The national, European and global future of the United Kingdom following Brexit by Antall József Tudásközpont

ANTALL JÓZSEF RESEARCH CENTRE

THE NATIONAL, EUROPEAN AND GLOBAL FUTURE OF THE UNITED KINGDOM FOLLOWING BREXIT ZSOLT CSEPREGI—PÉTER DOBROWIECKI— ALESSANDRO D’ONOFRIO—PÉTER STEPPER

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AJRC-Analyses Series of the Antall József Knowledge Centre

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2 Czuczor Street, 1093 Budapest +36 20 310 8776 ajtk@ajtk.hu | www.ajtk.hu/en

THE NATIONAL, EUROPEAN AND GLOBAL FUTURE OF THE UNITED KINGDOM FOLLOWING BREXIT1 ZSOLT CSEPREGI—PÉTER DOBROWIECKI— ALESSANDRO D’ONOFRIO—PÉTER STEPPER

EXECUTIVE SUMMARY PÉTER DOBROWIECKI

Prime Minister Boris Johnson announced on 31 January 2020 that, as per his pre-election promise, he “got Brexit done.” After three years of tiring negotiations, the United Kingdom ceased to be a member state of the European Union. According to the plans, the still ongoing transition period would end with a UK-EU agreement on 31 December 2020. At the same time, the transition period puts London into a delicate situation, as it is no longer part of the EU, has no say in its decisions, but is still obliged to align with its rules, while also remaining member of the single market and customs union. It is no coincidence then that the British government has emphasised the importance of negotiating a trade deal with the EU before the end of the transition period. Nevertheless, negotiating a complete and mutually accepted deal and concluding the ratification process before 31 December 2020 is an extremely daring enterprise—especially in light of the coronavirus pandemic (COVID-19) that also had widespread and disastrous effect in Europe. Currently, British negotiators have very limited space for manoeuvre, which may lead to the UK having to choose one from two unattractive options: leaving the EU at the end of the transition period without a trade deal or signing a piece-meal deal, but most likely on EU terms. The main concern of the EU is that the British government will provide competitive advantages to domestic businesses through direct subsides, significantly relaxed market regulation, or the reduction of the already low corporate taxes, as, without a trade deal, the UK is not compelled by any means to maintain the high standards designated by the EU. In the same manner, the UK might be forced to accept lower standards after the exit in order to be able to strike new international trade deals or to let products onto its market that were made more cheaply and according to lower standards in other parts of the world. The latter will involuntarily entail the lessening of British corporate standards because, in this highly competitive situation, this will provide the only means for British companies to preserve their earned market share in the long run.

Original text published in Hungarian on 4 May 2020. <https://ajtk.hu/hu/kutatas/ajrc-elemzes/az-egyesultkiralysag-nemzeti-europai-es-globalis-jovoje-a-brexit-utan >

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With the deadline approaching, the UK and the EU could decide to follow an alternative approach to signing separate agreements encompassing specific areas, similar in manner to the arrangement signed between the EU and Switzerland, but with fewer agreements and a clear institutional structure. A deal along these criteria could prove to be more efficient, however, it would hardly cover all the sensitive issues that an arrangement between London and Brussels should necessarily set in order. Such a less comprehensive deal would likely be the result of the short timeframe, in which priority would be given to the major areas of trade in goods—more difficult talks would then take place after 2020. The UK and the EU could also apply unilateral, time-limited measures as a legislative expedient in case of areas not covered by the agreement. This way, the future relationship of the parties involved would be subject to day-to-day talks. Currently, it is probably the position most preferred by the UK. In contrast, if the British government were to decide on a free trade deal, the UK would choose the most severe and economically harmful form of divorce. The Brexit policy of the Johnson government could have a significant effect on the internal dynamics of the UK and so the threat lingers that the British territorial constitution will be shaken in an irrevocable way. It is also a possibility that concluding an agreement with the EU will not be the hardest task of the government, but mending the fractures created by the Brexit within the British society. Over Boris Johnson’s clear victory in December, the success of the Scottish National Party (SNP) in Scotland, which obtained 45% of the votes and 80% of the seats, was mostly overlooked by the public. The majority of the Scots (62%) voted against the exit from the EU in 2016 and SNP has continuously been campaigning for holding a new referendum since the independence referendum of 2014. The question of independence is not only a political tool for them, but an answer to a situation where the British government has frequently ignored the opinion of the devolved institutions (local governments of Scotland, Wales, and Northern Ireland) during the talks with the EU. The Scottish government has many times requested that the consequences of exiting the EU be lessened in Scotland through special measures, underlining that local businesses might gain an economic disadvantage because of Northern Ireland’s privileged access to the EU single market. In Northern Ireland, the decision to leave the EU—which was rejected by the majority of voters—has intensified the polarisation between the unionists, favouring to remain within the London-led union, and nationalists. The local results of the Brexit vote were understood by nationalist parties as a sign of democratic support of their pro-European pro-Irish unity policies. The risk of Northern Ireland being isolated from the rest of the UK, as well as losing access to financial funds pertaining to the EU membership reinforced these parties, which now are openly supporting the end of partition and are campaigning for a border poll. Although to a smaller extent than in Scotland, the Welsh devolved government is also facing a significant Brexit dilemma. As opposed to the Scottish and Northern-Irish people, the Welsh voted for the exit from the EU in 2016. However, Cardiff sought and argued for a softer form of Brexit during the talks. A major Welsh concern is that, after the Brexit, they will receive significantly less from the budget relieving the financial support coming from EU structural funds. British governments led by Theresa May and Boris Johnson highlighted the importance of the UK becoming, from a foreign policy and trade perspective, a “globally” significant

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factor again (Global Britain). Concrete measures to be taken to reach this long-term goal, however, are quite unclear. According to the concept, in possession of its re-established authority, the UK will be able to create favourable positions when setting new tariffs and trade deals. The scientific sector would be the economic backbone of this new vision that could form the base for a global hub concerning science, academic cooperation, and financial services. When concluding new trade deals, the Johnson administration plans to focus on three geographically separate directions: North America, Europe, and the Indo-Pacific. In addition, the UK wishes to re-establish its close ties with the Commonwealth countries, stating that deep economic and trade relations with these states were downgraded in the second half of the Cold War. At the moment, however, no concrete resources are allocated to support these policy objectives. Only promises that defence spending over the 2% threshold of the GDP will be maintained, or increased annually if possible, or that the level of international development aids over 0.7% of the GNI will be preserved can be considered as a form of assurance. The UK decided to sacrifice the advantages provided by the EU membership and the force multipliers it entails in return for the benefits of added flexibility gained from independence. However, it is clear for both parties that the interests of London and Brussels will align in most cases in the future too. Despite the fact that Donald Trump vocally supported and welcomed Brexit, great difficulties await the US, as its closest ally is leaving the EU in a period when intensions of achieving a (certain degree of) strategic autonomy seem to be articulated more frequently within the Union. From Washington’s perspective, the UK will be less relevant when it comes to foreign policy, as it will be less effective in mediating with Paris and Berlin than it was as an EU member state. Tension arising from the asymmetric relations between the two countries will most certainly surface during talks on a new trade deal. At the moment, the UK’s foreign policy aligns much closer to that of other European capitals than to Washington’s, especially in the case of such key international issues as relations with China and Iran, or the resolution of the Syrian civil war. Therefore, the UK will be torn between its European allies with similar priorities and the US. Until 2020, the main pillar of the UK’s relevance was its EU membership, in the absence of which it must set a new role for itself: that of a global middle power. London must think, act, and show itself to its allies as a global middle power having special capabilities and assets. Concurrently with accepting its status as a middle power, it would be practical for the UK to establish a new network comprising middle powers with common foreign policy priorities to counter conflicts not manageable individually—it is no coincidence that British diplomacy supports the enlargement of the permanent seats of the UN Security Council. The UK can easily find other middle powers that are also threatened by the erosion of the rule-based world order and the volatile politics of great powers. However, neither of these countries, including Japan, Canada, Australia, or the Republic of Korea, have so many and significant military, economic, and other globally applicable capabilities as the UK, the (potentially) greatest middle power among them. From a defence policy perspective, the exit will not only affect the defence cooperation of the EU member states, but Europe’s defence capabilities inside the NATO alliance, the British defence policy and defence industry, as well as the defence industry of European

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great powers. Therefore, military cooperation with the US will be exponentially important for the UK, which, in this case, will not indicate a mutually favourable environment of equals, but it will be more similar to the US-Australian relations, where the weaker party must oblige the requests of the stronger party to preserve its security guarantees. This way, the bilateral UKUS defence cooperation is more vulnerable than it would be if European-American clashes of interests were to be debated as part of a multinational framework within NATO. From a security policy perspective, accepting its status as a middle power seems to be a hard road to take for the UK, as exemplified by their action to renew the Trident programme, which reveals an insistence on great power ambitions. As part of this, in 2016 the development of a new generation of submarine-launched ballistic missiles (with nuclear capability) was, surprisingly, approved of by the overwhelming majority of the Parliament for a planned cost of EUR 31 billion. The reason for this is the tricky situation that the UK finds itself in, as it needs nuclear weapons because of the great power status, but today this status is exclusively ensured by the fact that they possess nuclear weapons. In the short run, the UK’s exit will clearly have a negative effect on the EU’s defence capabilities, despite the fact that the British, who had always been opposed to the idea of a common European force as a member state, were rather a hindrance to the development of common EU capabilities. At the moment, there are no obstacles within the EU to the inclusive approach regarding the Permanent Structure Cooperation (PESCO). However, a heated debate ensued on whether non-EU member states—in particular the US and the UK—could join the PESCO project. One of the reasons for this is that increasing defence capabilities has a very stimulating effect on the economy. Large European consortia, partly French and partly German, would not like to compete for PESCO sources with British companies after the Brexit. Because of the nature of defence industry, the effects of the changes due to the Brexit will not be felt in the short run. Most of the new defence tenders were closed by the companies before the exit. At the same time, budget planning for the European Defence Fund will still take a while and, even if a decision is reached, effects of the increased budget will be felt only in a few years. For Hungary, it is extremely important that the UK-EU relations should be defined by sound agreements along the lines of mutual advantages in the future too to ensure that the tightest cooperation possible is formed between London and Brussels. As a military ally, the biggest Hungarian export target country outside the EU, and the fourth largest foreign employer present in the country, the UK will continue to have a defining role in Hungary’s security policy, as well as foreign policy and trade relations after the Brexit. The harmonious cultural and social relations, common values articulated on many occasions, the large and active diaspora living in both countries all underline the importance of maintaining and strengthening an intensive bilateral cooperation.

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BREXIT IS FINALLY DONE. AN OUTLOOK ON THE EU-UK NEGOTIATES AND THE EFFECT OF LEAVING ON THE UNITED KINGDOM ALESSANDRO D’ONOFRIO

As promised before the election—and following three years of tiring negotiates—on 31 January Boris Johnson “got Brexit done.” After almost five decades the United Kingdom, which was EU’s third largest economy and its de facto second biggest contributor, ceased to be a member state. From 1 February, a complicated and hard transition period has just begun that will expire on 31 December 2020 —probably— with an agreement between the EU and the UK. However, in order to do so new bilateral relations between the two parts must be determined. During the transition period the UK finds itself in a delicate position, being no longer a member of the EU, losing its rights to have an influence over the union’s decisions, but continuing to be aligned to its rules, while also remaining a member of the single market and customs union. The British government has often reassured that its first commitment is to negotiate a trade deal with the EU before the transition period will be over and prominent figures have even emphasised that the future relationship between the United Kingdom and the EU will be even “deeper” and more “special.”2 However, to negotiate a complete, mutually accepted deal before the 31 December 2020 is considered an extremely ambitious plan, or even impossible since almost half of the original 21-month period has been wasted, leaving the parties involved with just 11 months not only to find an agreement, but also to complete the ratification process. In fact, recently EU’s chief Brexit negotiator Michel Barnier warned the British government of the scarce chances in negotiating a comprehensive deal in this compressed timetable.3 If common sense should prevail, London will ask for a further extension that should be presented not later than June. However, it is very unlikely that Boris Johnson, who stubbornly excluded such an option during his campaign, making it even illegal to ask for it, will make such a U-turn.4 The prime minister’s recklessness dramatically reduced the space of manoeuvre for the British negotiators which, in turn, might present the UK with only two unattractive options: to leave the EU at the end of the transition period but without a trade deal, or to negotiate a piece-meal deal, likely on EU terms. Since the Conservative landslide victory in the December general election, the likelihood of a “no-deal” Brexit at the end of the year rose dramatically. In the current situation a

2 Patrick Wintour: No more deal or no deal: Brexit language diktat for Foreign Office staff. The Guardian. 4 February 2020. <https://www.theguardian.com/politics/2020/feb/04/no-more-deal-or-no-deal-no-10s-brexitdiktat-to-foreign-office > Accessed: 12 March 2020.

Hussein Kassim: It's far from clear how close and special the UK and EU's relationship will be post-Brexit. The Telegraph. 4 February 2020. <https://www.telegraph.co.uk/politics/2020/02/04/far-clear-close-special-ukeus-relationship-will-post-brexit/ > Accessed: 12 March 2020. 3

Chris Morris: What is the Withdrawal Agreement Bill?. BBC. 23 January 2020. <https://www.bbc.com/news/ uk-politics-50125338 Accessed: 12 March 2020.

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“No-deal” will look different from the same perspective before the introduction of the Withdrawal Agreement. In fact, under the “new” scenario after 31 December the relationship between the UK and the EU— issues regarding citizens’ rights, the Irish border and financial settlement—will be regulated by the bill approved by the British parliament and ratified by the European institutions at the end of January. However, for all these areas of EU–UK cooperation not covered by the Withdrawal Agreement—for example trade in goods, services, data transfers and security co-operation—the implications of leaving without a deal in December 2020 would look very much the same as the No Deal scenario, introduced in the first phase of Brexit negotiations.5 The new Withdrawal Agreement, though looking mostly the same as the previous one introduced by Theresa May (rejected by the House of Commons), presents some essential alterations, additions and a number of more minor drafting modifications. The main differences are to be found on questions concerning Northern Ireland. Since 2016 renewed efforts of the Brexit negotiates came to a standstill because of questions related to Northern Ireland with the issue of the Irish border making it impossible to reach any agreement between the different sides. The first attempt to deal with the issue came from former prime minister Theresa May, whose minority government was formed thanks to the support of 10 Democratic Unionist Party (DUP) MPs. For more than two years the Northern Irish representatives held the balance of power in Westminster, influencing the government negotiations, and, eventually voting against May’s proposed deal which envisaged the introduction of a backstop for Northern Ireland that, in the absence of a free trade deal or alternative solution, would have seen the UK remain in the EU's customs union and Northern Ireland follow some of the EU's single market rules. Opposition to the backstop came also from the most hardliner MPs within the Conservative Party on the grounds that it would have kept Northern Ireland and the whole UK bogged in the EU’s regulatory system for years to come. On the opposite, Johnson’s excellent performance at the polls gave the Conservatives a large majority in the Commons which made the support of minor parties, such as the DUP, unnecessary. This situation gave the prime minister a free hand in the Brexit negotiations and made possible the introduction of a deal with a new solution for the Irish border. Johnson’s deal enables the UK as a whole to leave the EU's customs union and freely diverge in terms of tariffs and regulatory standards from the EU, and to conclude trade deals with other countries. At the same time the Northern Irish state will remain partially aligned to the single market and follow EU procedures in the case of goods arriving into the country. A solution as such removes the possibility of goods being checked along the Irish border shifting the barriers to trade to the Irish Sea, while protecting the cooperation between Northern Ireland and Ireland secured by Strand II of the Good Friday Agreement. However, this solution puts Northern Ireland in a very uncomfortable position, namely being part of an area in which the rules of the UK’s internal market and the EU’s single market will overlap while the future relationship between the

Antonio Villafranca: Che Brexit Sará? ISPI Commentary. 10 February 2020. <https://www.ispionline.it/it/ pubblicazione/che-brexit-sara-24886 > Accessed: 10 March 2020. 5

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two players has been dealt only in the broadest terms in the Withdrawal Agreement. With all these points still undecided—and likely to be so for months—and no preparatory work having started for defining the checks on both sides of the Irish Sea, the December deadline looks certainly undeliverable. Besides, the Withdrawal Agreement also contemplates the institution of a Joint Committee composed of UK and EU representatives responsible for overseeing the implementation of the agreement including the power to determine when goods entering Northern Ireland are “at risk” of entering the EU and therefore subjects to checks and customs. If this Committee would not be set up Northern Ireland could face a major disruption in trade, with Northern Irish businesses importing British goods paying the highest price.6 As a concession to the Northern Irish people, four years after the end of the transition period, the Belfast assembly will have to decide by a simple majority vote whether to extend these provision for another four years. If consent is not reached, there will be a two-year “cooling off” period during which both sides need to agree on a new solution to prevent the return of a hard border in Ireland. Given that in this region it is always very difficult to find common ground, in all likelihood the debates over the implementation of a new trade agreement will almost inevitably be framed less as a policy or economic matter than as a constitutional and identity one.7 Other than the Northern Ireland Protocol, the Withdrawal Agreement touches upon two other fundamental key issues that the UK has agreed to settle before leaving the EU: the financial settlement, or as it is often called, the “divorce bill,” and the citizens’ rights—those of EU nationals living in the UK, and British people living in Europe. The financial settlement is the money the UK owes the EU to settle its obligations that, despite not being a definitive cost to the settlement, has been originally estimated above £30-35 billion (€35-40 billion).8 However, it is almost certain that this figure has increased because the two Article 50’s extensions which required the UK to pay into the EU budget as a full member up to the end of January 2020, prolonged the original timeframe by ten months longer than anticipated. The “divorce bill,” as in the Withdrawal Agreement, reflects the appropriate amount the UK accepted responsibility for continuing to pay into the EU budget for the whole year, until the transition period comes to an end. Obviously, in case of a further extension additional payments would be due, something that could help explain why Boris Johnson stubbornly refuses to discuss the possibility of prolonging the process beyond the end of this year.9 Yet, after leaving the EU, London is likely to continue paying some money to Brussels in order to remain part of certain EU spending programmes, in addition to those earmarked

European Commission: Revised Protocol on Ireland and Northern Ireland included in the Withdrawal Agreement. EC Key Documents. 17 October 2019. <https://ec.europa.eu/commission/publications/revisedprotocol-ireland-and-northern-ireland-included-withdrawal-agreement_en > Accessed: 10 March 2020. 6

7 Katy Hayward Dr: Brexit has placed Northern Ireland at the UK-EU interface. The UK in a Changing Europe Analyses. 8 February 2020. <https://ukandeu.ac.uk/brexit-has-placed-northern-ireland-at-the-uk-eu-interface/ > Accessed: 10 March 2020. 8 House of Commons Library: Brexit: the financial settlement – in detail. House of Commons Library. 19 DeCember 2019. <https://commonslibrary.parliament.uk/research-briefings/cbp-8039/ > Accessed: 11 March 2020.

Institute for Government: Brexit deal: the financial settlement. Institute for Government. 19 February 2020. <https:// www.instituteforgovernment.org.uk/explainers/brexit-deal-financial-settlement > Accessed: 11 March 2020. 9

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for international development aid (the European Development Fund) already included in the Withdrawal Agreement. In fact, the UK could opt to remain part of future EU research programmes and the Erasmus program which supports the mobility of younger people.10 Another issue which attracted major attention from EU member states’ concerns the rights of EU citizens living in Britain. Following the 2016 referendum, British authorities reassured EU citizens legally residing in Britain that nothing will change and they would be allowed to remain in the UK. Yet with Boris Johnson premiership things seems to have taken a different turn. Even if the Withdrawal Agreement gives EU citizens the right to continue working and living in the UK, the EU has expressed some concerns about the prime minister’s determination to stop free movement of people from 31 December 2020. Since beginning of 2019 UK’s authorities called all the EU citizens who have been lawfully residing in Britain to apply until the end of June 2021 for the so-called “settled status” (EUSS) which will grant them a right to stay in the UK once the transition period is over. So far the British government received around 2.7 million applications and around 59% of these were accepted, while and the rest were only granted pre-settled status—where the individual will have rights to stay for five years, after which they will have to apply for full settled status.11 This is a very important number but it does not shed light on another impressive number, namely on the amount of those EU citizens who, though regularly working and paying taxes in the UK, for different reasons haven’t applied for this status yet. It seems that most of these individuals might be unaware of this scheme due to living and working in rural and remote areas, with poor English language skills and limited access to internet. Many of these people belong to the most vulnerable layers of society, as well as elderly people, children and homeless and are often employed with precarious working contracts, with longer and alienating shift patterns which makes it difficult to attend possible appointments for support. As a matter of fact, from June 2021, all these individuals will find that they cannot access healthcare, housing, welfare benefits or employment and after the deadline could be left without legal rights with the risk of deportation.12 This is particularly worrying for the many people coming from Eastern Europe that represent the bulk of EU migration into the UK. While a certain amount of those individuals have a higher education and are employed in high qualified jobs, the majority of them work in areas where minor competences are required, such as the construction industry, factories, health and social care sector. According to recent estimates the number of EU8 and EU2 citizens living in the UK, i.e. those coming from the block of Central-Eastern European countries which joined the EU in 2004 plus Romania and Bulgaria, even if steadily declining, is now at1,818,000 with Polish citizens representing the largest EU-national

10 Iain Begg Professor: It’s Still the Money, Stupid. The UK in a Changing Europe Analyses. <https://ukandeu. ac.uk/its-still-the-money-stupid/ > Accessed: 11 March 2020.

Home Office: EU Settlement Scheme. Experimental Statistics. Home Office. 17 December 2019. <https:// assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/852619/eusettlement-scheme-statistics-november-2019.pdf > Accessed: 6 March 2020. 11

Various: Unsettled Status. The UK in a Changing Europe Analyses. 12 November 2019. <https://ukandeu. ac.uk/unsettled-status/ > Accessed: 9 March 2020. 12

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group (ca.832.000).13 The possibility that hundreds of them could be forced to leave their living and working quarters could have serious implications both in Britain, which could face a serious labour shortage in certain areas, and in the countries of origin where there could be a fall in remittances—which for many Eastern Europe member states represents a consistent part of their GDP.14 As seen, the first phase of the negotiations covered only questions included in the Withdrawal Agreement, which took nearly two years to be signed and whose implementation will likely require at least the same amount of time. From this perspective it takes a lot of imagination to believe that a comprehensive new trade deal could ever be reached in the short time until 31 December. In normal circumstances trade deal agreements are negotiated over a timespan of several years and the very strict—self-imposed —deadline will also not be beneficial for the final outcome of the next phase of Brexit negotiations. In this stage, started in March 2020, the focus of the EU-UK negotiations will be directed on the future level of access that the United Kingdom will have to the European single market after Brexit. Although in the Conservative Party’s manifesto, the government pledged to establish “a new relationship based on free trade and friendly cooperation” with the EU, considerable uncertainty surrounds the implementation of its second phase. 15 The problem also derives from the illusion that the extent of the Conservative’s victory last December could strengthen the UK’s position in the negotiations with the EU, not least because they believe that the credibility of the no deal threat is even greater. The truth is that, even if some areas of the negotiations will be extremely contentious and for some, the UK could face a choice between concession or the failure to get a deal, at present, the British government still needs to agree on its priorities in the negotiations and set up structures to effectively manage the economic impacts. The British government’s ideal deal— “zero tariff, zero quota”16—still leaves a huge number of unanswered questions on the details of the UK’s preferred future relationship with the EU. The “Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom,” a non-legally binding document agreed on 17 October 2019, represents an attempt to outline the UK’s and the EU’s aspirations for their future relationship is far from being complete. The Declaration made it quite clear that, given the “geographic proximity and economic interdependence" of the UK with the EU, the future relationship

Office for National Statistics: Migration Statistics Quarterly Report: February 2020. Office for National Statistics. 27 February 2020. <https://www.ons.gov.uk/peoplepopulationandcommunity/ populationandmigration/internationalmigration/bulletins/migrationstatisticsquarterlyreport/february2020 > Accessed: 12 March 2020. 13

14 The Financial Times: Brexit decision hits migrant workers’ wages sent home. The Financial Times. 17 August 2016. <https://www.ft.com/content/3b3f1bee-63bc-11e6-a08a-c7ac04ef00aa > Accessed: 2 March 2020.

The Conservative and Unionist Party: Get Brexit Done: Unleash Britain’s potential. Manifesto, 2019. The Conservative and Unionist Party. December 2019. 5 <https://assets-global.website-files. com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf > Accessed: 11 March 2020. 15

BBC: Brexit: Zero tariff, zero quota aim for trade talks, says Barclay. BBC. 26 January 2020. <https://www. bbc.com/news/uk-politics-51255528 > Accessed: 18 March 2020.

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must include “robust commitments to ensure a level playing field.”17 Level playing field measures are often included in trade agreements to ensure that the parties involved cannot gain a competitive advantage by deregulating their domestic market. The previous declaration, negotiated by Theresa May, envisaged the UK remaining closely aligned to the EU but Johnson, rejecting the need for strong legal commitments on the level playing field, wants to depart from his predecessor’s line and pursues a more independent trade policy. In fact, the aspiration of the prime minister is to avoid the EU law being the reference point for establishing common standards what is more he is adamantine in asking that the UK must not be subject to the jurisdiction of EU institutions and the European Court of Justice. As expected, Johnson’s new political direction caused concern not only in Brussels, but also among the most moderate British political and business circles, opposed to Brexit. However, under the new Withdrawal Agreement, the prime minister obtained the right that his ministers do not to have to seek for Parliament’s approval before initiating negotiation with the EU. In this way the government gained greater flexibility in choosing the terms of when to start the negotiations. From the EU side, the areas where Brussels insists that level playing field measures must be maintained are workers' rights, taxation, state subsidies for business and, of course, environmental protection, since Commission President Ursula von der Leyen appears to be strongly committed to the implementation of the Commission’s environmental agenda during her mandate. In particular, the EU is worried that the UK could pose a challenge to European businesses by deciding to become a sort of “Singapore on Thames,” with the provision of greater subsides to national industry, introducing a more relaxed competition regime or cutting its, already low, corporation taxes.18 On environment and social protection, in the absence of EU membership the UK government could choose to pursue lower environmental standards. In fact, if no trade deal is agreed, the UK has no legal obligation to maintain the EU’s high standards on environmental protection deciding to drop some of the costlier “green policies” enabling British goods and services to become more competitive on the global market. From the same perspective but in a reverted scenario, once outside the EU, the UK could also be required to accept lower environmental standards in order to reach new international trade deals or even to allow onto its market goods produced more cheaply in other parts of the world, which in turn will push British businesses to request the lessening of existing standards and laws to give a boost to domestic production. However, negotiates are expected to present many potential obstacles also on other sensitive issues. Some of the most sensitive talks will be directed on essential subjects like fishing rights, criminal justice and law enforcement, intellectual property, energy, transport,

HM Government: Political Declaration setting out the framework for the future relationship between the European Union and the United Kingdom. HM Government. 19 October 2019. <https://assets.publishing. service.gov.uk/government/uploads/system/uploads/attachment_data/file/840656/Political_Declaration_ setting_out_the_framework_for_the_future_relationship_between_the_European_Union_and_the_United_ Kingdom.pdf > Accessed: 12 March 2020.

Therese Raphael: Singapore-on-Thames Isn't Going to Happen. Bloomberg. 15 October 2019. <https:// www.bloomberg.com/opinion/articles/2019-10-15/brexit-deal-singapore-on-thames-isn-t-going-to-happen > Accessed: 18 March 2020. 18

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as well as on procedural questions, where the UK and the EU must urgently find an agreement. Future fishing rights in UK waters are likely to be a flashpoint in negotiations between Brussels and London regarding post-Brexit relations since the issue already became a dominant topic during the Brexit referendum campaign. In fact, the UK’s withdrawal from the Common Fisheries Policy (CFP) means that vessels belonging to EU member states will no longer be granted automatic access to UK waters. Despite the fact that the fishing industry represents a relatively small economic sector, European fishermen are highly dependent on access to the seas around the UK and about 42% of all fish caught by EU fishing crews are plucked out of British waters. 19 For this reason, officials in Brussels, urged by the North-Western EU member states, have made reaching a deal on it conditional to the future post-Brexit relations between the two sides. Although, the “Political Declaration” already set up a key date for an agreement on access to fishing waters to be reached by July 2020, this timeframe seems very optimistic considering the fact that at the same time a magnitude of other decisions will have to be made on the rest of the negotiation topics. At the same time, while the fishing industry accounts for just 0.1% of the UK’s economy, it has assumed a high symbolic significance in domestic politics and it is very likely that Johnson will also try to use the EU’s reliance on its waters to its advantage while in Brussels—maybe seeking concessions on financial services. However, while the “fisheries battle” might give the prime minister an advantage vis-à-vis Brussels, it could also act as a disruptive force for the UK’s constitutional balance in the long run. In fact, the fishing industry is vital for many local economies and communities in different parts of the UK, while most UK fishing activities occurring in Scotland–consequently Edinburgh was quick to state that no decision should be made on the issue without its consent.20 Furthermore, the UK and EU will quickly need to concur on the exact structure of the agreements they want to reach. It seems that the EU’s approach is to split negotiations into several agreements based on areas that belong exclusively to the EU’s competence and those parts of the deal where the competence is shared between the EU and member states. A similar approach has already been taken by Brussels during the negotiates with Japan and Singapore, but it is not yet clear if it will take a similar approach during negotiations with the UK. As for the UK’s approach there are several different possibilities. In fact, London could decide to opt for a comprehensive Association Agreement—similar to the EU’s agreement with Ukraine—which would surely be the most expansive. In this case a final agreement would only be adopted once all negotiation had been completed. This approach is mentioned in the Political Declaration and has long been advocated by the European Parliament. However, this kind of agreement, even if it would allow negotiators to adopt a

19 European Fisheries Alliance: All in the same boat: free Markets and fishing grounds. EUFA Key Issues. 15 September 2017. <https://fisheriesalliance.eu/key-issues/all-in-the-same-boat-free-markets-andfishing-grounds > Accessed: 12 March 2020. 20 Owen Joe, Jack Maddy Thimont, Georgina Wright, Jess Sargeant, Alex Stojanovic and Haydon Etherington: Getting Brexit done. What happens now? Institute for Government Insight. January 2020. <https://www. instituteforgovernment.org.uk/sites/default/files/publications/getting-brexit-done-WEB.pdf > Accessed: 11 March 2020.

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more compromising attitude in case of unrelated issues, would almost certainly take longer than 11 months to negotiate and ratify.21 Alternatively, the two sides could choose to advance towards the direction of separate agreements covering specific areas—similar to the one signed with Switzerland but with fewer agreements and a clearer institutional architecture. A deal with these features could prove more efficient but it will hardly cover all of the most sensitive issues where an agreement is vital. This type of less comprehensive deal would be most likely the result of the short timeframe, with priority given only to principal areas of trade in goods—with more difficult talks delayed until after 2020. As a legislative expedient for those areas not covered by the agreement, the UK and the EU could issue unilateral, time-limited measures leaving the future relationship between the parties in many areas subject to day-to-day negotiates. This is probably the most favoured position in the UK. In fact, London has often declared that it would rather negotiate distinct agreements, and keep the different areas of co-operation separate from each other because it fears that linking everything together would allow the EU to threaten sanctions in unrelated areas in the event of perceived British non-compliance with one particular bit of the agreement. As for the EU, a deal with these characteristics needs to come as a single package and should have some overarching governance framework in order to avoid the UK copying Switzerland, with which Brussels has signed more than hundred separate bilateral treaties in an arrangement it considers inadequate and burdensome.22 In any case, whatever version Brexit Johnson will pursue, the economy of the United Kingdom will be weaker than it would be remaining in the EU. By opting only for a free trade agreement (FTA), the UK is going to choose the hardest, most economically harmful form of departure. Moreover, Johnson’s political direction is at odds with the general mind-set of the governments in Wales and Scotland, while its deal on Northern Ireland, designed to allow Britain to obtain a quick definition of the Irish border, has been widely rejected by all the Northern Irish political parties. It has already been observed that Brexit fomented the divisions and rancour already existent in British society and put the union as a whole to a strain. The process of leaving the EU is now close to its definition but the level of discontent across large parts of the nation risks to shake the British territorial constitution in an irreversible way. The hardest task for the government will be not to conclude a deal with the EU, but trying to rebuilt the fractures Brexit has created in the British society before it is too late. On one side, a challenge is represented by the new political and socio-economic cleavages which are both the reason and the result of the Leave vote. On the other side, Boris Johnson and his successors have the duty to keep the country united, by addressing the necessities of all the constituent countries forming the UK. Preventing a scenario according which once the divorce with the EU will be finally effective, constituent countries could decide to go on their own way and lead to the dissolution of one of the most resistant political unions in history.

Council of the European Union: New approach on negotiating and concluding EU trade agreements adopted by Council. Council of the European Union. Press Release. 22 May 2018. <https://www.consilium.europa.eu/ en/press/press-releases/2018/05/22/new-approach-on-negotiating-and-concluding-eu-trade-agreementsadopted-by-council/ > Accessed: 12 March 2020. 21

HM Government: Political Declaration.

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Boris Johnson’s clear victory in December put another important result of this election in the background. In fact, at the same time that the Conservatives’ were jubilant because British people handled them a clear mandate for negotiating Brexit, the success of Nicola Sturgeon’s SNP (Scottish National Party) in Scotland, which obtained 45% of the votes and more than 80% of the seats, could place the first brick in the process of dissolution of the United Kingdom. SNP’s result has been explained as a sign of clear support by the Scottish people for a second independence referendum, which could offer them the opportunity to determine whether they still want to remain part of a UK outside of the EU, or to choose a different course as an independent European state. In 2016, while the UK as a whole voted to leave the EU, 62% of voters in Scotland made their choice to remain and since then, given the material change of circumstances from the first independence vote, the SNP leadership is campaigning for a new vote over freedom. Independence is not only a tool Sturgeon is using to gather support around her party, but it represents an extrema ratio to a situation that saw the British government repeatedly ignoring the devolved institutions’ opinion while negotiating with the EU. In case of the Scottish Government, since Brexit, there have been recurrent demands for special measures to be introduced in Scotland in order to limit the consequences of leaving the EU. For example, few months after the referendum Sturgeon proposed a compromise that would see the UK as a whole remain within the EU single market or, in this decision’s absence failing that, a special arrangement that would have allowed Scotland to remain within the single market even if the rest of the UK diverged. Obviously, this compromise was not given serious consideration and there is little evidence that it has ever been brought to Brussels’ attention. Furthermore, from a Scottish perspective, there is the growing feeling that two sets of standards have been used by the British administration when dealing with requests coming from Northern Ireland and Scotland, with the latter’s Brexit preferences being cast aside.23 Even if SNP’s ministers do not object in principle to special arrangements for Northern Ireland, they are still concerned that Northern Ireland’s privileged access to the EU single market, will put Scotland at a comparative economic disadvantage. In fact, according to Scottish Government analysis, Scotland’s economy would suffer significant damage under the prime minister’s Brexit deal with estimates between £9 billion (€10,3 billion) and £12.7 billion (€ 14,5 billion) by 2030 compared with EU membership.24 As a matter of fact, Johnson’s premiership made nothing to settle the differences between London and Edinburgh and his refusal to accept a Scottish independence referendum during his mandate even worsened the relationship between the two countries. In fact, a new vote in Scotland needs formal permission from Westminster, and even if the large majority of Scottish voters gave a mandate to the independentist SNP—which not

Scottish Government External Affairs Directorate: Scotland's place in Europe: assessment of the revised EU withdrawal agreement and political declaration. Scottish Government Analyses. 30 October 2019. <https:// www.gov.scot/publications/scotlands-place-europe-assessment-revised-withdrawal-agreement-politicaldeclaration/pages/4/ > Accessed: 18 March 2020. 23

Scottish Government: Brexit deal impact study. Scottish Government. 30 October 2019. <https://www.gov. scot/news/brexit-deal-impact-study/ > Accessed: 12 March 2020. 24

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necessarily indicates that all of these voters’ support independence—London is not willing to allow the creation of a Catalonia-like domestic political situation while negotiating in Brussels. From this perspective, SNP's best hope of forcing Johnson to agree to granting a new referendum lies in the next Scottish parliament election in May 2021. An electoral success like the one obtained in December would definitely reinforce the democratic case for SNP for holding another referendum on separation. It must be understood that, once the UK has left the EU, the reopening of the debate concerning independence might become even more difficult for Scotland both technically and economically. As the Northern Irish example showed, there will be many difficulties in discussing all the issues belonging to independence and the future relationship with the UK. For one, there will be a difficult debate over the question of currency. In addition, there are all sorts of challenges to creating a trade or regulatory border between England and Scotland. All these problems might be even greater if Johnson is not able to negotiate a comprehensive deal at the end of the transition period.25 While the debate over independence is far from being settled, urgent measures need to be taken to prepare the Edinburgh administration to manage the undesired effects of Johnson’s Brexit. As a matter of fact, Scottish government and parliament should have been involved in deciding upon the UK’s negotiation stance on such important devolved matter as fisheries, the environment and justice, as well as the many other issues that will affect the country. But, once again, EU-UK negotiation have strained the relationship between London and the devolved institutions. In the case of Scotland, the most illustrative episode concerns the negotiations on fisheries policy. In the last few decades the UK’s constitutional framework has undertaken a process of “devolution,” where a wide range of policy competencies have been delegated from the centre—the British parliament—to the devolved institutions in Scotland, Wales and Northern Ireland. In the case of Scotland, intergovernmental relations between Edinburgh and London have been relatively stable and efficient since 1999, even if some complications have arisen in some areas where the demarcation between delegated and reserved competences, as set out in the Scotland Act 1998, resulted in somehow genuinely ambiguous situations. Indeed, a number of policy decisions in areas where the devolved institutions had the power to legislate were subsequently delegated at the EU level while administrative functions were still carried out by local governments. Fisheries are a good example for one of these policy areas. Unsurprisingly, Brexit had disrupted the balance between the Scottish government, London and Brussels since no new UK-wide policy frameworks have been yet agreed. As the fishing industry is an important part of the Scottish economy and 2/3 of British fish comes from Scotland, the Scottish parliament believes that its legislative consent would be needed before any agreement is reached in Brussels.26 Nevertheless, during the drafting of the

The UK in a Changing Europe: Brexit: What’s Next? The UK in a Changing Europe Research. February 2020. 36-37. <https://ukandeu.ac.uk/wp-content/uploads/2020/02/Brexit-what-next-report.pdf > Accessed: 12 March 2020. 25

26 Ailean Beaton: Post-Brexit Fisheries bill to be introduced by UK Government. Holyrood. 29 January 2020. <https://www.holyrood.com/news/view,postbrexit-fisheries-bill-to-be-introduced-by-uk-government_15031.htm > Accessed: 18 March 2020.

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UK Fisheries Bill, the new legislation which will replace the EU legislation on the matter, Marine Scotland—an institution that could be considered as the Scottish ministry of fishing policy—was sidelined amid Edinburgh’s great irritation. Obviously, this decision raised political considerations regarding the principle of cooperation between London and the devolved institutions. From a “constitutional” perspective—an artificial term since the UK does not have a written constitution—Brexit, by leading to the recentralisation of power within the UK, is creating more overlap between devolved and reserved powers, which are weakening the meaning of devolution and raising concerns about Westminster’s willingness to reduce the powers of the local parliaments. On 8 January 2020, in a rather symbolic gesture, the Scottish parliament voted to withhold consent for the Withdrawal Agreement Bill, that without considering the opinion of the devolved institutions in Edinburgh, Cardiff and Belfast, repatriated the EU laws and translated them into a new category of domestic law. Nevertheless, this attempt did not stop the introduction of the legislative measure but it is likely that its implementation will increase the risk that the dispute over Scotland’s constitutional future will inevitably fought on different battlegrounds. Together with the renewed pressure for independence in Scotland, Brexit is posing a big challenge on peace in Northern Ireland. Suddenly after the referendum the small region, which will represent the only external land border of the UK with the EU, became the cornerstone of the Brexit negotiates. Being under the spotlight, as the reason behind the Brexit impasse, put the very fragile Northern Irish political landscape under strain and reignited the traditional divisions already existent in the region. The decision to leave the EU, rejected by the majority of voters in Northern Ireland, has in fact exacerbated the polarisation between unionists—who traditionally support Northern Ireland remaining part of the United Kingdom—and nationalists, which campaigned against Brexit and which now consider the event of Irish unification more likely. In fact, at the time of the referendum, the division between unionists and nationalists reproduced itself on the leave/remain spectrum and—as in the case of Scotland— when the majority of voters opted to remain in the EU, the nationalist parties considered this as a sign of democratic support for their pro-European pro-Irish Unity policies. However, the reinforced division between the parties in Northern Ireland led to the failure to find an agreement to restore the Legislative Assembly in Belfast, which since March 2017 was inoperative. Finally, an agreement had been reached last January with the “New Decade, New Approach” agreement between the British and Irish governments and Northern Ireland’s political parties. The agreement set out a list of priorities for the region after Brexit, as already agreed by Theresa May’s letter in August 2016, which include efforts to be made to achieve the sustainability of the agricultural sector, that businesses, both local and foreign investment companies, “retain their competitiveness and do not incur in additional costs,” and that the Irish border does not become an impediment to the movement of people, goods and services.27 However, as a result of the Protocol on Northern Ireland—successively rejected by all the parties in 27 House of Commons Library: Northern Ireland Assembly: New Decade, New Approach. House of Commons Library. 10 January 2020. <https://commonslibrary.parliament.uk/parliament-and-elections/devolution/ northern-ireland-assembly-new-decade-new-approach/ > Accessed: 11 March 2020.

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Northern Ireland—the circumstances seem to have put the Six Counties on a different path. In fact, Northern Ireland, despite remaining nominally in the UK, will be de facto part of the EU’s custom territory and also part of the EU’s single market for goods, meaning that trade across the Irish Sea will be directly affected by the future negotiations between the UK and the EU. The effect of these negotiations could foster frictions within the UK internal market and present additional costs for Northern Irish businesses. This is the cause of deep distress in the region, as from being potential beneficiaries of a “best of both worlds” scenario, the Six Counties could face serious disruptions in trade once the Withdrawal Agreement will gain effect, with the areas along the border suffering the most negative impact.28 As a matter of fact, many of these trading problems could be avoided if only the UK would agree an extensive free trade deal with the EU, and the UK and EU could agree that the inherited regulatory alignment for trade in goods should be maintained. However, the negative effects of Johnson’s Brexit will not only be economic but will primarily affect politics, that is based in Northern Ireland on a very fragile compromise between the two predominant parties, DUP and Sinn Féin. It is easy to expect that one of the biggest points of confrontation which will follow the implementation of the Withdrawal Agreement Bill will materialise four years after the end of the transition period. On that date the Members of the Legislative Assembly (MLAs) of Northern Ireland will have the exclusive power to vote on whether to continue to be aligned to EU rules for the following years. This debate is expected to be very complicate due to the strong resurgence of identity issues which could even trump economic matters. Disagreements and divisions are expected in the region which only in the last few decades recovered from a long period of sectarian violence. This is the reason why, more and more people from all backgrounds in Northern Ireland think that Irish unity could represent a viable way out in the close future. In fact, the risk of Northern Ireland being isolated from the rest of the UK and at the same time being left out from the EU, from which the region receives a large amount of funds, is reinforcing the anti-Brexit parties which support the end of the partition and campaign for a border poll—a solution devised by the Good Friday Agreement which states that, if, at any time, it appears “likely” to the Northern Ireland Secretary that a majority of people in Northern Ireland would vote for a united Ireland, a referendum must be called. Indeed, not only Sinn Féin and the other nationalist parties in Northern Ireland, but also the moderate Alliance party see the attraction of Irish unity, mostly as a mean to return to the EU. On the other side, Brexit could act as a serious backlash for unionists. In fact, the last UK general election, saw the increase in support for nationalist and cross-community parties’ MPs which increased their seats in Westminster, while on the contrary DUP could no longer claim to be the voice of Northern Ireland. Also, more people with a unionist background are accusing Boris Johnson of abandoning Northern Ireland in exchange for a deal with the EU. As a matter of fact, since the British government has been relying on the 10 DUP MPs to form a majority, the solution of the Northern Irish border problem has been a priority in the negotiations. However, after Conservative’s obtained a majority large enough to form a government without support from the smaller party in December 2019,

The UK in a Changing Europe: Brexit: What’s Next?. 38-39.

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London agreed to leave Northern Ireland in an ambiguous situation in order to “get Brexit done.” Obviously, nationalist parties took the opportunity of this “betrayal” to raise their voice in favour of, from their point of view, a much more convenient Union. Although Irish unity is the nationalists’ obsession for more than a century it has been scarcely considered as a realistic proposition so far and indeed there is scarce debate regarding the form that the future state should eventually assume. In the Republic of Ireland Sinn Fein’s surge at the February general election has promoted reunification to a higher but still uncertain place in an agenda preoccupied mostly with economic reform. The next months will be decisive to understand which direction Northern Ireland will take and how far the debate over its constitutional framework might go. Whatever the outcome, the region will be affected in perpetuity and irrevocably by the UK’s withdrawal from the EU both in its relationship with Ireland and with Great Britain.29 Even if in a smaller extent then Scotland, also the Welsh devolved government is facing a big Brexit dilemma. In fact, differently from the Scots in 2016 Welshmen voted to leave the EU, but since then the Cardiff executive sought a softer form of Brexit. Nonetheless, similarly to ongoing debates in Scotland, there are also concerns in Wales that Brexit could impact the devolved powers of the local institutions and see a repatriation of many competences back to London. One of the biggest concerns for Cardiff’s administration is the future of the financial support that the region now receives form the EU’s structural funds and that after Brexit will be managed by the central government in London with the risk that spending priorities might change to fight the negative consequences of leaving the EU. In fact, the Conservative Government has already made it clear that they desire less autonomy for Wales, rather than more, and feel that they have a mandate for these changes.30 Since Johnson seems to have no appetite for compromise, Wales might be soon put in front of a crossroad. If the chosen direction will be not to force the status quo, then the region could be forced to adapt to a reduced version of its already limited autonomy. On the other side, Wales could force its hand and put further pressure on the UK’s changing Union.31 Contrarily from common belief, challenges to survival of the United Kingdom did not start with Brexit, but leaving the EU will surely exacerbate the difficulties that aroused since the process of devolution started. Devolution assumed EU membership, which served as a kind of framework that helped hold the UK together. Since part of the EU’s single market, the British parliament has been allowed to leave some thorny issues unsettled or unanswered, being certain that a fair management of the generous funds coming from Brussels could make up to the lack of a clear domestic framework. But Brexit is causing an earthquake in the UK and, as it can be seen, the renewed pressure for independence in Scotland and

29 Brian Walker: There’s more to it than polling. Ireland needs more than one choice of political future. Slugger O’Toole. 9 March 2020. <https://sluggerotoole.com/2020/03/09/theres-more-to-it-than-polling-ireland-needsmore-than-one-choice-of-political-future/ > Accessed: 11 March 2020. 30 Daniel Wincott Professor: The Welsh Government and Johnson’s Brexit. The UK in a Changing Europe Analyses. 1 March 2020. <https://ukandeu.ac.uk/the-welsh-government-responds-to-johnsons-brexit/ > Accessed: 18 March 2020.

The UK in a Changing Europe: Brexit: What’s Next?. 40-41.

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unification in Ireland and future fractions between London, Cardiff and Edinburgh are likely to lead to the dissolution of the United Kingdom. If such a prospect proves real, it will be even harder to believe to the Brexiteers’ point of view that the EU represents the biggest threat to UK’s sovereignty, but it will be rather evident that Brexit has been the result of a short-sighted and folkloristic British—or rather English—populism.32 And it is exactly this kind of Britishness that Boris Johnson has pursued both as Brexit campaigner and as prime minister and that will set the path of the country in the future. On the other side, a partial or complete disintegration of the EU because of Brexit seems highly unlikely but this does not mean that the EU should not be ready to rethink its role once the UK has left. Since joining the EU, the UK tended to slow down the integration process and, in this sense, the EU-27 should now rethink the functioning of the EU’s institutions, promote the Eurozone reforms or define the EU’s role in an increasingly volatile world. It is early to say if this will happen, but the first effect of Brexit is already visible. In fact, since the EU-UK negotiates got to the heart, pressures from other member states to flirt with similar ideas have diminished. Partly, this is because the UK’s exit has demonstrated that also small countries have a great power when sitting at the negotiating tables. Ireland—the most Brexit-affected member state— secured what it needed in the Withdrawal Agreement, and EU unity was maintained. Yet the EU is losing one of its most globally active member states and one of the members of the UN Security Council. The UK is the third-biggest spender globally on international aid, and it spends more alone than the combined efforts of the EU institutions. Moreover, after the UK leaves the EU will see, among others, its nuclear weapon system capability— submarines and heavy drones—and transport aircraft halved and its electronic intelligence aircraft reduced by a third. The UK’s outsized share of EU defence equipment means a significant downgrading of collective EU capabilities, as well as the loss of a nuclear power and a leading NATO member. Eastern member states, such as the Baltic states and Poland in particular, have understandable concerns that tensions in the EU-UK trade relationship could easily spill over into a wider disengagement of the UK from the region. It is therefore understandable why the political declaration on the future EU-UK relationship makes sure that when it comes to UK participation in EU foreign and defence policy there will be a certain degree of openness. It includes the possibility of the UK attending informal EU ministerial meetings, allowing the UK to participate on a case-by-case basis in EU defence missions and involving the UK in the EU’s defence programmes and agencies, as well as co-ordination on sanctions. It is in the interest of both sides to continue the cooperation in this field as well as in many others because, in the words of Boris Johnson, the UK is leaving the EU, but not leaving Europe.

Paul Taggard: UK After Brexit: No Room for British Populism. ISPI Commentary. 29 January 2020. <https:// www.ispionline.it/it/pubblicazione/uk-after-brexit-no-room-british-populism-24945 > Accessed: 11 March 2020. 32

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GLOBAL BRITAIN – SCENARIOS FOR BECOMING THE GREATEST OF THE MIDDLE POWERS ZSOLT CSEPREGI

INTRODUCTION As the United Kingdom is in the process of re-establishing and reconfiguring its links to the World after it has legally left the European Union, narratives are abounding regarding the exact nature of the new role the country might play in global affairs. UK governments under the leadership of Theresa May to Boris Johnson have promoted the vision for a “Global Britain”, a catchphrase which until now has suggested and hinted a great deal but has meant little and had even fewer concrete details. While the phrase „Global Britain” became a slogan for the hard core Brexiters, may they be Conservatives, UKIP or the Brexit Party, many experts, domestic and foreign alike, tried to analyse its future implications. Without clear substance, analysts were and in fact are still forced to measure a vague vision put forward based on their own understanding of Britain’s potential. This leaves a lot of questions open when it has to be determined, whether the United Kingdom might become a more influential foreign policy actor in the current and emerging world order. As the analysis depends mostly on how one sees the interaction between great powers and middle powers and particularly the role Europe and/or the European Union plays in the world, one should expect greatly diverging views on the future role of the UK. This, as we shall see is only partly true, the exact role is debated but there is a significant degree of alignment on the future potential capabilities and interests of the UK. The aim of this chapter is to analyse the roles the UK might play in the future international arena, based on its interests and unavoidable capability limitations it faces when it will try to project power across the globe. Understanding the role, the UK will play in global affairs in not only relevant from a security and economic policy point of view in Central Europe but also provides an insight into a number of future scenarios of middle and great power relations especially regarding the limits of true sovereignty in the increasingly interdependent and contested world order.

THE VISION The years long process known as Brexit was chiefly about domestic British issues (sovereignty and priorities) while it statedly also aimed to “removing the shackles of the EU” from the United Kingdom. A third, quite superficially articulated issue was the elevation of the UK’s international standing after Brexit with the adoption of a “Global Britain” vision for the country, arguing that the country will become more influential once it has successfully left the EU.33 Interestingly

Sam Lowe: Priorities for ‘Global Britain’. Centre for European Reform. CER Bulletin. February/March 2020. <https:// www.cer.eu/publications/archive/bulletin-article/2020/priorities-global-britain > Accessed: 27 March 2020. 33

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enough both major parties agreed on the intention but not on the meaning. By the end of 2019 two alternative visions were proposed by the Conservative and Labour Parties. The governing party outlined an outward looking, mercantile and at the same time “value based” foreign policy, not suggesting that there might be irredeemable inconsistency or even a trade-off between these qualities.34 Labour also suggested a global vision for the UK but focusing more in climate change, human rights and other traditionally “leftist” policy stances even if a proposed second referendum on Brexit would have led to the UK still leaving the EU.35 As Boris Johnson won the December 2019 elections with the Conservative party, we will only use his “Global Britain vision” in our current analysis. If and when the Labour rebuilds itself and charts a new (foreign policy) platform, it would be interesting to see a competing proposal, while in the case of the Conservatives a different understanding articulated by leaders in the governing party, but at this time we can only build on the official statements of the Johnson administration. “Global Britain” therefore is merely a headline for a blueprint which has yet to be elaborated. What we can understand from the intention of Conservative politicians, especially Prime Minister Boris Johnson, the new path concerns basic values, outlooks and strategies alike. On the values front, the United Kingdom will be both a mercantile nation which also champions international cooperation and development. Regarding the first pillar, the UK is aiming to utilise its re-established authority to set its own tariff and own trade deals. The economic backbone for this new enterprise would be advanced science, outlining a global hub in terms of science, international academic cooperation and financial services.36 With newfound liberty to engage in mutually beneficial trade agreements the Johnson administration aims to build on three geographically separate pillars for elevating Britain economically, North America, Europe and the Indo-Pacific. The three main economic pillars of the world economy would be complemented by a return to deeper engagement with the Commonwealth countries, pointing out that the United Kingdom downgraded these relations in the second half of the Cold War.37

The Conservative and Unionist Party Manifesto. 2019. <https://assets-global.website-files. com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf> Accessed: 27 March 2020. 34

Thomas Raines: UK General Election 2019: Britain’s New Foreign Policy Divide. Chatham House. 9 December 2019. <https://www.chathamhouse.org/expert/comment/uk-general-election-2019-britains-new-foreign-policydivide > Accessed: 27 March 2020. 35

How UK foreign policy responds to an ever more challenging global environment. International Relations Committee Memorandum FPW0027. UK Foreign and Commonwealth Office. 28 February 2018. <http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/international-relations-committee/ foreign-policy-in-changed-world-conditions/written/79900.html > Accessed: 27 March 2020. 36

Boris Johnson: Prime Minister’s speech in Greenwich. Prime Minister's Office. 3 February 2020. <https:// www.gov.uk/government/speeches/pm-speech-in-greenwich-3-february-2020 > Accessed: 27 March 2020. 37

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Global economic (re)engagement would be accompanied by diplomatic, security and development cooperation on a scale never seen before according to the official narrative. As the Conservative Manifesto states: “Getting Brexit done will allow us to do more on the international stage. We will continue to be an outward-looking country that is a champion of collective security, the rule of law, human rights, free trade, anti-corruption efforts and a rules-based international system. After Brexit, we will bolster the alliances and institutions that help project our influence and keep us safe: the UN and the UN Security Council; NATO; the Commonwealth; Five Eyes; the G20; the G7; and the World Trade Organisation.”38 It is important to unpack these three sentences later on in our analysis, but overall, determining whether these are plausible objectives, or just vague ideas is impossible to verify now. We can see the set vision from the UK political side, but we are lacking a firm grip on the resources which are to be allocated to support these goals, as the only outlined assurance is the maintaining and yearly growing defence spending over 2% of GDP, international development aid over 0.7% of GNI.39 The question is whether these efforts on the side of the United Kingdom combined with its capabilities prove enough to remain a relevant or even become a flourishing actor in the international arena?

THE ARENA—A CHANGING WORLD ORDER, FOR THE WORSE It would be a great understatement to point out that the Global Britain policy shift is not happening in a vacuum. The international arena is highly contested and the oft referenced “rules-based order” is at best fractured, worse, it does not exist anymore. Instead of one “liberal, rules-based world order” parallel and conflicting orders exist in which each power must navigate.40 The United Kingdom loosens, but does not intend cut the ropes which bind it to the EU in an era, when the “changing world order” blanket expression covers not only a potential challenge against the hegemonic power of the United States by the People’s Republic of China. Also, a parallel restructuring is in the process, the emergence of a multipolar world order, one which the world did not experience in the last hundred years and even then solely European empires were challenging each other. The decision of the UK to embrace a more global and flexible foreign and security policy strategy and look for new partnerships across the globe, is even more of an enigma, if we take into consideration that the UK was one of the pillars and chief beneficiary of the Western lead “liberal world order”, based on permanent alliances and economic partnerships with likeminded democracies

The Conservative and Unionist Party Manifesto 2019. 51.

Ibid 53.

Henry Kissinger: World Order. London: Penguin Books. 2014. 365.

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across the globe.41 The chief international dynamics of the day are Russian revanchism and the rise of China.42 This higher echelon of power actors are accompanied and followed by a number of regional powers aiming at exercising a more assertive foreign policy, especially in traditional UK spheres of (waning) influence such as the Gulf region and the Indo-Pacific. Alongside middle powers charting their own new paths parallel balancing against each other and the great powers, vast swaths of territories are griped by power vacuum, civil strife and terrorism (Syria, Iraq, Yemen, Afghanistan) and even more regions are on the verge of falling into chaos, such as the Sahel, Central Africa, Venezuela, Central Asia and the Caucasus. “Global Britain” aims to utilize opportunities in the world economy which were closed to the UK because of its integration in the EU, but even if the economic “Garden of Eden” was out there in the strategy’s inception in 2016, it is highly doubtful that we are still living in the same economic era of positive conjuncture. This was true even before the outbreak of the global coronavirus pandemic in 2020, as even economic engines outside of the EU were showing lacklustre and slowing economic growth (China, India, Russia) or show signs of renewed stagnation and even recession (Japan, Brazil, South Africa).43 Therefore, a dozen years after the financial crisis of 2008-2009, facing another cyclical downturn in the world economy, the UK has to restructure its trade relations in an already negative economic environment. The real novelty is the emergence of parallel technologicaleconomic regimes, led by the United States and the People’s Republic of China. Between them all countries have to align on way or the other, the smaller the country, the lesser the bargaining power it has in this new great game. The technological contest has been manifested most articulately in the issues concerning the introduction of 5G mobile technology and the banning of Chinese telecommunication giants from public offerings, because of intelligence and intellectual property theft concerns, including in the UK.44 The scope of this study does not permit a detailed analysis of the technological-economic regimes’ contest, but it is important to note that the UK is not entering into a rules-based international economic order, nor a level playing field. Finally, if the great powers constantly challenge the rules-based international order, the only instrument for influential but not top-tier countries like the UK to enforce, if not an order, but a framework at least, are international organisations. The UK is prominent in all types of international organisations, in the economic, political and security sphere, it Edward Schwarck: Understanding the UK’s Security Policy in the Asia-Pacific. In: Jonathan Eyal, Michito Tsuruoka and Edward Schwarck (Ed.): Partners for Global Security New Directions for the UK–Japan Defence and Security Relationship. Royal United Services Institute for Defence and Security Studies. Whitehall Report 3-15. February 2020. 19. <https://rusi.org/publication/whitehall-reports/partners-global-security-newdirections-uk-japan-defence-and-security > Accessed: 27 March 2020. 41

42 Jack Watling: The UK’s Integrated Review: The Need for Clear Guidance. Royal United Services Institute for Defence and Security Studies. Commentary, 10 March 2020. <https://rusi.org/commentary/uk-integratedreview-need-clear-guidance > Accessed: 27 March 2020.

World Economic Outlook. International Monetary Fund. October 2019. 2-13. <https://www.imf.org/en/ Publications/WEO/Issues/2019/10/01/world-economic-outlook-october-2019 > Accessed: 27 March 2020.

44 Amanda Sloat: Brexit endgame: Britain’s EU departure marks the end of Brexit’s beginning. The Brookings Institution. 30 January 2020. <https://www.brookings.edu/blog/order-from-chaos/2020/01/30/brexitendgame-britains-eu-departure-marks-the-end-of-brexits-beginning/ > Accessed: 27 March 2020.

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is also a founding member of many of them. Naturally, the most important of them is the United Nations, in which the UK holds a permanent seat at the Security Council and will rely heavily on this position in the future to maintain its influence.45 This forum of course will not be enough and the UK has to use all its positions in the WTO, OECD, G7 etc. to catalyse its middle power allies in order to shape the world order and uphold the “rules”.46 The question is if they will be enough if these organisations remain the battleground between great powers or parallel institutions are created by each of them, as we can perceive the Western-led (mainly the US) and the emerging China-led financial institution competing for influence. The UK will have a difficult time navigating between these contested institutions. In conclusion, the fragmentation of the rules-based order, great power competition, security vacuum and economic uncertainty characterises the international arena in which the UK opted to go global, therefore it is worthwhile to analyse its relations’ reformation with four plus one actor, namely the EU, US, Russia, China and the middle powers as a group.

THE PLAYERS—THE EUROPEAN UNION The irony is not lost on any analyst that all considerations on “Global Britain” must start with discussing the supranational organization the UK has left, but all sides understand that geography dictates that Europe will remain the most important partner for the UK in the future. Geopolitically speaking the European core territory or “ecumene”, the most populated and economically prosperous zone includes the English Midlands and the Thames basin as much as Northern parts of France, Germany and Italy, binding together a coherent Western European bloc.47 This fact is realised by the Johnson administration as well, and it is even understood that the interests of the EU and the UK will align most of the times.48 The UK government just opted to forgo the advantages provided by EU membership in terms of force multipliers in influence and benefit from added flexibility provided by its newfound independence.49 As the UK left just legally speaking the EU, it must start its newfound flexibility to restructure its connections with the EU and European capitals in the fields of economy, security and diplomacy. The hardest issue, as noted in Alessandro D’Onofrio’s chapter is the economic agreement with the EU, setting the rate (if any) of tariffs, customs and norms. Without going into the details here, it is 45 How UK foreign policy responds to an ever more challenging global environment. International Relations Committee Memorandum FPW0027. UK Foreign and Commonwealth Office. 28 February 2018. <http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/international-relations-committee/ foreign-policy-in-changed-world-conditions/written/79900.html > Accessed: 27 March 2020.

Robin Niblett: Britain Must Balance a Transatlantic Heart with a European Head. Chatham House. 19 December 2019. <https://www.chathamhouse.org/expert/comment/britain-must-balance-transatlanticheart-european-head > Accessed: 27 March 2020. 46

Saul Bernard Cohen: Geopolitics. New York: Rowman & Littlefield Publishers. 2009. 171-172.

49 How UK foreign policy responds to an ever more challenging global environment. International Relations Committee Memorandum FPW0027. UK Foreign and Commonwealth Office. 28 February 2018. <http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/international-relations-committee/ foreign-policy-in-changed-world-conditions/written/79900.html > Accessed: 27 March 2020.

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important to note that these economic negotiations will take away the better part of 2020 if not more, leaving scarce diplomatic capability to realise the truly global pillar of “Global Britain”, especially in the face of the current global COVID-19 health crisis. The underline the challenge, less contentious and politically heated trade negotiations with Japan and Canada took years to negotiate, there is high chance that Britain will revert to WTO rules without an economic deal.50 Contrary to the other extra-European trade deals, of course both sides are more interested in finding a workable solution, but even if Johnson knows that his country needs ease of access to the EU market, which signifies half of all UK exports, he also cannot turn his back on his promise to find better deals than the UK had as an EU member. While these crucial negotiations on economic issues are sorted out with the EU, the US has to take a second place.51 Even though the Global Britain vision is a highly mercantile outlook, trade and profit are not the only interest of the UK, but security cooperation and a high degree of joint work on the above acknowledged common interests with the remaining EU members will be vital for London. The UK was a notorious obstacle at every step of the Common Foreign and Security Policy pillar of the EU, but now it wants and needs to have a seat at the table or at least a standing spot next to the wall.52 The EU members are of course concerned to give an outside power too much insight into the inner workings and debates of the EU, especially when the buzzword in Brussels is “strategic autonomy” in the narrow military and broader diplomatic sense.53 Irony aside the EU aims d to utilise the not insignificant influence and set of capabilities of the UK and cooperate with it in the foreign and security policy field. But the restructuring of this relation will require a compromise from both sides, the utilisation of existing models of cooperation like the ones with Norway and Canada and going well beyond those in a potentially formal agreement. Also, this requires the UK investing a lot of energy and manpower into a permanent and well-connected presence in Brussels and the EU capitals, to be able to stand (quite literally) just at the doorstep where EU CSFP decisions are made, hopefully next to an open door.54

Nicolai von Ondarza: The Brexit Revolution New Political Conditions Change the Dynamics of the Next Phase of EU-UK Negotiations. Stiftung Wissenschaft und Politik. Comment No. 13. March 2020. 2. <https://www.swpberlin.org/fileadmin/contents/products/comments/2020C13_Brexit.pdf > Accessed: 27 March 2020. 50

Sven Biscop: European Strategy in the 21st Century – New Future for Old Power. Oxon: Routledge. 2019. 135-137.

Shared Vision, Common Action: A Stronger Europe - A Global Strategy for the European Union’s Foreign And Security Policy. European External Action Service. June 2016. 19-21. <https://eeas.europa.eu/archives/docs/ top_stories/pdf/eugs_review_web.pdf > Accessed: 27 March 2020.. 53

54 Ian Bond: British foreign policy after Brexit: Hand in hand? Centre for European Reform. CER Bulletin. April/ March 2018. <https://www.cer.eu/publications/archive/bulletin-article/2018/british-foreign-policy-after-brexithand-hand > Accessed: 27 March 2020.

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THE UNITED STATES Following relations with the fellow European states, the most important connection for London is the one with Washington and the enduring special relationship between the two countries. Even though Donald Trump vocally supported and welcomed Brexit, the US will face a great difficulty with its closest ally leaving the EU and thereby leaving the decision making table as the Union aims to achieve a degree of strategic autonomy.55 Regardless who will be (re)elected as the next US President, Washington will still have a great interest in maintaining close ties with London, although, for the US, it will be worth less when Britain was still an EU member. The prime field of asymmetry between the two countries will surface during the negotiation on a new trade deal between them. The UK aims to close the deal first with the EU, which came as quite a shock to the US administration, which believed that London would quickly turn to them, even though that would go against core British economic interests. Priorities and special relations aside it will be a hard bargain for Johnson to reach a favourable trade deal with Trump in an election year.56 So before going global the UK has to settle its trade relations with the US which is keen on using the threat of tariffs in order to “mitigate” any economic asymmetry it deems unfavourable to the US. Beyond the narrower issue of trade, the more relevant aspect of the realignment of the UK is the broader role it plays in transatlantic cooperation. As noted before, London’s influence on the European side of the Atlantic will wane in collective EU level foreign and security policy decisions. The UK government stated that the alliance with the US is the first priority after Brexit.57 This might be true from an overall security guarantee perspective (which was of course immensely more relevant during the Cold War), but it is doubtful in the current international arena. UK foreign policy aligns much closer to other European capitals than to Washington in all major international issues, such as policy on China, Iran, Syria, rules-based world order etc.58 Which means that the UK will be torn between likeminded European allies and the US, this exercise in diplomatic manoeuvring will consume a serious amount of energy from London, even in managing the Euro-Atlantic bond. London would be also less relevant to Washington as it will not be as effective to handle Paris and Berlin as it was as an EU member state.59

Sven Biscop: European Strategy in the 21st Century – New Future for Old Power. Oxon: Routledge. 2019. 125-129.

Tridivesh Singh Maini and Mahitha Lingala: Will Brexit Push the UK Closer to Asia? Future Directions International. 12 February 2020. <http://www.futuredirections.org.au/publication/will-brexit-push-the-uk-closerto-asia/ > Accessed: 27 March 2020. 56

58 Malcolm Chalmers: Taking Control – Rediscovering the Centrality of National Interest in UK Foreign and Security Policy. Royal United Services Institute for Defence and Security Studies. Whitehall Report. February 2020. 4. <https://rusi.org/publication/whitehall-reports/taking-control-rediscovering-centrality-nationalinterest-uk-foreign > Accessed: 27 March 2020. 59 Claudia Major—Nicolai von Ondarza: No “Global Britain” after Brexit Leaving the EU Weakens UK Foreign and Security Policy, Closer Ties Remain in Germany’s Interest. Stiftung Wissenschaft und Politik. Comment No. 13. March 2020 <https://www.swp-berlin.org/fileadmin/contents/products/comments/2018C24_mjr_orz.pdf > Accessed: 27 March 2020.

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CHINA AND RUSSIA The UK has outlined a foreign policy which is global, pragmatic but also upholds its key values at the same time. These guiding principles would be hard to parallel maintain visà-vis the allies, consider, championing free trade against a US bent on using tariffs as a regular foreign policy tool, it will be even harder when it comes to revanchist Russia and China which challenges the global status quo and the Western-led world order. The UK of course differentiates between these two powers, which is useful for Central European nations looking for the continuation of pragmatic British policies. London set out to push back against continued Russian aggression in Eastern Europe and also against an “assertive” Chinese foreign policy, nevertheless it will look for opportunities to cooperate and engage in fields in which interests align.60 Handling the Russian threat means the continuation of UK military presence on the Eastern flank of NATO, where UK is set to uphold its participation in missions aiming at keeping Russia at bay, which can assure concerned European allies, especially Poland and the Baltic states.61 China is a different issue altogether, because in the field of economy it holds much more promise and in the security realm it is much further afield both in geographic and geopolitical terms. It is hard to envision what the UK could do to effectively counterbalance Chinese moves in East and Southeast Asia. London embraced warmly the Chinese Belt and Road Initiative and the accompanying Chinese investments. The rapidly growing, but still quite recent appearance of Chinese FDI in the UK will be tempered by Brexit as it wouldn’t give EU access for the investing foreign companies. 62 London is determined to offset this potential negative trend by promising an investment environment in terms of taxes, legal framework and regulation more favourable than the EU (which is possible) and a quick solution to signing a trade deal with the EU without tariffs (which is not at all plausible at the moment) and continue to attract the influx of Chinese capital. On the other hand, UK still aims to balance Chinese assertively in the South China Sea together with the US, Japan and other regional actors. With such issues arising, first is the will, the second are the means. Would London endanger Chinese investments for participating in faraway conflicts between East Asian states and the US? Beijing will be in an excellent position to pressure the UK to stand down, using its economic weight to “convince” the UK into alignment. One particular arena of this new bargain could be the UN Security Council. As Chinese investment grows in the UK, it would have more leverage over a relatively weak

60 How UK foreign policy responds to an ever more challenging global environment. International Relations Committee Memorandum FPW0027. UK Foreign and Commonwealth Office. 28 February 2018. <http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/international-relations-committee/ foreign-policy-in-changed-world-conditions/written/79900.html > Accessed: 27 March 2020. 61 Piotr Szymański: The consequences of Brexit for the UK’s security policy and NATO’s eastern flank. OSW -Center for Eastern Studies. Commentary. 3 April 2019. 5. <https://www.osw.waw.pl/en/publikacje/oswcommentary/2019-04-03/consequences-brexit-uks-security-policy-and-natos-eastern > Accessed: 27 March 2020. 62 Tim Summers: Chinese Investment in the UK: Growing Flows or Growing Controversy? In: Seaman, J. et al.: Chinese Investment in Europe A Country-Level Approach. European Think-tank Network on China (ETNC). December 2017. 165. <https://www.ifri.org/en/publications/publications-ifri/ouvrages-ifri/chinese-investmenteurope-country-level-approach > Accessed: 27 March 2020..

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power wielding a lot of institutional influence and force it to choose between values and interests, or even between its short-term national interest and the long-term alliance cohesion.63 The second issue is capabilities, or more precisely, the relative lack of them. The main area of contest between the US, allied Asian powers and China is the South China Sea. The UK is currently not in a position to add any significant military weight to naval presence (as seen later in the subchapter on UK capabilities), the only thing it could provide is diplomatic support (which will be in conflict with economic engagement with China) or niche capabilities provided to allies.64 The UK will experience a great conflict between its values and interests when it comes to the two anti-status quo powers in the changing world order and its relations with it traditional allies would also complicate the matters. What it could opt for is to catalyse a new network of like-minded middle powers to counterbalance the conflicts it cannot solve by itself.

JOINING THE MIDDLE POWER CLUB The United Kingdom experienced its downgrading from a first-class world power in the end of the XIX. Century to a mid-tier power by the first decades of the Cold War.65 The former British Empire, spanning the globe, experienced this downgrading because of three reasons: firstly, it was bled dry in manpower, capital and strategic assets in the Second World War, secondly, but gradual decolonisation in its Empire and thirdly it being overshadowed by the US and the Soviet Union, which became undisputable after it was put to its place in 1956 in the Suez Crisis (together with France).66 It seemed like the UK has adapted to its new position as a middle power with assets all over the globe, and unique capabilities which made it a global financial hub and valuable military ally. As we have noted, a key pillar of the UK’s relevance was until 2020 its membership in the EU, without which it must chart a new role for itself: a global middle power. Officially, the UK government aims to act on an equal footing with the other UN Security Council permanent members.67 This statement simply either a naïve or dishonest or both. The UK will not be a similar power as the US or China, not even a “regional power plus” like Russia (not that it wants to be) and unlike France, it would lose the EU as an influence multiplier. Acting like a (mock) great power would do a great deal of disservice to London, and considering it one would be a strategic error by any

64 Edward Schwarck: Understanding the UK’s Security Policy in the Asia-Pacific. In: Jonathan Eyal, Michito Tsuruoka and Edward Schwarck (Ed.): Partners for Global Security New Directions for the UK–Japan Defence and Security Relationship. Royal United Services Institute for Defence and Security Studies. Whitehall Report 3-15. February 2020. 19. <https://rusi.org/publication/whitehall-reports/partners-global-security-newdirections-uk-japan-defence-and-security > Accessed: 27 March 2020.

John J. Mersheimer: The Tragedy of Great Power Politics. London: W. W. Norton & Company, 2014. 350-355.

Henry Kissinger: Diplomacy. New York: Simon & Schuster. 1994. Chapter 24.

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capital aiming to cooperate with the Brits. It is not a coincidence that the UK is promoting the enlargement of the UN Security Council’s permanent seats in other attract other second tier powers into a network binding the two big one, plus Russia.68 The UK must think, act and be considered by its allies as a middle power with special capabilities and assets. Before discussing UK’s future capabilities more in depth in the next subchapter, we must define what might a global middle power mean in our changing world order. The most obvious comparison to the UK’s future role in the global order (even if an imperfect one) is Japan. Two prosperous insular or island nations lie next to the two most dynamic parts of the Eurasian supercontinent, their defensive positions benefiting from the stopping power of the seas surrounding them. Both of them have a special alliance with the US and have experience with being a great power. The differences are also important, the UK is a dynamic military power, while Japan is a reluctant, defence oriented (re)emerging one, the UK neighbours a stable and friendly continental Europe, while Japan is engaged in a difficult, albeit non-violent tug-of-war with the Republic of Korea and China, and a predictably unpredictable North Korean regime. Differences aside, both countries are interested in a rules-based world order therefore their partnership is inevitable.69 What both of these countries can do in order to exercise global influence in faraway but strategic regions (Europe for Japan and East Asia for the UK) is maintain close bilateral relations with likeminded nations and also put a lot of effort into intergovernmental organisations through which various aspects of global affairs are managed.70 Instead of supranational organisations to which neither of these powers have access, they can use these two methods as force multipliers of their influence. The UK can easily find other middle size powers similarly threatened by the erosion of the rules-based world order and the erratic or steadily assertive policies of great powers. Beyond Japan, other likely partners in these efforts in the first stage, in the upper tier of the middle powers are Canada, Australia and the Republic of Korea.71 But to be frank, neither of them brings so many and important capabilities (grouped in the next subchapter as military, economic and the umbrella term of “global” assets) to the table as the UK, the (potentially) greatest middle power of them all.

UK foreign policy in a shifting world order. UK House of Lords. Select Committee on International Relations 5th Report of Session 2017–19. 54. <https://publications.parliament.uk/pa/ld201719/ldselect/ ldintrel/250/250.pdf > Accessed: 27 March 2020. 68

69 Sam Lowe: Priorities for ‘Global Britain’. Centre for European Reform. CER Bulletin. February/March 2020. <https://www.cer.eu/publications/archive/bulletin-article/2020/priorities-global-britain > Accessed: 27 March 2020. 70 Edward Schwarck: Understanding the UK’s Security Policy in the Asia-Pacific. In: Jonathan Eyal, Michito Tsuruoka and Edward Schwarck (Ed.): Partners for Global Security New Directions for the UK–Japan Defence and Security Relationship. Royal United Services Institute for Defence and Security Studies. Whitehall Report 3-15. February 2020. 17. <https://rusi.org/publication/whitehall-reports/partners-global-security-newdirections-uk-japan-defence-and-security > Accessed: 27 March 2020. 71 Robin Niblett: Britain Must Balance a Transatlantic Heart with a European Head. Chatham House. 19 December 2019. <https://www.chathamhouse.org/expert/comment/britain-must-balance-transatlanticheart-european-head > Accessed: 27 March 2020.

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THE ISSUES AND CAPABILITIES OF THE UK As noted, the UK is not the global, mainly naval military powerhouse as it was before. It still possesses important overall and specific abilities, such as (naval) nuclear striking capabilities, a significant land army, and complete defence spending surpassing 2% of GDP which enables the 6th highest defence budget in the globe.72 The UK also has one of the best connected intelligence apparatus in the world, involved in ongoing deep cooperation with the US, European and Anglo-Saxon and other allied services. What it does not have is a significant blue water navy and strategic enablers for significant global force projection. In realty the UK can project power only on a regional level and together with allies. Its navy has lost quantity and quality edge over the decades and it lacks airlift capacity and other expensive equipment which would enable it to play any significant role in conflicts in the Indian Ocean or the Pacific. What it can do is intervene jointly with allies in regions most relevant for other European allies, such as the Sahel, the Gulf and the Eastern front. In these regions it can add vital capabilities and relatively significant manpower and equipment contribution to missions, which it already does. The most importantly, the UK is one of the few European nations which can provide an overall high level command and control module for joint mission and serve as a framework provider nation to other smaller contributors.73 The UK faces a tough choice where to commit its military and intelligence assets as due to its nature as a middle power they are going to be limited, it can go global or stay in the European neighbourhood, but it can only do one of them, develop its capabilities accordingly and leave its second and third and so on priorities to its allies.74 NATO’s future orientation itself may very well shape London’s decision on its focus area, as it is currently the only defence and security forum where the UK can participate fully in the decision making process.75 On the other hand, if the US and the UK push NATO too far into a global role and out of area missions beyond the European periphery, it can create a rupture in the alliance and catalyse the emergence of European strategic autonomy, where London does not have a say. This would be particularly threatening to the Central European NATO allies which rely heavily on British military deployments on NATO’s Eastern flank, the Baltics and Poland naturally encourage the UK to remain committed to supporting the defence of NATO’s Eastern flank and deter

Finance and economics annual statistical bulletin: international defence 2019. UK Ministry of Defense. Research and Analysis. 10 September 2019. <https://www.gov.uk/government/publications/internationaldefence-expenditure-2019/finance-and-economics-annual-statistical-bulletin-international-defence-2019 > Accessed: 27 March 2020. 72

Malcolm Chalmers: Taking Control – Rediscovering the Centrality of National Interest in UK Foreign and Security Policy. Royal United Services Institute for Defence and Security Studies. Whitehall Report. February 2020. 10. <https://rusi.org/publication/whitehall-reports/taking-control-rediscovering-centrality-nationalinterest-uk-foreign > Accessed: 27 March 2020. 73

Jack Watling: The UK’s Integrated Review: The Need for Clear Guidance. Royal United Services Institute for Defence and Security Studies. Commentary, 10 March 2020. <https://rusi.org/commentary/uk-integratedreview-need-clear-guidance > Accessed: 27 March 2020.

Claudia Major—Nicolai von Ondarza: No “Global Britain” after Brexit Leaving the EU Weakens UK Foreign and Security Policy, Closer Ties Remainin Germany’s Interest. Stiftung Wissenschaft und Politik. Comment No. 13. March 2020 <https://www.swp-berlin.org/fileadmin/contents/products/comments/2018C24_mjr_orz.pdf > Accessed: 27 March 2020. 75

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Russia from continued aggression by actually having troops serving as tripwire in the region.76 While “Global Britain” is essentially an economic, mercantile vision, in the current contested world order lasting economic influence should be combined with hard or at least soft security provider capabilities in order to uphold the rules based order. While the US and China may aim at setting their own “rules” to benefit primarily themselves, the UK can only hope for a level global playing field. The UK’s economic future will be shaped greatly by the decision it takes, where to invest its limited resources. Regardless this decision, the UK has currently important economic capabilities which position it as one of the greatest middle power in economic terms as well. It is a developed economy, with one of the most capable global financial hubs, the City of London attracting companies, individuals and governments wanting to set up operations.77 This role has and will be damaged by Brexit, but the reliable UK legal environment, the ease of conducting business, virtual lack of corruption and global reach still make it an attractive destination for capital. Currently the three largest investors are the EU states, US and Japan, so there is room for diversification and attracting capital from economies themselves diversifying and going global, such as the aforementioned China, ASEAN and GCC countries and more. British knowledge economy is also a world leader and the society (along with the US) is known to embrace change and adapt successfully to the post-industrial economy.78 UK universities attract the best talent from the world. The often referenced Commonwealth as a source of future British glory is overestimated from an economic and political point of view in my assessment, but in this sense it does provide a talent pool of almost two and a half billion people, a truly global instrument for recruiting the top tier movers and shapers of the future of the global technology intensive economy. The UK will be hindered by the renegotiation of its trade relations with the EU and the US, and it can last probably three years to really be in a position to elevate its global standing.79 After these two crucial pillars, the most it can do is manage the economic “home front” to the best of their abilities and exercise a range of strategies to uphold the rules-based order. The best instrument to achieve this, also recognised by the UK government are especially in international financial institutions, and bound the great powers in them in order to adhere to their values.80 Finally, the global assets include the British Overseas Territories, a vast and experienced diplomatic service, and position in international organization. The remnants of the colonial

76 Piotr Szymański: The consequences of Brexit for the UK’s security policy and NATO’s eastern flank. OSW -Center for Eastern Studies. Commentary. 3 April 2019. 5. <https://www.osw.waw.pl/en/publikacje/oswcommentary/2019-04-03/consequences-brexit-uks-security-policy-and-natos-eastern > Accessed: 27 March 2020.

Parag Khanna: Connectography. New York: Random House. 2016. 74-76.

Francis Fukuyama: Political Order and Political Decay. New York: Farrar, Straus and Giroux. 2014. 449-450.

Malcolm Chalmers: UK Foreign and Security Policy after Brexit. Royal United Services Institute for Defence and Security Studies. Briefing Paper, January 2017. <https://www.rusi.org/sites/default/files/201701_bp_uk_ foreign_and_security_policy_after_brexit_v4.pdf > Accessed: 27 March 2020. 79

80 How UK foreign policy responds to an ever more challenging global environment. International Relations Committee Memorandum FPW0027. UK Foreign and Commonwealth Office. 28 February 2018. <http://data. parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/international-relations-committee/ foreign-policy-in-changed-world-conditions/written/79900.html > Accessed: 27 March 2020.

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empire still span across the globe, mainly in the Atlantic Ocean, but also the highly strategic Gibraltar in the Mediterranean. Overseas military bases round out this global presence in the Indian Ocean and the Gulf and Cyprus. These positions are nothing like US deployments across the globe, but they are important assets for intelligence and other relevant niche capabilities. These are not enough by themselves to supply a global military footprint, but they can add valuable pillar to any ally interested in utilising them. UK diplomatic network boast a manpower numbering more than fifteen thousand highly professional officers in addition to the local staff, in one of the most expansive foreign policy networks in the world in various specialised departments. If London finds the right strategy for “Global Britain” it has the infrastructure to realise the diplomatic aspect of it, even if it will be bogged down in the coming years by the realignment. Britain will furthermore always have a coveted seat in international organisations such as the G7, WTO, OECD, UN and potentially in regional trade arrangements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.81 Finally, the UK is one of the most significant international aid providers in the world, committing 0.7% of its GNI yearly to beneficial causes around the world. This activity makes it an attractive partner to most of the countries in the globe and provides much needed prestige in the future.

THE VERDICT AND SCENARIOS Considering all of the above, the vague nature of the “Global Britain” vision, the difficulties presented by the contested nature of the international arena and the behaviour of the other actors besides the UK’s capacities itself, what are the chances of the vision to succeed and how should Central European states respond to it? Of course, it is too early to tell and the COVID19 pandemic delays the implementation of the required crucial moves by London even further, but four potential scenarios can be outlined, two positive and two negative. Regardless of the exact outcome they all point to the complex nature of middle size power’s influence in the world stage, and the fact that the globalised international arena forces countries to embrace cooperation because one by one they would be dominated by the great powers with their global reach. Creative foreign policy strategies aside no country can go alone, but must tailor its international network according to its interests and capabilities supporting an underlining rules-based order. Moving back to the “Global Britain” strategy in particular, the two negative scenarios come in two shades, one in which the UK will untangle as an actor and will be doomed to become globally insignificant. All the concerns Alessandro D’Onofrio outlined in his chapter may come to pass. A “not-that-great” Britain might find itself stranded on the shores of European continent after Scotland, Northern Ireland and Wales potentially leave the union. Without these assets everything stated above in this chapter is null and void, England would revert to an influential country on the European level, like Spain and Poland, but would not have any significant global influence, especially not any kind of 81 Robin Niblett: Britain Must Balance a Transatlantic Heart with a European Head. Chatham House. 19 December 2019. <https://www.chathamhouse.org/expert/comment/britain-must-balance-transatlanticheart-european-head > Accessed: 27 March 2020.

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strategic autonomy. Even without complete untangling, lasting disagreement between London and the devolved parts would bog down the country into a domestic quagmire and bloc it from going global. The next three scenarios therefore stipulate that the UK will remain unified and manage its domestic affairs successfully in the coming years. While unity is necessary, it is not sufficient by itself to make “Global Britain” a success. Even if the UK remains relevant, it might very well find itself in a tug-of-war between the US and the EU as it tries to balance its relations with Washington with its core economic and security interest with European capitals. Much less likely, but planners must consider a third option in which China may exert an economic influence too overbearing to be comfortable for London’s allies. Instead of thinking about whom to staunchly support in the upcoming global issues, it can only avoid this fate if it maintains an ability to say “no” to both sides in disagreements between the two sides of the Atlantic and stand by its own interests and values outlined in the “Global Britain” vision and the whole Brexit narrative.82 In order to succeed, Britain needs to have its own principled voice at the negotiating table and not become a mere policy follower. It has too many important capabilities for our Euro-Atlantic alliance to become just a tool in other (great) powers’ game. The somewhat alarmist rhetoric of this chapter aside, we must all agree that Britain’s success in charting its path as “Global Britain” is in the interest of the whole of Europe, US and all international actors favouring a rules-based peaceful and prosperous world order. The success can also come in two ways, a “Global Britain” re-anchoring itself in Europe and one which keeps a larger distance from the old continent but contributes to an overall network of middle size powers across the globe and institutions. In the first scenario, one which is more likely than many would imagine, the EU embarks on achieving limited strategic autonomy, to which the UK aligns itself, by maintaining close and cordial relations with Brussels and also the capitals by strong but not exclusivist bilateral relations.83 The plausibility of this scenario is reinforced by the fact that the interests already align in most of the issues and all European parties are interested in working together and utilise their cooperation as a force multiplier instrument.84 Global Britain might be global in economic terms, but its core security interests are still determined by geography and therefore they are European by nature. It is naturally interested in thwarting the appearance of a hostile European hegemon (the EU will not become a unified empire that is for sure) and the security of the Atlantic and the North Sea, and fighting against terrorist and cyber and other non-conventional threats which can only be done in the Euro-Atlantic alliance’s framework. This means that London

82 Malcolm Chalmers: UK Foreign and Security Policy after Brexit. Royal United Services Institute for Defence and Security Studies. Briefing Paper, January 2017. 4. <https://www.rusi.org/sites/default/files/201701_bp_uk_ foreign_and_security_policy_after_brexit_v4.pdf > Accessed: 27 March 2020. 83 Nicolai von Ondarza: The Brexit Revolution New Political Conditions Change the Dynamics of the Next Phase of EU-UK Negotiations. Stiftung Wissenschaft und Politik. Comment No. 13. March 2020. 6. <https://www.swpberlin.org/fileadmin/contents/products/comments/2020C13_Brexit.pdf > Accessed: 27 March 2020.

Sven Biscop: European Strategy in the 21st Century – New Future for Old Power. Oxon: Routledge. 2019. 135-136.

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will separate security and economic diplomacy to a large degree, enjoy close defence and political relations with the EU, but utilise its freedom in setting trade relations with the globe. Finally, a more overarching restructuring of UK foreign policy would see both security and economy going global. The UK would effectively leave core European security especially in the neighbourhood to its European allies and build capacities with which it can project significant power far overseas. Its global activity would align with the US and like-minded middle size powers in the Greater Indo-Pacific, like Japan, Singapore, Australia, India and Gulf states. It would invest in a rules-based order by maintaining a diverse, risk-taking foreign policy, in order to give credibility to its motto the “Global Britain”. Its influence in international (financial) institutions would complement its bilateral and multilateral cooperative relations. This kind of foreign policy would need to successfully tackle many conflicts of interests, such as balancing China on the security front while developing economic relations, give access to foreign investors in critical sectors, whilst anchoring to the US and NATO allies and finally remain cordial to European states even if it focuses its resources overseas. Most probably, the exact future of the UK’s foreign policy will not be as clear cut as these four scenarios suggest. There will be a certain degree of domestic strife, US-EU diplomatic rows in which the UK will be a mere third wheel. Also, European engagement is a must for the UK and Britain’s global star will not completely go dark in the short term whatever happens in the upcoming years. But hopefully, as the more concrete strategic directions of “Global Britain” are clarified in Westminster and the highly capable British diplomatic corps and related services gear up and continue realising British national interests, as an effect of their activity the positives will gradually dominate the initial negative aspects and consequences of Brexit. A successful and prosperous Global Britain, without quotation marks, deeply anchored in the Euro-Atlantic security architecture and at the same time serving as a global beacon of a rules-based, free trade-oriented world order is in the interest of Hungary, the EU and in the long run, all mankind.

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NEW PROSPECTS OR WILL EUROPEAN DEFENCE BECOME INSIGNIFICANT AFTER THE BREXIT? PÉTER STEPPER

INTRODUCTION The United Kingdom of Great Britain and Northern Ireland ceased to be the official member state of the European Union on 31 January 2020. Yet, there are many issues still undecided regarding Brexit, such as the conditions for a trade deal with the EU, bilateral agreements with member states, as well as numerous other problems, be it small or significant. This current article tries to analyse the impact the Brexit might have on European security. The Brexit will affect the defence cooperation of EU member states, Europe’s defence capabilities inside the NATO alliance, the British defence policy and defence industry, as well as the defence industry of European great powers. There are various theoretical and methodological tools available to examine Brexit, from a national security perspective, it is a defence policy, security policy, as well as a foreign policy issue. This study is not aimed at providing an understanding of the origin of the (foreign) policy decision and the circumstances surrounding it, but the impact it will have on international relations (IR). Therefore, the tool-box of IR theories was used to help understand the phenomenon. In addition to the two major trends of IR theories, realism and idealism, in other words liberal institutionalism, observations by the representatives of the so-called English School will be examined, which is a kind of synthesis of the previous two models when it comes to thoughts on international politics. First, an overview will be offered of the main notions of the above theories on international politics in general, and then the logical expectations along these notions regarding Brexit and the future of European defence will be investigated. Different or even similar conclusions can be drawn concerning the background of the Brexit-decision and the expected impacts through the neo-realist-neo-liberal debate and observations by the English School. At the end of this subchapter, topics where the given models get similar conclusions, although via different paths, and the differences that can be observed will be illustrated through a matrix. The theoretical part will be followed by a case study on European defence initiatives and the British stance on these, the history of the British-European defence industry, and the effects the Brexit has thus far had on the area.

DIFFERING THEORETICAL EXPLANATIONS ON THE IMPACT THE BREXIT WILL HAVE ON INTERNATIONAL SECURITY Realism The political forces of sovereignism, federalism, and separatism have jointly been at work since Brexit, which can have long-term repercussions on the Union’s future, as its European

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political arena is becoming more and more polarised. No political changes occurred before the Brexit such as the election of Emmanuel Macron in France in 2017, or that of Donald Trump in 2016. The former was welcomed by the cosmopolitan and federalist camp, while the latter by sovereignists. Moreover, there arose some challenges that were obviously to call for action, but were not dealt with in the short run. Problems that were only partially solved before the Brexit was done on 31 January 2020 include the issues of the public health regulation of living animals, the Irish border, the European supervision of nuclear plants regarding the Euratom mechanism, or the detailed rules of access to the internal market. In time, many of these can cause strategic problems. This is exemplified well by the fact that Airbus, which operates centres seated in the UK, endeavours to transfer its activities into continental Europe because of the exit, and this will affect not only commercial travel but military developments as well.85 By the understanding of realists, the fundamental driver of international politics is national interest that is created through rational decision-making processes, which change in time when so national interest requires based on the assessment of the current situation. Less attention is paid to the cost-cutting effect of the common norms and standards of common institutions or other positive externalities that the believers of liberal economics advocate. For this reason, realist authors usually outline the fact that the British traditionally took a limited role in EU initiatives in the field of defence and, instead of taking over common standards, they took preference in bilateral agreements that they deemed useful from the angle of national interest. For instance, the Lancaster House Treaty in 2010 created the basis of the French-English cooperation strictly as a bilateral treaty of nation states. The importance of bilateral agreements is not only underlined in relation to European countries but in the context of UK-US relations too. With the British distancing themselves from European affairs, NATO (and any other multinational framework) under the Trump administration gets devalued over bilateral agreements, which may lead to the BritishAmerican special relationship getting revalued by Washington. This does, however, not suggest a mutually favourable environment of equals, it rather bears similarities to the US-Australian relations where requests of the stronger party must be respected by the weaker party, otherwise the security guarantees of the latter will diminish, thereby it will become more vulnerable than it would be if European-American clash of interests were to be debated by the parties as part of a multinational framework in the strong NATO organisation. Challenges to be faced by European defence initiatives are also significant. The reason for this is that the number and significance of EU-led missions is decreasing, Germany does not spend enough on defence, and the perceptions of danger vary. Furthermore, if European countries are not careful enough, PESCO and similar initiatives might disincline Americans from spending on European defence. If, however, we are too careful not to cause an American conflict of interest, be it real or feigned, the whole European defence project might become inane.

â&#x20AC;&#x2030; Francois Heisbourg: Europe's Defence: Revisiting the Impact of Brexit. Survival, 2018/6. 17-26. <https://www. tandfonline.com/doi/full/10.1080/00396338.2018.1542796 > Accessed: 2 April 2020. 85

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The realist approach puts emphasis on resources and their distribution. As for financial resources, the European Defence Fund (EDF) has an annual budget of EUR 500 million in the period of 2021-2028, with the possibility of the amount available for defence spending from the total EU budget reaching EUR 6.5 billion. European member states, except for the Brits, spend EUR 25-30 billion on defence procurement annually, with the Brits alone affording EUR 10 billion annually. Although the planned budget of defence spending during the MFF talks will decrease, the 15-20% increase on the European level can still be deemed significant.86 In sum, it can be observed that, according to the realist model, truly important international policy measures are usually a result of bilateral negotiations and the given steps by states originate from the changes of the international structure. In the globally changing political arena, the sovereignist ideas of Trump and the federalist and cosmopolitan ideas of Macron bring about unforeseen changes. However, from the point of view of the defence policy and defence industry sectors, as well as European security, it is the agreements between nation states (not the supranational institutions) and the government financing rendered to a given programme that are vital. This does not exclude the possibility that the European defence initiative will be more successful after Brexit, not because of the federalist development of the institution, rather the French-GermanItalian agreements, which might serve as alternatives to the traditionally strong British defence industry suppliers.

Liberal institutionalism Essentially, the liberal approach assumes of international security that a permanently peaceful and economically productive situation can be created through the establishment of the appropriate institutions, as realist presumptions on security dilemma, the nature of power, and international anarchy can be exceeded. For that, however, the appropriate international norms, mutual trust between the parties involved, and interdependency are needed, which may make them interested in keeping peace. The Brexit is a relatively difficult terrain for the liberal model. The exit in itself shows that the British were unsatisfied with the functioning of the created institutions and they did not perceive the benefits promised by the model to come to fruition. Therefore, it can be said that the fundamental expectations were unfulfilled. Yet, it could still be worthwhile to look at some of the central thoughts through the lens of the liberal approach and compare its assumptions on Brexit to that of other international policy theories. Liberal mainstream theories assume of the relation of state and society that governmental politics express the value articulation of society groups after all, the interest groups shaping the national interest, however, can be very diverse.87 The liberal intergovernmentalism (LIG) theory by Andrew Moravcsik is able in part to explain the willingness for international

Francois Heisbourg: Europe's Defence: Revisiting the Impact of Brexit. Survival, 2018/6. 17-26. <https://www. tandfonline.com/doi/full/10.1080/00396338.2018.1542796 > Accessed: 2 April 2020. 86

87 Mads Dagnis Jensen—Holly Snaith: When politics prevails: the political economy of a Brexit. Journal of European Public Policy, 2016/9. 1302-1310. <https://www.tandfonline.com/doi/full/10.1080/13501763.2016.1 174531 > Accessed: 2 April 2020.

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cooperation, as well as accession to and then divorce from the Union by the Brits. According to LIG, governments can reduce their vulnerability to the negative impacts of unexpected externalities through cooperation. Upon the success of the Leave campaign, the British government preferred bigger autonomy to cooperation, intended to reduce interdependency; that is, the degree of mutual dependence with the EU. Generally speaking, countries tend to act like this where the proportion of disadvantages is greater than that of the advantages during cooperation.88 However, looking at the scale of the advantages and disadvantages of EU membership, it is not clear whether the British public judged the situation adequately. The liberal intergovernmentalism theory considers the following criteria when trying to assess the decision leading to the exit: people forming the national interest within the British government (lobby power), the extent of mutual dependence with the EU, and the way in which the distribution of advantages-disadvantages will go in light of the decision. It is worth looking at analyses by Jensen and Snaith to determine who shaped national interests.89 Their undertaking was to identify interest groups who presumably had a serious impact on the process, therefore, they interviewed representatives of organisations such as the Confederation of British Industry (CBI), Federal Trust (FT), the British Banking Association (BBA), and the National Farmers Union (NFU). The CBI was clearly in favour of staying; up until the referendum, they attempted to appear neutral, informally, however, they were continuously in contact with Tory MEPs and tried to convince Prime Minister David Cameron to stay. In general, the City (banking sector) was a Remain advocate; although there was a group within the BBA (typically hedge funds) who preferred to leave, most of them were concerned about the costs of losing access to the internal market. For long, the NFU had no unanimous position on the matter, given the fact that the CAP sources constituted a serious contribution to the British agricultural sector and farmers were worried that they would not be the ones receiving financial support from the British government equivalent to the CAP contributions after the exit.90 The British, who are otherwise net contributors, all in all benefited from getting rid of CAP, however, this will not give solace to the farmers in case the resources released will be allocated elsewhere. The liberal institutionalist Rosecrance set up his neoliberal model on the degree of mutual dependence and vulnerability already back in the 1970s. He opines that vertical interdependence defines the extent to which a change in a factor price in a given state alters the price of a similar factor in a different state, while horizontal interdependence reflects the number of swaps between given countries.91 In case of the latter, in 2014, 44% of the British export went to EU member states, while 53% of the imports came from EU member states. The two types of vulnerability essentially depend on intermediate agreements

88 Andrew Moravcsik: Preferences and power in the European Community: a liberal intergovernmentalist approach, JCMS: Journal of Common Market Studies, 1993/31. 482. 89 Mads Dagnis Jensen—Holly Snaith: When politics prevails: the political economy of a Brexit. Journal of European Public Policy, 2016/9. 1302-1310. <https://www.tandfonline.com/doi/full/10.1080/13501763.2016.1 174531 > Accessed: 2 April 2020.

Ibid.

Richard Rosecrance: Whither interdependence?, International Organization, 1977/3. 425–471.

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to be outlined for the post-Brexit situation, the type of the trade deal to be signed, the products it will concern, and the degree of customs to be determined. Vulnerability will surely increase, given the fact that a separate free trade agreement will be in force and the United Kingdom will no longer be part of the internal market. Yet, the country will be free to sign deals with third countries, and these bilateral agreements will cause a change regarding export-import indicators too. In sum, it can be observed that liberal models in general assume that Brexit will affect the main actors negatively, certainly at least in the short run. Representatives of most of the groups interviewed (industry, trade unions, agriculture) expect the erosion of institutions (CAP, banking union, internal market) to have negative effects.

English School The English School is not a trend defining policy proposals, it is rather a social approach (Buzan 2004) that focuses on the regularities, norms, and institutions of international life. The main concept of the theory is international society (IS), which can also have regional subunits, such as the European regional international society (ERIS). This could entail sovereigns with differing views (pluralist) or members with common values whose behaviour converges in general (solidarist). The question is what the result of the solidaristpluralist debate will be in a given international society. This model is specifically essential to acquire an understanding of the federalist-confederalist debate within the Union. The nature and role of the primary institutions of IS/ERIS is yet another important topic when it comes to the English School. The third issue relevant according to the English School is great powers, as well as the source and significance of this status.92 According to the assumption of English School representatives, the EU is much more than an interstate institution. Some authors believe that it is not the model of the postWestphalian world as stated93 by Linklater,94 but it is a sui generis entity that cannot be compared to any other organisation. According to their belief, in case a federalist United States of Europe is created, it would mean that the international society has fewer members (European instead of German, French, Italian, etc.), the enlargement and deepening, however, have no serious impact on the international society as a whole. Already back in 1982, from a defence policy perspective, Hedley Bull referred to the EU as an alliance within an alliance (NATO). Based on Bull’s way of thinking, it can be observed that, according to the English School theory, the exit will not have a significant effect on international security. In addition to this, Bull focused heavily on the question of pluralism in the international society, and made the conclusion that common rules

92 Peter Wilson—Tim Oliver: The international consequences of Brexit: an English School analysis. Journal of European Integration, 2019/8. 2. <https://www.tandfonline.com/doi/full/10.1080/07036337.2019.1665656 > Accessed: 2 April 2020. 93 Andrew Linklater: The Transformation of Political Community: Ethical Foundations of the post-Westphalian Era. Cambridge: Polity. 1998. 2004.

Linklater also represents the English school, see: Andrew Linklater—Hidemi Suganami: The English School of International Relations: A Contemporary Reassessment. Cambridge: Cambridge University Press. 2006. 94

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within the international society are mostly good for creating the conditions of peaceful co-existence, but no more.95 It is particularly true of the functioning of the UN. From this viewpoint, however, the EU is not pluralist, but an institution based on solidarity, which is a combination96 of state-centric and cosmopolitan solidarism; that is, it contains intergovernmental and supranational approaches. The question is how their proportion will change compared to one another. According to the Brits, cosmopolitan voices became louder and, for them, the expansion of integration is more useful than the deepening, which two can in no way function simultaneously. The British always tried to stay out of certain measures of the “ever closer union” concept, which strengthens solidarism, as can be observed by looking at the wide array of opt-outs, from common currency to the Schengen borders. However, the neo-Thatcherite politics of David Cameron failed, as it did not gain concessions from Brussels, nor did it acquire legitimacy from the voters, instead, it led the country out of integration. Primary international institutions (balance of power policy, the bloc system during the Cold War, federalism, etc.) are practices and procedures to realise common goals.97 Institutions are lasting designs originating from the common values of members of intergovernmental societies; they are a set of rules of behaviour and principles. The fact that the EU is a sui generis entity does not mean that it has not had an effect on the operation of the primary institutions of the international society. Through the Buzanian understanding, we can observe that the spread of the supranational territories at the beginning of the 2000s reduced the sovereigntist and nationalist institutions and increased the importance of multilateral diplomacy.98 With quality majority becoming more common, with respecting compulsory principles, and with having a major role in the acquis hierarchy of norms, the concept of sovereignty has become more complex and nationalism has thereby transformed. The best example to show this is the change in the institution of the balance of power that has been replaced by the concept of the pool of sovereignty, which has been integrated into the European Regional International Society (ERIS). In other words, the German-French rivalry continues to be determining in Europe. However, as the parties concerned gain most of their sovereignty from the common European organisation, their debates are also conducted within the frameworks of common institutions. The Brexit will most probably leave this process unchanged, what British diplomacy might do is to breathe life into the institution of the balance of power.

95 Hedley Bull: “Civilian Power Europe: A Contradiction in Terms?” Journal of Common Market Studies, 1982/21. 149–170. <https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1468-5965.1982.tb00866.x > 96 Barry Buzan: From International to World Society?. English School Theory and the Social Structure of Globalisation. Cambridge: Cambridge University Press. 2004.

Hedley Bull: The Anarchical Society: A Study of Order in World Politics. London: Macmillan. 1977.

Barry Buzan: From International to World Society? English School Theory and the Social Structure of Globalisation. Cambridge: Cambridge University Press. 2004. 98

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Its self-image as a great power 99 provides an indication that it will most certainly try this, even if the points listed above signal the ineffectiveness of such an attempt. The Trident nuclear programme is a good example of the paradoxical situation of a Great-Britain which is unable to let go of its status as a great power. As part of its renewal, GBR 31 billion was spent on the development of submarines carrying nuclear missiles in 2016, which surprisingly was overwhelmingly voted in favour of by the Parliament. The reason that they are caught in this tricky situation is that, because of the status of great power, the British need nuclear weapons, however, today this status is only ensured for them because of their possession of nuclear weapons.100 Based on the observations of the English School, we can assume that, even though there will be a fine tuning between the core states and semi-periphery states because of the Brexit, there will be no change in the basic functioning of the whole system from the viewpoint of international society, the Brexit will have a limited effect on European defence capabilities. Realists Motives

Nature of agreements (order of preference)

Scale of profits and losses

Liberal institutionalism

national interest resulting from a rational policydecision-making process

national interest that is ultimately the articulation of interest by citizens

bilateral agreements

multilateral agreements

English School

international society that is shaped by its primary institutions

• bilateral and • multilateral

agreements can also be important

• if it has no access to

the internal market, only a few European states/ companies will sign bilateral agreements with the British • the US needs the special relationship, but it will not be beneficial for the Brits because of power asymmetry

• vertical

interdependence • horizontal interdependence

• pool of sovereignty vs balance of power

• maintaining the

status of great power is costly

The illusion of being a great power stems from various assumptions. The first is the historic memory of an empire where the Sun never sets. The second is the role that the Bank of England plays in the world’s financial centres, holding their ground against the Nazis during WWII, or possessing “independent” nuclear weapons. After the Brexit, London as the European financial centre will most likely be replaced by Frankfurt. Moreover, the British colonies are independent states today and contracts to ensure concessions in trade with Commonwealth countries are not outlined at the previously anticipated pace. 99

Peter Wilson—Tim Oliver: The international consequences of Brexit: an English School analysis. Journal of European Integration, 2019/8. 12. <https://www.tandfonline.com/doi/full/10.1080/07036337.2019.1665656 > Accessed: 2 April 2020. 100

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Effect on European defence

Effect on British defence

• positive as resources

by EDF will increase, and, at the same time, the British will take part in European defence through their NATO membership • negative, as the EU will alienate the US and lose British capabilities

• positive if they

connect to the global production chain through bilateral agreements • negative if European companies relocate

positive, as the Brits will no longer hinder the integration of the territory

not significant, as the European international society barely changes

negative, as profits from bilateral agreements will be smaller than the ones ensured by the multilateral framework

n/a

THE FUTURE OF EUROPEAN DEFENCE CAPABILITIES AFTER BREXIT Changes in the security environment The declining trend of the European defence spending due to the Ukrainian crisis now seem to reverse; after the expeditionary warfare of the 2000s and the protracted engagement of the US in Afghanistan and Iraq, Europe seems to find its way back onto the list of top security priorities of the international community. Following the Cold War, depleting the peace dividends was seemingly easy, today, however, European countries should revisit the fact that the security and peace of the continent cannot be taken for granted and actions should be taken to guarantee them. Compared to previous initiatives, European Union projects such as PESCO can be considered more serious, as the plans clearly outline the member states’ willingness to increasingly support defence industry enterprises and projects. Since the end of the Cold War, defence expenditures have continuously decreased. However, it is no longer possible to permanently go in that direction due to the changes in the security environment and the need to maintain good transatlantic relations. The transformation of the geostrategic environment is the main reason for this change in attitude and it would be quite a mistake to take expectations by Donald Trump on Euro-Atlantic solidarity as a point of departure. Trump was solely more explicit in stating already-existing American expectations and European states have taken a limited role in out-of-area operations. The Russian expansive aspirations and the burden of out-of-area military missions are no exclusive explanation in itself to the question of why more expenditures on defence shall be incurred—there are more complex defence industry issues in its background. Relieving the Americans would trigger a positive response in Washington, the creation of too independent European forces, however, would not. For British foreign policy, this would give an opportunity to stress the importance of the “special relationship” within the US administration.

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When it comes to the limited role European states took, Great Britain was always an exception, as it had great ambitions in areas such as nuclear weapons (the Trident programme mentioned above) and power projection on a global level (i.e. the launch of the 65 thousand-ton aircraft carrier HMS Queen Elisabeth101 in 2017). In talks with EU leaders on Brexit, the existence of British defence capabilities increased the bargaining power of the British. This is best exemplified by Theresa May’s statement, who argued that if the agreement concluded is not satisfactory enough, cooperation in the fight against terrorism will be weakened.102 To offset concerns regarding the weakening of European defence, Federica Mogherini, High Representative for Foreign Affairs and Security Policy of the EU, explicitly implied that the British, who had always been opposed to the idea of a common European force, were rather a hindrance to the development of common capabilities, thus, their exit will enable true integration. This statement implicitly presumes that a common EU “army” will be stronger than a coalition comprising member states’ offerings. This assumption should be subject to reservations, because not having British resources at disposal will clearly cause problems in the short run. The European Union is split into two camps regarding the Permanent Structure Cooperation (PESCO). Led by the Netherlands, thirteen member states support an inclusive approach, while French favours a scenario where the four big European countries (France, Germany, Spain, and Italy) cooperate in defence force development. As of now, nothing hinders the inclusive approach, as many member states have decided to join the PESCO project. However, there is a heated debate on whether or not to allow non-EU states to participate. In fact, the situation became strained in case of Great-Britain and the USA, because increasing defence capabilities is not only important from the point of view of the changed strategic environment (and the connected reaction capabilities), but it also has a very stimulating effect on the economy. Large European consortia, in part of French and German interest, would not like to compete for PESCO sources with British companies after the Brexit.103 Regarding the development of the European defence project, member states now frequently report on their national implementation plans at the Foreign Affair Council. As part of the Coordinated Annual Review on Defence (CARD), they present their national plans on implementation every two years. In connection with European defence planning, it is still unsure whether the budget proposed for the multiannual financial framework talks will be approved; that is, spending EUR 500 million on R&D and EUR 1+4 billion on capacity

The original concept that the French Charles De Gaulle class and the British Queen Elisabeth class carriers should use similar flight desks and landing strips, as well as be capable of receiving American F35s was not realised, despite the fact that the idea of a European fleet (it does not matter whether it is an EU member state or a European NATO member) capable of relieving one and another at a given theatre would have been benefitting. 101

Stepper Péter: Az európai védelmi kezdeményezésekről - Fényes jövő vagy borús kilátások?, AJTK kutatói blog. 2018. <https://ajtk.hu/hu/kutatas/kutatas-blog/az-europai-vedelmi-kezdemenyezesekrol-fenyes-jovovagy-borus-kilatasok > Accessed: 2 April 2020.

102

Csiki Tamás—Molnár Anna—Stepper Péter—Varga Gergely—Wagner Péter: Hogyan hathat a brexit az uniós védelempolitikára? KKI 4:1 A Külügyi és Külgazdasági Intézet időszaki kiadványa. 2018. <https://kki.hu/assets/ upload/16_KKI_4_1_EU-UK_20181025.pdf > Accessed: 2 April 2020.

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building. Of the latter, EUR 1 billion would be allocated by a common European investment agency, while the additional EUR 4 billion would be earmarked by member states, therefore, not from the Union budget. Member states will be able to draw support from this amount if they hand in a bid as part of a consortium comprising defence industry companies from at least four different states. Obviously, it is a construction more favourable for nations with big defence industry companies.

THE HISTORY OF EUROPEAN DEFENCE COOPERATION To better understand the situation and to be able to outline post-Brexit scenarios, a short overview of the European defence industry cooperation is needed. Since defence industry is of strategic significance, European states laid out a multicentre framework, as none of them was willing to discard their own developments. During the Cold War, bilateral or multilateral investment projects, such as the development of the Tornado Strike Fighter, were characteristic.104 These functioned as economic incentives and had political benefits because of the increasing interoperability that contributed to a greater interdependence of the parties involved, which implicitly enforced permanent good-neighbourly relations (i.e. British-French and French-German cooperation). The purpose behind establishing the Western European Union (WEU) and its subsidiaries (Western Union Armaments Group: WEAG and Western European Armaments Organisation: WEAO) was to create a European defence industry single market. Moreover, in 1992, CFSP was institutionalised by the Maastricht Treaty, then, in 1998, France, Germany, Italy, and the United Kingdom founded OCCAR, and finally these four countries, along with Spain and Sweden, signed the Framework Agreement.105 These documents served as the basis for the creation of the European Defence Agency (EDA) in 2004 that established common standards for defence procurements. In addition to the intergovernmental level, the “defence package” by the European Commission in 2009 is also of crucial importance, which led to the development of two directives in the field of defence procurement.106 Three trends were characteristic of European defence industry developments in the period starting in the 1980s. First, R&D spending was drastically increased regarding weapons platforms. This is the reason why no European state could finance defence industry innovation during the post-1973 decrease in economic growth, instead they initially purchased parts from abroad, generally from the US, and thereby a global supplier network evolved. As a result, American companies had transformed, as, because of diminishing marginal utility (worth commencing an activity) and integrated markets (new products can be sold), they are able to meet this new demand, they can make more considerable profits in the short run. For this reason, European governments attempted to get rid of lossmaking

Jan Joel Andersson: European defence collaboration – back to the future. EUISS Briefs, 2015/19. 4. <https:// www.iss.europa.eu/sites/default/files/EUISSFiles/Brief_19_Defence_collaboration.pdf > Accessed: 2 April 2020.

104

Antonio Calcara: Brexit: what impact on armaments cooperation?, Global Affairs, 2017/2. 2. <https://www. tandfonline.com/doi/full/10.1080/23340460.2017.1342555 > Accessed: 2 April 2020.

105

Ian Anthony—Sibylle Bauer: Controls on security-related international transfers. SIPRI Yearbook, Oxford: Oxford University Press. 2009. 476-478.

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national military companies and started privatising. However, German, French, British, and Swedish defence private companies soon realised that modern products can only be made in a profitable manner if they work together. Therefore, different fusions (Airbus, BAE Systems, Finmeccanica/Leonardo, Thales) were established that were now able to compete with American companies.107 The British BAE Systems is the fourth biggest defence company in the world, which has significant interests in US markets too, as it manufactures electronic equipment for Lockheed Martin F-35 Lightning fighters too. In addition, it is a shareholder of Saab that produces Gripen fighters. BAE Systems have cooperated with many large European groups, with Airbus standing out, which, next to planes made for commercial travel, is famous for producing attack helicopters, and Leonardo S.p.A., called Finmeccanica before 2017, which is known for manufacturing the AgustaWestland helicopters.

Cooperation between British and other nations’ defence companies The British has significantly contributed to the European defence industry since the end of World War II. The Eurofighter programme or the John Strike Fighter project, developed together with the US, are an excellent example of multinational developments. The abovementioned cooperation of BAE System on the development of Gripen is also based on this model. The reason the British participate in such multinational projects is that, in the 1980s and 1990s, they made several governmental measures of great significance, the Levene Reforms (named after Lord Peter Levene), which aimed at achieving the liberalisation of the sector, the improvement of the quality of goods, and also the decrease of prices; in other words, the increasing of competitiveness.108 BAE purchased the GEC Marconi company and thus BAE Systems came into existence that also bought the US company United Defence Industries, thereby ridding the US defence industry of a serious part of its market.109 The US administration was half pleased with this outcome and made extraordinary efforts to hinder the technological transfer to the Brits by trying to levy a tax on US intellectual properties through administrative burdens.110 Despite the fact that, for the British company, the American market was still the most attractive, they had to preserve the competitiveness of national sectors. Therefore, they desired to take part in European defence cooperation projects too. The British were more likely to receive governmental support from EU resources, even as part of multinational partnerships, and European partners counted on the results of a strong, technologically advanced company.

Antonio Calcara: Brexit: what impact on armaments cooperation?, Global Affairs, 2017/2. 3. <https://www. tandfonline.com/doi/full/10.1080/23340460.2017.1342555 > Accessed: 2 April 2020.

107

Antonio Calcara: Brexit: what impact on armaments cooperation?, Global Affairs, 2017/2. 4-5. <https://www. tandfonline.com/doi/full/10.1080/23340460.2017.1342555 > Accessed: 2 April 2020.

108

Andrew Dorman—Matthew R.H. Uttley—Benedict Wilkinson: A benefit, not a burden. The security, economic and strategic value of Britain’s defence industry. London: King’s College. 2015. 26. <http://www. defencesynergia.co.uk/wp-content/uploads/2015/04/A-benefit-not-a-burden.pdf > Accessed: 2 April 2020. 109

Daniel Fiott: Europe and the Pentagon’s third offset strategy. The RUSI Journal. 2016/1. 29. <https://www. tandfonline.com/doi/full/10.1080/03071847.2016.1152118 > Accessed: 2 April 2020.

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Developed together with Airbus, the A400M project was realised as part of OCCAR and the declaration of intent was deposited in Great Britain. The Lancaster House Treaty signed with the French stands out from the bilateral agreements, but important arrangements were also made with Italian, German, and Swedish companies. The British were the most supportive of the creation of the EDA too.111 The Brexit might have an impact, varying from minimal to a greater degree, on various sectors of the British defence industry. The exit might affect the national defence industry of the UK, although more likely to a limited extent. The reason for this is that, despite the fact that they supported the creation of EDA and the proposal by the European Commission to Europeanise, Conservative British politicians in the past few years have attempted to prevent the EU from gaining more powers in the field of common defence. Directives outlined on the basis of proposals by the Commission encouraged a more extensive international (European) competition in the field of public procurement, in reality 80-90% of the calls were won by domestic companies, although not only in the case of the British. On the other hand, the juste retour practice, which calls for the integration of such reciprocitybased conditions into the contracts as the supplier being obliged to create workplaces in the customer’s domestic industry, is still in effect. 112 Therefore, cooperation is a good business for the receiving country also because of its job-creating effect. This is exemplified well by the fact that a site operating in Yeovil enables thousands of Brits to work on manufacturing AgustaWestland helicopters. The expectations of the European Commission have been fulfilled only nominally, as although Leonardo S.p.A and BAE Systems work together on European projects, differences in relative manufacturing costs that ensure competitiveness will not be able to set in because of protectionist measures and oligopolistic markets. Interests of European companies with different national backgrounds are similar in that they can call in government resources and EU funds, but, until juste retour practices are operational, they are only able to make products expensively and with low efficiency. Then, it must be inferred that there will not be any significant change after the Brexit, as no positive externalities have thus far been visible. Fear persists that the Brits will withdraw from larger European defence industry projects because of the Brexit. If we look at Eurofighter and Airbus A400M, the two biggest European enterprises, we can observe that the parties have not collaborated within the EU frames, but in part through bilateral agreements, which will most likely remain the case. European partners need the capabilities of the British defence industry too much to let British companies be eliminated from European projects. As a consequence of the French-British Lancaster House Treaty of 2010, interoperability and, at the same time, mutual interdependence were formed between the parties concerned. For the British, it is important to be shareholders in the programme of the French Airbus, in particular in missile development, therefore, BAE

Matthew R.H. Uttley—Benedict Wilkinson: Contingent choices: The future of United Kingdom defence procurement and defence industries in the post-Brexit era. Global Affairs. 2016/5. 1-12. <https://www. tandfonline.com/doi/abs/10.1080/23340460.2016.1294370 > Accessed: 2 April 2020.

111

Antonio Calcara: Brexit: what impact on armaments cooperation?, Global Affairs, 2017/2. 6. <https://www. tandfonline.com/doi/full/10.1080/23340460.2017.1342555 > Accessed: 2 April 2020.

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Systems and Airbus have a 37,5%-37,5% share in the MBDA Missiles Systems for example (with Leonardo S.p.A. also having a 25% share). For the French, however, it is crucial to have a cost-effective drone programme and the British have a very developed technology in the field of UAV solutions.113 How the common European defence policy will develop with the Brits leaving and how attractive it will be for the French to invest in such common projects together with the Germans is another question. If these will be successful, bilateral agreements shall be worth rethinking, which could lead to the Brits losing bigger European investments. This, however, will not happen in the next couple of years. The third logical impact that we can expect after the Brexit is that European companies will pull out from UK territories. In spite of the fact that the UK is the second greatest market for the Italians after their domestic market, changes regarding the movement of goods may affect the helicopter-manufacturing site operating in Yeovil. To erode this fear, the CEO of Leonardo issued a statement saying that their company is inarguably dominant in manufacturing electronic equipment. Therefore, in case customs duties may occur, they will be looked upon by the Brits as serious partners. This is supported by the fact that the British Ministry of Defence was quick enough to sign a contract worth EUR 800 million on the maintenance and renovation works of 55 pieces of AW101 Merlin helicopters (previously AgustaWestland). Airbus has also a stake in maintain the status quo. Their sites operated in Broughton and Filton manufacture wings for every Airbus fix-winged aircraft. Although the two sites are owned by the French, it would cost considerable amounts to resite them from the UK to other European country’s territory. 114

Conclusions on the future of European defence capabilities Since 2014, European defence capabilities have been a more integral part of the agenda than they were any time after the Cold War. From the facts stated above, it becomes clear that the defence industry of Great Britain was a very valuable market for the EU member states. British companies have become such significant actors that they could appear on the considerably larger US market and, in Europe, they were part of every bigger consortium, also comprising French, Italian, Swedish, Spanish, and German companies. In many cases, bilateral agreements were the basis of the cooperation of national defence industry companies and governments, it was a rare occurrence that actors waited for decision to be made by EU institutions. However, without a doubt, the foreign and security policy relevance of the EU has gradually increased, and, with it, so did that of the EU defence industry. In many instances, British politicians were in favour of such developments thinking that if they cannot hinder something, they should get to the helm of it. This initiating position was often used to prevent projects that they supported from moving to too federalist a direction and supranationalism becoming dominant in the field. Liberal institutionalists who perceived

Antonio Calcara: Brexit: what impact on armaments cooperation?, Global Affairs, 2017/2. 7. <https://www. tandfonline.com/doi/full/10.1080/23340460.2017.1342555 > Accessed: 2 April 2020.

113

Ibid.

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it as a problem now hope that after the Brexit developing the above institutions will be possible and they can become important factors. Even realist thinkers who believe that bilateral relations and power distribution are relevant does not exclude the possibility of such a positive turn either, as the EDF can become a serious power factor with its budget drastically increasing. Forecasts are not so optimistic when it comes to the future of British defence investments; realists believe in the importance of the potential of US-UK bilateral relations, but at the same time they realise that it does not necessarily entail a favourable market environment. Researchers emphasising the role of positive externalities caused by the institutions fear that the British defence industry will be denied access to the internal market, which encourage large multinational consortia to relocate. Everyone agrees that, because of the nature of defence industry, the effect of the changes due to the Brexit will not be felt in the short run, most of the calls were advertised by the companies before the exit, budget planning for the EDF will not be soon finalised, and even if a decision is reached, effects of the increased budget will be felt only in a few years.

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