between power and responsibility. Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble are elected by voters in Germany, not in Greece or Portugal. But they decide (with others) what is happening in these countries – an unacceptable and unsustainable state of affairs.

We must overhaul, too, the composition and functions of the European Commission. It is intolerable that each country appoints its own commissioner, meddling in matters that can be solved nationally and concerned above all with providing jobs for the Commission’s 23,000 employees. Further improvements are needed in the construction of monetary union – which needs an independent body for monitoring member countries’ budgets and financial performance, and is able to reject budgetary plans that infringe guidelines and impose sanctions where necessary.

Britain’s decision is a disappointment and a setback, but it provides a chance to move forward. Unless Europe grasps the opportunity, further failures are in store.

Ernst Welteke was President of Deutsche Bundesbank between 1999 and 2004, and is a member of the OMFIF Advisory Board.

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