Cameron's gamble

Would Great Britain dump the EU?

February 16, 2013
  • Britain's Prime Minister David Cameron said that he will ask voters by the end of 2017 if they would like the country to continue participation in the European Union.

Hectored by archconservatives in his Tory party who object to Britain's membership in the European Union, Prime Minister David Cameron has made a promise he may live to regret.

He has announced that he will call a referendum by the end of 2017 on his country's continued participation in the EU. This would be a binding vote. Britons would make the call: in or out.

Talk about taking a risk.

The benefits of the United Kingdom's 20-year membership in the economic and political union with Europe outweigh the problems, as Cameron acknowledges. He has said that if the EU were to negotiate a new deal with Britain, he would call the referendum but campaign to persuade British voters to stay in the union.

Note that all this depends on Cameron retaining his post as prime minister when Britain votes in 2015, no sure thing considering he's behind in the early polls.

The EU clears the way for free trade across 27 countries. It brings together 500 million people, representing 20 percent of the world's production. It binds them together through common governance and treaties. Its single market has given the UK an enormous boost, but it also has bred resentment in some quarters.

Euro-skeptics in Britain complain about the EU's sluggish bureaucracy, penchant for social engineering and attempts to meddle in domestic fiscal policy. The British should be pushing the sclerotic EU to reform. Cameron, in his speech last month announcing the referendum plan, made a compelling case for change.

"There is growing frustration that the EU is seen as something that is done to people rather than acting on their behalf," he said. Cameron demanded a new focus on economic competitiveness as he delivered a sobering prognosis: "Europe's share of world output is projected to fall by almost a third in the next two decades."

So why shouldn't Britain — which has never adopted the common currency of Europe — kiss off the continent right now?

Mostly because the divorce would be a messy affair. EU members trade much more with each other as a result of the union. In the U.K., that economic activity has created an estimated 3.5 million jobs and raised per capita income by 6 percent. Further, Britain is among the world's top destinations for foreign direct investment, in no small part because of its EU membership.

Unfettered access to the single market is a prerequisite for much of the money flowing in: The Nissan operation in the English city of Sunderland, for instance, is the U.K.'s largest car plant and its biggest car exporter. Would it continue to expand, as it has, if it faced red tape and trade barriers to move its Infinitis across the Channel? Doubtful.

London is Europe's financial center, thanks to the free flow of capital and harmonized systems. As Europe has debated new rules in the aftermath of its banking crisis, Britain has championed free markets. It has beaten back the worst impulses to overregulate, and steered Europe in a direction consistent with the American approach to global finance.

Cameron is gambling that the rest of the EU will negotiate because they can't afford to lose Great Britain. The response from other EU members has been muted, diplomatic. Don't take that as a good sign. While no one has suggested that Great Britain go take a flying leap into the North Sea, no one has stood up and said "Britain is right, we're in big trouble."

Cameron's push for negotiations under threat of a 2017 referendum on whether to bolt could touch off a long, distracting, acrimonious debate. It could complicate the path to a free-trade agreement between the United States and the EU, which President Barack Obama has promised to make a priority.

Capitol Hill has euro-skeptics too. They will wonder why America should build closer ties with Europe just as its closest European ally, Great Britain, is moving toward the exit.

We suspect that the British public would vote to stay in the EU. Britons, like Americans, are smart about safeguarding their fundamental interests. But it's up to the rest of Europe to listen to Cameron's demands.

The European Union has problems. It has an uncertain future. Cameron has called it out.

Time to listen up, and change.