Why are they Negotiating Brexit? The Cost of Withdrawal from the EU

Nation-states are sovereign entities. No state can legitimately coerce another state to take any actions that they don’t want to take. Or so all the textbooks say.

They why are the UK and the other European Union (EU) states negotiating over Brexit? Can’t the UK just bail tomorrow and be done with it?

The answer is that the UK could do just that, but the price it pays would be very, very high.

States are sovereign, that much is true, but in an anarchic world, no outside power guarantees commitments. That means that all a state has is its reputation for compliance with its agreements. The UK could just walk away, but they made strong and deep commitments to the EU, including a commitment to follow a set of procedures if they want to withdraw. To abandon these commitments would mark the UK as a state that cannot be trusted.

It would also mean abandoning all of the benefits of EU membership instantly. Economic relationships have value and an instant, disordered end to these relationships would potentially wreck the UK economy. It might also damage the economy of the other EU members, so they have an incentive to play by the rules as well.

Following the rules makes everyone better off, even if there is no outside enforcer.

In cases like this, enforcement is easy. Everyone is better off, so no one chooses to blow up the system. The actual terms of negotiation will be much harder, and the eventual deal will be difficult for all sides to agree on. But, the negotiation and eventual deal still beats throwing the rules out the window. The EU Treaty is thus a self-enforcing agreement, even when one party wants to break away.

This kind of situation is actually remarkably common in international relations. The International Postal Union manages international mail service. The International Air Transport Association sets global standards for the aviation industry to make global air travel safer and more orderly. Numerous other organizations handle these kinds of boring activities that most people ignore every day.

In many high-stakes areas such as security and human rights, organizations face greater challenges. When faced with these challenges, it can be harder to maintain the rules. That is why the design of international institutions can be challenging, and why institutions can fail under pressure. The most famous example is still the League of Nations, which failed to halt Japanese, Italian, and German aggression in the years before World War II.

One of the things that Brexit shows us is that strong institutions that provide large benefits to their members can support rules-based solutions even when faced with serious problems.

 

Discussion:

  1. The UK wants to leave the EU, but it wants to keep most of its economic ties to the EU economy. How likely is it that the other EU member states will be willing to offer this benefit without concessions in return? At what point might this change the mutual benefit equation discussed above?
  2. The EU member states are all democracies. They have to be democratic to become members. Does the fact that all of these countries are democratic, and thus select leaders through a set of rules and procedures, make the political leaders of these countries more likely to accept rules and procedures in international politics? Does the democratic nature of the membership make following the rules easier?
  3. Sovereignty was clearly important enough that a majority of UK voters were willing to leave the EU to preserve it. Does the willingness of the UK to leave the EU damage the reputation of the UK for honoring its commitments? Is following the rules on the way out just a bandage over the wound to the UK’s reputation?