Brexit means big changes for the European Union too

SINCE June 2016's Brexit referendum, much attention has focused on key intra-UK debates about the nation leaving the EU, which the new Boris Johnson government has intensified. Yet, potentially the most important, but often overlooked, outcome of the UK's vote to leave is how this is helping drive significant change in the Brussels-based club itself.

Brexit has catalysed a series of such debates across the EU-27 which have been brewing for years, in part, because of UK disengagement. And these discussions will assume even higher prominence when the UK formally leaves next month, presuming that is indeed the end outcome, and the EU's chief Brexit negotiator Michel Barnier, will update key players in Brussels on these issues this week, including the European Parliament.

These key European domestic and foreign policy debates about the EU's future are wide-ranging. They include how the union will be re-balanced, internally, following the exit of one of its largest members; the bloc's future external role in a multi-polar Europe with other non-EU European countries; and the EU's positioning in a changing world outside of the continent, especially vis-a-vis big global powers such as the United States.

The scope of these changes underlines that far from Brexit solely defining the future of the EU, this is just one of several big challenges and potential opportunities confronting the Brussels-based club. How the EU responds, from ongoing pressures facing the eurozone and Schengen areas, to ties with other world powers, will determine its future and place in the world, including framing its post-Brexit UK relationship.

On the external front, numerous challenges are particularly pressing in Brussels in what outgoing European Council president Donald Tusk has called the EU's new geopolitical reality. In 2017, he outlined these pressures which include an increasingly assertive Russia and China; instability in the Middle East which has helped drive the migration problems impacting the continent; and policy uncertainty from Washington with pro-Brexit Donald Trump calling for the EU's further dismemberment.

Wide-ranging as these threats are, it is Russia and the US which are the two non-EU states which will probably be pivotal to shaping how Brexit plays out vis-a-vis Europe's changing landscape and the wider multipolar world. To be sure, other powers such as China will also influence, but it will mainly be the choices of Washington and Moscow - whether to engage, exploit or ignore - that will shape the context in which Brexit unfolds. Russia knows it can gain, potentially, from an increasingly fractured EU, not least as Vladimir Putin pushes the Eurasian Union as a countervailing power. Moreover, an emboldened Mr Putin will now unquestionably welcome a scenario in which there is a prolonged post-Brexit period of introspection with the EU-27 forced to focus more on internal reform challenges and potentially less on external issues, like Ukraine, where Moscow and Brussels are at loggerheads.

Given current tensions with Russia, it is the EU's particular misfortune that the current US president, who may be in the White House till 2025, has gone as far as to call the EU a "foe". While Mr Trump's antipathy towards the bloc is broad-based, it is especially intense on the economic front because of Europe's big goods trade surpluses with the US.

The contrast could not be starker between Mr Trump's stance and US attitudes at the start of the European integration process as embodied in John Kennedy's 1962 Atlantic Partnership speech. To be sure, US administrations have gradually become more ambivalent as European integration deepened, especially during the George W Bush administration. However, even the Bush team eventually recognised the need to draw back from this approach, but Mr Trump appears cut from a different cloth

This new geopolitical reality is already catalysing the EU into reform, including a European Defence Action Plan. This advocates greater military cooperation between member states, and reversing around a decade of defence cuts.

One further signal of change here is the outgoing European Commission president Jean-Claude Juncker's assertions that the EU needs its own army so it can react more credibly to threats to peace in member states or in neighbouring states. This proposal has been welcomed by key stakeholders, including his replacement as European Commission president (and outgoing German Defence Minister) Ursula von der Leyen, but such a force remains a longer-term aspiration.

Externally, Brexit is also changing the relationship of Brussels with non-EU European countries, including Norway, Switzerland, Ukraine, Turkey, Lichtenstein and non-EU states in the Balkans. Each has developed relations with Brussels intended as a means to an end of potential eventual EU membership, or at least closer relations with the EU, but Brexit has injected greater uncertainty into these assumptions.

For instance, there has been some discussion as to whether Brexit might open opportunities for a more far-reaching overhaul of Europe's institutional architecture beyond those ideas that already exist in "off-the-shelf models". This includes an August 2016 think-tank proposal, focused on the future EU-UK relationship, which called for a new "continental partnership" which would see a relationship, short of EU membership, that goes beyond a simple free trade deal.

Such ideas have, however, at least temporarily lost momentum. This is partly because Brussels wants to change on its own terms and timeframes, and not be seen to dance to a Brexit tune and accommodate the departing United Kingdom.

Yet, such far-reaching reform may ultimately arrive. And this could be catalysed if the vexed UK withdrawal agreement negotiated by Theresa May, with concessions such as the UK divorce bill, is revised, rejuvenated and ratified by Mr Johnson or another UK prime minister as there will then be growing need for the EU-27 to think more "out of the box" as the next wave of future relationship negotiations get under way.

Taken together, significant change is now on the cards for the EU-27 from the complex array of challenges and opportunities it now faces, Brexit and beyond. How Brussels responds, which is not yet crystal clear, will collectively help frame not just its future relationship with the UK, but also its broader place in the world at a time of major geopolitical turbulence from Asia-Pacific to the Americas.