Revoking Brexit: Can Member States Rescind Their Declaration of Withdrawal from the European Union?


Jens Dammann, William Stamps Farish Professor in Law, the University of Texas School of Law.*

Note: This full-length Article appears in Volume 23, Issue 2 of the Columbia Journal of European Law, available soon in print and online via HeinOnlineLexisNexis, and Westlaw.

Introduction

On June 23, 2016 U.K. voters did the unthinkable and voted, by a narrow margin, for the United Kingdom to leave the European Union.[1] Such a move is entirely legal. The Treaty on European Union explicitly gives Member States the right to withdraw from the European Union.[2]

Nonetheless, the outcome was unexpected.[3] Most pundits had predicted a victory for the “remain” camp.[4] So had the betting markets. On the day of the referendum, they saw the likelihood of a defeat for the Brexit camp at ninety percent.[5] Even one of the leading Brexit supporters, Nigel Farage, more or less conceded that Brexit’s opponents would triumph.[6]

Given these expectations, the Brexit vote sent immediate shock waves through the financial and political world.[7] The day after the referendum, the British pound dropped by ten percent to levels last seen in 1985,[8] and London stocks plunged by sixteen percent.[9] The British Prime Minister, David Cameron, declared his intention to resign[10] and in fact did so about a month later.[11] Some had expected prominent Brexit supporter and former mayor of London Boris Johnson to succeed him.[12] However, in the end it was Theresa May, previously a supporter of Britain’s membership in the European Union,[13] who was deemed fit to clean up the mess and elected Prime Minister.[14]

Prior to Mrs. May’s election, many Britons had hoped that, despite the victory of the Brexit camp, the United Kingdom would somehow end up staying in the European Union.[15] The Brexit referendum had, after all, been non-binding.[16] However, once elected, Theresa May quickly and repeatedly ruled out a second referendum and announced her determination to declare the United Kingdom’s withdrawal from the European Union by 2017.[17]

Of course, this choice may turn out to be highly problematic. The costs and benefits of withdrawal depend in large part on how the future relationship between the European Union and the United Kingdom will be structured.[18]

In one—now largely theoretical—extreme, the United Kingdom could retain complete and unfettered access to the European Union’s markets. In that case, the negative impact of Brexit might end up being much less severe than commentators fear. The most plausible option of that nature would involve membership in the European Economic Area (EEA) and is often referred to as the “Norway option” after the EEA’s most prominent member.[19] However, this would require the United Kingdom to both continue to pay financial contributions to the European Union and accept most of the European Union’s rules, including the free movement of workers.[20] British Prime Minister Theresa May has made it abundantly clear that the British government will no longer accept the free movement of workers guaranteed by the Treaty on the Functioning of the European Union (TFEU).[21] Moreover, she has indicated that she will prioritize the goal of curbing immigration over that of maintaining access to the European Union’s markets. [22]  In a speech given in January 2017, she went even further and stated explicitly that the United Kingdom would not stay part of the single market.[23] While it is not impossible for Theresa May to change her views in the future, her current position now makes it extremely unlikely that the United Kingdom will end up adopting the Norway model.

Another way of maintaining more or less complete access to the European Union’s markets would be to follow Switzerland’s example and conclude a web of bilateral trade agreements with the European Union.[24] However, like Norway, Switzerland accepts the free movement of workers and pays financial contributions to the European Union.[25]

At the other extreme, the United Kingdom might opt for a clean break and fail to enter into any special agreement with the European Union. Britain would then be treated like a regular third country such as China or Argentina and enjoy access to the European Union’s markets solely under the rules of the World Trade Organization.[26] In that case, most observers agree, the economic damage caused by Brexit would be substantial.[27] More than forty percent of all British exports go to the European Union,[28] and if these exports were subjected to regular third-country tariffs and administrative procedures, then export-oriented businesses located in the United Kingdom would likely suffer, resulting in lower investment and growth.[29]

Unfortunately for the United Kingdom, the future relationship with the European Union is not known at the time that a Member State declares its intention to withdraw. Rather, under the structure provided by Article 50 of the Treaty on European Union (TEU),[30] the relevant declaration is followed by a two-year period during which the European Union and the withdrawing state negotiate a withdrawal agreement. Thus, under the procedure laid down in Article 50 TEU, the state has to declare its intention to withdraw without knowing the consequences of that withdrawal. To quote former Prime Minister Tony Blair:

It’s like moving house without having seen the new house. We have made an agreement to exchange, but we don’t yet know the terms of Brexit, we don’t know the costs and the consequences.[31]

Needless to say, the United Kingdom—as well as any Member State that may choose to declare its withdrawal in the future—may try to avoid this problem by holding informal talks with EU officials and other Member State governments before formally declaring its intention to withdraw. Indeed, Theresa May was quick to express her interest in such consultations in order to smooth the way for Brexit.[32] However, EU officials and other Member State governments were just as quick to rebuff her suggestions: in a rare show of unity, they made it clear that there would be no official or unofficial talks before Britain has made a formal declaration of withdrawal,[33] a position aptly named “no negotiation without notification.”[34] It is easy to see why the other Member States and the European Commission have adopted this position: any pre-withdrawal deals regarding the post-Brexit relationship, however informal, might actually encourage the United Kingdom to withdraw.

Of course, even if the other Member States publicly declare that they will not negotiate until the United Kingdom has made a formal declaration, some state governments may be ready to hold secret negotiations anyway. Indeed, statements by officials from various Member States strongly suggest such a willingness to talk behind closed doors.[35] However, even if informal talks were to occur before the official declaration of withdrawal, such talks would be of limited value in eliminating the uncertainty facing the United Kingdom. Political majorities change, new governments get elected, and politicians have been known to change their views. Accordingly, promises made before the declaration of withdrawal may not be kept later on. Moreover, as explained in more detail below, the EU rules governing the withdrawal process allow any single Member State to block the negotiation process.[36]  Hence, any commitment made in advance would be of limited use unless all Member States were on board. In sum, informal talks with other Member States cannot change the fundamental dilemma facing the withdrawing Member State: the fact that that Member State has to make its declaration of withdrawal without knowing what comes next.

Against this background, a question of fundamental importance is whether the withdrawing Member State can rescind its declaration of withdrawal during the two years that follow. The relevance of such a rule is obvious. To begin, it would allow the government of the withdrawing Member State to make the final decision about whether or not to leave the European Union at a time when the post-withdrawal relationship has already been determined. Even more importantly, such a rule would have a profound impact on the bargaining process between the withdrawing Member State and the other parties involved.[37] It is one of the core insights of modern game theory that the outcome of negotiations very much depends on whether a party can commit in advance to a particular course of action, or whether the party retains the ability to change her mind.[38]

Interestingly, the existing literature all but ignores the question of whether a formal declaration of withdrawal can be rescinded. A few authors mention the problem but limit themselves to the observation that Article 50 does not address this issue.[39] Others also acknowledge the Treaty’s silence on the issue but offer different views on how it is to be interpreted: some scholars note, in passing, that the Treaty fails to prohibit States from rescinding their declaration of withdrawal,[40] while others argue, with equal brevity, that the declaration of withdrawal cannot be revoked since the Treaty does not explicitly authorize such a move.[41]

This article shows that there are strong policy reasons for allowing a Member State to rescind its declaration of withdrawal until the moment that the State’s membership in the European Union actually ends. More specifically, it uses insights from game theory to demonstrate that the right to rescind one’s declaration of withdrawal plays an essential role in securing efficient outcomes. It also argues that there are persuasive doctrinal arguments justifying the recognition of such a right as a matter of black letter law.

The structure of this article is as follows: Part I provides some background on the withdrawal right contained in Article 50 of the Treaty on European Union. Part II examines the United Kingdom’s role in the European Union. Part III analyzes the legal framework for withdrawal. In particular, it shows that the relevant EU rules essentially enable any single Member State to sabotage the withdrawal negotiations and thereby prevent the United Kingdom from retaining privileged access to the European Union’s markets. Part IV argues that giving Member States the right to rescind their declaration of withdrawal is desirable as a matter of legal policy. Part V shows that such a rule is also supported by strong doctrinal arguments.

I. A Short History of Article 50 TEU

Article 50 of the Treaty on European Union explicitly gives the Member States a right to withdraw. Yet this provision is of fairly recent origin. It was introduced into European law only with the Treaty of Lisbon of 2007, which entered into force in 2009.[42] Before the Treaty of Lisbon, the question of whether countries could leave the European Union without the consent of the other Member States had long been the subject of heated debate.[43]

A. From 1957 to the European Convention

When the European Economic Community (EEC), the precursor of today’s European Union, was created in 1957, the relevant Treaty provided that it was concluded “for an unlimited period.”[44] However, whether this wording could be read to exclude a withdrawal right was rather unclear, in part because the Treaty’s history is ambiguous. On the one hand, when the Treaty was drafted, the inclusion of an explicit withdrawal right had been proposed and rejected.[45] On the other hand, the parties had abandoned an earlier wording according to which the Treaty could not be dissolved.[46] Against this background, the question of whether Member States could withdraw from the European Economic Community, which was later renamed the European Community before it eventually became the European Union, remained controversial.[47]

In the following years, various countries left or came close to leaving the European Union; yet the existence of a withdrawal right remained unresolved.  As early as 1962, Algeria gained independence from France.[48] It thus became, strictly speaking, the first country to leave the European Union.[49] However, because Algeria had never been a party to the Treaty Establishing the European Economic Community (EEC Treaty), its departure did not raise the question of a formal withdrawal.

In the seventies, the withdrawal issue almost gained practical relevance. Even though the United Kingdom had only joined the European Economic Community in 1973,[50] Britons soon developed second thoughts. As early as 1974, polls indicated that more British voters disapproved than approved of Britain’s membership in the European Economic Community.[51] That same year, Harold Wilson, the Labour Party’s candidate for Prime Minister, promised that if elected, he would not only renegotiate the terms of Britain’s membership in the European Economic Community, but also hold a referendum on the continuation of that membership.[52] Upon his election, Wilson kept these promises. However, because he managed to portray the fairly modest results of his negotiations as a substantial success, the referendum, which took place in 1975, ended with a landslide victory for the pro-European camp.[53]

In 1981, the Greek government also seemed to be reconsidering its membership in the European Economic Community. Greece had ratified its accession to the Community only two years earlier, in 1979. Yet in 1981, the year that Greece’s entry into the European Economic Community took effect, the left-wing party PASOK, which had been opposed to Greece’s accession to the EEC and supported a referendum, gained a solid majority in Greece’s parliament.[54] However, once in power, PASOK grew more moderate and the referendum never took place.[55]

Soon thereafter, Greenland, which had long been part of Denmark, left the European Economic Community. In 1979, Denmark adopted the so-called Home Rule Act, which granted Greenland far-reaching autonomy.[56] After a referendum in which a clear majority of voters cast their votes in favor of leaving the European Union,[57] Greenland in 1985 submitted a formal request for withdrawal from the EEC.[58] The matter was solved via negotiations, and so Greenland ended up leaving the EEC via multilateral Treaty rather than by unilateral withdrawal.[59] Accordingly, the question of whether a right to unilateral withdrawal existed remained unresolved.

B. From the European Convention to the Treaty of Lisbon

The issue of a formal withdrawal right resurfaced in the context of the so-called European Convention. Chaired by former French President Giscard d’Estaing, the European Convention was established in December 2001 in order to draft a European Constitution,[60] began its work in 2002, and lasted until July 2003. The European Convention consisted of a total of 105 members (conventionnels) as well as numerous other invitees. Aside from the Convention’s president and vice-presidents, the voting members represented either the European Union’s institutions or the Member State governments or parliaments.[61] Various so-called “candidate countries”—countries formally recognized as prospective Member States—had been allowed to send nonvoting members.[62]

Crucially, of the 105 members of the Convention, only twelve (and one invitee) formed the so-called Praesidium,[63] where many of the most important decisions were made or at least prepared.[64] These twelve members consisted of the chairman Giscard d’Estaing, his various vice-chairmen, and a few other select members.[65]

When the Praesidium presented its preliminary draft for a European Constitution on October 28, 2002, this draft proposed, for the first time, the inclusion of an explicit right to withdraw from the European Union, without, however, going into detail.[66] The Praesidium’s next draft, presented on February 4, 2003, contained a fully fleshed out withdrawal right.[67] This version already made it clear that the withdrawal right was to be unconditional and unilateral.[68]  The next version, which the Praesidium presented on May 26, 2003, remained largely unchanged but, for the first time, included comments by the Praesidium aimed at justifying the withdrawal right:

The Praesidium considers that the Constitution must contain a provision on voluntary withdrawal from the Union. Although many consider that it is possible to withdraw even in the absence of a specific provision to that effect, the Praesidium feels that inserting a specific provision in the Constitution on voluntary withdrawal from the Union clarifies the situation and allows the introduction of a procedure for negotiating and concluding an agreement between the Union and the Member State concerned setting the arrangements for withdrawal and the framework for future relations. Moreover, the existence of a provision to that effect is an important political signal to anyone inclined to argue that the Union is a rigid entity which it is impossible to leave.[69]

This draft drew numerous comments, and various members of the Convention suggested amendments. Some members of the Convention feared that the provision might be abused as a blunt bargaining tool[70] and that it might even endanger the stability of the European Union.[71] Others voiced the concern that the withdrawal right was contrary to the spirit of European integration[72] as well as to the idea of solidarity between the Member States.[73] Accordingly, many members suggested that the withdrawal right be stricken entirely,[74] made contingent on the conclusion of a Treaty between the European Union and the withdrawing state,[75] or at least limited to certain narrowly defined circumstances.[76] One member even suggested that any withdrawing state should be liable for any damages that such withdrawal caused.[77] Others, however, supported the proposal, and some argued that the withdrawal right was an important affirmation of state sovereignty.[78]­

By and large, there was a certain division between old Western European Member States and Central European Member States, which had only recently escaped the Soviet Union. The former sought to have the withdrawal right severely limited or even abolished.[79] But the latter, who had only recently reacquired full national sovereignty with the collapse of the Soviet Union, welcomed the withdrawal right.[80] Moreover, many believed that this was a crucial issue for the newer Member States.[81] In the end, the supporters of the explicit withdrawal right won the day, and the provision was included in the final draft.[82]

Of course, the European Constitution as such never went into force.  Signed with great fanfare, it went out with a whimper. Having been ratified by eighteen out of twenty-five Member States,[83] it lost any chance of entering into force when it was rejected by popular referenda in both France and the Netherlands in 2005.[84] However, much of its substance was incorporated into the Treaty of Lisbon that was adopted in 2007 and took effect in 2009.[85] Hence, the withdrawal right survived the inglorious death of the European Constitution with minor changes and can now be found in Article 50 of the Treaty on European Union.[86]

II. The United Kingdom’s Road to Brexit

Let us now turn to the country that has made the withdrawal right a major issue in today’s public discourse, namely the United Kingdom. Most observers were surprised when a majority of British voters cast their votes in favor of the United Kingdom leaving the European Union.[87] However, in a historic light, the referendum’s outcome was, perhaps, less shocking than it may seem. The United Kingdom has long played a bit of an unusual role in the process of European unification.[88]

After World War II, it was none other than Winston Churchill, who, in his famous Zurich speech of 1946, declared the need for a United States of Europe.[89]  Yet he never intended for the United Kingdom itself to be part of that Europe. Rather, his idea was for Great Britain, together with the United States and Russia, to be “friends and sponsors of the new Europe” and “champion its right to live.”[90] Accordingly, when, on April 18, 1951, six European nations—Belgium, France, Germany, Italy, Luxembourg, and the Netherlands—signed the Treaty Establishing the European Coal and Steel Community (ECSC Treaty),[91] Britain opted to stay outside. Some years later, the six member states of the European Coal and Steel Community added the EEC Treaty[92] and the Treaty Establishing the European Atomic Energy Community (Euratom Treaty).[93] Both treaties were signed in Rome on March 25, 1957, and entered into force on January 1, 1958.[94] They are generally known as the Treaties of Rome.[95] But still Britain could not persuade itself to join.

The reasons for the United Kingdom’s position were complex. At the time, British politicians saw little need to become part of the European project.  After all, the United Kingdom had its ties with the Commonwealth countries and enjoyed a close relationship with the United States, at whose side it had successfully fought the Axis powers in World War II.[96] In addition, many in Britain expected the European Economic Community to fail.[97]

However, in the following years, it became increasingly clear that the European Economic Community was highly successful in economic terms.[98] In addition, Britain, which was traditionally committed to preserving a balance of powers on the European continent, grew increasingly concerned that France might use the EEC to acquire a leadership role in Europe.[99] It even feared that the United States might give particular emphasis to its relationship with the EEC, relegating the special relationship between the United States and the United Kingdom to secondary importance.[100] Accordingly, the United Kingdom changed its stance towards the EEC. At first, this change of heart proved futile: Britain’s first two attempts to join the EEC, made in 1961 and 1967, were vetoed by the French President Charles de Gaulle.[101] However, in 1969, Charles de Gaulle resigned as France’s president, thereby opening the way for the United Kingdom to become a member of the EEC. Effective January 1, 1973, the United Kingdom, Denmark, and Ireland became members of the EEC in what is known as the first round of enlargement.[102]

Even after joining the European Economic Community, though, the United Kingdom played a special role. Only two years after joining, the Labour government held a referendum on Britain’s membership in the EEC.[103] And while the pro-European camp won that referendum in a landslide,[104] opposition to Britain’s EU membership remained alive and well.

One of the earlier sources of conflict concerned agricultural subsidies, which made up a large portion of the European Community’s budget.[105] Given its relatively small agricultural sector, Britain received a relatively meager share of these subsidies but still had to pay hefty financial contributions to the EEC budget.[106] Moreover, the financial contributions that Member States had to pay to the European Union depended in part on the revenues a Member State derived from its Value Added Tax (VAT);[107] and the United Kingdom had disproportionately high VAT revenues relative to its GDP.[108] In fact, though relatively less prosperous than various other Member States, it was the second largest net contributor to the Community Budget, surpassed only by the then much more prosperous Germany.[109] This enraged British voters and politicians who saw the United Kingdom at a disadvantage vis-à-vis other large Member States, such as France and Italy. The conflict culminated at the Dublin summit in 1979 with Margaret Thatcher’s famous demand: “I want my money back.”[110] Years of negotiations followed, and at the 1984 European Council meeting at Fontainebleau, the Member States agreed on a mechanism—the so-called “British rebate”—that reduced the United Kingdom’s contributions to the Community’s budget by about two-thirds.[111] Of course, this compromise came at a cost. Aside from sowing discord among European governments, it has traditionally been exploited as a political argument by euro-skeptics in other countries who complain gleefully about the United Kingdom’s special deal.

Over the following years, Britain managed to obtain obtained various other exemptions from EU law. Perhaps the most obvious one concerned the European Union’s common currency, the euro. Together with Denmark, the United Kingdom negotiated the right to remain outside of the Eurozone,[112] a right that both countries have exercised to this day.

Ironically, though, it may have been Britain’s strict adherence to another area of EU law that proved most fateful. When, in 2004, Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the European Union—an event generally known as the “big bang”[113]—EU law allowed the old Member States to shield their labor markets against immigration from the new Member States for a transition period of up to seven years. Whereas most of the old Member States made use of that right, the United Kingdom, Ireland, and Sweden failed to take any such measures.[114] Accordingly, a disproportionate number of job seekers from the new Member States ended up coming to the United Kingdom.[115]  Whereas the British government had expected 13,000 immigrants from the new Member States, the actual number turned out to be 600,000.[116] And it appears to have been immigration more than any other factor that contributed to the misgivings that British voters had regarding the European Union.[117]

Further divisions between the European Union and the United Kingdom arose when, in 2008, the Eurozone descended into a long-lasting economic and financial crisis. Soon, it became necessary to bail out various Eurozone countries to prevent them from becoming insolvent. The years 2010 to 2015 saw bailouts for Greece,[118] Ireland,[119] Portugal,[120] Spain,[121] and Cyprus.[122]  The United Kingdom declined to participate in these bailouts on the ground that it was not part of the Eurozone.[123] However, Britons still ended up having to contribute indirectly, since the United Kingdom is a member of the International Monetary Fund (IMF), which bore some of the costs of these bailouts.[124]

The British government also showed little enthusiasm when the European Union sought to reform its banking sector in order to put an end to the financial crisis and prevent future ones. Most notably, when the European Union created the so-called Single Supervisory Mechanism that gave the European Central Bank a central role in supervising the largest European banks, the United Kingdom successfully insisted on being exempt.[125]

Despite the United Kingdom’s efforts at avoiding any involvement in the Eurozone’s problems, the ongoing troubles of the euro reinforced the belief of many British voters that European integration had gone too far and that Britain would be better off on its own.[126] Of course, the rise of euro-skepticism was not confined to the United Kingdom. More generally, the Eurozone crisis emboldened euro-skeptic voices and even contributed to the rise of ultra-right wing parties across Europe.[127]

The year 2013 then saw what history will likely remember as a major political blunder by the then British Prime Minister David Cameron.[128] In an effort to silence euro-skeptic members of his own party before the 2015 general election, Cameron promised a referendum on Britain’s EU membership by 2017 at the latest.[129] After winning the 2015 election by a substantial margin,[130] he confronted the other Member States with a list of demands.  In particular, he sought four main concessions: (1) he wanted the United Kingdom to be exempt from the European Union’s declared goal of an ever-closer union;[131] (2) he wanted national parliaments to be able to block EU legislation;[132] (3) he sought protections for non-Eurozone countries; and most importantly, (4) he demanded the ability to deny welfare benefits to immigrants from other Member States.[133]

After some back and forth,[134] a compromise was finally achieved at an EU summit in February 2016.[135] That compromise granted Cameron some of the changes he had sought,[136] but the concessions were heavy on symbolism and light on substance.[137] The other Member States agreed on exempting the United Kingdom from the goal of an ever closer union.[138] However, as many observers were quick to point out, the commitment to an ever closer union is more of a symbolic commitment anyway[139] and derives its legal importance mainly from its relevance to the interpretation of other Treaty provisions.[140] The compromise also banned discrimination against non-Eurozone countries, but the practical relevance of this commitment, too, was dubious. By contrast, when it came to the more significant changes sought by Cameron, the other Member States proved far less generous. Rather than allowing national parliaments to block EU legislation, the compromise only included a rule under which the Council had to reassess any legislative drafts that sufficiently many national Parliaments viewed to be in violation of the so-called principle of subsidiarity.[141] Most importantly, though, the Central European Member States forcefully resisted Cameron’s demands on welfare benefits for immigrants,[142] and so the Brussels compromise only made a relatively weak concession to Cameron in this regard: the compromise called for the creation of a mechanism to allow Member States to deny welfare benefits to immigrants, but that mechanism could only be applied in exceptional circumstances, could only remain in place for a maximum of seven years, and could not be renewed.[143]

The rest of the story is well known. Hoping to have obtained sufficient concessions to impress British voters, Cameron called a referendum on Britain’s EU membership for June 2016. However, contrary to prevailing expectations, on the day of the referendum, British voters decided it was time for the United Kingdom to leave the European Union.[144] The next day, Cameron announced his intention to resign.[145] About a month later, he in fact stepped down.[146]

The Brexit camp did not escape unscathed either. Boris Johnson, former mayor of London and leading Brexit supporter, was widely expected to succeed David Cameron as Prime Minister should the Leave campaign prevail.[147] However, soon after the referendum, lack of support in Parliament forced him to give up on this ambition.[148] Justice Secretary Michael Gove, who had originally supported Boris Johnson before declaring his own candidacy, also ended up dropping out of the race.[149] In the end, Theresa May, previously a supporter of Britain’s membership in the European Union,[150] was elected Prime Minister.[151] Since then, Mrs. May has repeatedly stated that the United Kingdom will make a formal declaration of withdrawal in 2017.[152]

III.  Article 50 of the Treaty on European Union

Article 50 of the TEU provides an unconditional right to withdraw from the European Union.[153] The procedure is relatively simple. First, the Member State seeking to withdraw notifies the European Council of its intention.[154] This declaration is followed by a two-year period in which the European Union and the withdrawing Member State have the opportunity to negotiate an agreement that sets out the arrangements for the withdrawal.[155]

The withdrawal negotiations take place on the basis of guidelines provided by the European Council.[156] If, on the basis of these guidelines, no agreement regarding the withdrawal is reached, the withdrawing Member State’s membership ends two years after it has declared its intent to withdraw. It is possible to extend the two-year period by way of a unanimous decision of the Member States.[157]

At first glance, Article 50 may seem to provide a suitable framework for assuring that a Member State’s withdrawal does not lead to legal and economic chaos. After all, the conclusion of a withdrawal agreement offers an opportunity to address murky legal issues as well as to prevent or at least attenuate economic disruptions. However, as shown below, Article 50 offers ample opportunities to individual Member States to sabotage this process.  This matters because it makes withdrawing from the European Union much riskier: even if the withdrawing State believes that many other States are interested in reaching a mutually beneficial deal, there exists a substantial likelihood that one or more Member States will prevent a compromise, with the result that the withdrawing State ends up losing any privileged access to the European Union’s markets or is forced to accept a highly imperfect agreement.

A. The Council’s Guidelines

According to Article 50(1), the negotiations between the withdrawing Member State and the European Union are based on the guidelines enacted by the European Council.[158] In principle, involving the European Council is a good idea. The European Council consists of the heads of state or government of the Member States,[159] so its participation in the process ensures that the European Union cannot simply ignore the interests of the Member States when it negotiates the withdrawal agreement.

However, the involvement of the European Council also has a downside. Under the general rules of the TEU, the European Council makes a unanimous decision when deciding on the guidelines.[160] This, in effect, gives individual Member States a veto right. Moreover, given that the guidelines are an integral part of the overall process, the failure to adopt such guidelines blocks the negotiations.[161]

B. The Decision to Extend the Two-Year Deadline

Another opportunity for individual Member States to sabotage the negotiation process arises with the possibility of an extension of the two-year deadline.

Most political observers agree that two years is likely far too little time to resolve the legal and economic issues presented by a Member State’s withdrawal.[162]  Past experience confirms the accuracy of this view.  Agreements pertaining to cross-border trade are notoriously difficult to negotiate.[163] For example, it took the European Union and Canada more than six years to negotiate a bilateral trade agreement, and that agreement still has not been ratified.[164] Moreover, in the case of the United Kingdom, the issues to be governed by such an agreement go far beyond trade and touch upon every aspect of the economy. Questions abound: what is to happen to U.K. citizens living abroad and to citizens of other Member States living in the United Kingdom?[165] How will the United Kingdom’s withdrawal affect patents and other intellectual property rights? What will be the new framework for enforcing civil judgments from the United Kingdom in other European countries? What impact will the United Kingdom’s withdrawal have on antitrust enforcement? How will firms be able to transmit consumer and other personal data to the United Kingdom, given that EU law imposes special restrictions on data transfers to third countries?[166]

The list of potential questions seems endless, and because almost no one expected the British to vote in favor of Brexit, many scholars are only now beginning to discuss these issues in earnest.

The only event bearing any resemblance to a precedent is Greenland’s decision to leave the European Union by treaty in 1985.[167] However, even that treaty took more than four years to negotiate.[168] More importantly, Greenland has only about 57,000 inhabitants,[169] and the withdrawal negotiations focused almost exclusively on fishing rights.[170] In other words, the negotiations concerned a relatively straightforward topic, and Greenland’s departure had almost no economic significance for any of the other Member States, rendering compromises much easier than they would be in the case of the United Kingdom’s withdrawal. On top of this, at the time of Greenland’s exit, the European Union had less than half as many Member States as it does now.

In practice, therefore, it seems highly likely that any withdrawal agreement between the United Kingdom and the European Union will take much longer than two years to negotiate. But, as noted above, an extension requires the unanimous consent of all the other Member States. As a practical matter, therefore, individual Member States can sabotage the conclusion of a withdrawal agreement simply by refusing to agree to an extension.

C. The Withdrawal Agreement

The withdrawal agreement itself requires only a qualified majority in the Council and the consent of the European Parliament.[171] At first glance, therefore, it would seem that at least this stage does not give individual Member States the opportunity to hold up the process. In fact, however, the situation is more complicated. That is because it remains unclear whether or not the withdrawal agreement may actually cover the future relationship between the withdrawing Member State and the European Union. The wording is somewhat ambiguous in this regard. Article 50(2) refers to “an agreement with [the withdrawing Member State] setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.”[172] Some authors point out that this wording specifically mentions the future relationship between the withdrawing Member State and the European Union, thereby implying that that relationship can be covered in the withdrawal agreement.[173] Others, however, note that under the wording of Article 50(2), the agreement sets out the arrangements for the Member State’s withdrawal, whereas the future relationship is merely to be taken into “account.”[174] Accordingly, these authors believe that the withdrawal agreement under Article 50(2) may only govern the withdrawal itself.[175] By contrast, they think that in order to define the future relationship between the European Union and the withdrawing Member State, a legal basis other than Article 50(2) is needed.[176]

These different views matter because they determine how many Member States have to assent to the agreement governing the future relationship. If all aspects of the future relationship can be viewed as legitimate subjects of the withdrawal agreement, then under Article 50(2) TEU, all that is needed for a compromise on the part of the European Union is a qualified majority in the Council and the consent of the European Parliament.

If, by contrast, one takes the view that the withdrawal agreement can only cover the withdrawal itself, but not the future relationship between the European Union and the withdrawing Member State, then matters get more complicated. Under Article 50(2) TEU, the withdrawal agreement still only requires a qualified majority in the Council and the consent of the European Parliament. However, the future relationship between the European Union and the withdrawing Member State must be made the subject of a separate agreement. Regarding that second agreement, one then has to distinguish. Trade agreements between the European Union and third countries only require a qualified majority in the Council,[177] so even if the trade deal between the withdrawing State and the European Union could not be included in the withdrawal agreement, it could still be adopted without a unanimous decision on the part of the Member States. By contrast, a unanimous decision in the Council is required for treaties pertaining to trade in services, commercial aspects of intellectual property, direct investments, and various other areas, at least to the extent that internal EU rules would require a unanimous decision.[178] Accordingly, any treaty governing these latter issues could be vetoed by any individual Member State acting through its representative in the Council.

The fact that the future rules on trade in services may have to be approved by all Member States is of particular significance in the case of the United Kingdom, since one of the main pillars of the U.K. economy lies in the financial services industry.[179] By some estimates, the United Kingdom accounts for approximately fifty percent of financial services in the European Union.[180] Hence, the United Kingdom’s economy can hardly be satisfied with a mere trade agreement; rather, it needs a more general treaty that also covers services.[181]

D. The Actual Potential for Hold-ups

The fact that any individual Member State can sabotage the conclusion of an arrangement governing the future relationship between the United Kingdom and the European Union is all the more worrisome because European history is full of examples where individual States managed to block important multilateral agreements by invoking their national interest.

For example, French President Charles de Gaulle vetoed France’s accession to the European Economic Community not once, but twice,[182] allegedly for fear that allowing the United Kingdom into the EEC might decrease the political influence of France.[183]  Similarly, Greece has blocked tiny Macedonia, which was once part of Yugoslavia, from joining the European Union because—this is no joke—it objected to Macedonia’s name.[184] These are only the most obvious examples, but they demonstrate that individual Member States can be quite brutal in vetoing important agreements on purely national grounds.

This potential for obstruction is of crucial importance when it comes to evaluating the withdrawal procedure from a policy perspective, an issue to which I turn next.

IV. Legal Policy

A central claim of this article is that a Member State’s right to rescind its declaration of withdrawal is crucial to achieving desirable outcomes. In fact, it shows that the right to rescind serves two important functions in this context.

First, it reduces the risk of uninformed withdrawal decisions. A crucial feature of the right to withdraw from the European Union is that Member States have to declare their withdrawal at a time when the nature and content of the Member State’s future relationship with the European Union is not yet known. Allowing a Member State to rescind its declaration of withdrawal protects both the European Union and the withdrawing Member State against withdrawal decisions that were made on the basis of incorrect assumptions.

Second and more importantly, the right to rescind protects the European Union against “strategic” withdrawal threats by Member States who do not really find it in their interest to withdraw and solely want to use the threat of withdrawal to obtain concessions from other Member States. The intuition here is that as long as the withdrawing Member State has the right to rescind its declaration of withdrawal, the other Member States will not take a merely strategic threat of withdrawal seriously, knowing that even if the threatening Member State were to declare its withdrawal from the European Union, it would likely rescind its declaration rather than ending up outside the Union.

In the following section, I address these two issues in turn, before turning to the possible counterargument that a right to rescind the declaration of withdrawal might in fact make Member States more willing to declare their withdrawal from the European Union.

A. Preventing Withdrawals Made on the Basis of Mistaken Assumptions

Granting Member States the right to rescind their declaration of withdrawal solves a central problem inherent in the withdrawal process: at the time that a State gives formal notification of its intent to withdraw, the nature of the future relationship with the European Union is not yet known, and thus voters and governments have to make their decision based on assumptions that may later turn out to be incorrect.[185]

This informational deficit poses obvious problems for the government of the withdrawing state. Even with the best of intentions, that government may end up making choices that are detrimental to the nation’s interests if it does not know the consequences of withdrawal.

Yet this lack of information also creates another, perhaps even more serious problem. Euros-skeptic politicians may, out of ignorance or opportunism, persuade voters to vote for withdrawal by making farfetched promises about the nature of the future relationship between the withdrawing Member State and the European Union. Indeed, the Brexit campaign in the United Kingdom presents a perfect illustration of this problem. The British government,[186] EU officials,[187] and foreign statesmen[188] had given very explicit warnings that post-Brexit Britain should expect to be treated harshly by the European Union and other trading partners. Even President Obama had declared quite bluntly that the United Kingdom’s economic relationship with the United States would suffer if the country left the European Union and that a Brexit would send Britain “to the back of the queue” in negotiating a trade relationship.[189]

However, these warnings proved ineffective. Brexit supporters assured voters that it would be easy for the United Kingdom to attain a favorable trade deal,[190] and warnings to the contrary were dismissed as scaremongering.[191]  Voters seem to have believed such promises: pre-referendum polls suggested that leading Brexit supporter Boris Johnson was considered far more trustworthy than Prime Minister David Cameron.[192]

It is easy to see that allowing Member States to rescind their declaration of withdrawal would solve—or at least attenuate—this problem. Once the withdrawal agreement has been negotiated or it has become clear the parties will not be able to come to an agreement, the withdrawing State’s government could once more ask the people to vote, this time on the basis of a more complete understanding of what the future holds. Or the withdrawing State’s government could simply renege on its withdrawal promise, hoping that the voters will not hold the government to a promise that was made years ago and based on expectations which have gone unfulfilled. Of course, such an about-face may not always be politically feasible. However, deciding not to leave the European Union after all or at least calling a second referendum is likely to be much easier to defend politically if such a move occurs against the background of a harsh withdrawal agreement.

In sum, there is every reason to believe that a right to rescind the declaration of withdrawal can help prevent the adverse consequences of an ill-informed decision to withdraw. In theory, there is another way of achieving the same result, even in the absence of a right to rescind. After all, according to Art. 50(5), any Member State that has withdrawn from the European Union can reapply for membership. However, the transaction costs of leaving and then rejoining the European Union are likely to be substantial. Moreover, there is always the risk that some other Member State will veto the membership application for purely national reasons.[193] Thus, allowing Member States to rescind their declaration of withdrawal is by far the easiest and most effective way of ensuring that a country’s membership in the European Union is not terminated due to mistaken assumptions at the time that the Member State declares its withdrawal.

B. Discouraging Strategic Withdrawal Threats

Granting Member States the right to rescind their declaration of withdrawal also has a second, arguably even more important advantage. Such a right can help discourage purely strategic withdrawal threats that are made with the sole purpose of extracting concessions from other Member States.

1. The Existence or Lack of a Surplus

To illustrate this argument, it is helpful to begin by distinguishing two fundamentally different scenarios: those situations in which the combined costs of a country’s Membership in the European Union outweigh the benefits, and those cases where they do not. By costs and benefits, I mean all monetary and non-monetary benefits that accrue either to the Member State pondering a withdrawal or to the rest of the European Union.

If the costs of a Member State’s membership indeed outweigh the benefits thus defined, then the Member State will rationally leave the European Union. This is obvious if the benefits accruing to the pertinent Member State are outweighed by the costs borne by that Member State. But even if, for some reason, the costs of a country’s membership are borne primarily by other Member States, so that the country profits from being in the European Union despite an overall negative balance for the European Union as a whole, the outcome will eventually be the same. Those Member States that bear the costs will eventually bribe the county to leave the European Union in what amounts to a Coasian bargain.[194] Granting the withdrawing Member State the right to rescind the declaration of withdrawal does not change this outcome, and the right to rescind is therefore irrelevant in this context.

Thus, the right to rescind the declaration of withdrawal can only become relevant in the second situation, where a country’s membership in the European Union creates a surplus in the sense that the combined benefits of the country’s membership in the Union outweigh its costs. As a practical matter, it is reasonable to assume that this second situation is often much more realistic than the first one. After all, the European Union’s Member States would not have joined (or been allowed to join) the European Union in the first place if their membership had created greater (economic and noneconomic) costs than benefits. But in any case, the fact that the right to rescind the declaration of withdrawal only matters where the country’s membership in the European Union creates a surplus has a very simple implication: in discussing the pros and cons of the right to rescind, we can simply disregard those situations in which no such surplus arises. The following analysis, therefore, is based on the assumption that the withdrawing country’s membership in the European Union creates greater benefits than costs.

2. Conceptualizing the Role of Withdrawal in the Bargaining Process

The existence of a surplus means that the various parties involved will continually bargain over the distribution of that surplus. The ongoing political struggle over the size of the “British rebate”—the financial mechanism that reduces the United Kingdom’s contributions to the European Union—is an obvious example: the British rebate was first agreed upon in 1984,[195] and the other Member States have tried—and in part succeeded[196]—to renegotiate this issue ever since.[197]

To the extent that Member States bargain over the surplus created by their membership in the European Union, the withdrawal right can serve as a bargaining tool: as predicted by many delegates at the European Convention,[198] individual Member States may threaten to leave the European Union unless they are given a larger share of the surplus created by their membership. Game theory predicts that the relevance of that threat depends on whether the Member State can commit in advance to making good on the threat to withdraw.[199]

a. Bargaining with and without Commitment

Assume, first, that a Member State cannot commit in advance to exercise its withdrawal right in case its demands are not met. Under this assumption, the withdrawal threat has little value as a bargaining tool: as long as the status quo allows the Member State to capture at least some fraction of the surplus created by its membership in the European Union, the other Member States know full well that the State is better off accepting the status quo rather than leaving. Hence, they also know that if they fail to meet the demands of the relevant Member State, that Member State will stay in the European Union for fear of losing its current share of the surplus. In other words, without the ability to commit, the threat to leave the European Union is not credible and therefore unsuitable as a bargaining tool.

b. Bargaining with One-sided Commitment

Now let us change our assumptions slightly and assume that a Member State can commit in advance to withdrawing from the European Union if its demands are not met. By contrast, the other Member States cannot commit in advance to refrain from meeting its demands. Under these new assumptions, the Member State threatening to exercise its withdrawal right gains the upper hand in the negotiations over the surplus.

The relevant Member State—say the United Kingdom—simply has to make an offer under which it gets most of the surplus created by its membership whereas the remaining Member States get very little. Faced with this offer, the other Member States have only two choices. (1) They can accept the offer, in which case they receive at least a small fraction of the surplus created by the threatening Member State’s membership in the European Union. Or (2) they can reject the offer, in which case the threatening Member State is forced to leave the European Union, whereby all of the surplus is lost to the parties. Faced with this choice, the other Member States will rationally accept the threatening Member State’s offer.[200]

Of course, once it is possible for Member States to commit in advance to exercising their withdrawal right, there is no reason why only one Member State should make use of this possibility. Rather, other Member States may also find it in their interest to invoke the threat of withdrawal. In the most extreme scenario, each and every Member State may manage to extract more or less the surplus that its membership creates for the European Union. This would also mean the European Union loses the ability to transfer wealth from richer Member States to poorer ones, as it currently does.

c. Bargaining with Commitment on Both Sides

What happens if both parties can commit in advance? In other words, what is the outcome of the bargaining process if the threatening Member State can commit to leaving the European Union unless its conditions are met, whereas the other Member States can commit in advance not to give in to these demands?  In that case, game theory predicts that the outcome of the game depends on which party can commit and signal its commitment first.

If the threatening Member State manages to commit and communicate its commitment first, then the other Member States have nothing to gain from making a commitment not to change the status quo. Rather, for them, the rational choice is to give in to the demands made by the threatening State. The other option is to refuse the threatening Member State’s demands, but this would lead to the State’s withdrawal and eliminate the surplus.

By contrast, if the other Member States can commit first, then they have the upper hand. Knowing that the other Member States have already committed to refrain from giving in to any demands, it would be pointless for the State making the demands to threaten withdrawal.

3. Bargaining in the Absence of a Right to Rescind

The crucial question, then, is which of the models described above comes closest to capturing actual bargaining at the EU level, if one assumes that Member States cannot revoke their declarations of withdrawal. As it turns out, that question is not difficult to answer.

a. The Inability to Commit to Not Make Concessions

It is clear that if a particular Member State, such as the United Kingdom, threatens to leave the European Union, it would be quite difficult for the other Member States to make any ex ante commitment not to give in to the threatening Member State’s demands. Even if the remaining Member States have announced that they will not make any concessions, nothing prevents them from doing so anyway. Admittedly, some concessions, such as changes to the Treaty on European Union or to the Treaty on the Functioning of the European Union, require a unanimous decision by all the Member States. Hence, the other Member States may well be able to state quite credibly that certain Treaty amendments are unlikely to survive the ratification process, especially where Member States have made promises to their own citizens to subject future changes to the Treaties to popular referenda. However, the Member State demanding concessions can avoid this problem by focusing on changes to secondary EU law—in particular, directives and regulations—instead. The enactment of regulations or directives requires the participation of the Council, where the Member States are represented, but the Council generally decides by qualified majority.[201] Thus, by demanding changes to secondary EU law, the Member State making the demands makes it very difficult for the other Member States to commit in advance to not make any concessions.

b. Committing to Withdraw

The question remains whether a Member State threatening withdrawal can make a credible commitment to carry out that threat if the State’s demands are not met. In this regard, one has to distinguish: in some Member States, voters quite staunchly support the State’s membership in the European Union. One example is Germany, where surveys indicate that voters are fervently opposed to leaving the European Union.[202] If the German Chancellor were to threaten that Germany might leave the European Union, she simply would not be taken seriously.

By contrast, there are other Member States where the population either opposes—or can be brought to oppose—the State’s membership in the European Union.[203]  In those Member States, popular referenda offer a highly plausible way of backing up a withdrawal threat. The example of the United Kingdom illustrates this point. By promising to call a referendum and abide by its result, Cameron essentially tied his own hands. If the other Member States did not grant sufficient concessions to win over the British public, withdrawal was destined to be a consequence that the British government would find very hard or impossible to undo.

Now, in the case of the United Kingdom, it is important to note that Cameron may not have intended the referendum primarily as a bargaining tool to wring concessions from the other Member States. At least in part, the promise to hold a referendum seems to have been designed to silence euro-skeptic critics within his own party in his 2015 bid for reelection.[204] However, it is also clear that he used the specter of Brexit as a threat to persuade the other Member States to accede to Britain’s demands for reforms.[205] Thus, when Cameron first presented the European Union with a detailed list of demands at the end of 2015, he warned that he might personally campaign for Britain to leave the European Union should the United Kingdom’s demands be ignored.[206]  It was also understood, quite clearly, that such a move had substantial threat potential, as observers warned that a British withdrawal might set an example for other states and might eventually set in motion a chain reaction destroying the European Union.[207] Without a right to rescind the declaration of withdrawal, then, the European Union is essentially facing a situation in which any State with a sufficiently euro-skeptic population can use the threat of withdrawal to demand all or most of the surplus that its membership in the European Union creates.

4. The Downside of Member States’ Ability to Use Withdrawal as a Threat

Of course, the question remains whether this outcome is necessarily undesirable. Critics of the European Union may be delighted that the threat of withdrawal essentially allows each Member State to keep the surplus that its participation in the European Union creates.[208] However, there are various reasons to view this outcome critically.

One of these reasons is purely normative. The TEU explicitly embraces the goals of economic cohesion and solidarity among the Member States.[209] Moreover, the European Union’s second foundational treaty, the TFEU,[210] contains detailed provisions seeking to implement these goals.[211] For example, the Treaty calls for a European Regional Development Fund to support economically lagging or declining regions.[212] A bargaining process that lets each Member State keep the surplus that its membership creates[213] essentially precludes the European Commission from any redistribution of wealth between Member States and is therefore hard to square with these Treaty provisions.

Another reason is more closely related to economic efficiency. In order to use the threat of withdrawal in the way described above, Member States need to ensure that their voters are sufficiently euro-skeptic. After all, if a Member State’s population stands firmly behind the country’s EU membership, then the promise of a referendum does not result in a credible threat of withdrawal. Yet this creates a very problematic incentive: in order to be able to use withdrawal as a threat, national governments essentially need to fan the flames of euro-skepticism. But if every government did that, popular support for the European Union would soon erode, and the Union would likely collapse. Thus, the enormous benefits created by the internal market would be lost to all.[214]

The example of the United Kingdom suggests that this danger is all too real. Admittedly, Britons have traditionally viewed the European Union more skeptically than their French or German peers.[215] However, it is also true that over decades, successive British governments—with the notable exceptions of Tony Blair and his successor Gordon Brown—have done relatively little to change this attitude.[216] Even David Cameron, the Prime Minister who led the Remain camp and frequently came into conflict with the more stringently anti-European wing of his own party, was known for embracing euro-skepticism when it suited him.[217] David Corbyn, the leader of the Labour Party, claimed to oppose Brexit, but offered such lukewarm support to the Remain camp that several members of his shadow cabinet resigned in protest after the referendum.[218]

Of course, the ambivalent attitude of British governments and politicians towards the European Union is likely to have been at least in part a strategic response to voters’ preferences. Nonetheless, it does not seem farfetched to believe that the causal relationship ran both ways: British voters might have been more enthusiastic about Britain’s EU membership if successive British governments had done more to persuade ordinary Britons of the European Union’s benefits.

In sum, a bargaining structure that would encourage national governments to promote euro-skepticism is unlikely to benefit the European Union’s long-term prospects for survival.

Moreover, there exists yet another, even more important drawback of bargaining with one-sided commitment. In practice, a bargaining strategy under which a party commits itself in advance to carrying out a threat in order to persuade the other party to give in can misfire very badly: if, for some reason or other, the other side fails to react as the model predicts and refuses to give in to the threatening party’s demands, the worst of all outcomes results, as the threatening party is forced to implement a threat that it had never meant to carry out in the first place.

The Brexit referendum illustrates this point perfectly. Cameron had effectively tied his own hands by promising to hold a referendum and abide by the results. The fact that his successor, Theresa May, promised swiftly and repeatedly to respect the referendum’s outcome and withdraw from the European Union, despite having supported Britain’s EU membership in the past,[219] is testimony to how well that commitment worked. Yet despite the prospect of a referendum, the other Member States largely refused to give in to the most important request that David Cameron had made: they made very limited concessions regarding welfare benefits for immigrants,[220] despite the fact that immigration was first and foremost on the minds of many British voters.[221]

It is not entirely clear why the other Member States proved to be less amenable than Cameron might have hoped. Perhaps they thought, as most observers did, that the Brexit opponents would win the referendum even if Cameron did not get all the concessions he wanted. Statements made by officials from both the European Union and other Member States certainly point in this direction.[222] Perhaps the other Member States also feared that if Cameron got all he desired, some Member State governments would follow his example, setting off a chain reaction that would ultimately destroy the European Union anyhow.[223] In the end, the why may be less important. What matters is that as a result of Cameron’s bargaining strategy, Europeans are left with the worst possible outcome. Instead of the economic surplus from Britain’s European Union membership being distributed between the Member States,[224] a large part of that surplus may now be lost entirely. Assuming, hypothetically, that the declaration of withdrawal cannot be withdrawn, the best outcome to hope for would be that the future relationship between the European Union and the United Kingdom at least partially preserves the benefits of EU membership. However, as noted above, that outcome is far from certain given that any individual Member State is able to hold up the negotiation process.

Another example illustrating the potential costs associated with a bargaining process involving one-sided commitment lies in the Greek referendum of 2015. Due to its ongoing economic crisis, Greece had been offered another bailout package, but contingent on the implementation of austerity-oriented reforms and with an obligation to repay the funds in future times.[225] The Greek government demanded more favorable terms and called a referendum on the bailout.[226] Prime Minister Tsipras then called on Greek voters to reject the bailout; and indeed, the bailout’s opponents won the referendum in a landslide.[227] Ex ante, this may have seemed like a promising strategy: by persuading Greek voters to reject the referendum, Greece seemed to tie its own hands regarding the conditions for a future bailout. Thus, it appeared that the other Member States and the European Commission only had two choices. They could either present Greece with a more generous bailout package than the one rejected in the referendum, or they could stick to their original offer. However, in the latter case, Greece would slide into insolvency, and its sovereign default might trigger a chain reaction, drawing other Member States such as Italy and Spain into the abyss and laying waste to the European Union’s financial system.[228]

If this was the plan,[229] it did not work. Even when Greek voters rejected the bailout package, the other Member States and the European Commission made no substantial changes to their offer.[230] In fact, the new deal they offered was worse, because the delay caused by the referendum had allowed the financial and economic situation in Greece to erode further.[231] Thus, when it finally accepted the bailout, Greece ended up with the same harsh conditions but an even larger mountain of debt to repay.[232]

It is not entirely clear why the other Member States and the European Commission decided to play hardball. They may have guessed (correctly) that the Greek government would cave in and ignore the referendum result rather than risk the economic meltdown that might have followed in the absence of a bailout. In other words, the other Member States may have recognized that Greece had not made an effective commitment. The other Member States may also have assumed that the financial markets had already grown accustomed to the idea of a sovereign default in Greece and that the risk of a Lehman-type shock to the financial system was therefore small. Statements by EU officials tend to support such an interpretation.[233] And of course, other Member State governments had their own voters to reckon with, who were already fed up with the continuing financial support for Greece.[234]

Either way, the Greek strategy did not work. But the case of the Greek referendum demonstrates once again that the strategy of using a referendum as a commitment device for the purpose of making credible threats is quite dangerous. The other Member States may or may not give in to the threat. If they do not, and the commitment turns out to be effective, as it appears to be in the case of the United Kingdom, very undesirable outcomes may result. Even if the commitment turns out to be ineffective, as in the case of Greece, the attempted threat may cause much political and economic damage.

5. Bargaining in the Presence of a Right to Rescind the Declaration of Withdrawal

By granting Member States the right to rescind the declaration of withdrawal, the drawbacks of one-sided bargaining can largely be avoided. That is because the existence of such a right to rescind makes it much more difficult for Member States to make a binding commitment to leave the European Union.

The British example may once again serve to illustrate this point. Given that a majority of British voters cast their votes in favor of Brexit, it would be very difficult right now for the British Prime Minister to decide against such a withdrawal. In fact, Theresa May quickly made it clear that staying in the European Union is not an option and that she will make a formal declaration of withdrawal in 2017.[235]

However, Article 50(2) of the TEU calls for a two-year period of negotiations. That period can be extended by unanimous consent,[236] and most observers agree that the negotiations will take much longer than two years.[237] Once several years have passed and new election results are in, it is likely to be far easier for the British government to ignore the referendum result and stay in the European Union. Moreover, once the future relationship between the United Kingdom and the European Union has been negotiated, the British government will likely find it much easier to justify an about-face on the ground that the agreement on the future relationship is far less generous to Britain than Brexit supporters had expected when they voted to leave the European Union.  In sum, the existence of a right to revoke the declaration of withdrawal makes it far easier to stay in the European Union despite a pro-Brexit referendum outcome.

In other words, by granting Member States the right to rescind their declaration of withdrawal until the point when that withdrawal actually takes effect, one can move from bargaining with one-sided commitment to a situation much more akin to bargaining without commitment. As previously described, this means that Member States can no longer use the threat of withdrawal as an effective bargaining tool, provided that under the status quo, they receive at least some fraction of the surplus that their Membership in the European Union creates.

C. Encouraging Withdrawals

One concern remains to be addressed. One may wonder whether the existence of a withdrawal agreement might increase the number of withdrawals: knowing that they can always change their minds, governments and voters might be more ready to opt for withdrawal than they are now. However, there are several reasons to think that this is not the case.

To begin, a Member State’s declaration of withdrawal is costly, even if the Member State does not follow through. Markets and entrepreneurs do not like uncertainty. Once withdrawal has been declared or promised, firms will find it much more difficult to make reasonable planning decisions. Accordingly, they will be tempted to scale back investments, thereby hurting the economy even if the Member State ultimately remains part of the European Union.

Again, the case of Britain may serve as an example. The British government has not yet submitted a formal declaration of withdrawal, but this has not prevented the referendum from showing effects. Confidence among businesses, an important predictor of investment activity, has taken a hit.[238]

There is also another reason why the recognition of a right to rescind a formal declaration of withdrawal is unlikely to encourage States to declare their withdrawal. As explained above, in the absence of a binding commitment, the threat of withdrawal is no longer useful as a bargaining tool. Hence, as long as Member States reap at least some fraction of the surplus created by their Membership, they quite simply have nothing to gain from declaring withdrawal or threatening to do so.

In sum, then, from a legal policy perspective, it is highly desirable that Member States have the right to rescind their declaration of withdrawal. Such a right helps to prevent inefficient bargaining results, allows Member States and voters to make more fully informed decisions about whether or not to withdraw, and poses little risk of leading to reckless declarations of withdrawal.

V. The Doctrinal Case for a Right to Rescind

The case for granting Member States the right to rescind their declaration of withdrawal is not only desirable as a matter of legal policy. Such a right should also be recognized as a matter of black letter law. Admittedly, Article 50 of the Treaty on European Union does not explicitly address the question of whether the declaration of withdrawal can be revoked.[239] However, one can nonetheless advance several strong doctrinal arguments in favor of such a right.

A. Teleological Considerations

It is helpful to begin with the purpose or “telos” of the withdrawal right.  The Court of Justice of the European Union has traditionally accorded “teleological” considerations a central role in interpreting European law.[240] More specifically, the Court invokes both the goals pursued by individual provisions and the broader goals of EU law.[241]

As various Members of the European Convention pointed out,[242] one cannot help but notice a certain tension between the purpose of the withdrawal right now contained in Article 50 TEU and the broader goals of the Treaties:  on the one hand, the Treaties explicitly aim at an “ever closer union.”[243] On the other hand, the withdrawal right was meant to clarify that any Member State is free to leave the European Union.[244] How can these somewhat opposing objectives be reconciled?

Part of the answer is that the explicit withdrawal right may actually promote European integration by allaying fears about an irreversible loss of sovereignty.[245] But more importantly, while Member States have the right to withdraw, they may not necessarily have strong enough incentives to do so.  Thus, to the delegates at the European Convention, the explicit withdrawal right may have seemed to provide the best of two worlds. It protected the sovereignty of the Member States while generating little risk of actual withdrawal.[246] As a representative of Estonia argued:

“[It is] truly unlikely that this clause would ever be invoked. Thus we could get for a rather low price something far more valuable – the confidence of peoples and states that the cooperation they engage themselves in is truly voluntary and democratic and respects the sovereignty of the Member States.”[247]

It becomes clear, then, why granting the Member States the right to rescind their declaration of withdrawal is perfectly in line with both the purpose of Article 50 and the broader goal of forming an ever closer union: a right to rescind one’s declaration of withdrawal does not interfere with the Member State’s right to leave. Hence, it is perfectly compatible with the narrow goal of Article 50, which is to give States the possibility to leave the European Union if they are so inclined.

Yet the right to rescind the declaration of withdrawal also reduces the risk that Member States will actually exercise their withdrawal right. That is because the right to rescind makes it much more difficult for states to commit to a future withdrawal and thereby greatly reduces the risk that Member States withdraw by accident as a result of using the withdrawal right as a bargaining tool.

B. The Procedure’s Design

The design of the procedure in Article 50(2) TEU also proves instructive. According to the justification provided by the European Convention’s Praesidium, the withdrawal procedure was partially modeled on the Vienna Convention on the Law of Treaties.[248] Indeed, Article 65 of the Vienna Convention provides a broadly similar procedure governing the withdrawal from international treaties. Under that provision, the party seeking to assert a withdrawal right must first “notify the other parties of its claim.”[249] The other parties then have at least three months, or a longer period specified by the withdrawing party, to raise objections. If no objections are raised, the withdrawing party may then “carry out” its withdrawal.[250] Crucially, though, scholars agree that under the Vienna Convention, the withdrawing state is at liberty to rescind its notification and abstain from carrying out its withdrawal.[251]  It is not clear, therefore, why Member States using the procedure in Article 50 TEU, which was modeled on Article 65 of the Vienna Convention, should not have the same right.

C. The Kaufmann Amendment

At this point, it is worth addressing a possible counterargument. In the context of the European convention, one of the German delegates, Sylvia-Yvonne Kaufmann, had proposed an amendment that included, inter alia, the following additional sentence:

The declaration to withdraw can be rescinded at any time by a declaration addressed to the European Council.[252]

Given that this proposed amendment did not make it into the final draft, one might be tempted to argue that the declaration of withdrawal was not intended to be revocable. However, this line of reasoning would be patently wrong: the main thrust of the Kaufman amendment was to make the withdrawal right contingent on the conclusion of a withdrawal agreement.[253] In other words, the amendment sought to abolish the unilateral nature of the withdrawal right now included in Article 50 TEU. Hence, the rejection of this amendment must be read as a decision in favor of the unilateral right to withdraw rather than as a decision on whether the declaration of withdrawal can be revoked.

D. Article 50(5) TEU

A final argument in favor of a right to rescind the declaration of withdrawal can be derived from Article 50(5) TEU, which reads:

“If a State which has withdrawn from the Union asks to rejoin, its request shall be subject to the procedure referred to in Article 49.”[254]

This provision makes it clear that once a Member State has actually withdrawn, it has to follow the general rules on the admission of new Member States in order to become part of the European Union again. And under Article 49 TEU, the admission of new Member States requires a unanimous decision by the Council.[255]

However, a Member State’s notification of its intention to withdraw does not constitute that State’s withdrawal. Rather, the “notification” of the Member State’s “intention” to withdraw merely sets in motion the process that may eventually lead to the Member State’s withdrawal. Under the unambiguous wording of Article 50 TEU, the withdrawal of the Member State occurs only by way of a withdrawal agreement or, in the absence of such an agreement, two years after the Member State has notified the European Council of its intention to withdraw. In other words, if the two years have not yet passed, and no withdrawal agreement has yet been reached, then a Member State that has merely notified the Council of its intention to withdraw has not yet “withdrawn” within the meaning of Article 50 TEU. Accordingly, Article 50(5) does not yet apply to such a Member State. However, if Article 50(5) requires a Member State that has withdrawn from the European Union, but experiences a change of heart, to follow the regular procedure for the admission of new Member States, while imposing no such requirement for States that have not yet withdrawn from the European Union, then one can only conclude that the latter must have the power to retain their membership status without the consent of the other Member States. Hence, a Member State that has not yet achieved its withdrawal from the European Union must have the power to revoke its declaration of withdrawal unilaterally.

In sum, there are ample reasons to believe that the withdrawing Member State has the right to rescind its declaration of withdrawal as long as its membership in the European Union has not been terminated.

Conclusion

Article 50 of the TEU explicitly allows Member States to withdraw from the European Union. By default, this withdrawal takes effect two years after a Member State has notified the European Council of its intention to withdraw.

But can the Member State revoke this notification? While the literature all but ignores that question, the answer must be yes as a matter of both legal policy and black letter law. In fact, a rule that allows the withdrawing Member State to revoke its notification of withdrawal fulfills two crucial functions.

First, it fundamentally reshapes the bargaining process at the European level: a Member State that is at liberty to rescind its declaration of withdrawal at any moment will find it much more difficult to commit in advance to leaving the European Union if its demands are not met. As a result, the threat of withdrawal becomes much less valuable as a bargaining tool; this in turn reduces the risk that Member States withdraw against their best interest solely because their bargaining strategy misfired.

Second, granting Member States the right to rescind a declaration of withdrawal greatly reduces a central problem inherent in the withdrawal procedure. Under Article 50, Member States make their declaration of withdrawal before their future relationship with the European Union has been negotiated. This creates the risk that euro-skeptic politicians persuade voters to cast their votes in favor of withdrawal by making farfetched promises about this future relationship. Allowing Member States to revoke their declaration of withdrawal ensures that the final decision about withdrawal is made when all the facts about the future relationship with the European Union are on the table.

To observers of European politics, the practical importance of the question discussed in this article should be quite obvious. U.K. voters have decided that it is time for the United Kingdom to leave the European Union, and the new British Prime Minister has made it very clear that she will abide by this decision and declare the United Kingdom’s withdrawal.

However, the wisdom of this course of action depends very strongly on the outcome of the negotiations that will follow the United Kingdom’s declaration of withdrawal; there is little to suggest that this outcome will be favorable to the United Kingdom. Once the terms of the future relationship between the United Kingdom and the European Union have been negotiated, will the British government still want to leave the European Union?  That is uncertain at best. To quote the former Prime Minister Tony Blair:

There will come a moment when we have had the negotiations and we can see the terms we are being offered by the rest of Europe and we will be able to say that it is a good idea or perhaps that it is a bad idea with major consequences.[256]

Even now, some political observers are betting that Theresa May will eventually be looking for a way to keep the United Kingdom in the European Union.[257] Recognizing a right to rescind the declaration of withdrawal would make such an outcome much easier to achieve.


*For excellent research assistance, I am indebted to Katelin Cox and Andrew Van Osselaer.

[1] Jenny Gross, U.K. Votes to Leave EU—Historic Election Sets Global Markets Reeling, Wall St. J., June 24, 2016, at A1.

[2] The Treaty on European Union even contains a procedure for amending the Treaties. Treaty on European Union, art. 50(1), Oct. 26, 2012, 2012 O.J. (C 326) 1 [hereinafter TEU].

[3] E.g., Leslie Picker, Slowdown in Mergers and Acquisitions Deals Pegged to Political Uncertainty, N.Y. Times, July 1, 2016, at B7 (“unexpected”).

[4] See, e.g., Roger Cohen, Hold the Referendum, N.Y. Times, Jan. 15, 2013 at 1 (arguing that Cameron should opt to hold a referendum, since the pro-European camp would likely prevail); Adam Taylor, Stories from 2015 that May Shape 2016, Wash. Post, Dec. 31, 2015, at A6 (describing a Brexit as “unlikely”).

[5] Proinsias O’Mahony, Financial Predictions Lose Their Edge After Brexit and Trump, Irish Times, July 12, 2016, at F18.

[6] Gary Murphy, Polling Firm Predictions Not Wide of Mark, The Irish Times, June 25, 2016, at 7.

[7] Peter S. Goodman, Turbulence, and a Lot of Uncertainty, for Investors as the Global Market Wobbles, N.Y. Times, June 24, 2016, at A6 (pointing out that “Britain’s exit from the European Union shocked global markets and unleashed uncertainty”).  Cf. Gerard Baker, Britain Fires a Shot Heard Round the World, Wall St. J., June 25, 2016, at A1 (describing the referendum result as a political earthquake for the United Kingdom); Steven Erlanger, Cameron to Quit as E.U. Aims for Rebirth, N.Y. Times, June 25, 2016, at A1 (noting that the referendum outcome “plung[ed] the financial markets into turmoil).

[8] Goodman, supra note 7.

[9] Id.

[10] Stephen Castle & Sewell Chan, Incoming Prime Minister Appoints ‘Brexit’ Supporters to Key Posts, N.Y. Times, July 14, 2016, at A10; Dan Bilefsky, Cameron Is Hustled Out, But the Cat Stays, N.Y. Times, July 13, 2016, at A8.

[11] Id.

[12] Cf. Steven Erlanger, Cameron Faces Struggle With Tories Over the E.U., N.Y. Times, Oct. 5, 2015, at A6 (speculating that Boris Johnson might succeed Cameron in case the Brexit supporters win the referendum); Erlanger, supra note 7 (noting that Boris Johnson and Theresa May were the most likely candidates to succeed David Cameron as Prime Minister).

[13] Castle & Chan, supra note 10; Griff Witte & Karla Adam, Cameron’s Deal with E.U. Rankles Many in Britain, Wash. Post, Feb. 21, 2016, at A8.

[14] Castle & Chan, supra note 10 (noting that Theresa May became Britain’s new Prime Minster on July 13, 2016).

[15] Indeed, an online petition for a second referendum managed to gather almost four million signatures within a few days after the referendum. Max Fisher, Four Ways to Back Out of Leaving—and the Risks a Reversal May Involve, N.Y. Times, June 28, 2016, at A10.  However, the British government had ruled out a second referendum before the Brexit vote. Karla Adam, Britain’s Cameron Lays Out Demands for Reform of E.U., Wash. Post, Nov. 11, 2015, at A19.  Hence, a change of position after the referendum would have appeared opportunistic. There also have been protests against Brexit since the referendum. Jon Stone, May Warns of ‘Difficult Times Ahead’ as Britain Prepares to Leave EU, The Independent, Sept. 4, 2016, at 5.

[16] Tom Peck, May Accused of Acting Like ““Tudor Monarch” for Plan to Skip Parliament Brexit Vote, The Independent, Aug. 28, 2016, at 7.

[17] Christopher Hope, No Tax Rises for Rest of the Decade, Pledges May, Daily Telegraph, July 1, 2016, at 6; Stephen Castle, 2 Months After ‘Brexit’ Vote, Britain’s Push to Leave E.U. Is a Muddle¸ N.Y. Times, Aug. 31, 2016, https://www.nytimes.com/2016/09/01/world/europe/britain-brexit-eu.html?_r=0; Stone, supra note 15.

[18] For an overview of various models of future cooperation, see Hannes Hofmeister, Splendid Isolation or Continued Cooperation? Options for a State After Withdrawal from the EU, 21 Colum. J. Eur. L. 249, 249-87; Catherine Dixon, Brexit Brainstorming, 166 Nat’l L.J. 8, 8 (2016).

[19] E.g., Dixon, supra note 18, at 18; Sebastian Mallaby, Britain’s Post-Brexit Warning for Americans, Wash. Post, Sept. 4, 2016, at A23.

[20] E.g., Hofmeister, supra note 18, at 257; Lee A. Sheppard, What Would Happen Upon Brexit?, 81 Tax Notes Int’l 903, 903 (2016).

[21] Mallaby, supra note 19.

[22] Mike Bird, Pound Enters New Ground in Its Decline—Official Data Indicate Currency is Weakest Yet Versus those of U.K.’s Trading Partners, Wall St. J., Oct. 13, 2016, at B5.

[23] Stephen Castle & Steven Erlanger, British Prime Minister Outlines Path to Clean Break with the E.U., N.Y. Times, July 13, 2016, at A1.

[24] Hofmeister, supra note 18, at 272; Sheppard, supra note 20, at 903.

[25] Hofmeister, supra note 18, at 278–79; Sheppard, supra note 20.

[26] Alan Beattie, Brexit and the WTO Option: Key Questions about a Looming Challenge, Fin. Times, July 12, 2016, http://www.ft.com/cms/s/0/5741129a-4510-11e6-b22f-79eb4891c97d.html#axzz4JIt3fE00; Sheppard, supra note 24, at 903.

[27] According to estimates by the World Trade Organization, British consumers would have to shoulder about 9 billion British pounds of additional import tariffs per year, and British exporters would have to bear export tariffs worth another 5.5 billion British pounds per year. Peter Spence, EU Clean Break Strongest Option for Negotiating New Trade Deals, Daily Telegraph, June 3, 2016, at 4. Cf. Martin Rhodes, Brexit—A Disaster for Britain and for the European Union, in Key Controversies in European Integration 252, 257 (Hubert Zimmermann & Andreas Dür eds., 2016) (surveying several research papers on the likely consequences of Brexit); Gianmarco Ottaviano et al., The Costs and Benefits of Leaving the EU (CFS Working Paper No. 472,  2014), http://dx.doi.org/10.2139/ssrn.2506664 (estimating that welfare losses induced by Brexit’s effect on trade will range from 1.13% to 3.09% of GDP even after taking into account lower transfers to the EU and estimating that welfare losses may range from 2.2% to 9.5% of GDP once lower productivity growth is considered). But see Graham Gudgin, Ken Coutts, & Neil Gibson, The Macro-Economic Impact of Brexit: Using the CBR Macroeconomic Model of the UK Economy (UKmod) 44 (Centre for Business Research, University of Cambridge Working Paper No. 483, 2016), https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp483revised.pdf (concluding that even under “pessimistic assumptions about (temporary) uncertainty and trade losses, the path of GDP is projected to be only a little lower than it might have been in the absence of a Leave vote.”).

[28] Mallaby, supra note 19.

[29] Simon Nixon, Europe File: A British Threat That Can’t Be Ignored, Wall St. J., Jan. 11, 2016, at A10 (pointing out that many economists agree that the Brexit will end up damaging investment and growth). Cf. Ylan Q. Mui, Study Sees Big ‘Brexit’ Cost to U.K. Economy, Wash. Post, Apr. 28, 2016, at A14 (citing a study by the OECD that predicted reduced growth in the U.K. as a result of the Brexit).

[30] TEU, art. 50.

[31] Andrew Woodcock, Tony Blair Says Britain Can Still Say No to Brexit, The Independent, Sept. 2, 2016, at 16 (quoting former British Prime Minister Tony Blair).

[32] See Andrew Grice, Theresa May Rules Out Second Referendum on Scottish Independence, The Independent, July 16, 2016, at 13 (reporting that Theresa May seeks informal talks before formally declaring her intention to withdraw); Stephen Fidler & Anton Troianovsk, World News: Britain Feels Out EU Stance, Wall St. J., July 21, 2016, at A9 (reporting that “Ms. May suggested that she would push for informal discussions before triggering Article 50”).

[33] Pierpaolo Barbieri, Britain Is Europe’s Reverse Domino, Wall St. J., Aug. 15, 2016, at A11; Denis Staunton, Johnson and May to Lead Field in Tory Leadership Contest, Irish Times, June 29, 2016, at 4.

[34] Barbieri, supra note 33, at A11.

[35] See, e.g., Fidler & Troianovsk, supra note 32 (noting that “EU officials are fully expecting the U.K. to try to pre-negotiate some key issues before triggering Article 50”); Stephen Booth, Don’t Assume All of Europe is United Against Britain, Daily Telegraph, June 29, 2016, at 7; Noah Barkin, Tight Brexit Timeline Could Be ‘Mission Impossible’, Sydney Morning Herald, July 26, 2016, at 11 (noting that “top officials in Berlin and Brussels” thought the complete ban on pre-withdrawal negotiations was unrealistic).

[36] See discussion infra Part III.

[37] See discussion infra Part IV.

[38] See, e.g., Bernard Salanié, The Economics of Contracts 162–68 (2d ed. 2005).

[39] Hannes Hofmeister, ‘Should I Stay or Should I Go?’—A Critical Analysis of the Right to Withdraw from the EU, 16 Eur. L. J. 589, 594 (2010); Raymond J. Friel, Providing a Constitutional Framework for Withdrawal from the EU: Article 59 of the Draft European Constitution, 53 Int’l & Comp. L. Q. 407, 426 (noting, with respect to the withdrawal right included in the Draft Constitution, that it leaves open the question of whether the declaration of withdrawal can itself be withdrawn).

[40] Gavin Barrett, The Era of Article 50: How the UK Will Leave the EU if It Opts for Brexit in its 23 June, 2016 Vote 10 (UCD Working Papers in Law, Criminology & Socio-Legal Studies Research Paper No. 02/16 2016),  https://dx.doi.org/10.2139/ssrn.2784214.  See also Alexander Thiele, Der Austritt aus der EU—Hintergründe und rechtliche Rahmenbedingungen eines Brexit [Leaving the EU—Background and Legal Framework for a Brexit], 51 Europarecht [European Law] 281, 286 (2016) (noting that, at least from the EU’s perspective, there appears to be no reason not to allow the withdrawing Member States to rescind its declaration of withdrawal).

[41] Steve Peers, Article 50 TEU: The uses and abuses of the process of withdrawing from the EU, EU Law Analysis, Dec. 8, 2014, http://eulawanalysis.blogspot.com/2014/12/article-50-teu-uses-and-abuses-of.html; cf. Tom Peck, Fears of Brexit Feud Mount as May Summons Ministers, The Independent, Aug. 29, 2016, at 7 (asserting that “[o]nce Article 50 is triggered. . . , it would be up to the European Union, and not the UK, if it wished to change its mind”).

[42] Treaty of Lisbon Amending the Treaty on European Union and the Treaty Establishing the European Community, Dec. 13, 2007, 2007 O.J. (C 306) 1 [hereinafter Treaty of Lisbon].

[43] For a summary of the discussion on the existence of a withdrawal right before the Treaty of Lisbon see, e.g., Thomas Bruha & Carsten Nowak, Recht auf Austritt aus der Europäischen Union? Anmerkungen zu Artikel 1-59 des Entwurfs eines Vertrages über eine Verfassung für Europa [Right to Withdraw from the European Union? Comments on Article I-59 of the Treaty on a Constitution for Europe], 42 Archiv des öffentlichen Rechts [AöR] 1, 1–5 (2004); Hofmeister, supra note 39, at 590–92; Simon Wieduwilt, Article 50 TEU—The Legal Framework of a Withdrawal from the European Union, 18 Zeitschrift Europarechtliche Studient [ZEuS] 169, 172–74 (2015).

[44] Treaty Establishing the European Economic Community, art. 240, Mar. 25, 1957, 298 U.N.T.S. 3 [hereinafter EEC Treaty]. The same was true for the European Atomic Energy Community. Treaty Establishing the European Atomic Energy Community, art. 208, Mar. 25, 1957, 298 U.N.T.S. 167 [hereinafter Euratom Treaty].  By contrast, the Treaty Establishing the European Coal and Steel Community had been concluded for a period of 50 years. Treaty Instituting the European Coal and Steel Community, art. 97, Apr. 18, 1951, 261 U.N.T.S. 140 [hereinafter ECSC Treaty].

[45] See Juli Zeh, Recht auf Austritt [The Right to Withdraw], 7 Zeitschrift für Europarechtliche Studien [ZEuS] 173, 190 (2004).

[46] See id.

[47] See Bruha & Nowak supra note 43, at 1–5; Hofmeister, supra note 39, at 590–92; and Wieduwilt supra note 43, at 169, 172–74.

[48] Peter A. Samuelson, Pluralism Betrayed: The Battle Between Secularism and Islam in Algeria’s Quest for Democracy, 20 Yale J. Int’l L. 309, 311 (1995).

[49] Cf. Rainer Muenz, Magreb: Past and Present, in Population Dynamics in Muslim Countries: Assembling the Jigsaw 225, 227 (Hans Groth & Alfonso Sousa-Poza eds. 2012) (noting that because Algeria was deemed to be an integral part of France, it also formed part of the European Economic Community from the founding of the Community in 1957 to Algeria’s independence in 1962).

[50] See Philip Thody, An Historical Introduction to the European Union 17 (1997).

[51] See Thiele, supra note 40, at 286.

[52] See id.

[53] See id.

[54] See Jose M. Magone, The Role of the EEC in the Spanish, Greek, and Portuguese Transitions, in The Politics and Memory of Democratic Transition: The Spanish Model, 215, 224 (Diego Muro & Gregorio Alonso eds. 2010).

[55] See id.

[56] See Steven Blockmans, Between the Devil and the Deep Blue Sea? Conflicts in External Action Pursued by OCTs and the EU, in EU Law of the Overseas 307, 313 (Dimitry Kocheno ed., 2011).

[57] See id.

[58] See Frederick W. Perry, Secession, The Rule of Law and the European Union, 31 Conn. J. Int’l L. 61, 81 (2015).

[59] See Id.

[60] E.g., Andrew C. Snavely, Note, Should We Leave the Backdoor Open? Does an Agreement Uniting States Need a Withdrawal Provision: The European Union Draft Constitution, 73 UMKC L. Rev. 213, 215 (2004).

[61] Markus G. Puder, Constitutionalizing the European Union—More Than a Sense of Direction from the Convention on the Future of Europe, 26 Fordham Int’l L.J. 1562, 1574 (2003).

[62] Id. at 1574.

[63] Jean Claude Piris, The Lisbon Treaty: A Legal and Political Analysis 16 (2010).

[64] Cf. Puder, supra note 61, at 1575 (noting that the Praesidium was designed “to give the impetus to the proceedings”); Finn Laursen, Process and Main Elements of the Treaty, in The Rise and Fall of the EU’s Constitutional Treaty 1, 5 (Finn Laursen ed., 2008) (noting that the “actual drafting of treaty articles was mostly done by the Praesidium, sometimes Giscard d’Estaing himself”); Georg Tsebelis & Sven-Oliver Proksch, The Art of Political Manipulation in the European Convention, in Reforming the European Union: Realizing the Impossible 76, 80 (Daniel Finke et al. eds., 2012) (noting that the Convention’s rules allowed “the agenda setting Praesidium and the Presidency to gain sufficient leverage over which amendments to reject and which ones to accept”).

[65] See Laursen, supra note 64, at 5.

[66] See Preliminary Draft Constitutional Treaty, CONV 369/02, Oct. 28, 2002, art. 46, European Convention, http://european-convention.europa.eu/pdf/reg/en/02/cv00/cv00369.en02.pdf (which read: “This article would mention the possibility of establishing a procedure for voluntary withdrawal from the Union by decision of a Member State, and the institutional consequences of such withdrawal.”).

[67] Draft Constitutional Treaty, Title X: Union membership, CONV 648/03, April 2, 2003, art. 46(1), European Convention, http://european-convention.europa.eu/pdf/reg/en/03/cv00/cv00648.en03.pdf, (providing that “[a]ny Member State may decide to withdraw from the European Union in accordance with its own constitutional requirements”).

[68] Id.

[69] Draft Constitution, Volume I, CONV 724/03, May 26, 2003, at p. 134, European Convention, http://european-convention.europa.eu/pdf/reg/en/03/cv00/cv00724.en03.pdf.

[70] Proposition d’amendement à l’article 46 déposée par Anne Van Lancker, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46VanLackerFR.pdf (pointing out, in the comments to the proposed amendment, that the right to withdraw might well be used as a permanent threat in negotiations).

[71] Id.

[72] Suggestion for amendment of Article 46 by G.M. de Vries T.J.A.M. de Bruijn, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46vriesEN.pdf (arguing that “facilitating the possibility to withdraw from the Union is contrary to the idea of European integration”); Vorschlag für die Änderung von Art. 46, Teil I, Titel X des Verfassungsentwurfs von Prof. Dr. Jürgen Meyer, Delegierter des Deutschen Bundestages, CONV 648/03, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46Meyer(DEFREN).pdf.

[73] Vorschlag für die Änderung von: Art. 46, Teil I, Titel X des Verfassungsentwurfs von Prof. Dr. Jürgen Meyer, Delegierter des Deutschen Bundestages, CONV 648/03, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46Meyer(DEFREN).pdf

[74] Suggestion for amendment of Article I-59 by Ernâni Lopes & Manuel Lobo Antunes, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_ArtI%2059%20Lopes%20EN.pdf; Suggestion for amendment of Article  59 by G.M. de Vries & T.J.A.M. de Bruijn, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_Art%20I%2059%20de%20Vries%20EN.pdf; Suggestion for amendment of Article 46 by Joschka Fischer, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46fischerDE.pdf; Suggestion for amendment of Article 46 by Voggenhuber, Wagener, Lichtenberger, Nagy, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46Voggenhuber.pdf; Proposition d’amendement à l’Article 46 (Titre X) Déposée par MM. Santer et Fayot (Titulaires, Luxembourg) et M. Schmit (Suppléant, Luxembourg), European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46SanterFR.pdf; Suggestion for amendment of Article 46 by Hannes Farnleitne & Gerhard Tusek, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art.46FarnleitnerEN.pdf; Vorschlag für die Änderung von Art. 46, Teil I, Titel X des Verfassungsentwurfs von Prof. Dr. Jürgen Meyer, Delegierter des Deutschen Bundestages, CONV 648/03, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46Meyer(DEFREN).pdf.

[75] Suggestion for amendment of Article I-59 by Sylvia-Yvonne Kaufmann, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_Art%20I%2059%20Kaufmann%20DE.pdf.; Suggestion for amendment of Article 46: (Title X : Union membership, part I of the Constitution) by Teija Tiilikainen, Antti Peltomäki, Riitta Korhonen, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46TiilikainenEN.pdf.; Proposition d’amendement à l’Article 46 Déposée par Monsieur Haenel, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46haenelFR.pdf.

[76] Some members sought to limit the withdrawal right to those cases in which the European Constitution has been amended and the Member State has failed to ratify this amendment in accordance with its own constitution. Proposition d’amendement à l’Article : I- 59 Déposée par M. Louis Michel, M. Elio di Rupo, Mme Anne Van Lancker, membres de la Convention et M. Pierre Chevalier et Mme Marie Nagy, membres suppléants de la Convention, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_Art%20I%2059%20Michel%20FR.pdf; Proposition d’amendement à l’Article I-59 Déposée par Monsieur de Villepin, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_Art%20I%2059%20de%20Villepin%20FR.pdf.; Proposition by Brok, Szajer, Akcam, Van Der Linden, Lamassoure, Brejc, Demetriou, Figel, Liepina, Santer, Kelam, Kroupa, Tajani, Almeida Garrett, Altmaier, Kauppi, Lennmarker, Maij-Weggen, Rack, Vilen on behalf of the EPP Convention Group, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/46_Art%20I%2059%20Brok%20EN.pdf; Proposition d’amendement à l’Article 46 Déposée par Monsieur: Alain Lamassoure, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46Lamassoure.pdf.  It was also suggested that the Treaty should list, in detail, all cases in which withdrawal was permitted.  Suggestion for amendment of Article: 46 Suggestion for Title X by Prof. Danuta Hübner, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/ART46hubnerEN.pdf

[77] Proposition d’amendement à l’Article 46 Déposée par Monsieur Badinter, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/art46badinterFR.pdf.

[78] Dimitrij Rupel, Gov’t Rep. Slovenia, Member of Convention, Intervention  at the nineteenth plenary session of the European Convention (Apr. 24, 2003),  http://european-convention.europa.eu/docs/speeches/9546.pdf (welcoming the withdrawal right).

[79] Zeh, supra note 45, at 196–97.

[80] Id. at 196.

[81] Perry, supra note 58, at 82.

[82] Draft Treaty establishing a Constitution for Europe, art. I-59, July 18, 2003, 2003 O.J. C (169) 1.

[83] Perry, supra note 58, at 82. Detailed ratification results are reported by Laursen, supra note 64, at 16–18, tab.3.

[84] Laursen, supra note 64, at 16.

[85] Cf. Perry, supra note 58, at 82 (noting that the Treaty of Lisbon incorporated many of the provisions of the Draft for a European Constitution).

[86] Id.

[87] See sources cited supra notes 4 to 6.

[88] This fact has not been lost on political observers.  See, e.g.¸ Griff Witte, Europe Setting Limits on Retaining Britain in E.U., Wash. Post, Feb. 18, 2016, at A9 (noting the U. K.’s longstanding ambivalence towards the European Union).

[89] Winston S. Churchill, The Tragedy of Europe, in The European Union: Readings on the Theory and Practice of the European Union 5–6 (Brent F. Nielsen & Alexander Stubb eds., 1994).

[90] Id. at 6.

[91] ECSC Treaty.

[92] EEC Treaty.

[93] Euratom Treaty.

[94] See sources cited supra note 44.

[95] E.g., Rafael Leal-Arcas, Is EC Trade Policy Up to Par? A Legal Analysis Over Time–Rome, Marrakesh, Amsterdam, Nice, and the Constitutional Treaty, 13 Colum. J. Eur. L. 305, 311 (2007).

[96] Among some pundits, the view of the Commonwealth as a plausible alternative to EU membership is still alive today.  See, e.g., Mark Stanford, Brexit Brings the Chance to Build a New and Better Commonwealth, Daily Telegraph, Sept. 1, 2016, at 14 (arguing that the U.K. should view Brexit as an opportunity to revive and reinvent the Commonwealth).

[97] Martin Roberts, Britain 1846–1964: The Challenge of Change 18 (2001).

[98] H.S. Chopra, De Gaulle and European Unity 190 (1974).

[99] Id. at 188.

[100] Id. at 188-90.

[101] Thody, supra note 50, at 16-17.

[102] Id. at 17.

[103] See Thiele, supra note 40, at 286.

[104] See id.

[105] See Stephen Wall, A Stranger in Europe: Britain and the EU from Thatcher to Blair 4 (2008) (noting that, at the time, agricultural subsidies accounted for about ninety percent of the Community’s budget).

[106] See Johannes Lindner, Conflict and Change in EU Budgetary Politics 115 (2006).

[107] See id.

[108] See id..

[109] See Wall, supra note 105, at 5.

[110] See id. at 6.

[111] See Wall, supra note 105, at 5.  In 2005, Tony Blair, under pressure from other Member States, agreed to a deal that reduced the “British rebate” by about twenty percent for the next seven years.

[112] Protocol (No 15) on Certain Provisions Relating to the United Kingdom of Great Britain and Northern Ireland, Sept. 9, 2008, 2008 O.J. (C 83) 284; Protocol (No 16) on Certain Provisions Relating to Denmark, Sept. 9, 2008, 2008 O.J. (C 83) 287 (2010).

[113] Cf. Roger J. Goebel, The European Union in Transition: The Treaty of Nice in Effect: Enlargement in Sight: A Constitution in Doubt, 27 Fordham Int’l L.J. 455, 472 (2004) (“the most dramatic change in membership in [the European Union’s] history”).

[114] See Andreas Geddes, Migration in European Governance: The Constitution of a Transnational Policy Field, in Handbook of the International Political Economy of Governance 395, 397 (Anthony Payne & Nicola Phillips eds., 2014).

[115] Committee on European Union, Fifty-Third Report on European Union, 2005-06, HL, ch. 3.86 , available at http://www.publications.parliament.uk/pa/ld200506/ldselect/ldeucom/273/27302.htm.

[116] Id.

[117] Castle, supra note 17 (noting that the demand to restore national control over immigration was “perhaps the most fundamental issue championed by the campaign to leave”); Mallaby, supra note19 (pointing out that the Brexit vote “was largely an expression of hostility to immigrants”).

[118] See Min Zeng, Treasury’s Bounce Back, Wall St. J., July 23, 2011, at B14.

[119] See Stephen Castle & Liz Alderman, Europe Approves Irish Rescue and New Rules on Bailouts, N.Y. Times, Nov. 29, 2010, at B1

[120] See Patricia Kowsmann, World News: Portugal Reaches a Deal on Bailout, Wall St. J., May 4, 2011, at A12.

[121] See Raphael Minder, Bailout in Spain Leaves Taxpayers Liable for the Cost, N.Y. Times, June 12, 2012, http://www.nytimes.com/2012/06/13/business/global/bailout-in-spain-leaves-taxpayers-holding-the-bag.html; Raphael Minder & Paul Geitner, Pressed to Seek a Bailout, Spain Assesses the Needs of Its Banks, N.Y. Times, June 9, 2012, at B1; Gabriele Steinhauser, Euro Zone Turmoil: Continental Drift Adds to Challenge—With Crisis Deepening, Europe’s Changing Cast of Leaders Demonstrates Little Rapport as G-20 Meeting Gets Under Way, Wall St. J., June 16, 2012, at A6.

[122] See Andrew Ross Sorkin, Bank Levy in Cyprus, and Why Not to Worry, N.Y. Times, Mar. 19, 2013, at B1.

[123] See Adam Taylor, U.K. Refuses to Take Part in the Next Greek Bailout, Bus. Insider, June 20, 2011, http://www.businessinsider.com/greece-uk-bail-out-2011-6.

[124] See Id.

[125] The relevant regulation makes it clear that the Single Supervisory Mechanism only covers banks in Eurozone countries as well as banks in countries that choose to cooperate voluntarily. Council Regulation 1024/2013/EC, Conferring Specific Tasks on the European Central Bank Concerning Policies Relating to the Prudential Supervision of Credit Institutions, art. 4, 2013 O.J. (L 287) 63.  The U.K. has made it clear that it has no intention to cooperate. See, e.g., Jens C. Dammann, The Banking Union: Flawed By Design, 45 Geo. J. Int’l L. 1057, 1081–82 (2014).

[126] See Michael Moran, Politics and Governance in the UK 199 (2015) (noting that the financial and economic crisis of the Eurozone “gave a spur to Euroskepticism”).

[127] Cf. Christopher K. Connolly, Independence in Europe: Secession, Sovereignty, and the European Union, 24 Duke J. Comp. & Int’l L. 51, 98 (2013) (noting that the Eurozone crisis spawned a resurgence of right-wing movements in many European countries); Susannah Verney, Euroskepticism in Southern Europe: A Diachronic Perspective 151 (2013) (noting that Euroskepticism has increased with the Euro crisis).

[128] Cf. Steven Erlanger & Stephen Castle, Brexit, Cameron’s Problem of His Own Making, N.Y. Times, June 22, 2016, at A1 (analyzing the various costs of David Cameron’s decision to promise a referendum).

[129] See Connolly, supra note 127, at 96 n.247; Erlanger & Castle, supra note 128

[130] Erlanger & Castle, supra note 128.

[131] See, e.g.¸ Witte, supra note 88..

[132] See id.

[133] See id.

[134] A preliminary compromise had been achieved in negotiations between EU president Donald Tusk and David Cameron.  Letter from President Donald Tusk to Members of Eur. Council, (Feb. 2, 2016), available at http://www.consilium.europa.eu/en/press/press-releases/2016/02/02-letter-tusk-proposal-new-settlement-uk/. However, that preliminary compromise did not meet with the necessary approval from the other Member States.

[135] European Council Conclusions EUCO 1/16 CO EUR 1 CONCL 1, Brussels European Council (Feb. 19, 2016).

[136] For a detailed juxtaposition of Cameron’s original demands on the one hand and the compromise on the other hand see Ralf Drachenberg & Torlach Grant, Outcome of the European Council of 18-19 February 2016,  Eur. Parl. Res. Serv. Blog, Feb. 26, 2016, available at https://epthinktank.eu/2016/02/26/outcome-of-the-european-council-of-18-19-february-2016/.

[137] But see e.g., Editorial, The British Brawl over Europe, Wall St. J., Feb. 22, 2016, at A12 (claiming that David Cameron had won “major concessions”).

[138] Thus, the Council Conclusions explicitly “[recognize] that the United Kingdom, in the light of the specific situation it has under the Treaties, is not committed to further political integration into the European Union” and stress that  “[t]he substance of this will be incorporated into the Treaties at the time of their next revision in accordance with the relevant provisions of the Treaties and the respective constitutional requirements of the Member States, so as to make it clear that the references to ever closer union do not apply to the United Kingdom.” European Council Conclusions, supra note 135, at 16.

[139] E.g., Denis Staunton, Proceed to Brexit, Irish times, June 18, 2016, at 4 (calling Britain’s exemption from the goal of an ever-closer union “largely symbolic”); Editorial Board, Britain’s Risky Moment, Wash. Post, Feb. 23, 2016, at A16 (noting the “largely symbolic” nature of the EU’s commitment to an ever-closer union).

[140] Cf., e.g., Peter L. Lindseth, Democratic Legitimacy and the Administrative Character of Supranationalism: The Example of the European Community, 99 Colum. L. Rev. 628, 701 (1999) (noting the importance of the goal of forming an ever closer Union to the interpretation of the Treaties).

[141] See id.

[142] See Karla Adam, Europe Offers Britain Deal to Remain in Europe, Wash. Post, Feb. 3, 2016, at A13 (noting that Poland and other East European countries offered resistance to Cameron’s plan to impose limits on welfare benefits to immigrants).

[143] See European Council Conclusions, supra note 135.

[144] See sources cited supra note 1.

[145] See sources cited supra note 10.

[146] See id.

[147] Cf. Erlanger, supra note 12 (speculating that Boris Johnson might succeed Cameron in case the Brexit supporters win the referendum); Erlanger, supra note 7 (noting that Boris Johnson and Theresa May were the most likely candidates to succeed David Cameron as Prime Minister).

[148] See Castle & Chan, supra note 10.

[149] See id.

[150] See id.; Witte & Adam, supra note 13.

[151] See Castle & Chan, supra note 10 (noting that Theresa May became Britain’s new Prime Minster on July 13, 2016).

[152] See sources cited supra note 17.

[153] E.g., Dirk Hanschel, Der Rechtsrahmen für den Beitritt, Austritt zu bzw. aus der Europäischen Union und Währungsunion, 31 Neue Zeitschrift für Verwaltungsrecht [NVwZ] 995, 997 (2012); Hofmeister, supra note 39, at 590; Oliver Dörr, Art. 50 EUV: Austritt aus der Union [Art. 50 TEU: Withdrawal from the EU], in Grabitz/Hilf/Nettesheim: Das Recht der Europäischen Union ¶ 17 (Martin Nettesheim ed., 56th ed. 2015); Werner Meng, Artikel 50 EUV: Austritt aus der Europäischen Union [Article 50 TEU: Withdrawal from the European Union], in von der Groeben/Schwarze/Hatje, Europaisches Unionsrecht ¶ 5 (Jürgen Schwarze & Armin Hatje eds., 7th ed. 2015).

[154] TEU art. 50(1).

[155] Id. art. 50(2).

[156] Id. art. 50(2).

[157] Id. art. 50(3).

[158] TEU art. 50(1).

[159] Id. art. 14(2).

[160] Id. art. 15(4).

[161] Cf. Thiele, supra note 40, at 299 (noting that any Member State can prevent the conclusion of a withdrawal agreement by blocking the adoption of guidelines in the Council).

[162] See, e.g., Castle, supra note 117 (noting that exit negotiations are “are likely to last at least three years and possibly much longer” and noting that some analysists estimate that they “might take a decade”); Stone, supra note 15 (noting that estimates for the duration of withdrawal negotiations range from two years to ten years); Barkin, supra note 35 (noting that “the two-year deadline is widely viewed as a stretch”).

[163] E.g., Henry Gao, From the Doha Round to the China Round, in China in the International Economic Order: New Directions and Changing Paradigms 79, 80 (Lisa Toohey et al. eds., 2015) (noting that trade agreements are hard to negotiate and typically present greater negotiation challenges than other international treaties).

[164] See Senan Molony, Two Years Is ‘Too Short’ for Complex UK-EU Trade Deal, Irish Daily Mail, July 6, 2016, at 4 (noting that the process of negotiation actually took eight years if the review stage following the formal conclusion of negotiations is included).

[165] This issue is particularly thorny in the case of the U.K. because of the large number of nationals from other Member States living there. Cf. Mallaby, supra note 19 (noting that “[i]f the 3.5 million other Europeans in Britain all suddenly applied for permanent residence, it would take the existing immigration staff 140 years to deal with the onslaught”).

[166] Cf. Sibylle Gierschmann, Brexit—Was Passiert, wenn Großbritannien Drittland wird [Brexit—What happens when the United Kingdom Becomes a Third Country?], 19 MultiMedia und Recht [MMR] 501, 501 (2016) (summarizing the legal challenges in the area of European data protection law that arise in the case of Brexit).

[167] See supra text accompanying notes 56 to 59.

[168] See Barkin, supra note 35, at 11.

[169] See Cecile Pelaudeix, EU-Greeland Relations and Sustainable Development in the Arctic, in Global Challenges in the Arctic Region 306, 306 (Elena Conde & Sara Iglesias Sanchez eds., 2016).

[170] See Barkin, supra note 35, at 11.

[171] TEU, art. 50.

[172] TEU, art. 50(2).

[173] See Dörr, supra note 153, at ¶ 31 (arguing that this wording gives the parties a mandate to decide the basic shape of the future relationship between the withdrawing Member State and the EU in the withdrawal agreement); Meng, supra note 153 (asserting that according to Article 50 TEU, the withdrawal agreement shall define the future relationship between the withdrawing Member State and the EU); Hanschel, supra note 153 (taking the position that the withdrawal agreement can govern the future relationship with the withdrawing Member State and even provide for a partial EU membership).

[174] Cf. Christian Calliess, Artikel 50 EUV, in EUV/AEUV 465 (Christian Calliess & Matthias Ruffert eds., 5th ed. 2016) (arguing that the withdrawal agreement may not include far-reaching adjustments of European law, let alone changes to the European Treaties); See Barrett, supra note 40, at 9 (arguing that Article 50 does not make any statement about what the future relationship should look like and that that question has to be governed by a different agreement, which is contingent on unanimous approval by the Member States if it is to cover more than just trade).

[175] See Barrett, supra note 40, at 9.

[176] See id.

[177] See Treaty on the Functioning of the European Union, art. 207(4), Oct. 26, 2012, 2012 O.J. (C 326) 1 [hereinafter TFEU].

[178] TFEU, art. 207(4).

[179] Cf. Castle, supra note 17 (noting that “London’s financial center . . . contributes billions in tax revenues”).

[180] Eilis Ferran & Valia S.G. Babis, The European Single Supervisory Mechanism, 13 J. Corp. L. Studies 255 (2015).

[181] Cf. John Armour, Brexit and Financial Services, Oxford Rev. Fin. Pol (Brexit Special Issue) at 15 (forthcoming 2017) (noting that the U.K.’s export of financial services to EU countries would “likely be substantially impaired by hard Brexit”).

[182] Thody, supra note 50, at 16–17.

[183] See Alina Kaczorowska-Ireland, European Union Law 94 (4th ed. 2016).

[184] More specifically, Greece argued that the name Macedonia belonged exclusively to a northern province in Greece, and Greece made it clear that it would not allow Macedonia to join the European Union under this name. See e.g., Frank Emmert & Siniša Petrović, The Past, Present, and Future of EU Enlargement, 37 Fordham Int’l L.J. 1349, 1410-11 (2014).

[185] See discussion supra Part I.

[186] E.g., A Long, Complicated Divorce, Agence France Presse, June 20, 2016, https://tribune.com.pk/story/1112305/brexit-long-complicated-divorce/ (noting that David Cameron had warned post-withdrawal trade negotiations might take ten or more years); British Brawl over Europe, supra note 137 (citing David Cameron’s warning that “leaving Europe would threaten [Britain’s] economic and . . .  national security”). Cf. Tim Shipman, Don’t Leap Into Boris’ Faulty Car, Sunday times, June 19, 2016, at 9 (noting that Cameron spent his last days before the referendum warning voters that “out means out”).

[187]  See, e.g., Agence France Presse, supra note 186 (noting that EU President Donald Tusk has warned British voters that the post-withdrawal negotiation process would likely last for seven or more years).

[188] See Jonathan Petre, French Minister’s Guernsey Taunt, Scottish Mail, June 19, 2016, at 10 (warning British voters that if the U.K. wanted to retain its access to EU markets after withdrawing, it would have to continue making financial contributions to the EU budget, and the only alternative would be a “total exit.”); see also Patience Wheatcroft, Pushing Remain Cause Has Exposed Empty Vitriol of Brexiteers, Evening Standard, June 16, 2016 (noting that German Finance Minister Wolfgang Schäuble had warned Brexiteers that “out is out”).

[189] Michael D. Shear & Steven Erlanger, Obama Warns Britain That Trade Might Suffer if It Leaves European Union, N.Y. Times, Apr. 23, 2016, at A9.

[190] Cf. Mallaby, supra note 19 (noting that Brexit supporters had “assured voters that it would be easy to negotiate a great trade deal with Europe”); Wheatcroft, supra note 188 (noting that Brexit supporters suggested the EU would offer generous terms to a post-withdrawal Britain).

[191] See, e.g., Editorial, We Must Vote Leave to Create a Britain Fit for the Future, Sunday Telegraph, June 19, 2016, at 23 (asserting that “we do not need a trade deal in order to sell and buy goods” and dismissing as “risible” the claim that “we will spend the next 10 years in some sort of economic limbo while we negotiate a new relationship”); Petre, supra note 188 (noting that warnings about the future relationship between the U.K. and the EU met with scorn from Brexit supporters).

[192] John Rentoul, Johnson More Trusted than Cameron over EU, The Independent, May 15, 2016, at 3 (reporting the results of a poll according to which forty-five percent of those surveyed deemed Boris Johnson more likely to tell the truth that David Cameron, whereas only twenty-one percent thought David Cameron to be more trustworthy).

[193] See supra text accompanying notes 179 to 184.

[194] Of course, it must be recalled in this context that we have not limited the costs and benefits of Membership to merely pecuniary ones.  Ronald Coase is famous for arguing that under certain assumptions including the absence of transaction costs, bargaining can eliminate the problem created by externalities and lead to a Pareto efficient outcome regardless of the initial allocation of property rights.

[195] See Michael Dobbs, European Summit Ends Long Quarrel Over British Payments, Wash. Post, June 26, 1984, at A1.

[196] See Chris Gifford, The Making of Eurosceptic Britain 145–46 (2nd ed. 2014) (describing Blair’s attempt to defend the British rebate even in the face of the enlargement round of 2004 and the eventual compromise to which Blair’s efforts led);Key Points of the EU Budget Deal, BBC News, Dec. 17, 2005, http://news.bbc.co.uk/2/hi/europe/4537912.stm (describing a compromise in which the British Prime Minister agreed to give up about twenty percent of the rebate).

[197] See, e.g., George Brock & Robin Oakley, Britain to fight Delors Plans for EC Budget, Times, Feb. 13, 1992, at 1, 16 (describing efforts by other Member States to curb the British rebate); Katherine Butler, Cardiff Summit: Germany demands rebate from EU; Budget crisis threat: Chancellor Kohl’s request for money back will lead to other European partners paying more, The Independent, June 16, 1998, at 11 (describing German Chancellor Helmut Kohl’s efforts to secure a British-style rebate for Germany).

[198] See sources cited supra note 70.

[199] On the relevance of the ability to make binding commitments in dynamic games see, e.g., Drew Fudenberg & Jean Tirole, Game Theory 71 (1991).

[200] This scenario is essentially a so-called “chicken game” or “hawk-dove game” in which one party can make a prior commitment.  See Fudenberg & Tirole, supra note 199, at 18 (describing the basic “hawk-dove game”). Note that the game becomes more complicated if one considers the possibility of a chain effect: the other Member States may reasonably fear that giving in to the threating State’s demands will lead other Member States to make similar threats. However, it is not clear that this consideration is enough to prevent the other Member States from giving in to the threatening Member State’s demands. After all, a Member State’s withdrawal may embolden euro-skeptic movements elsewhere and thus ultimately lead to the collapse of the entire EU. By comparison, the prospect that making concessions to the Member State threatening withdrawal will embolden other Member States to demand similar concessions, may seem easier to bear.

[201] TFEU, art. 294 (setting out the rules governing the ordinary legislative procedure).

[202] Jan Eichhorn, Christine Hübner & Daniel Kenealy, The View from the Continent: What People in Other Member States Think About the UK’s EU Referendum 24 (2016), https://www.aqmen.ac.uk/sites/default/files/TheViewFromTheContinent_REPORT.pdf.

[203] Id. at 24 tab.29 (presenting survey results indicating that large proportions of citizens in other Member States would also want a referendum on the constitution of their country’s membership in the European Union).

[204] See  sources cited supra note 129.

[205] See Anna Sauerbrey, European Political Poker, N.Y. Times, Aug. 10, 2015, at 1.

[206] See Witte & Adam, supra note 13, at A19; see also Erlanger, supra note 12.

[207] See Witte & Adam, supra note 13, at A19; Adam Taylor, supra note 4; Paul Taylor, For E.U., Things Can Get Worse, N.Y. Times, Dec. 22, 2015, at 1.

[208] Some scholars never tire of warning that the European Union might become a “transfer union” in which economically successful Member States have to support the weaker ones.  E.g., Jan Dams, Die Transferunion Ist Realitat [The Transfer Union Has Already Become a Reality], Die Welt, Aug. 14, 2015,  https://perma.cc/UL Z5-DQXP (arguing that the European Union has become a transfer union despite the fact that Germans have always opposed such a development).

[209] TEU art. 3(3).

[210] See TFEU, art. 238(3).

[211] TFEU art 174–78 (governing policies to promote social, territorial, and economic cohesion).

[212] TFEU, art. 176.

[213] Nixon, supra note 29 (noting that concessions to Mr. Cameron are also potentially destabilizing since “[o]ther countries might be tempted to try to carve out their own exemptions to common rules by similarly threatening to bring chaos to the rest of the continent.”).

[214] The internal market, as defined by the TFEU, comprises “an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties.” TFEU, art. 26(2).

[215] Thus, biannual surveys by the Pew Research Center starting in the year 2004 indicate that, until 2016, voters in the U.K. generally viewed the EU less favorably than their peers in Poland, Italy, Spain, France, and Germany. According to these surveys, of these five countries, only the French occasionally expressed less favorable views of the EU. Bruce Stokes, Pew research Center: Euroskepticism Beyond Brexit 3 (2016), http://assets.pewresearch.org/wp-content/uploads/sites/2/2016/06/Pew-Research-Center-Brexit-Report-FINAL-June-7-2016.pdf.  See also Helen Thompson, The British Conservative Government and the European Exchange Rate Mechanism. 1979-1994 6 (1996) (noting Britons’ longstanding ambivalence towards the EU).

[216] See, e.g., Gifford, supra note 196, at 129 (arguing that the Major administration embraced euro-skepticism as a way of preserving the legacy of Margaret Thatcher); Sean Greenwood, Britain and European Integration Since the Second World War 12–13 (1996) (noting that after the United Kingdom had joined the European Economic Community under Prime Minister Heath, his successor Wilson “reverted to a half-resentful, semi-detached condescension towards Europe which has remained the characteristic British position”); Jonathan Hollowell, From Commonwealth to European Integration, in Britain Since 1945 59, 83 (Jonathan Hollowell ed., 2003 ) (arguing that Wilson’s successor James Callaghan “was never more than lukewarm towards Britain’s membership in the Community”).

[217] John Curtice, A Disaster for Labour, But Hardly a Tory Triumph, The Independent, June 8, 2005, at 4 (noting the “strong Euroskeptic tone adopted by David Cameron”).

[218] Jamie Griersonand & Anushka Asthana, Labour Resignations Continue as MPs Try to Force out Jeremy Corbyn, The Guardian, June 27, 2016, https://www.theguardian.com/politics/2016/jun/27/labour-resignations-continue-as-mps-try-to-force-out-jeremy-corbyn.

[219] See sources cited supra note 17.

[220] See sources cited supra note 143.

[221] See sources cited supra note 117.

[222] Griff Witte & Karla Adam, E.U. leaders strike deal to try to keep Britain in bloc, Wash. Post, Feb. 20, 2016, at A1 (noting that “E.U. officials expressed hope . . . that they had given Cameron enough to secure an ‘in’ vote”).

[223] Of course, the outcome of the U.K. referendum also prompted fears of a chain reaction that might destroy the EU. Simon Nixon, Europe File: U.K.’s Demands Create a Dilemma for Europe, Wall St. J., Feb. 1, 2016, at A10 (noting the consensus among EU governments that “a Brexit would have disastrous consequences for the stability and security of the rest of the EU”); Nixon,  supra note 29 (noting that “a Brexit would throw the wider European project into disarray”); Witte, supra note 88 (noting experts’ “fear that [a Brexit] . . . could trigger a broader unraveling of the E.U.”); Witte & Adam, supra note 222 (pointing out European leaders’ awareness that “a British exit could be the start of a broader disintegration”).

[224] Most economists believe that surplus to be substantial. Cf. Steven Erlanger, Uncertain Economics Influence Brexit Talks, N.Y. Times, April 3, 2016, at 10 (noting that most economists believe Brexit “would create havoc with the pound, cut growth, damage the financial center of the City of London and provoke a lengthy period of uncertainty, with no guarantee that Britain could quickly negotiate free-trade agreements); Nixon, supra note 29 (pointing out that many economists agree that a Brexit will end up damaging investment and growth). Cf. Mui, supra note 29 (citing a study by the OECD that predicted reduced growth in the U.K. as a result of a Brexit).

[225] See Jens Dammann, Paradise Lost: Can the European Union Expel Members from the Eurozone, 49 Vand. J. Transnat’l L. 693, 710 (2016).

[226] See Jim Yardley, In a Twist, Europeans May Find Themselves Rooting for Greece’s Leader, N.Y. Times, Aug. 22, 2015, at 5.

[227] See id.

[228] In 2015, there was at least some concern that a full-blown sovereign default on the part of Greece might present a risk of contagion for other financially vulnerable countries in the Eurozone. See, e.g., Philip Stephens, Europe Would Pay Dearly for Losing Greece, Irish Times, July 10, 2015, at 1 (arguing that the Greek’s default might well trigger a chain reaction). During the height of the financial crisis, the risk of contagion was taken very seriously. E.g., Carol J. Williams, Dangers in Greek Default: If the EU Nation Goes Broke, the Prospect of a Return to Political Instability is a Greater Peril for its Neighbors, L.A. Times, June 30, 2015, at 1.

[229] Cf. Editorial, Suicide Isn’t Painless, Wall St. J., July 2, 2015, at A12 (referring to “Alexis Tsipras, the left-wing Prime Minister who forced this crisis on the theory that the European Union would never risk a Greek default”).

[230] See Dammann, supra note 225, at 711.

[231] See Liz Alderman, With ‘No’ Vote, Premier Wins a Victory That Could Carry a Steep Price, N.Y. Times, July 6, 2015, at A6 (noting that the Member States were no longer willing to offer the original bailout package after the referendum, and that Greece’s economy had “worsened drastically amid the political and financial chaos”).

[232] See id.

[233] See Luke Garratt, Fears Grow Over Greece Exit After ECB Says Europe Is ‘Equipped’ for Fallout: The Eurozone is No Longer at Risk of Chain Reaction Downfall if Greece Defaults on its Debts, The Independent, Apr. 20, 2015, at 1 (reporting that ECB President Mario Draghi “made it clear the eurozone is no longer vulnerable to the chain reaction experienced during earlier phases of the debt crisis.”).

[234] See, e.g., Eric Regul, Herr Bad Cop: Vilified Abroad, German Finance Minister Wolfgang Schäuble is a Hero at Home For Bringing Greece To Heel, Globe and Mail, Aug. 28, 2015, at 22 (noting that “Germans are more or less fed up with Greece”); Derek Scally, Greece Facing Far Tougher Bailout Deal After Hard Talking and Disharmony;, Irish Times, July 13, 2015, at 2 (noting that “Germans resent bending rules for Greece, the Baltics are tired of bankrolling richer Greeks”).

[235] See sources cited supra note 17.

[236] TEU, art. 50(3).

[237] See sources cited supra note 162.

[238] See Tim Wallace, Businesses Lose Confidence After Vote to Leave EU, Daily Telegraph, Aug. 31, 2016 (citing a survey by Lloyds Bank according to which “Britain’s businesses are less confident about the future in the wake of the Brexit referendum”).

[239] TEU, art. 50.

[240] See Carlos A. Ball, The Making of a Transnational Capitalist Society: The Court of Justice, Social Policy, and Individual Rights Under the European Community’s Legal Order, 37 Harv. Int’l L.J. 307, 334 (1996); Jens Dammann, The Right to Leave the Eurozone, 48 Tex. Int’l L.J. 125, 137 (2013); Nial Fennelly, Legal Interpretation at the European Court of Justice, 20 Fordham Int’l L.J. 656, 664 (1997); Constantinos N. Kakouris, Use of the Comparative Method by the Court of Justice of the European Communities, 6 Pace Int’l L. Rev. 267, 273 (1994); Lindseth, supra note 140. Cf., e.g.,  Agrover Srl v. Agenzia Dogane, Case C-173/06, EU:C:2007:612, ¶¶ 21–22 (giving “the purpose and general scheme” priority over the wording).

[241] Fennelly, supra note 240, at 664.

[242] See sources cited supra note 72.

[243] TEU, art. 1 (providing that “[t]his Treaty marks a new stage in the process of creating an ever closer union”), Preamble (stressing the Member States’ resolution “to continue the process of creating an ever closer union among the peoples of Europe”); TFEU, Preamble (stressing the Member State’s determination to create “an ever closer union among the peoples of Europe”).

[244] Draft Constitution Volume I, CONV 724/03, May 26, 2003, European Convention, http://european-convention.europa.eu/pdf/reg/en/03/cv00/cv00724.en03.pdf.

[245] See Thiele, supra note 40, at 290.

[246] See id. (noting that at the time of the European Convention, the chance that a Member State might actually make use of the withdrawal right must have seemed remote).

[247] Henrik Hololei, Alternate Member of Convention Gov’t of Est., Statement on articles 43-46 and the Final Provisions of the draft Constitutional Treaty, (Apr. 24–25, 2003), available at http://european-convention.europa.eu/docs/speeches/8915.pdf.

[248] See Vienna Convention on the Law of Treaties, May 23, 1969, 1155 U.N.T.S. 331..

[249] Id. art. 65.

[250] Id.

[251] See Mark E. Villiger, Commentary on the 1969 Vienna Convention on the Law of Treaties 812 (2009); Heike Krieger, Article 65: Procedure to be followed with respect to invalidity, termination, withdrawal from or suspension of the operation of a treatyin Vienna Convention on the Law of Treaties 1131, 1146, (Oliver Dörr & Kirsten Schmalenbach eds., 2012).

[252] Suggestion for amendment of Article 46 by Dr. Sylvia-Yvonne Kaufmann, European Convention, http://european-convention.europa.eu/docs/Treaty/pdf/46/Art46KaufmannDE.pdf (translation by author).

[253] Id.

[254] TEU, art. 50(5).

[255] TEU, art. 49.

[256] Andrew Woodcock, supra note 31 (quoting former British Prime Minister Tony Blair).

[257] See Mallaby, supra note 19 (arguing that Theresa May might claim to obey the referendum outcome without actually letting the U.K. leave the EU); see also id. (quoting Tony Blair as saying that the U.K. might change its mind once the results of the negotiations with the EU are known); and Peck, supra note 16 (arguing that the Prime Minister may lack the necessary votes in Parliament to obtain a resolution in favor of Brexit and that declaring Britain’s withdrawal from the EU without the Parliament’s support may run into constitutional obstacles).