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The EU divorce and after: rebuilding Britain's relationships

A Note by the Director                                                                                                           (2016/8)
6-8 October 2016

This Note reflects the Director's personal impressions of the conference. No participant is in any way committed to its content or expression.

Context and why it matters

The conference took place just over three months after the 23 June vote for the UK to leave the EU and a few days after Prime Minister May’s announcement that Article 50 will be triggered in Spring 2017, with taking control of borders and immigration the overriding objectives. The aim of the conference was not to refight the referendum – although we inevitably did a bit of that – but to contribute to thinking on all sides that could lead to a “smart Brexit”, meaning productive relations with Europe and other partners and a positive new place for the UK and the remaining states of the EU in the world.  We lacked strong Brexit voices, although they were invited, but anglophile Europeans and pro-European Brits nonetheless often found themselves on opposing sides of the argument.

People

Radek Sikorski, former Polish foreign minister chaired. Participants included influential politicians, senior officials and commentators from the UK, EU countries and the USA, Canada, Russia and Japan.

Where we are now

  • Most of Europe thinks the UK has committed economic suicide: “I never thought that populism would defeat capitalism in the country of its birth and that identity would override interests”. 
  • British voices asserting that we are not dead yet were seen as in denial: “fog in the Channel, continent cut off…” 
  • There was little acceptance amongst the Europeans that there could be opportunities as well as disadvantages to Brexit.  Brexiters were seen as delusional magical thinkers harking back to a mythical past – a buccaneering imperial Britain free of international controls.
  • There is considerable anger that the UK should deal such a blow to Europe when Europe is struggling with economic woes and a migration crisis that is stoking the fires of populism to dangerous levels.
  • Politics is seen as having triumphed over economics in the UK but European voices stressed that they will have their own political calculations to make.
  • All the Europeans insisted that there was no intrinsic ill will towards the UK, only regret, but all warned of the tough negotiations to come in which each side would fight hard for its interests, shaped by its own politics.
  • Everyone could see the risk of a zero-sum bad negotiation in which each side ends up looking to damage the other’s prospects and which ends in the eventual collapse of the talks. 
  • Faced with this, there is a lingering hope in Europe, although it is fading fast, that the UK will somehow reconsider, and that the referendum will be re-run with a different result.
  • On the British side, even those who campaigned passionately to remain in the EU accept that the referendum told us something about popular rejection of globalisation and supranational governance and must be respected.
  • But Remainers reject the interpretation that the British people want a complete break with the EU. They will insist on political ratification for a deal through parliament or a second referendum, arguing that the people have been heard but what they meant is far from clear. “Brexit means Brexit” was seen as clever time-buying politics but not as defining a negotiating position. 
  • The Brits were less convinced than the Europeans that “control” of borders necessarily meant the end of the single market and the customs union.  Passporting was not seen as a decisive issue by the Brits for the City as a whole, only for US investment banks.  (The Europeans viewed this as over confidence.)
  • There was frustration that “Brussels has still not got it”: even after many years of low growth and the Brexit vote, the level of reform required is massively underestimated.
  • EU states cannot contemplate treaty change because of the risk that will require referenda that could unleash similar forces and results as in the UK.
  • The 27 remaining states of the EU will hold together but deeper integration is unlikely.
  • External partners fear that the UK and Europe will be introspective for years to come as they wrestle with the detail of a deal, leaving the US and others to cope with Russian mischief making, the Middle East and the geopolitical challenge from the rise of China.    If the UK and the EU are not introspective, then they fear equally that we may “race to the lowest” with China in search of growth, pursuing mercantile policies at the expense of strategic and enduring interests.
  • Most participants saw a clear tension between the rejection of globalisation that contributed to the vote for Brexit and the remedies for the economic challenges ahead: more free trade agreements with more people around the world; more globalisation; more change; and probably more immigration from non-European countries.No one saw any particular value or viability in the concept of an “Anglosphere”. English was a globalised language not an identity. Britain would need largely to work through existing structures and alliances: the P5, the G7, NATO, G20, WTO etc.

Prescriptions

  • Careful language is going to be crucial in the negotiations. If the UK and Europe press each other on points of political sensitivity using intemperate terms or bombastically claim victory, then a positive negotiation will become unachievable and politics will have sway.
  • The EU sees the UK presently as a negative and unrealistic demandeur.  The UK should consider what it can and should offer Europe in a positive light that would serve its own interests. This could include:
  • A continued joint response in Europe on Russian expansion of influence. Europeans fear that the UK will now see Europe as an expendable buffer zone.
  • Naval support in the Mediterranean to help cope with the tide of economic migrants and refugees.
  • Coordinated and joint leadership on issues of mutual concern like climate change, the rule of law, pluralism, human rights and democracy.
  • A solution for Cyprus where the UK has status as a guarantor of the ceasefire and because of its sovereign bases.
  • Although the Breugel paper had immediately been rejected by most European states, there could be value in new European foreign policy and security structures that bring together the EU and NATO members to pursue common objectives and interests. Turkey saw this is a potential framework for its own relations with the EU. 
  • Liaison between the EU and NATO forces is going to be complicated if DSACEUR remains a British appointment.  EU states would not want their forces to serve under a British commander. 
  • The Political and Security Committee (PSC) observer status for the UK might help but the UK would not be able to participate in decision making if outside of the EU.
  • The UK should consider making some continued payments to the EU after secession in return for specific services or advantages or simply to help Europe cope with the influx of refugees.  This will not work if the EU insists on payment of a financial bill for Brexit.
  • There was no agreement on the prospect of the UK cutting good trade deals with the world. The Europeans were convinced that the UK’s negotiating position would be weak without the economic weight of the EU whilst British participants judged that other factors could be significant in individual negotiations, for example the financial role of London.  The UK might be able to do more with the Commonwealth. The ASEAN countries could also be significant partners.  All of this had been possible when in the EU but Brexit would focus minds.
  • The UK should consider its brand and identity in the new world that Brexit would create. On what issues did the UK want to lead?  The UK might be better off aiming to have decisive impact on some specific problems, rather than spreading a thin layer of contribution over many issues that might escape notice and not be effective.  The UK should be able to leverage strengths on defence, security, cyber, tech, culture, the creative industries, the media and finance. 

More ambitious prescriptions

  • Brexit and the economic shocks it could bring could force the UK into more fundamental reform and modernisation of the state.
  • The UK has strong prospects on technology thanks to the strength of its university system and shared language with Silicon Valley. The skilled UK workforce is already good value for money for tech start ups and the devaluation of the pound has added to this offer. It is possible that tech could compensate for damage to the City and conceivable that in the medium term it could transform the UK’s prospects, given that the five most valuable companies in the world were only created in the last few years.
  • The assumption that Brexit will mean more bureaucracy and cost for the state, for example, on controlling immigration can only be confounded through radically new approaches. This could be possible because functions of the state such as controlling immigration still run on a 1980s approach – based on examination of copies of documents such as university certificates and invitation letters.
  • Establishing effective but non-obtrusive customs and immigration borders with Ireland and, perhaps, an independent Scotland, is going to be particularly difficult. Technology may be able to help but this is much less obvious than on immigration control.
  • The challenge in all this is not only specific but one of general capacity: how to reinvent the state whilst simultaneously engaging in “the mother of all negotiations”.


Europe prescriptions

  • For many if not all in the group, Europe had to do much more on reforming European institutions to recover credibility on growth, democracy, security and immigration. As yet there is no sign this is going to happen.
  • Europe needs more mutualisation of risk on the economy, which looks difficult to achieve politically in Germany, and better control of the EU’s borders.
  • France and Germany would need to show leadership both on the economy and on geopolitical issues and defence. France is worried about Germany’s readiness to share the burden politically and Germany is worried about France economically.
  • Europe and the UK risk hastening their mutual decline in global terms in respect of GDP, demographics and global influence. It is hard to see how one would not effect the other and so some continued coordination must make sense.


Global prescriptions


  • The issues have become global and the politics local. We face a crisis of leadership. It is time for global leaders to lift their sights from the short term and the local, paradoxically in order for them to effect the positive change and growth at home they want to see. This is what it means to live in a globalised world.

CHAIR

Mr Radoslaw Sikorski 

Senior Fellow, Center for European Studies, Harvard University. Formerly: Speaker of Poland's Parliament (2014-15), Minister of Foreign Affairs of Poland (2007-14) and Minister of National Defence of Poland (2005-07); Executive Director, New Atlantic Initiative (2002-05); Deputy Minister of Foreign Affairs of Poland (1998-2001).

CANADA

Her Excellency Mrs Janice Charette 
High Commissioner of Canada to the United Kingdom (2016-). Formerly: Clerk of the Privy Council and Secretary to the Cabinet, Government of Canada (2014-16).

Mr Graham Fox 
President and CEO, Institute for Research on Public Policy, Montreal (2011-). Formerly: Strategic Policy Adviser, Fraser Milner Casgrain. A Member of the Canadian Ditchley Program Advisory Committee.

Ambassador Jeremy Kinsman
Resident International Scholar (Regent's Lecturer 2009-10), Institute of Governmental Studies, University of California, Berkeley (2008-). Formerly: Canadian Diplomatic Service: Canadian Ambassador or High Commissioner to: Moscow, Rome, London, Brussels (EU) (1992-2006).

Mr David Plunkett
Canadian Diplomatic Service: Senior Trade Advisor, Global Affairs Canada (2015-). Formerly: Ambassador of Canada to the EU, Brussels (2011-15).
 
FRANCE

Her Excellency Ms Sylvie Bermann
French Diplomatic Service (1979-): Ambassador to the United Kingdom (2014-). Formerly: Ambassador to the People's Republic of China (2011-14); Director, United Nations and International Organisations Directorate, Ministry of Foreign Affairs (2005-11); Ambassador to the Western European Union and European Union's Political and Security Committee, Brussels (2002-05).
 
GERMANY

His Excellency Dr Peter Ammon 
German Diplomatic Service (1978-): Ambassador of Germany to the United Kingdom (2014-); to the United States of America (2011-14); State Secretary, Federal Foreign Office, Berlin (2008-11); Ambassador to France (2007-08). An ex-officio Governor and Member of  the Council of Management, The Ditchley Foundation.

Dr Martin Heipertz 
Head, European Policy Division, Federal Ministry of Finance, Berlin (2014-).

GREECE

Professor Loukas Tsoukalis 
President, Hellenic Foundation for European and Foreign Policy, Athens; Professor of European Integration, University of Athens.

IRELAND

Mr Tom Arnold 

Director General, The Institute of International and European Affairs, Dublin (2013). Formerly: CEO, Concern Worldwide (2001-13).

JAPAN

Mr Yo Osumi 
Minister Counsellor/Head of Political Section, Embassy of Japan to the United Kingdom. A member of The Ditchley Foundation Programme Committee.

POLAND/UK/USA

Ms Anne Applebaum 
Director, Transitions Forum, Legatum Institute, London.

RUSSIAN FEDERATION

Dr Elena Ananieva 

Head of UK Studies, Institute of Europe, Russian Academy of Sciences (2008-).

SPAIN

Ambassador Jorge Toledo 
Spanish Diplomatic Service: Director, Department of EU Affairs and G20, Office of the President of the Government of Spain (2012-).

SOUTH AFRICA/USA

Ms Ashley Pople 
Probationer Research Student for DPhil in Economics, University of Oxford (2016-17); Rhodes Scholar (Diocesan College, South Africa and St Antony's College) (2015-16).

TURKEY

Ambassador Ünal Çeviköz 
President, Ankara Policy Centre. Formerly: Turkish Diplomatic Service (1978-2014): Ambassador of the Republic of Turkey to the United Kingdom (2010-14).

UK

The Lord Aldington
Chairman, Intramuros Ltd; Chairman, 2019 Committee, New College, Oxford. Formerly: Chairman, Deutsche Bank London (2002-09). A Governor and Member of the Council of Management and Business Committee and Chairman of the Finance and General Purposes Committee of The Ditchley Foundation.

Mr Anthony Barber 
Financial Times (1997-); Europe Editor and Associate Editor (2010-).

Mr Edward Barker 
Director of Trade Strategy & Capability, Department for International Trade.

The Baroness Bowles of Berkhamsted 

Life Peer, Member (Liberal Democrat) of the House of Lords (2015-); member, Lords Select Committee on Economic Affairs (2016-); Non-executive Director, London Stock Exchange plc (2014-). Formerly: Member of the European Parliament for the South East and Chair, Economic and Monetary Affairs Committee (2005-14).

Sir Nigel Broomfield KCMG 
Chairman, Cambridge Quantum Computing Ltd; President, German/British Chamber of Industry and Commerce; Chairman, German/British conference, Young Konigswinter. Formerly: HM Diplomatic Service (1967-97): Ambassador to Germany (1993-97); to the German Democratic Republic (1988-90). A Governor and former Director of the Ditchley Foundation and a Member of the Board of Directors, The American Ditchley Foundation.  

Professor Malcolm Chalmers 
Deputy Director General, Royal United Services Institute (2015-),

Ms Miranda Curtis 
Independent Director, Liberty Global Inc. (USA) (2010-) and Marks & Spencer plc (UK) (2011-); Trustee, Institute for Government (UK) (2009-). Formerly: Chairman, Waterstones Ltd (UK) (2011-16); President, Liberty Global Japan (2005-10).

Ms Rosie Donachie 
Director, Corporate Affairs, Europe, BHP Billiton plc. Formerly: Head of European Affairs, Kingfisher PLC; Senior Adviser, Behavioral Insights Team and the Prime Minister's Strategy Unit.

The Rt Hon Lord Hill of Oareford CBE PC 
Formerly: European Commissioner for Financial Stability, Financial Services and Capital Markets Union (2014-16).

Mr John Peet 
Political Editor, The Economist.

Mr John Knight 
Statoil ASA (2002-): Executive Vice President, Global Strategy and Business Development (2011-). A Governor of The Ditchley Foundation.

Ms Rachel Lomax 
Senior Independent Director (2015-), board member (2008-), HSBC. Formerly: Director, TheCity UK; President, Institute of Fiscal Studies; Deputy Governor (Monetary Stability), Bank of England (2003-08). A Governor and member of the Council of Management of The Ditchley Foundation.

Mr Vijay Rangarajan CMG 
Her Majesty's Diplomatic Service: Director Europe, Foreign and Commonwealth Office (2013-16).

The Rt Hon. Lord Robertson of Port Ellen KT GCMG Hon FRSE PC
Special Adviser, BP plc; Chairman, BP Russian Investments Ltd; Senior Counsellor, The Cohen Group (USA); Chairman, FIA Foundation (2016-). Formerly: Deputy Chairman, TNK-BP (2006-13); Secretary General, NATO and Chairman, North Atlantic Council (1999-2003); Secretary of State for Defence (1997-99). Chairman of the Council of Management, The Ditchley Foundation.

Mr Charles Songhurst 
Founding Partner, Katana Capital, Mountain View, CA; Director, Songhurst Group. Formerly: Corporate Strategy, Microsoft Inc.

Dr Charles Tannock MEP 
Member of the European Parliament (Conservative) for London (1999-); Foreign Affairs and Human Rights Spokesman for the UK Conservative delegation; Member, Foreign Affairs Committee. Formerly: Conservative Party Spokesman on Financial Services (1999-2001).

Ms Caroline Wilson CMG 
Director (Europe), Foreign and Commonwealth Office (October 2016-).

UK/USA

Dr Fiona Hill 
Senior Fellow and Director, Center on the US and Europe, Brookings Institution. Formerly: National Intelligence Officer for Russia and Eurasia, National Intelligence Council, Washington, DC.

Lady Judge CBE 
Chairman, Institute of Directors (2015-); Chairman Emeritus, United Kingdom Atomic Energy Authority. Formerly: Chairman, UK Pension Protection Fund (2011-16). A Governor and a Member of the Programme Committee and Business Committee, The Ditchley Foundation.

USA

Ms Heather A. Conley 
Senior Vice President for Europe, Eurasia and the Arctic and Director of the Europe Program, Center for Strategic and International Studies, Washington, DC. Formerly: Executive Director, Office of the Chairman of the Board, American National Red Cross (2005-08); Deputy Assistant Secretary of State, Bureau for European and Eurasian Affairs, U.S. Department of State (2001-05).

Mr Steven Erlanger 
New York Times: London Bureau Chief (2013-). Formerly: Paris Bureau Chief (2008-13); Berlin Bureau Chief (2001-02). A Governor of The Ditchley Foundation.

Ambassador C. Boyden Gray 

Founding Partner, Boyden Gray and Associates, Washington, DC. Formerly: U.S. Ambassador to the European Union.

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