Brexit Danger:The EU Strategy to Keep Britain from Leaving

This summer, Britain will vote on whether to remain in the European Union. The sceptic camp appears to be gaining ground-and EU leaders are growing concerned. They have developed a plan to give in to most of Cameron's EU reform demands.

The victor in this game has already been determined. On Feb. 19 in Brussels, David Cameron will prevail with all of his most important demands. The British prime minister, to be sure, will be standing alone at the summit, faced with opposition from his 27 EU counterparts. But in the end, following tough negotiations, he will get his way.

Such is the result envisioned by EU leaders and in fact European Council President Donald Tusk, European Commission President Jean-Claude Juncker and German Chancellor Angela Merkel have already written the script for their own defeat. "We want Cameron to return to London victorious," say EU officials in Brussels, in an uncommon display of unity. In Berlin, a Chancellery official says: "We will be extremely helpful." Anything that isn't a complete betrayal of European values is negotiable, the Berlin official says.

Their goal is that of providing Cameron with the political tailwind he needs to keep the United Kingdom in the European Union. This summer, Cameron is planning to hold a referendum on Britain's future in the EU. Only if he returns from Brussels in February with a better deal for Britain does he stand a chance of reversing the widespread EU-skepticism that characterizes the country.

For Tusk, Juncker and Merkel, a Brexit would be a nightmare scenario, and one that they are seeking to avoid at all costs. It would shake the EU to its core and has the potential of setting off a chain reaction that could leave the entire union in tatters. Indeed, Marine Le Pen -- leader of the right-wing populist Front National -- has already announced that she plans to hold a similar referendum in France should she win her country's 2017 presidential elections.

Ever since they joined the European club in 1973, the British have been proving their unique ability to stir up EU politics. Prime Minister Margaret Thatcher's insistence in the 1980s on a "British rebate" in compensation for Europe's disadvantageous agricultural policies has become legendary, not least for her demand "I want my money back," and for slamming her handbag onto the negotiating table in annoyance. Prime Minister Tony Blair also ran afoul of his European partners when he chose to shun the Germans and the French in joining the US for the invasion of Iraq in 2003.

An Uphill Battle

But at the same time, the British have often made the Continental Europeans more cosmopolitan, more economically liberal and more invested in the trans-Atlantic bond. A Brexit would knock the EU's finely balanced power structures off kilter. Without the British and their advocacy for free trade, the influence of southern European countries would become greater and that of Germany, the Netherlands and Finland would wane.

Furthermore, the heft and influence of the EU would be weakened in the globalized world economy. In the event of a Brexit, the union would have 13 percent fewer residents and its economic power would be reduced by 17 percent. Without London, the EU would be robbed of its only global financial capital outside of Frankfurt. "If we want to play a global role when it comes to development aid, environmental protection or security policy, then we need the British," says European Parliament President Martin Schulz.

Tusk, Juncker and Merkel are facing an uphill battle. Even if they are able to make Cameron look like the winner of the February summit, it is unclear if that will be enough. The opponents of Britain's continued EU membership have made up significant ground and many surveys now show them to be neck and neck with those who would like to see the UK remain part of the club.

On the Thursday before Christmas Eve, the Europeans held what amounted to a test run for the fixed February summit. At the meeting, David Cameron was allowed to hold forth for 40 minutes in Brussels, detailing to the other 27 EU leaders exactly which reforms he would like to see implemented.

The mood wasn't completely accommodating; Lithuanian President Dalia Grybauskaite could be heard quietly mumbling the word "blackmail" under her breath. But the speech was well received by many of those present. What, after all, could they have against Cameron's desire to make Europe more competitive on the global market? And should the EU really force Britain to accept the goal of an "ever closer union," as laid out in the preamble of the EU treaty?

Even on the most controversial of British demands, it looks as though concessions could be made. Cameron is insisting on implementing a law whereby citizens of EU countries who work in Britain will be prevented from accessing social benefits for four years. It is a clear case of discrimination and is in violation of European Union law. The Portuguese, Belgians and Greeks have tried to convince the British to rescind the demand.

Possible Solutions

Merkel too is disinclined to sign a document that discriminates against EU citizens. At least in principle. For Cameron's demand to be implemented, European treaties would have to be amended -- and that is something that Merkel is open to. She would like to see treaty changes made in an effort to make the EU and the Euro Zone more crisis resistant. But with all 28 member states having to approve such amendments, years often pass before they are implemented and Cameron doesn't have that kind of time. He would like to finalize an agreement with Brussels and with his EU counterparts by February.

There are possible solutions to the dilemma in circulation. At a 1992 summit in Edinburgh, for example, exceptions were granted to Denmark on EU defense policy and on the currency union plans, but they weren't formalized in the treaties until later. That model could be applied once again in the current situation.

Hamburg Mayor Olaf Scholz has introduced a second idea, which has been circulating in Brussels for some time. He envisions a compromise whereby citizens of EU member states could be excluded from British social benefits for one year in accordance with a previous European Court of Justice decision.

It is unclear, though, whether such maneuvers could convince British voters to remain a part of the European Union. Indeed, Cameron had hardly returned home from the pre-Christmas summit in Brussels before the conservative press began bashing him. "His negotiations have exceeded even our lowest expectations," screeched the tabloid Sun. "It is already clear that he has demanded virtually nothing and will get even less."

The European Parliament's Committee on Constitutional Affairs likewise recognized during a visit to Britain that Cameron could be losing control of the situation. "I returned even more disillusioned than I was when I left," says Jo Leinen, a European parliamentarian from the German Social Democratic Party.

Wealthy and Largely Independent

Those in favor of a Brexit have been dominating the public debate in Britain with those wanting to stay in the EU having trouble attracting attention. Not even the bankers in the City of London can be depended on. The influential and financially powerful industry is seeking to use a potential split for its own agenda. The dream is that of transforming Britain into a kind of northern Singapore: wealthy and largely independent.

The anti-EU campaign is being financed with money from business leaders and finance barons who had largely been unknown until now. Two large initiatives are competing for supporters: Vote Leave, led by the Westminster insider and lobbyist Matthew Elliott; and Leave.EU, headed up by real estate tycoon Arron Banks. Billionaire hedge fund managers like Michael Hintze and Crispin Odey have indicated their willingness to further the cause.

Banks' organization Leave.EU has managed to raise enough funding that he is able to employ 60 call-center agents in Bristol and has engaged US-based experts for his campaign -- including consultants from Goddard Gunster, which in the past helped both the soft-drink and pharmaceutical industries achieve their desired results on ballot initiatives in America.

The pro-Brexit activists have employed an aggressive online marketing strategy. Leave.EU was able to quickly assemble more than 320,000 Facebook likes and 39,000 Twitter followers, vastly more than the pro-EU crowd has been able to attract. Indeed, the campaign to keep Britain in the EU has had trouble gaining much momentum -- which is hardly surprising given that not even Cameron's own government is sure if it really wants to avoid a Brexit. Important cabinet posts are held by EU-skeptics, such as Secretary of State for Work and Pensions Iain Duncan Smith and Secretary of State for Defence Michael Fallon.

The pro-EU initiative Britain Stronger in Europe has thus far failed to gain traction, partly because arguments that the British profit handsomely from being part of the EU market have been made thousands of times and aren't particularly sexy. In Westminster, the pro-EU crowd is primarily known -- and ridiculed -- for its abbreviation: BSE.

A Shortage of Accomplished Politicians

Moreover, British successes in the EU are relatively rare, particularly on far-reaching issues such as defence and diplomacy, where Britain has increasingly taken a position contrary to that of the EU in recent years. It is an ironic state of affairs, since it was London, with its military strength and global diplomatic experience that helped Europe achieve a modicum of respectability in foreign and security policy in the past. But when it came to peace talks for the Ukraine, which resulted in the Minsk Protocol, Britain played no role at all. Instead, it was the Germans and French who engaged with the Russians and Ukrainians.

Furthermore, there is a shortage of accomplished British politicians in Brussels who might be able to convince voters back home of the benefits of EU membership. Jonathan Faull, who is leading Commission President Juncker's taskforce on questions relating to the British referendum, has long been a senior EU official. But when it comes to making the case for Britain to stay in the EU, it is mostly Juncker himself who does the talking.

Jonathan Hill, a former financial lobbyist an member of the House of Lords, is another experienced British EU functionary and is currently the commissioner responsible for financial markets. But he generally attracts attention with new proposals for market regulations -- which has done little to endear him to London bankers.

More than anything, though, there is a lack of new blood. The Foreign Office has complained about the lack of interest among young diplomats for being stationed in Brussels and posts in the EU capital are no longer seen as being particularly beneficial to a diplomatic career. The number of Britons occupying important Commission posts fell by roughly half between 2004 and 2014, putting the UK at a disadvantage to countries like Germany, France and Italy.

Collapsing Empire

Given this lack of interest, doubt is growing about the deal being pursued by Merkel, Tusk and Juncker. Why doesn't Cameron simply move to silence the EU-skeptics in his cabinet? "A government where everyone can simply say what they like isn't a government," says one European commissioner.

Plus, granting too many concessions to the British could encourage other EU member states to emulate them. "If Marine Le Pen becomes French president and then, like Cameron, demands special rules for France, should we then just give in?" wonders European Parliamentarian Leinen. "We need Cameron to win," says a Commission official, "but it could be a dangerous victory for the future of the EU."

These are good times for those in favor of a Brexit. They hope that British voters will choose to leave the EU no matter what kind of deal Cameron strikes in Brussels in February. For them, the union is a sclerotic structure, mired in disagreement over the refugee crisis andunable to reach consensus. In the weekly New Statesman, the Cambridge historian Brendan Simms recently compared the EU with collapsing empires like the Soviet Union, Yugoslavia and Austria-Hungary.

Multi-millionaire Jim Mellon, who is actively supporting the Brexit camp, is likewise forecasting the end of the common currency. He believes that the economic crisis on the Continent will worsen and that it is high time for Britain to distance itself. "The Euro Zone ship is like the Titanic, it will sink sooner rather than later," Jim Mellon says. "It is better to be sitting in a lifeboat than to be dragged down."