ZHAO Yongsheng: EU should create subunions to cope with Brexit crisis

The result of the UK's Friday referendum on its EU membership has shocked most of us: 51.9 percent for "Leave" (Brexit) against 48.1 percent for "Remain." Why has this difference of only 3.8 percentage points become a real tsunami for the Europeans and even the rest of the world?

We have to admit the importance of the UK in the EU. Although the UK is a member of neither the Schengen Agreement nor the eurozone, it is usually the third-largest economy in the EU, recently the second just behind Germany, with contributions of 17.8 billion euros ($19.6 billion) last year. The UK is one of three "pillars" within the EU bloc, together with Germany and France, and its vote to leave had hardly been forecast by most assessment institutions before Thursday's referendum. That's why the referendum's result came as such a surprise, knowing as we do that Brexit will not only influence Europe but also global political, social and economic patterns. 

Personally I'd like to justify the gap between the referendum result and previous predictions with two reasons. For one thing, it is true that this referendum was a way for UK people to express their feelings. But I'm not sure if all their real feelings have been demonstrated because, as with other votes, the referendum was also a chance for UK voters to express their general dissatisfactions, which could be related to the referendum's objective or have nothing to do with it at all.

This is evident in the fact that around 3 million people have already signed a petition calling for a second EU referendum following Thursday's vote to leave. Statistically speaking, it is really hard to tell how many people voted "by mistake" or "out of spite," but as the gap between "Out" and "In" is only 3.8 percentage points, any reaction by this group of "wavering voters" can play a decisive role in the referendum's result.

Second, this gap can be justified by the high degree of heterogeneity among EU member states in terms of economic growth, cultural identities and political and social policies. Many of the EU's 28 member states are so different from each other that they can hardly co-exist in the same bloc. That's why I argue that subunions should be created within the EU to cope with this heterogeneity, which is in fact the source of the Brexit crisis. The EU can be divided into three subgroups or subunions: the Subunion of Northern and Western Europe, the Subunion of Southern Europe and the Subunion of Eastern Europe.

This division corresponds to the heterogeneity among 28 EU member states' economic development level, which is one of the major motivations for the British vote to leave. The British assumed that they contributed more than other states, or at least more than the majority of member states. If the problem of heterogeneity is not settled, other crises will still take place inside the EU.

In fact, their feeling is rather plausible, because it is true that the UK contributed over 17 billion euros to the EU in 2015. But the EU gave back 6 billion euros in agricultural subsidies and 2 billion euros in R&D subsidies, so the UK only contributed around 9 billion euros to the EU.

My classification is based mainly on different economic and social development levels: the Subunion of Northern and Western Europe has the highest economic and social level, the Subunion of Southern Europe has a medium level and the Subunion of Eastern Europe has the lowest level. Then we can adopt the same or similar economic and social policies inside the same EU subgroup or subunion, keeping some common European policies that are truly indispensable to all the member states.

Of course, the threats of the refugee crisis and terrorist attacks were also largely disputed in the Brexit campaign, but most UK "Out" voters used these as an excuse for problems caused mainly by themselves or by their own government rather than by the EU.

In a word, I propose creating three subunions inside the EU so that the same economic and social policies can be adopted among a homogenous group of states while some macro-level regulations are retained for all member states. After more than ten years working in the EU, I am convinced that the process of EU integration is too fast to be manageable, and the UK's EU referendum is a case in point. The Europeans must learn from this lesson if they want to continue their titanic task of building their EU dream.

Nevertheless, both a petition for the second EU referendum with around 3 million signatures and a petition for London's independence with more than 140,000 signatures have passed the threshold for consideration by Parliament. Meanwhile, another petition from the Scottish people for a second round of voting on Scotland's independence may be just around the corner. So it is still too early to predict where the UK will go, even as the six founding countries of the EU urge the UK to exit as quickly as possible.

The author is Zhao Yongsheng, a Paris-based economist and professor, and vice-president of the Paris-based China-France Association of Lawyers and Economists. Contact: jacques.zhao@163.com