Ins and outs

As the British seek new EU opt-outs, Danes will likely vote to end theirs.

Over the past several years, as UK prime minister David Cameron has taken his country further and further toward the EU exit door, he has been keen to stress that the UK is not alone in its desire for a more devolved EU. He points to the increasingly Eurosceptic Dutch, who have, like the UK, recently conducted a review of the EU's powers. He points to the Danes and Swedes, who are also voluntarily remaining outside the Eurozone.

So when news came this week that it now looks likely that Denmark will hold an ‘EU referendum' next year, it may have seemed like welcome news for the British Conservatives. Cameron has attracted a large amount of ill will on the continent by scheduling an in/out EU referendum for the UK in 2017. But why should Britain be singled out for scorn, when the Danes are holding their own EU referendum?

However the Danish case is a very different animal. The British referendum will be a vote on a theoretical new EU-UK relationship which the government will negotiate, giving the UK more opt-outs from EU law. The Danish referendum will be the opposite – a vote on whether to end the opt-outs Denmark negotiated for itself back in 1992.

In other words, the assumption for the British referendum is that the status quo is bad because there is too much EU. The British voters would have two options – ‘less EU' or ‘no EU'. The Danes will vote for either the ‘status quo' or ‘more EU'.

Opting back in

Denmark's four opt-outs from the 1992 Maastricht Treaty, which transformed the European Community into the European Union, were negotiated after Danes narrowly rejected the treaty in a first referendum. The Danes voted yes in a second referendum after they received opt-outs from participating in EU monetary, defence and judicial policy.

But 20 years later, these opt-outs have proven to be more of a burden than a boon. Though they were meant to guarantee sovereignty, they are now forcing Denmark to sit on the sidelines in important policy areas where cooperation would be good for the country.

All of the main parties in Denmark now agree that the defence and justice opt-outs are tying the country's hands. They make it impossible for Denmark to benefit from things like shared crime data (Europol), defence cooperation (the Rapid Reaction Force), European patents and the European Public Prosecutor.

The country's justice minister recently said that Denmark's inability to be a part of Europol seriously weakens the country's ability to fight cross-border crime. The defence minister bemoaned that the country is having to spend more on it military because the opt-out prevents it from entering binding cooperation agreements with other countries.

Just a few years ago, before the eurozone crisis, the previous Liberal government of Lars Lokke Rasmussin was even talking about including a vote on the monetary opt-out (participation in the euro currency), as part of a referendum. There is increasing fear that as the eurozone heads toward ever tighter fiscal union, 

Denmark is being shut out of important decision-making by not being part of the  ‘Eurogroup' of 17 countries using the currency. The Danish krone is pegged to the euro, making it a sort of pseudo-eurozone member without being part of the Eurogroup which makes decisions.

But following the eurozone crisis and the resulting pessimism around the European project, the new Labour government of Helle Thorning Schmidt decided shelve not only a referendum on the euro but also any referendum on the other two opt-outs. In June of last year she said there was too much “anxiety and uncertainty" surrounding the EU to hold any such referendum.

Yesterday Rasmussen, now the opposition leader, reversed his previous silence and called for a referendum to be held on the justice and defence opt-outs quickly. The call will likely force the government's hand in calling a referendum next year. But while there is near universal agreement in the Danish parliament that it is in the best interests of the country to end these two opt-outs, the “anxious and uncertain” public may need more convincing. Still, recent polls have shown that 55% of Danes support ending the defence opt-out.

Europe à la carte

Cameron has become fond of painting a picture of a Europe where some countries opt to participate in projects like the euro, others don't, and that's just fine. But in fact there is an increasing mood against opt-outs both in Brussels and in national capitals.

It isn't just the French who condemn Cameron's ideas as an unworkable“Europe a la carte”. Denmark's experience shows that negotiating opt-outs for the sake of political expediency may seem like a good idea in the short-term, but in the long-term they have a way of coming back and biting you in the behind.

It is conceivable that even if Cameron were able to claw back new opt-outs from his EU partners ahead of the 2017 referendum, these opt-outs would be more for political showmanship than practicality. They could end up hurting the UK in the long-run.

One only needs to look at how the UK has behaved with the Lisbon Treaty opt-outs it negotiated to see the domestic political theatre at work. After Britain opted out of the area of freedom, security and justice in the EU's latest treaty, Cameron's government has quietly opted back in to most of the measures individually, a possibility granted to them in negotiations.

It is disingenuous for Cameron to present opt-outs as a normal part of EU business. In the UK, Sweden is often described as also having an opt-out from the euro, but this is not the case. Every member state except Denmark and Britain, who negotiated opt-outs, are required by the treaty to eventually join the Euro.

Sweden has avoided the common currency, which has been rejected by the Swedish public, by not applying to join the European Exchange Rate Mechanism (ERM). Countries must be in the ERM for two years before they can join the euro. The ECB has so far tolerated the use of this loophole, but has warned that new EU members will not be allowed to use it. It is also expected that should the eurozone crisis subside, the ECB may choose to get tough with Sweden and force it to make good on its treaty obligation to join the common currency.

Only three countries have been allowed to opt-out of any EU legislation. Ireland opts out from participation in the Schengen area of border-free travel, but this is only because it was forced to do so along with the UK or face setting up an immigration border with Northern Ireland for the first time in its history.

It is really only Denmark and the UK who are ‘opt-out' countries, and Denmark may soon be shedding their exceptions. This would leave the UK as a lone peculiarity. It is perhaps fanciful to think that the country's EU partners would be amenable to the idea of making this situation even more of an anomaly.

Far from being a natural part of how the EU works, the practical experience with opt-outs have shown them to be largely political theatre that can actually end up being self-defeating in the long term for the country that negotiated them. At the same time, they attract the resentment of other EU member states who don't understand why one country should be given special treatment.

The UK has already attracted resentment by opting out of Lisbon Treaty provisions which it ended up quietly opting back into anyway. Is Cameron's government prepared to attract even more ill will by demanding new opt-outs that even his own commissioned report has concluded are unnecessary?

The Danish experience should provide a reason for caution.