One issue; three interlinking components

Can 2016 live up to the excitement that last year gave us? Remarkably, it could. Internationally, the extremely interesting year-long elections in the US may well produce the first female president of the United States (albeit the wife of a former president), and if not, could well put an untested populist with no political experience in the White House.

But in Britain, one issue is likely to dominate: the European referendum on David Cameron’s deal with the EU. It’s true that the referendum need not take place this year. The promise was to hold it during the first half of the parliament so any time before October 2017 would fit that pledge. However, even if the vote doesn’t take place this year, the political narrative will be framed around it, not least precisely because of that delay.

More likely is that Cameron will want to hold it this Autumn, assuming that he can produce a deal he can sell in the Spring (or, far less likely, he accepts that he can’t get a deal and calls time, so recommending Leave). Leaving it longer simply allows the issue to dominate and poison the agenda for longer.

However, that’s to look at the issue through British eyes. For people like Donald Tusk or Jean-Claude Juncker, that’s only one of several major issues in their In-tray. Two others, both of which impact on the referendum, are the still-ongoing migrant crisis and the threat it contains to the open border program, and the ever-rumbling Greek debt saga. While the intensity of the latter has diminished from the continual brinkmanship of the last two years, it remains only a vote away from a renewed crisis, while the Syriza-led government retains only a slender majority in the Greek parliament.

More pressing, and even more threatening to the future of the EU is the migrant crisis which has already put tremendous strain on the Schengen agreement as well as causing tremendous problems from countries on the migration routes. One of those so affected is Germany itself, which has already taken over a million migrants. If the flow continues, we have to ask how many more Germany can take without a serious political backlash. And the flow may well continue. Syria’s war shows no sign of ending and Syria is in any case not the only source of migration. That flow, combined with the number of Islamist terrorist scares in recent months, has the potential to produce a toxic political brew.

Which is where it links back to the UK. Without doubt, the EU could do without Cameron’s negotiations. In all probability, David Cameron would rather not be going through a process with a lot of risk for little gain – but he has no choice and the EU, in its present vulnerable state, has no choice either. If Britain were to vote to leave at a time when two of the EU’s greatest achievements – the Euro and the Schengen zone – were at risk of breaking down, the entire project could suffer a fatal check to its momentum. Eurosceptics might rejoice at that prospect but the Eurocrats ought to be equally aware of the consequences of a Leave vote, not least because there’d be a feedback mechanism. A British ‘Leave’ would embolden sceptics on the continent who are fed up with, and angry at, being effectively forced into financially and socially costly policies at the whim of spendthrift Greeks or deluded Germans.

The failure of the EU to deal with either problem – kicking one continually down the road and barely even recognising the other – is manna to Leave, offering real-world examples of both how the Union isn’t working and how taking back sovereignty could reduce Britain’s vulnerability. That the arguments might be inaccurate is beside the point (Britain already has control of its borders and that hasn’t stopped thousands camping at Calais); what matters is whether those arguments are believed.

And that’s what will be at the heart of the referendum: who will be believed most? Claim and counter-claim will be rife, with both sides making exaggerated claims about the costs should the other side win. Ultimately, the decisive factor will be which claims chime more with experience – and on that basis, if the EU isn’t to lose the UK, it really can’t afford to fail on either of the other two issues.

The problem there is that the EU is useless at resolving issues; its preferred modus operandi for problems is to muddle through, taking as long as necessary until the problem goes away. As neither the Syrian War nor debt restructuring is likely to be finally resolved this year, that means that both issues are highly likely to still be extant at the time of the referendum. And that, combined with the probability of a sizable number of cabinet ministers recommending Leave (Cameron will have no option but to suspend collective responsibility; he can’t afford that many resignations), means that Leave is best-placed to win.

And if Leave wins, Cameron will go. It might not necessarily follow constitutionally but in political terms, one follows the other. Cameron is set to go this parliament anyway; what would be the point of a two-year death rattle when the centrepiece of his manifesto had gone down in flames? So what of the odds? Leave is best at 13/8. That offers some value but not much. Far better is the Cameron Leave market, where 2016 is 8/1 and 2017 6/1, both with Ladbrokes. And his replacement? Osborne will campaign for Stay; Javid, in all probability, will not.

David Herdson