German Vice Chancellor Worries Brexit Will End EU

Germany’s Vice Chancellor Sigmar Gabriel voiced his concerns over the week-end that Britain’s departure from the European Union, if handled badly, could result in the collapse of the whole thing. While Brexit is a regrettable folly that should never have been put to a vote under the circumstances it was, the EU without the UK is entirely feasible. Even if the divorce is messy and painful, it will take more out of the UK than it will out of the EU. It is a classic case of things never being as bad as the pessimists say and never as good as the optimist believe.

Here is exactly what the vice chancellor, who doubles as Germany’s economy minister, said, “Brexit is bad but it won’t hurt us as much economically as some fear – it’s more of a psychological problem and it’s a huge problem politically. If we organise Brexit in the wrong way, then we’ll be in deep trouble, so now we need to make sure that we don’t allow Britain to keep the nice things, so to speak, related to Europe while taking no responsibility.” In other words, the EU needs to make this painful enough that other nations don’t follow the British example.

However, there are only two nations in Europe whose participation as full members of the EU matters: Germany and France. The entire European project exists to manage the dominance of Germany at the heart of the continent in a way that everyone else can live with. Germany unification in the 19th century led to two World Wars, and the EU’s founding principles was to make that impossible by tying nations together through trade and economic integration.

France, as Germany’s historical and cultural rival, signed onto the European project because it lost three wars to Germany from 1870 to 1940 (while on the winning side of the 1914-1918 conflict, France lost by almost any measure). As Europe’s second power (Russia not counting as Europe for the purposes at hand here), its participation prevents the creation of a rival bloc.

The British were not present at the founding of the European project and were halfhearted members since joining in the 1970s. British policy focused more on preventing the UK from integrating than it did on making a contribution that would help the community over all. Britain got rebates and exemptions for its efforts, which also ensured it was not at the core of Europe when Brexit was decided.

It is hard to argue that the loss of the UK to Europe will be painless under any circumstances. And the vice chancellor’s insistence on hurting the British to keep the Dutch in is pure power politics. However, Britain has never been necessary to the success of Europe. Between the Empire-Commonwealth and the Special Relationship with America, Britain has never felt that its future was solely tied to Brussels. The losses in withdrawal will fall on the UK more than on the EU. Finance now done in London will still get done, just not necessarily in London. Other banking centers in the smaller EU will benefit. Since Britain was never in the eurozone, that will be easier. Defense remains a function of NATO, not the EU, so it is hard to see how Brexit really harms that.

British exports to the EU are subject to the Rotterdam-Antwerp effect, whereby the UK exports to the Low Countries which move the goods outside of Europe. Thus, there is an overstatement in the figures when it comes to UK exports to EU markets. The fact-checking stated in the run up to the referendum “The last time the proportion of exported goods and services [from the UK] heading to the EU crossed the 50% line was in 2008. Since then, it’s fallen to 44.4%; not quite half, but close.” In other words, there has been a rise in UK exports to other places as a proportion of overall exports at the expense of the EU. That means there has been a shift even before Brexit was taken seriously as an option.

The simple fact of the matter is that the EU doesn’t need the UK as a member. So long as Germany and France are committed to it, the smaller nations of Europe will fall into their orbit at one level or another. Losing Britain hurts the European Project, but it’s not a fatal blow by any means.