The foundations of the EU were laid after WW2 in an effort to put a stop, once for all, to the endless wars ravaging Europe throughout its history. Thus, the EU was primarily a political project. UK joined mostly for economic reasons.  No one should be surprised that the UK decided to finally exit when the economic benefits of staying in were largely overtaken by politics and its equivalent economic costs. What is astonishing is that the EU ‘allowed’ the UK to join on such terms (and even improve upon them) in the first place.

  1. Peace was a relatively infrequent occurrence in Europe which was instead constantly ruined by ‘internal’ wars and foreign occupations. One way to achieve peace was by unification. In the past, Europe was ‘united’ by empires: Roman, Byzantine, French, English
  2. For example, under Pax Britannica (1815-1914, in Latin “British Peace”) England was the dominant power which ‘assured’ that the Great Powers co-operated rather than fought with each other.
  3. After the devastating effects of WW1, the calls for European unification again became strong. In fact, in the Congress of Aix-la-Chapelle of 1818, tsar Alexander (Emperor of Russia) suggested a permanent European union.
  4. Nothing happened. We had to go through another world war after which Churchill finally called for a ‘United States of Europe’ (1946). Three years later the first pan-European organization, The Council of Europe, was established.
  5. Despite the immediate plan behind its founding treaty (Treaty of Paris, establishing the European Coal and Steel Community, 1951), the EU was a political project first and economic second.
  6. UK eventually joined the European Economic Community in 1973 (after being rejected by Charles de Gaulle a decade earlier) mostly for economic reasons and never embraced fully the political angle.
  7. The election of Margaret Thatcher and the embrace of neo-liberal economic policies, which led to a resurgence of the UK economy, influenced the direction of European integration towards a more economic turn. The idea being that economics will eventually drive politics: “the invisible hand working, its wonders to perform”.
  8. UK was (reluctantly) ok with the free movement of labor (Treaty of Rome 1957) and welcomed the free movement of capital (Maastricht Treaty 1994). But, UK became increasingly unhappy with the free movement of people especially after the enlargement of 8 extra Eastern European countries (the Citizens’ Rights Directive, 2004)
  9. This discontent was exacerbated by the fact that UK decided to open its borders immediately to citizens of those countries, after the Directive came into force, while most other EU countries chose to implement a 7yr-grace period.
  10. The creation of the common currency, the EUR, in 1999 was a natural evolution of the political union but also a response to a number of currency crises, especially so the ERM II in 1992.
  11. The UK decided not to participate despite/because of the fact its currency suffered a lot during ERM II, confirming that it was in mostly for economic reasons. We can say in hindsight that this was the right choice given that the EU political process was far from complete.
  12. This became particularly obvious after the EU sovereign crisis (2012-13) when the continent suffered disproportionally due to its fiscal inflexibility, lack of common treasury and a proper re-distribution mechanism.
  13. While after the 2004 Directive, the UK was swamped by mostly Eastern Europe migrants (by its own choosing), after the EU crisis, migration increased also from the EU periphery and even from the core.
  14. It was at this time that UK media/government started a concentrated push to blame the EU for UK’s economic problems, again, notwithstanding that its own unnecessary austerity was causing most of it.
  15. It was a surreal situation: by choosing to keep its own currency, the UK was not subject to the fiscal straitjackets of the EU, yet it chose to do exactly that and blame the EU in the process.
  16. The Brexit vote came in light of these developments, and with the Treaty of Lisbon (2007) providing for the first time legally a way out of the EU, the procedure of UK exit has started.
  17. What is interesting is that there is a big disconnect between the UK’s position and the EU’s stand in the negotiations: economics vs politics->despite the UK joining for mostly economic reasons, it did, after all, ‘join’ a political union.
  18. What is astonishing here is the UK’s failure to see the political aspect of this (for ex. Northern Ireland issue) and focus primarily on trying to “buy itself out”. Equally, it will be EU’s give-in to strike an economic solution while disregarding the political message it sends.
  19. What is surprising is not that the UK has decided to leave the EU but that the EU has ‘allowed’ for this loophole to exist: if a country wants to enjoy the economic upside of a union shouldn’t also share the political responsibilities that come with it?
  20. In fact, after the 2015 deal between the UK and EU, the UK did acquire a special status within the union: something no other country had been able to achieve. Why did the EU let the UK in on mostly economic terms and why did it even improve on them later on?
  21. But can we blame the UK that it has gone in the Brexit negotiations process asking “to eat the cake and have it” given that this is exactly what the EU has allowed it to do for 40 years (single market, free trade, own currency, no EU fiscal straitjacket, no Schengen)?
  22. This should not distract from the fact that the political union is far from complete. However, economic commentators not only largely underestimate the political difficulties inherent in building its infrastructure…
  23. …but also disregard the history behind this whole project: the initial impetus for it, and the gradual process of adding, layer after layer, in some cases, unfortunately, only following a crisis.
  24. Brexit, however, is the first serious political crisis facing the EU. The future peace in Europe is dependent not on what UK does now, but on how Europe decides to proceed forward.
  25. The European ‘unions’ of the past (empires) were largely based on the idea of ‘colonialism’ – the center takes much more than it gives back. This could be the first European union which is based on common sharing.
  26. On the other hand, if history is any guide, the failure to complete this European integration can have drastically negative political consequences which will dwarf the economic difficulties present today.