EU advised to rule out UK return

Though most UK politicians would have us believe that “Brexit is Brexit,” European leaders have recently spoken of a reversal of the UK's decision to leave the European Union as a real possibility. That should be alarming to anyone who cares about continuing the EU's resurgence since the 2016 vote.

“For the first time, I'm starting to believe that Brexit will not happen,” Maltese prime minister Joseph Muscat said last week. “I see encouraging signs that the tide is turning.” Muscat is knowledgeable about the Brexit process: His country held the EU's rotating presidency in January through June.

“Well I still hope that it won't happen,” Irish prime minister Leo Varadkar said when asked about Brexit on Monday. He also knows more than most about Brexit because his country's border with the UK is one of the thorniest issues under negotiation.

There are good reasons why UK politicians, affiliated with both the government and the opposition, won't say similar things. Calling for another EU referendum did nothing for the Liberal Democrats in the June election. Most major figures in UK politics have pledged to respect the result of last year's Brexit vote. No one wants to be first with a risky reversal, even if some polls show that most Britons would now vote to remain in the EU. Foreign leaders such as Muscat and Varadkar have no such constraints, so their sudden optimism is a strong hint that the ground is shifting behind the scenes.

But those who, like Muscat and Varadkar, hope that Brexit won't actually happen should be careful what they wish for.

After the 2016 catharsis, the EU looks stronger both economically and politically. But it still has trouble defining its goals and even basic values, as evidenced by the current strife between Western and Eastern Europe. The easterners, led by Poland and Hungary, are pushing toward more authoritarian government and tougher measures to remain ethnically homogeneous.

The Westerners stand on traditional liberal values and are softer on immigration despite pressure from right-wing parties. There are plenty of other divides, and new ones emerge constantly. Now, there's sudden tension between France and Italy over the former's decision to block the takeover of a major shipyard by an Italian company. French President Emmanuel Macron's foray into trying to settle the Libyan political crisis - traditionally Italy's domain in Europe - hasn't helped matters.

The EU bureaucracy and the bloc's core nations are trying to formulate a clearer common line on the union's future. The last thing they need is another centrifugal force - and the UK, with its current political establishment, would certainly be one. Even before Brexit burst into political reality, the UK was the most outvoted member state in the EU Council. Now, with millions of citizens who have voted against the EU, it would likely be even more contrary and anti-federalist.

The UK also had the most opt-outs of important EU policies - the Schengen free travel area, the euro, the Charter of Fundamental Human Rights (the UK wanted to block the European Court of Justice from overruling its laws on Charter-related grounds) -- and, uniquely, a rebate on the EU budget. The UK's ability to obtain these exemptions has inspired Eastern European countries - whose English-speaking elites have long idolised Britain - to seek their own opt-outs. If it hadn't been for the U.K. example, the euro area would probably be bigger today. When that example is eliminated, it will be easier for the EU to make a case for more uniformity and a closer union.

The UK is certainly to blame for Ireland's forced opt-out of the Schengen area: It would have wanted the travellers with Schengen visas to come without making a separate visit to the embassy, but seamless travel with the UK was more important. Even after Brexit, Ireland may be forced to stay out of the borderless area.

The scenario under which the UK comes back into the fold humbled and willing to accept everything - the euro, Schengen, full ECJ jurisdiction - or at least to make some concessions is probably what pro-European leaders such as Macron and German finance minister Wolfgang Schaeuble meant when they said they'd welcome a Brexit reversal. Such a turnaround, however, appears unrealistic. As long as brain surgery remains off the table, there's no way for the British public to change their minds so soon after making the decision to leave.

There is a better scenario for everyone than either a hard Brexit or a return to the pre-referendum status quo. It would involve the UK joining the European Free Trade Association, along with Iceland, Liechtenstein, Norway and Switzerland. Trade ties and current border arrangements would largely be preserved, but the UK would have no vote in Europe. It would stop being a centrifugal force, just as Norway isn't. Though UK politicians say the Norwegian scenario is not being considered, it's far easier to revive than full EU membership, perhaps for a transitional period first - with an eye to making a transition to permanence. Britons didn't vote against EFTA membership in 2016. Simply not overdoing Brexit would be better than forcing it or reversing it.

BLOOMBERG