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The EU post-Brexit: regroup or fall into the disintegration maelstrom? Prospects for geopolitics and the energy-climate nexus

The EU post-Brexit: regroup or fall into the disintegration maelstrom? Prospects for geopolitics and the energy-climate nexus

Yana Popkostova

The clock is ticking... a week after the vote, the questions and uncertainties accumulate, and answers, if anything, are vague and unsettling. The cacophony of voices, emotions and misconceived scenarios clatters the reality, that in itself is simple - Brexit is not a calamity, but it might well become the trigger for one, if we prioritise the result over far more urgent issues, such as social inequality, climate leadership and strong geopolitical remit. The British fog should not blur our vision - Europe needs to consolidate, and give a strong signal internally to its citizens, and externally to its regional and transatlantic partners that it is ready to assume its responsibilities, find its moral compass and forge cogently an authentic, value-driven and inclusive leadership. Quod periit, periit - what is gone is gone. Brexit is yesterday’s story.

Europe in the World

The immediate neighbourhood of the EU is imploding: Russia is more assertive and militarised, the Middle East is dangerously swinging into a future of terror, the Mediterranean sea is filled with the remains of those, whose fundamental human right to seek a life without fear we wrote and we infringed. The disintegration of human flesh on our borders is symptomatic of the lost utopia Europe represents to people within its border but also to those around and further beyond. The European Union has crumbled as a pillar of democracy, liberal economics and value-driven diplomacy. We have retreated into an amorphous entity with an astounding impotence to take decisions, pursue action, achieve meaning. Because for years, the EU has been unable to fashion a coherent response to anything really: from the prostration of Ukraine in front of our eyes to the soaring inequality of our societies and the recognition that at the very heart of our horn of abundance, many were left behind. A stroll across the Parisian banlieues or in the infamous Molenbeek neighborhood indicates how the strides we have made economically and politically produced the paradox of isolating often the most vulnerable. And the likes of Farage or Le Pen are a product of these people’s thirst for revenge. We are set for a bloody political maelstrom. 

Winter is coming. And the European land will be hit the hardest. 

Off Game of Thrones parallels, the debate consuming Europe post-Brexit has largely been parochial without a profound deliberation on the medium-to-long term knock-on effect on NATO, the transatlantic relationship, and the role of the EU in its immediate neighbourhood. And the moment has never been more optimal to strengthen out security and defense apparatus, but also curb the growing miasma of hate permeating the social fabric of our societies. Brexit should not defect attention from the urgent need for the EU to consolidate and reinvent its internal purpose and geopolitical role.

The disintegration of human flesh on our borders is symptomatic of the lost utopia Europe represents to people within its border but also to those around and further beyond. The European Union has crumbled as a pillar of democracy, liberal economics and value-driven diplomacy. We have retreated into an amorphous entity with an astounding impotence to take decisions, pursue action, achieve meaning.

Mired in constant crisis-management the EU has been evolving from a Union to a maze of overlapping unions in an endless Venn diagram: Schengen/Eurozone/Banking Union/Capital Markets Union/etc. Each of these ‘unions’ features its individual internal schisms, the most notable between German paymasters and unapologetic Greek benefactors who fancy employing Nazi parallels to mock their creditors within the almighty Eurozone. And yet, plans for Eurozone own budget, treasury, assembly, unemployment insurance, even eurobons are mushrooming across the spectrum, as if adding yet new layers to the shaky Union foundations will solidify the system. The result is a mash of disillusionment and antagonism, where the poorer and newer are often relegated to the periphery of decision-making, and where demagogy is popping up its ugly head smirking at our failing project, and at the geopolitical chaos unfolding before our weary eyes. EU’s soft power sounds oxymoronic. Joseph Nye’s critics will triumph. The EU is just soft they might say. 

Purpose will come with building the strength and credibility that the EU can provide security guarantees internally but also to its neighbourhood and further beyond. The internal disintegration of our societies is somehow interrelated to our inability to project confidence in our international remit, moral power and physical prowess in the face of the destructive hordes impeding on our livelihoods.  Our response to horror was to retweet images of a toddler washed ashore on our border, condemning and writing emotional statuses, while observing from a safe heaven the massacre of an entire region, and slamming the door shut to the thousands still alive. The paradox is not lost on anyone. But watch and tweet is all we could do. Conscious of our inability to engage and make a difference, we decided to retreat and immunize ourselves to the suffering and death unfolding in front of our eyes. The banality of evil became the banality of death. Despite a sustained ambition on paper, the European Security and Defense Policy (ESDP) has made a few tangible strides in reality. The few EU security missions which we managed to deploy to places as far as South Sudan, Somalia and Mali have been hectic and uncoordinated, with easily effaceable footprint in conflict interventions. The rapid reaction force remained largely an aspirational concept. The 2016 European Global Strategy, revealed just a few days after the Brexit vote result, shows a parochial block at the very periphery of global affairs - “Our Union is under threat” is the tone permeating a document meant to define EU’s place in the world today. Promising. Just a decade earlier, the first such strategy started with the loud and imposing “Europe has never been so prosperous, so secure, nor so free”. And Brexit, if anything, is partly an outcome of these growing EU feelings of unworthiness and inability to influence global affairs. 

So what now? France, as the remaining military heavyweight post-Brexit needs to capitalise on this historic moment and forge leadership in reversing the defeatist narrative which has overtaken our foreign policy. A strategic alliance between France, Germany and Poland seems pertinent. In the absence of UK’s opposition, plans for military and civilian planning headquarters, common defense procurement, exchange of intelligence can well be realised, not at the expense of NATO, but rather as a long-awaited security guarantee to the alliance and to the EU member states, particularly those at the East. 

France has to lead the way of EU’s engagement with NATO as well. The alliance features its own regional splits: West vs. East; North vs. South; pro-Russian Germany vs. the rest; and is earnestly preparing for a confrontation with Russia. “Anakonda”, “Saber Strike” and “Summer Shield” are not titles of newly released video games, but actual NATO war game exercises on the Russian border. Deployment of four 1000-strong military battalions to protect the Baltic states against Russian invasion are to be endorsed in the NATO summit starting next weekend (7-9 July in Warsaw). Russia retaliated already with a fresh delivery of nuclear missiles to Kaliningrad and by fortifying its presence in the Black, Barents and Baltic Seas. The reminiscence of the Cold War dynamics is obvious, and it is left to the EU to deescalate the relationship and engage in a balanced dialogue with Russia. Conflict would be a geopolitical insanity for the EU. Neither the EU, nor NATO can engage in a conflict with Russia. The 4,000 men deployed in Estonia, Lithuania and Latvia will be swept over by Russian forces in a matter of hours, if the hour comes. Strategic and forceful dialogue will make better strides. The EU has to lead the NATO-Russia deescalation. Simultaneously, we need to build a new security and intelligence infrastructure able to protect our borders, intervene meaningfully in international crisis and provide effective deterrence to extreme forces within. Consolidating our security and defense policy and dialoque internally will make us a more cogent voice in external interaction with the likes of Russia as well. A strong relationship with the UK is primordial, either through established forums (G7 for instance) or the formation of a new consultative platform of the type EU+1, where the 27 Member states act as one in negotiations and discussions with the UK. While militarily, the EU would not be able to engage in the Middle East, our moral imperative is to provide a solution to the migration chaos. Outsourcing the problem to Turkey will boomerang the consequences back when we are least prepared. The EU needs to provide a global leadership in resettling the migrants and ensuring other nations open their steel gates as well.

Espousing a new international trade model is also primordial. A continuation and completion of the Transatlantic Trade and Investment Partnership talks is essential as a signal that the EU does not and will not depend on a UK membership to strike key economic deals. The sheer economic size of the EU - a staggering $14 trillion dwarfs the British $2,5 trillion economy and ‘special relationships’ are often less special when economic interests are at play. The EU will remain the cornerstone of US transatlantic trade appetite. A success with the negotiations will also administer the lesson to isolationist and separatist forces within the EU. 

Pursuing plans for internal consolidation excludes enlargement. The enlargement fatigue has been palpable for years, but conceivable is also that the likes of Turkey, the Western Balkans and Ukraine will see their accession drive reconsidered. Who wants to join a club on the brink of collapse after all? Enlargement now will feed further the incipient isolationism and political discontent spreading across the continent and lead to a complete disintegration of the project.

The strengthened security and defence cooperation should be accompanied by a strategic communications on the image and moral valence of the EU. In the absence of a cogent vision of the EU’s strengths, the centrifugal forces of xenophobia and isolationism can easily sway across the continent in the upcoming few months with looming constitutional reform vote in Italy, repeal of the EU migrant resettlement quotas vote in Hungary, presidential and parliamentary elections in France and parliamentary vote in Germany. The overhaul of the centrist political establishment in the EU will endanger the future of the EU project and the continent per se. Deterrence is what we need to build militarily and politically because a world of Marine Le Pen, Trump, Beppe Grillo and Putin will certainly not be a jolly place to live in. 

The Energy - Climate Nexus

The roller coaster of debates and speculations of how the UK departure would influence the EU and the UK domestically has surprisingly not covered to a substantial extent the EU Energy Union plans and climate trajectory. The probable reason for this notable omission is that not much will change in energy and climate terms, neither for the UK, nor for the EU.

The UK has historically been amongst the most climate ambitious EU Member States, pioneering new legislation, pushing for grid expansion and liberalisation, and advocating for diversification of suppliers and routes. The UK was the first country in the world to pass a Climate Change Act back in 2008, introducing a binding emissions cut of 80% by 2050 and 5-year carbon budgets to measure progress. Prior to that, the country has instituted its own cap-and-trade emissions scheme (2003) which informed the development of the European Emissions Trading Scheme. The UK’s fanatics about deregulation (and strong opposition to dependency) were instrumental in the development of the Third Energy Package and the unbundling of ownership and distribution across the EU. Britain has also been a key ally to Central and East European Member States in ring-fencing against Russian energy offensive. Notwithstanding the above, the UK has also been instrumental in repealing a renewable energy target post-2020.

Which way the British political establishment tilts in the next few months will indicate the future direction of the energy and climate commitment. The first signs have been reassuring. The UK government set the fifth carbon budget in law on Thursday (30th of June), committing the UK to cut 57% by 2032. The 5th climate budget corresponds to UK’s commitment as part of the EU’s common mandate to achieve 40% reduction by 2030; but also the UK’s own Climate Change Act. Henceforth, disentangling UK’s commitment from that of the EU should not bring a reversal of the target. Similarly, the ban on coal-powered generation as of 2025 was introduced by national legislation last year, so one should not expect that the Large Combustion Plant and Industrial Emissions Directives will be repealed. In terms of emissions, the ETS does not require an EU membership, but is part of the single market system, so a UK not part of the single market might be exposed to a slightly altered ETS membership. 

This being said, if anything, British politics is often tendentious. Thereof, a new cabinet led by Michael Gove (who has been climate dubious in the past) can lead to a further reduction of the offshore wind subsidies for instance (already dwarfed by the current Chancellor), outright repeal the 2020 renewable target or some muffling around the emissions cuts. Theresa May has always been silent when it comes to climate and energy, so she might be susceptible to climate sceptic lobbying (from the Global Warming Policy Foundation mighty Lord Lawson for example). While profound unsettling of UK’s climate ambitions is not be expected, political shocks are worth examining and preparing for, especially given that the current cabinet has not yet ratified the Paris accord (at the time of writing - 01.07.2016). 

The spreading political uncertainty has a price tag though, and some key energy projects might be stalled. The future of Hinkley Point C and Bradwell is not clear. Both projects being led by non-British companies (French and Chinese respectively) might be less welcomed by incipient good-old British nationalism, despite EdF indicating otherwise. Further, having the four major power utilities owned by foreigners might not please the sovereign citizen, yet the alternatives to RWE, EON, EDF and Iberdrole are not easy to find, and the issue will most probably be comfortably muffled in the medium term. Overall, the impact on the energy industry would likely be minimal. The price of key commodities is set on international markets, and the energy mix is a national competence under EU law, largely sustained with the Energy Union plans. The latter focus predominantly on interconnections and grids across the continent, and with or without Brexit the UK might well continue be part of those. The complex gas and electricity grid, especially around the North Sea will not be disentangled, but future interconnection corridors meant to strengthen the internal energy market might not include the UK. The all-powerful ENTSO-E and ENTSO-G (European networks for the transmission of electricity and gas respectively) do not require EU membership, thereof the British National Grid will remain a member and benefit from access to European funding from the Projects of Common Interest funding streams (potentially). The UK also has 4 LNG terminals and three gas interconnectors, so no immediate cataclysms in terms of security of supply are expected. In the short term, that is. The UK LNG terminals have been not exactly busy to say the least.

The UK would see its internal power and gas markets considerably changed though. Norther Ireland’s electricity market is integrated with that of the Republic of Ireland. The Irish EirGrid acts as a regional TSO. Post-Brexit, the trade between Northern Ireland and the Republic will be considered as an inter-country trade and susceptible to tariffs (if Northern Ireland remains part of the Kingdom). Also, the UK will need to strengthen its internal interconnections - a well-integrated Welsh, Scottish and English energy market will be taxing on the treasury budget and have an impact on the cost of energy. 

Cost will also be influenced by any potential energy trade regime between the UK and the EU. Since membership of the European Economic Area (EEA) akin to the one enjoyed by Norway would not be an option for the UK (primarily because of the indisputable free movement of labour but also, such a regime will make the British market regulated by EU energy laws, and thus make nuclear subsidies and generous capacity mechanisms incentivizing high-carbon backload generation susceptible to EU state aid rules and competition authority, which is an anatema to the British leave voter), post-Brexit, a new WTO rules will regulate the market. Generally less lenient than the EU regulations, such might actually increase the cost for the British consumers and rule certain subsidies, almost accepted under the EU framework, as illégal. No island is an island in itself.

All things square, we must admit that economically, the world has ceased being flat. The EU is certainly unflattening, and this trajectory hides profound peril for the climate cause. Potential divisions will poison not only our recognised climate leadership and stop the energy transition momentum, but inflame fears about the erosion of sovereignty, too much infringement upon the national identity and complex conspiracy against the national economic stability and energy control. And if distrust, uncertainty and nationalist chaos wreck hovac across the continent, 2 degree will become, it as well, yesterday’s story. Our planet will likely follow.

For the EU, the key challenge post-Brexit is if Member States are swayed by the unleashed centrifugal forces of renationalisation and decide to return to a sovereign patchwork of energy frameworks. This will have an immediate impact on security of supply, exposing Member States to the Russian divide-and-rule tactics. With the UK out of the Union, Russian interests will be much more difficult to oppose and the Central and Eastern European Countries might find it harder to match the remit of the German-Russian energy axis and push for independence and diversification. Brexit would also isolate the Republic of Ireland. Currently, Irish diversification links are passing through the UK, so the development of alternative connections might be extremely expensive to build. In the absence of the opposing UK, the big opportunity for the EU is to propel the expansion of renewable energy post-2020.

Concerning EU’s commitment to curb 40 percent of emissions compared to 1990 level by 2030, it is a compound of Member States national energy plans. The UK’s commitment is amongst the most ambitious, the above-mentioned 57% by 2030. The departure of the UK will necessity disentangling of the UK’s commitment from the EU’s target under the UNFCCC which would change the internal EU distribution of ambition and responsibility - the remaining 27 Member States would need to compensate for the ‘lost’ reductions by increased domestic ambitions - this might unleash some opposition forces, especially in the CEE block. While it is impossible to change the pledges made in the Paris agreement (unless with more ambition that is), an internal bickering might change the trajectory for Europe. 

All things square, we must admit that economically, the world has ceased being flat. The EU is certainly unflattening, and this trajectory hides profound peril for the climate cause. Potential divisions will poison not only our recognised climate leadership and stop the energy transition momentum, but inflame fears about the erosion of sovereignty, too much infringement upon the national identity and complex conspiracy against the national economic stability and energy control. And if distrust, uncertainty and nationalist chaos wreck hovac across the continent, 2 degree will become, it as well, yesterday’s story. Our planet will likely follow.

Conclusions

The EU is celebrating its 60th anniversary next year. Existential crisis are normal at this age - a time of retrospect and likely regrets, less zeal and optimism, critical self-assessment and fatigue. The schizophrenic nature of the EU adds further complexity to an already demanding period. What is important to understand is that this crisis is not caused by the Brexit, rather the Brexit is a consequence of the internal soul-searching and alienation amongst EU partners, and between the EU leaders and those who have elected them. But, Brexit might also become a trigger for further insecurity and disintegration, and put a break to important strides in climate ambition and defense cooperation. The EU needs to capitalise on the wake-up call presented by Brexit to consolidate and find a strong unifying vision for internal solidarity and external impact which will fortify its international credibility and place in the world as power, others are reckoning with and willing to follow. Because the alternative, as the school of existentialism tells us, is irrelevance. Quo vadis, Europa?

 

This piece was first published on the 2d of July, 2016 in the European Center for Energy and Geopolitical Analysis (ECEGA) Newsletter. For feedback and debate please write directly to yana.popkostova@ecega.eu

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