Brexit lessons from Greenland and Venezuela

Brexit

The possibility of the UK exiting the EU is taking centre stage in UK politics following the return of a Conservative majority in the latest election.

Contingency planning should be a normal part of government work, and should therefore also be part of the planning of the upcoming EU referendum.

Precedents for the UK’s scenario

First, following its achievement of autonomy from Denmark in 1979, Greenland negotiated its withdrawal from the then European Communities.

Second, and also less widely known, Venezuela withdrew from the Andean Community in 2006 to later join the South American trading bloc Mercosur.

These scenarios provide close parallels to the UK situation. By exploring how Greenland and Venezuela achieved these exits the UK can learn how to avoid too many negative consequences.

This allows for a more informed, less anxiety-fuelled debate about whether to stay in or go from the EU. In current public discourse, the argument in favour of staying often focuses on uncertainty as to the effects of an EU exit, especially for the UK economy.

It also helps answer these two questions: first, could the UK successfully negotiate to leave the EU, retaining close links with the organisation and continuing to participate in aspects of the internal market?

Second, could careful planning minimise disruption and contribute to a smooth transition to the new political landscape?

There are both significant differences and similarities between the scenario of a UK exit and the two ‘precedents’ above.

No doubt, the situation of Greenland and Venezuela do not provide a comprehensive blueprint for how a UK exit from the EU could be planned, but they are likely to contain important lessons nonetheless.

Greenland

In the case of Greenland, an obvious difference in that it was not a separate member state within the then European Communities, it was a territory within Denmark. However, its renegotiated relationship, now as an autonomous state whose foreign policy is still conducted through Denmark, is the same as what the UK would experience following an exit: an independent state seeking to participate in some of the bonds and principles of a previously closer relationship.

Venezuela

In some respects, the comparison with Venezuela is more useful. First, the Andean Community has extended its cooperation beyond core free trade to include aspects of criminal justice, especially combatting the trade in illegal narcotics.

Similarly, the EU has substantially expanded its sphere of policy cooperation, beginning with the Single European Act 1986.

Second, although independent external trade policy is no longer possible in the EU, the Andean Community has developed a more flexible approach to free trade: current Andean member states retain control over their trade relations with third countries. Even though Venezuela decided to leave the Community, this flexibility has actually increased trade between Venezuela and Andean Community member states after its exit.

Just as Venezuela joined Mercosur, it is likely that if the UK decides to leave the EU it would consider joining and the European Free Trade Association (EFTA) and the European Economic Area (EEA). And although there is not an Andean equivalent to the EEA (the EEA is a framework for the non-EU member states in EFTA to engage with the EU), Mercosur and the Andean Community engage quite closely and are in a process of developing stronger links.

This shows that the UK does not need to see an exit from the EU in terms of a competitive model, but instead could continue a cooperative and mutually supportive, albeit more flexible, relationship with the EU.

How Venezuela transitioned from the Andean Community to Mercosur may therefore help illustrate how the UK could transition to EFTA (and the EEA) in the case of an EU exit.

However, more research is required as to how more exactly these mechanisms could work and what degree of adjustment would be required of the UK.

By Dr Gerard Conway, Brunel University London.

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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