Alexis Tsipras has a renewed mandate, but apart from that the situation remains as fraught and unpredictable as it was before Sunday´s vote. Greek negotiators will return to lock horns with their German counterparts and the wrangling will continue for the foreseeable future. Thus preoccupied with the Greek crisis, European officials could be forgiven for not giving too much thought at present to another referendum on Europe which looms over the horizon, even if the implications of that vote, should it go the same way as the Greek όχι, would dwarf the present crisis by comparison.
Britain’s in/out referendum on Europe, a campaign pledge of David Cameron’s recently re-elected government, due to be held no later than 2017, threatens to be the most serious challenge to the EU´s integrity to date. Remember, the current debacle involves the possibility of one of Europe´s smaller members leaving the Eurozone, but staying in the EU; the British vote involves one of its most powerful members exiting the Union entirely. In the grand scheme of European integration, the former would be a major bump in the road, to be sure, but the latter prospect would slam the whole project into reverse and disarray. The reason for this is simple: size matters. Whereas German manufacturers have collectively shrugged their shoulders at the possibility of Greece leaving the Eurozone — accounting as it does for €360 million in German exports — they are gnashing their teeth at any potential loss to the €6.8 billion in annual exports to Britain. Not that Britain leaving the EU, or even Greece leaving the Eurozone, necessarily means they will buy less German or European goods, but there could be a rise in transaction costs due to regulatory asymmetries.
Not to mention that for the first time in nearly half a century, tariffs and duties could be imposed in response to industrial disputes where before there had only been regulatory harmony. These are exactly the kinds of impediments to the free movement of goods that the single market was designed to abolish. Even when the No camp argue that one need only look to Swiss treaties with the EU to see how harmonious relations can be between the block and its close neighbours, the Yes camp can reply that the Swiss example notwithstanding, it could take up to 10 years for all the treaties to be renegotiated; 10 years in which anything can happen, and does Britain want to find itself with one leg in Europe and one leg out when that something does happen?
To further twist the screw the Yes camp will likely point to the incongruity of the Conservatives — who won the election on the mantra that theirs was a safe pair of hands, and voting for the labour would mean economic chaos and disruption — now throwing caution, and 40 years of stable European membership to the wind so recklessly.
The No camp, for their turn, will counsel their opponents not to be so dramatic and point out that many now campaigning to stay in Europe once campaigned to join the Euro, and look how well that worked out for Greece. They´ll point to the fact that Britain has consistently outperformed its Eurozone neighbours since the introduction of the single currency, and that´s even with burdensome labour directives from Brussels shackling its economic potential. Once free of the EU Britain can set its own, more business-friendly labour regulations and win more investment from its trading partners. Many in the financial sector will strongly agree with this sentiment, pointing to the Financial Services Action Plan, which they say is designed by Brussels to punish the success of the City of London by imposing bonus caps, and transaction taxes. Leaving Europe would mean no longer chafing under these anti-competitive rules. By the same token, businesses that rely on their ability to attract a highly educated globalised workforce are stoutly against leaving Europe for fear it could limit their visa-free access to European recruits.
Europe too would suffer a blow to its resources if Britain left, meaning its second biggest net contributor would no longer be adding to the pot, at least not nearly so generously. But from Europe´s perspective a British exit would wreak much more than just an economic toll. It would, in some way mean the end of a dream, the end of the “ever closer union” that had been it been its guiding principle since overcoming the divisions of the past. It would break a taboo that until now was held to be nearly sacred: once you´re in, you´re in and there´s no getting out.
Whatever happens in the Greek crisis, it doesn´t really serve as any kind of guide to how things might play out during the British referendum, the stakes will be much higher for Europe and unlike in the case with Greece, Germany will likely be much more accommodating, nay, bend over backwards to grant Britain whatever it needs in order to keep the European dream alive.
