From a strategic point of view, the United Kingdom and Germany have different aspirations for Europe's future. London has traditionally sought to prevent the emergence of a single continental power in Europe and has occasionally used its EU membership to counterbalance Germany's and France's influence in continental affairs. For its part, Germany is interested in tighter continental integration. Berlin's strategy is to consolidate its alliance with France and enhance the European Union's common market and currency union in order to expand its own political and economic pre-eminence, particularly in Europe's traditional battleground, the North European Plain.
This is why the British and German governments have had such disparate reactions to Europe's economic crisis. London believes integration has gone too far and that national parliaments should reclaim some powers, including those that govern labor legislation and immigration. Berlin believes that the European Union should have more control of member states' fiscal policies to prevent excessive deficits and unmanageable levels of public debt.
Room for Compromise
Despite their strategic differences, London and Berlin share similar views on several issues. Germany sees the United Kingdom as an important political and ideological counterbalance to France and the rest of southern Europe's protectionist tendencies. Like Germany, the United Kingdom is a staunch defender of the free trade agreement in Europe and rejects excessive bureaucracy and spending at the supranational level.
It is worth noting that France sees the United Kingdom as a counterbalance to Germany. Paris is worried about Berlin's progressive consolidation as the Continent's largest economic and political power. This is why France and Germany — with Britain, the three largest economies in Europe — are interested in keeping the United Kingdom within the continental bloc; it provides a relative balance of power.
The German and British governments are also under pressure from Euroskeptical actors at home, which is linked partly to the lack of democratic accountability in the bloc. In the United Kingdom, the anti-European Union UK Independence Party is on the rise. In Germany, some members of the ruling Christian Democratic Union remain skeptical about deepening EU integration, while rulings by the German Constitutional Court and the relative rise in popularity of the Euroskeptical Alternative for Germany party show that EU integration is still being questioned in the country.
Like their British counterparts, German officials are increasingly worried about the European Union's democratic deficit and could be interested in strengthening the role of national parliaments. In the face of growing Euroskepticism, France could eventually support the idea as well. There is also room for agreement on immigration issues; to varying degrees, France, the United Kingdom and Germany are increasingly concerned about the negative effects of the free movement of people within Europe. The United Kingdom is already preparing measures to prevent unemployed foreigners from accessing welfare benefits. Germany — and France to a lesser extent — has been less critical of so-called welfare tourism, but both have recently suggested that abuses of the free movement principle should be stopped.
British Options
The United Kingdom has three options for the renegotiation of its role in Europe. First, it could push for all EU treaties to be amended to repatriate certain powers from Brussels. With anti-European Union sentiment at record-high levels, Berlin and Paris do not think this is the right time for such an option. Some countries are constitutionally obligated to submit treaty amendments to referendum, while others would probably do so to avoid domestic criticism. If a country rejected the amendments during a referendum, it would force the Europeans to restart treaty negotiations from scratch, as was the case when France and the Netherlands blocked the European Constitution in 2005.
In addition, every time a new treaty is negotiated or renegotiated, member states push for exemptions, opt-outs or special conditions. At a time of growing political fragmentation in Europe, this process could lead to even deeper divisions, especially if the treaty change was happening because of London's efforts to take back powers from Brussels. The United Kingdom could try to pursue modest treaty changes rather than a full treaty overhaul, but it would still need all 28 members to ratify the amendments.
The German and French governments believe the crisis needs to be stabilized before discussions of a new treaty or amendments to the existing one can begin. Both countries will hold general elections in 2017, so any significant reforms to the European Union's legal framework would not take place until that was over. Even then, the negotiation, drafting and ratification of European treaties is a lengthy process that would not be over for years. And treaty change requires unanimous approval, which means the support of Germany and France would not be enough to introduce the changes the United Kingdom wants.
With treaty change out of the question, London's second option is to leave the European Union and negotiate a free trade agreement with Europe. This would please the Euroskeptical elements of the Conservative Party but would contravene London's strategic interests. The United Kingdom would be subject to most of Europe's rules and norms but would not have a seat at the negotiating table. This situation has already created problems in Switzerland, which in order to trade with the European Union is forced to apply regulations it cannot influence.
Finally, London could try to reverse or modify those areas of legislation it finds objectionable. Unlike treaty change, this would not require unanimity but qualified majority. It would still be a significant political challenge for the United Kingdom — it would have to convince a sufficient number of member states and the European Parliament to follow its lead — but it would be simpler than treaty change. Though other countries, particularly in northern Europe, would probably support such initiatives, this is where the political backing of Germany and France, because of their size, becomes crucial. This is also where Berlin is more likely to make promises and offers to London.
Crumbling Dreams of a European Federation
Merkel's government can be expected to make concessions to London in areas that do not involve treaty change. For example, Germany will support the United Kingdom's plans to limit welfare tourism and will promise to eventually accept a renegotiation of EU treaties. Berlin hopes this will lead Cameron — or whoever is in charge after the United Kingdom's general elections in 2015 — to delay or even cancel the referendum on the United Kingdom's EU membership. Most opinion polls suggest that if the referendum were held right now, it would pass.
This is not a long-term strategy. If German promises are strong enough, Cameron could campaign on a platform of EU reform next year. But if the British started to feel that Germany was not keeping its promises, anti-European Union rhetoric would resume. This approach could also lead other countries to seek special treatment, risking further fragmentation of the continental bloc.
There is room for accommodation between the United Kingdom and continental Europe. London does not reject the deepening of integration in the eurozone — it just does not want it to affect the United Kingdom. Any new treaties or reforms designed to appease the British would merely acknowledge the existing state of affairs: Europe's dreams of a continental federation will probably not be realized. Some countries will continue pushing for integration while others will elect to stay away from the process. What matters is how many countries choose to belong to the second group.
