INTRODUCTION
The concepts of contemporary political crisis and European integration cannot be separated from the recent phenomenon of the British intention to leave the framework of the EU. This undertaking was materialized in a referendum. The neo-functionalism theory of integration at the basis of the European Union integration has played a major role in shaping the structure of the European organization. As a theory it has been criticized over the early years of the EU for depriving the member-states of their sovereignty and giving a supranational nature to EU’s institutions leaving out states which according to other scholars supposed to be the sovereign actors and sovereign decision makers. Our work in this paper, will consist of drawing back to this neo-functionalism theory of integration and explain why Britain exited the European Union.
NEO-FUNCTIONALISM THEORY OF INTEGRATION
Neo-functionalism is a theory of regional integration which downplays globalisation and reintroduces territory into its governance. Jean Monnet’s approach to European integration, which aimed at integrating individual sectors in hopes of achieving spillover effects to further the process of integration, is said to have followed the neo-functional school’s tack. The founder of the term, Ernst B. Haas, later declared the theory of neo-functionalism is obsolete, a statement he revoked in his final book, after the process of European integration started stalling in the 1960s, when Charles de Gaulle’s “empty chair” politics paralyzed the institutions of the European Coal and Steel Community, European Economic Community, and European Atomic Energy Community. The theory was updated and further specified namely by Wayne Sandholtz, Alec Stone Sweet, and their collaborators in the 1990s and in the 2000s. The main contributions of these authors was an employment of empiricism.
Neo-functionalism describes and explains the process of regional integration with reference to how three causal factors interact:
- Growing economic interdependence between nations
- Organizational capacity to resolve disputes and build international legal regimes
- Supranational market rules that replace national regulatory regime
Early neo-functionalist theory assumed a decline in importance of nationalism and the nation-state; it predicted that, gradually, elected officials, interest groups, and large commercial interests within states would see it in their interests to pursue welfarist objectives best satisfied by the political and market integration at a higher, supranational level. Haas theorized three mechanisms that he thought would drive the integration forward: positive spillover, the transfer of domestic allegiances and technocratic automaticity
- Positive spillover effect is the notion that integration between states in one economic sector will create strong incentives for integration in further sectors, in order to fully capture the perks of integration in the sector in which it started.
- Increased number of transactions and intensity of negotiations then takes place hand in hand with increasing regional integration. This leads to a creation of institutions that work without reference to “local” governments.
- The mechanism of a transfer in domestic allegiances can be best understood by first noting that an important assumption within neo-functionalist thinking is of a pluralistic society within the relevant nation states. Neo-functionalists claim that as the process of integration gathers pace, interest groups and associations will transfer their allegiances away from national institutions towards the supranational European institutions. They will do this because they will, in theory, come to realise that these newly formed institutions are a better conduit through which to pursue their material interests.
- Greater regulatory complexity is then needed and other institutions on regional level are usually called for. This causes integration to be transferred to higher levels of decision-making processes.
- Technocratic automaticity described the way in which, as integration proceeds, the supranational institutions set up to oversee that integration process will themselves take the lead in sponsoring further integration as they become more powerful and more autonomous of the member states. In the Haas-Schmitter model, size of unit, rate of transactions, pluralism, and elite complementarity are the background conditions on which the process of integration depends
- Just as Rosamond put it, political integration will then become an “inevitable” side effect of integration in economic sectors.
NEO-FUNCTIONALISM AND THE EU
The two main competing theories of EU integration are Neo-functionalism and Intergovernmentalism. Although these theories have been heavily criticised, amended or even abandoned, they do contain two strong theoretical integration arguments.
Firstly, Neo-functionalism was developed in the second half of the 1950s and is the first, ‘classical’ grand theory/narrative of European integration. It is a theory of regional integration, building on the work of Ernst B. Haas, an American political scientist and Leon Lindberg, also an American political scientist. Jean Monnet’s approach to European integration, which aimed at integrating individual sectors in hopes of achieving spill-over effects. The core of Neo-functionalism is the use of the concept of ‘spill-over’. The process of ‘spill-over’ refers to situations when an initial decision by governments to place a certain sector under the authority of central institutions creates pressures to extend the authority of the institutions into neighbouring areas of policy, such as currency exchange rates, taxation, and wages. This core claim meant that European integration is self-sustaining: ‘spill-over’ triggers the economic and political dynamics driving further cooperation. Haas later declared the theory of Neo-functionalism obsolete, after the process of European integration started stalling in the 1960s, when Charles de Gaulle’s ‘empty chair’ politics paralyzed the institutions of the European Coal and Steel Community, European Economic Community, and European Atomic Energy Community. Neo-functionalism proposed the concept of ‘spill-over’ – ‘Integration within one sector will tend to beget its own impetus and spread to other sectors.
Intergovernmentalism was developed in the mid-1960s and initially proposed by Stanley Hoffmann. It suggests that national governments control the level and speed of European integration. The theory proposed the Logic of Diversity, which ‘set limits to the degree which the ‘spill-over’ process can limit the freedom of action of the governments…the logic of diversity implies that on vital issues, losses are not compensated by gains on other issues’. Any increase in power at supranational level, he argues, results from a direct decision by governments. He believed that integration, driven by national governments, was often based on the domestic political and economic issues of the day. The theory rejects the concept of the spill-over effect that Neo-functionalism proposes. He also rejects the idea that supranational organisations are on an equal level (in terms of political influence) as national governments.
This debate is intended to look at the core points of each theory, where they differ and which is the more convincing argument.
BREXIT
DEFINITION OF BREXIT
Brexit, short portmanteau of British exit from the European Union, is the impending withdrawal of the Britain from the European Union (EU). In a referendum on 23 June 2016, a narrow majority (52%) of those voting supported leaving the EU. On 29 March 2017, the UK government invoked Article 50 of the Treaty on European Union. The United Kingdom is due to leave the EU on 29 March 2019 at 11 p.m. UK time (midnight Central European Time), when the period for negotiating a withdrawal agreement will end unless an extension is agreed.
Prime Minister Theresa May announced the government’s intention not to seek permanent membership of the European single market or the EU customs union after leaving the EU and promised to repeal the European Communities Act of 1972 and incorporate existing European Union law into UK domestic law. A new government department, the Department for Exiting the European Union, was created in July 2016. In 2018, the British Cabinet agreed to the Chequers Agreement, and these are the current proposals suggested from the UK under the Premiership of Theresa May.
Negotiations with the EU officially started in June 2017, aiming to complete the withdrawal agreement by October 2018. In June 2018, the UK and the EU published a joint progress report outlining agreement on issues including customs, VAT and Euratom.
The UK joined the European Communities (EC) in 1973, with membership confirmed by a referendum in 1975. In the 1970s and 1980s, withdrawal from the EC was advocated mainly by Labour Party members and trade union figures. From the 1990s, the main advocates of withdrawal were the newly founded UK Independence Party (UKIP) and an increasing number of Eurosceptic Conservative Party members. Prime Minister David Cameron held the referendum in fulfilment of a 2015 manifesto pledge. Cameron, who had campaigned for “Remain”, resigned after the referendum result and was succeeded by Theresa May, who called a snap general election less than a year later, in which she lost her overall majority. Her minority government is supported in key votes by the Democratic Unionist Party.
Six weeks after the referendum, the Bank of England introduced quantitative easing and lower interest rates, thus allowing both depreciation of sterling and a rise in inflation that outpaced wage growth for most of 2017. The drop in the value of sterling has been claimed to have been caused in part by hedge-fund managers betting on Brexit against polls predicting a narrow victory for the “Remain” camp.
There is a broad consensus in existing economic research that Brexit is likely to reduce the UK’s real per capita income in the medium term and long term. There is also agreement among economists that the Brexit referendum itself damaged the economy in the subsequent two years. Studies on effects that have materialised since the referendum show annual losses of £404 for the average UK household from increased inflation, and losses between 2% and 2.5% of UK GDP. Brexit is likely to reduce immigration from European Economic Area (EEA) countries to the UK, and poses challenges for UK higher education and academic research. As of August 2018, the size of the “divorce bill”, the UK’s inheritance of existing EU trade agreements, and relations with Ireland and other EU member states remain uncertain. The precise impact on the UK depends on whether the process will be a “hard” or a “soft” Brexit.
REASONS FOR BREXIT
The British voted to leave the European Union. Even at only 52%, Brexit couldn’t have been imagined 10 years ago. This fragmentation has been evident throughout Europe, but it’s the first case of a nation actually deciding to leave. I doubt that it’s the last. Now we should try to understand why the majority of Brits favored an exit from the EU and learn lessons. There are three main factors that led to this outpouring of votes to leave.
Economics
The first was simple. Opponents of the EU argued that it is a dysfunctional economic entity. The EU failed to address the economic problems that had been developing since 2008… for example, 20% unemployment in southern Europe. The difference between the lives of southern Europeans and Germans; who enjoy 4.2% unemployment is profound. Europe as a whole has stagnated economically. The argument for remaining in the EU was that the alternative was economic disaster. However, staying in a stagnated organization to solve British problems seemed shortsighted and made little sense to opponents. They believed that remaining in the European Union would make Britain follow Europe’s lead. Obviously, they didn’t think that Europe would throw up trade barriers against Britain. The UK is Germany’s third most important export target. The last thing Germany wants is a trade war with Britain. Similarly, the threat that London’s banks would decamp for Frankfurt is logistically implausible. Clients from around the world enjoy visiting London, and in finance, it’s the clients that matter. The European Union didn’t create the existing financial relationships. Britain’s financial role goes back almost two centuries. The EU is a system that aligns with financial reality. It does not create it. If London’s banks were to move to Frankfurt, New York would become a unique magnet. In the end, the Europeans need a financial center in London. They will not lock it out.
Sovereignty
The second reason for Brexit is the rise of nationalism across the world. There’s a growing distrust of multinational financial, trade, and defence organizations created after World War II. The EU, the IMF , and NATO are good examples of this. Many who oppose the EU believe these institutions no longer serve a purpose. Not only that, these organizations take control away from individual nations. Mistrust and fear of losing control made Brexit a reasonable solution to them. But for the supporters of the EU, such organizations are self-evidently valuable. They may need to be tweaked but not abandoned. The immigration crisis in Europe was a trigger. Some EU leaders argued that aiding the refugees was a moral obligation. But EU opponents saw immigration as a national issue, as it affected the internal life of the country. Steering clear of this issue was an important driver for the “leave” vote. The EU doesn’t understand the power of nationalism. It attempts to retain nationality as a cultural right. On the other hand, it deprives individual nations of the power to make many decisions. This may have worked before 2008, but it has become increasingly difficult to accept.
Political Elitism
Finally, the political leadership of Britain faced a profound loss. The “leave” voters rejected both the Conservative and Labour parties. Both parties had endorsed remaining with the EU and saw many of their members go into opposition on the issue. Ultimately, it was a three-way struggle. Two established parties wanted to remain in the EU, and a third faction, drawn from both parties, opposed it. People in this third group saw both of the establishment parties as hostile to their interests. This should be considered in the broader sense. The possibility of Brexit frightened financial markets. They said so loudly. What they did not grasp was the degree to which they had lost legitimacy in 2008. Most “leave” supporters believed that the financial industry’s recklessness and incompetence had created a disaster for many. Besides, they saw no benefit to themselves in the success of the financial industry… even though it wasn’t true. It’s vital to understand that Brexit was a vote against the British elite. Voters thought politicians, business leaders, and intellectuals had lost their right to control the system. Voters thought the elite had contempt for their values, for their nationalism and interests. This is not a new phenomenon in Europe. This is not a British phenomenon, either. It is something that is sweeping Europe and China. And with the rise of Donald Trump, it’s also present in the United States. Trump’s entire strategy is to attack both the Democratic and Republican leadership… and the elite who have contempt for the nationalism and moral principles of those beneath them. It’s a shift in politics that the West is undergoing. Now, it’s in London.
NEO-FUNCTIONALISM AND BREXIT
The UK has long been considered one of the most euroskeptic members of the EU, with many British leaders and citizens traditionally cautious of ceding too much sovereignty to Brussels. As a result, the UK chose to remain outside the eurozone and the Schengen free movement area, and it negotiated the right to participate in only selected justice and home affairs policies. The United Kingdom wants to have control over its borders for security reasons and immigration flux which the EU member states are facing; also over its economy and market/trade policies. According to Neo-functionalism theory:
- • Positive spillover effect is the notion that integration between states in one economic sector will create strong incentives for integration in further sectors, in order to fully capture the perks of integration in the sector in which it started. But for the fact that the theory has become obsolete; it brought about the treaty of Lisbon of 2009. The European Parliament, after the Lisbon treaty possesses equal powers to those of the Council of the EU, particularly when codecision is discussed, a fact that did not exist before 2009; which actually brought about the article 50 which allows the UK to leave the EU.
- Also, because of the supranational nature of the EU and its institutions, lost track of its economic and political sovereignty. Due to the spillover effect of the neo-functionalism; the EU integration moved from economic integration to political integration which the UK finds unsupportable. They cannot decide on their trade partners or take national security or immigration measures or policies without consulting first the European Union.
The argument of the neo-functionalists (and partially also the federalists) was that an intrinsic Europeanism or, in other words the desire for a politically united Europe, had existed for centuries in Europe, and Europe itself was predestined, almost teleologically, as Kant would say, towards political unity. Supranationalism was then the ultimate material achievement of this endeavor. By creating a supranational institution (the European Commission, originated from the High Authority in the ECSC times) that was delegated with the powers for the designing of common policies, where no nation would be unevenly compensated, a path was opened for the beginning of this process. After the positive initial results of this system a process of “spill-over” would then occur making more common policies fall under this system. The relationship between several states and this supranational institution would then change forever. Haas therefore stated: “State preferences are seen as resulting from changing domestic competitions for influence; there is no fixed and knowable national interest. Preferences of political actors are formulated on the basis of the values held; they, in turn, determine an actor’s sense of interest. In short, neo-functionalism carried the assumptions of democratic pluralism over into policy formulations relating to international matters by disaggregating the state into its actor-components” (Haas, 1958, pp. xiv).
CONCLUSION
This system, according to neo-functionalists, was not implying or defending the need for a European state, consequently, according to Haas: “Political community, as here defined, need not presuppose the emergence of a federal state, though this is one possibility and certainly the aim of many contemporary European statesman and thinkers” (Haas, 1958, pp. 7). Supranationalism and neo-functionalism are thus clearly separated systems from federalism although both share common ideals of a political unity in Europe. Haas demarcated himself from such beliefs and in analysis of the ECSC, advocating that there was a mix between the state and the supranational. “The feature common to most of the jurists who were active in the drafting of ECSC is an admission that supranationality refers to a type of integration in which more power is given to the new central agency than is customary in the case of conventional international organizations, but less than is generally yielded to an emergent federal government” (Haas, 1958, pp. 34). The views on these embryonic years of European supranationalism were vast and numerous and encompassed historians, politicians, academics, scientists, economists and civil society.
However, we must remember that these initial years of European integration, though wanting to achieve a kind of federation, were no more than an embryo of such a process. The ECSC that developed into the European Economic Union (EEC) by the Treaty of Rome (with the addition of more common policies under supranational supervision) in 1957 and later transformed into the European Union in 1991 by the signing of the Treaty of Maastricht, by the creation of co-decision and European citizenship, and the successive enlargements achieved all through the decades, starting with the United Kingdom, Denmark and Ireland in 1973 and having reached a total of 28 member states (as of 2015), achieved a much higher level of federalized powers. However, with new political and economic events unfolding, newer perspectives of these initial times started to appear focusing their perspectives on the role of the state and not on supranational institutions. Leon Lindberg, though following on the works of Haas and neo-functionalism, was the one where a closer analysis of the role of the independent and sovereign states under this system was to be researched. If one is to take a federalist or neo-functionalist approach, then the “Brexit” is merely a setback in an otherwise teleological path towards European federalization. Sooner or later, the United Kingdom, separately or as a whole, will change its political stance and make a new accession request. Since federalists believe in a Europeanist ideal where the peoples and governments of Europe are predestined for a political and economic unity, and since the EEC and the EU were the projects that have achieved the most in this regard, then either the same EU as it exists today or a similar one in the future shall be responsible for the re-entrance of the UK.
Taking into precedent the fact that enlargements in the EU almost always entailed a new treaty of the EU, then the “Brexit” shall also originate a new treaty although such fact is merely speculative.
REFERENCES:
- Wikipedia, ‘Neo-functionalism’, en.wikipedia.org, http://en.wikipedia.org/wiki/ Neo-functionalism
