About that other referendum...

Insight
31 March 2016

The April 6th Dutch referendum on the EU’s association agreement with Ukraine comes two months before the UK’s Brexit referendum. Together, they reveal a worrying trend in European politics.

In the cacophony of politics and punditry surrounding the UK’s EU referendum, one could be forgiven for overlooking the April 6th referendum in the Netherlands on the EU’s association agreement with Ukraine. A vote against the agreement is likely. This would undermine the EU’s relationship with Ukraine, fuel populism across Europe and hand Russian President Vladimir Putin an undeserved victory.

The association agreement commits Ukraine to making reforms with the help of the EU in areas such as the rule of law, crime-fighting and anti-corruption, and human rights. The agreement also contains trade chapters – the deep and comprehensive free trade agreement (DCFTA) – which reduce tariffs and technical barriers to trade. The agreement was negotiated from 2008 to 2012, but in late 2013 Moscow pressured Ukrainian President Viktor Yanukovych into refusing to sign it. This precipitated the Maidan crisis that resulted in the formation of a new, more pro-European government which signed the agreement in March 2014. Most of the non-trade clauses provisionally entered force in November 2014, while the trade clauses did so in January 2016, pending ratification of the agreement by EU member-states.

On July 28th 2015 the Dutch parliament adopted a law to ratify the association agreement, which is now the subject of a non-binding referendum. That is because four weeks earlier, on July 1st 2015, a law came into force enabling Dutch citizens to call a non-binding referendum on any legislation passed by the parliament by collecting 300,000 signatures – out of 12.5 million eligible voters. The objective of the law was to help bridge the gap between the political elite and the public. The Euro-critical blog ‘Geenpeil’ and a group of activists pounced on the ratification law for the association agreement. Tapping into public discontent with the EU, and negative perceptions of Ukraine as a conflict-ridden and corrupt failed state, Geenpeil easily collected the necessary signatures.

Geenpeil argues that Ukraine and the association agreement are of secondary importance to its overarching goal: to address the democratic deficit in the EU. The EU is certainly suffering from waning legitimacy, although the Commission is trying to address the gap. The problem is that Geenpeil is now holding European foreign and trade policy hostage in order to take a stab at the EU. Other opponents of the association agreement say it forces Ukraine to choose between the EU and Russia. But this is wrong. Nothing in the trade agreement is incompatible with Ukraine’s membership (with Russia) of the CIS Free Trade Area: nothing prevents a country participating in multiple free trade agreements. Serbia, for instance, has free trade agreements with both Brussels and Moscow. If anything, it was Russian arm-twisting over the creation of a Eurasian customs union that forced Yanukovych to choose between his relations with Russia and those with the EU. As far as the non-trade dimension of the agreement is concerned, opponents point to the military co-operation clause in the agreement, saying it risks drawing the EU closer to a conflict with Russia. But nothing in the agreement commits the EU to assist Ukraine militarily; the clause refers to military dialogue, technological co-operation and possible Ukrainian participation in EU missions. If Europe has not shown any interest so far in becoming militarily involved in the Ukraine crisis, it is a leap of the imagination to think it would now.

If the turnout is lower than 30 per cent, the result of the referendum will not be valid. But polls suggest that this threshold will be met. A ‘No’ vote, rejecting the association agreement, is likely. One of the more credible polls has No at 44 per cent, with proponents of the association agreement at around 33 per cent (see chart). One quarter of voters still have to make up their mind. Worryingly, the polls also suggest that the more likely people are to vote, the more likely they are to vote against the agreement. Among those not intending to vote, nearly two-thirds are in favour of the agreement. Many falsely believe that if they stay at home the threshold will not be met. But even if most of these people vote, it will be an uphill struggle for the Yes campaign to win.

The government’s campaign in favour of the association agreement is half-hearted. Prime Minister Mark Rutte from the centre-right VVD is the most obvious spokesman for the pro-ratification campaign, but he fears that he has little to gain from leading it. He faces general elections in Spring 2017, and his party is neck-and-neck with Geert Wilders’ right-wing populist Freedom Party in the race to become the country’s largest. While Freedom Party voters will overwhelmingly vote against the association agreement, Rutte’s VVD constituency is divided. If he is too pro-European, he will alienate more Eurosceptic voters. If he is too critical of the EU and the agreement with Ukraine, it will complicate his relations with the rest of Europe, particularly while the Netherlands holds the presidency of the Council of Ministers. So he has trodden carefully over the past weeks. Instead of campaigning with conviction and purpose, some in the Yes camp still hope that it will rain on April 6th, or that some other external factor will ensure that the turnout threshold is not met. 

By contrast, the No camp is a coalition of the willing, composed of a diverse group of organisations, including Geenpeil. Some of them are sovereigntists who want to claw back power from the EU; others think that the association agreement would only benefit European big business. Finally, some fear that the agreement will drag the EU deeper into the Ukrainian conflict. The referendum is warmly supported by the Freedom Party, the far left Socialist party, and two smaller fringe parties. Despite their differences, they all share a dislike of the EU and claim it is undemocratic and unaccountable. 

The Dutch have a history of voting down EU initiatives. In 2005, the Netherlands dismissed the European constitution, also in a consultative referendum. The pro-ratification camp is struggling now to make its case. Some external interventions have backfired. Commission president Jean-Claude Juncker warned that a Dutch ‘No’ could precipitate a continental crisis and destabilise Europe. He was accused of fear-mongering by both sides of the argument and criticised for interfering in a domestic debate. 

The government has sought to limit the scope of the referendum debate to the virtues of the association agreement, sidestepping broader issues such as the state of the EU or the geopolitics of EU-Russia relations. But the geopolitical argument is an important one. Juncker was not entirely wrong: the consequences of a vote against the agreement would go well beyond the Netherlands, and would complicate the EU’s efforts to stabilise Ukraine – a country of more than 40 million people, bordering on four EU member-states. Such a vote would play into Putin’s hands, deepening disagreements between EU member-states over how to deal with Ukraine. The Ukrainian government is doing nothing to help the pro-agreement cause: old habits of corruption and deals between oligarchs die hard, and the reform process ‒ despite significant progress over the last two years ‒ is running out of steam as vested interests fight back. A Dutch vote against the association agreement would give Putin hope that Europe’s support for Kyiv could break. Not surprisingly, Moscow has praised the referendum. In February the Russian foreign ministry’s spokeswoman tweeted that “the referendum is a logical reaction to the EU’s foreign policy that disregards the opinion of EU people.” 

So what happens if the Dutch vote No on April 6th? Pending the outcome of the referendum, the Netherlands has not formally ratified the association agreement. Without Dutch ratification, the agreement cannot fully enter into force. In the end, it is up to the Dutch government to decide how to interpret the outcome of the referendum. The government could simply ignore the result of the non-binding referendum and move ahead with ratification. But if the vote is a resounding no, this would be politically toxic, especially with elections approaching. While the cabinet has kept quiet, the parliamentary faction of Rutte’s coalition partners, the Social Democrats, has already said that it would respect the result of the referendum. 

But a No vote does not mean that the association agreement will go into the rubbish bin either. After all, 27 member-states and Ukraine have ratified it and will want to see it through. The trade segment of the association agreement, which is in the EU’s exclusive competence, provisionally entered into force on January 1st and only a unanimous decision of the European Council can suspend it. So that part of the agreement may well be provisionally in force for a long time.

The Netherlands may look for options to mitigate the consequences of a No without having to redraft the agreement. For instance, the Netherlands could seek an opt-out for the non-trade chapters of the agreement, or an ‘adjusting protocol’ to exclude the Netherlands from the list of contracting parties of the agreement. The details remain unclear, but Mark Rutte may soon find himself lobbying Europe for a favour.

Any solution may give only temporary respite to the Dutch government. A No vote will make it more likely that Geenpeil and others will seek more referendums on big European issues, such as the TTIP transatlantic trade deal or new legislation on eurozone governance. This prospect threatens to turn the Netherlands – one of the European community’s founding members – into a hesitant European at best, or a spoiler at worst. A succession of Dutch referendums would harm the EU, making a slow decision-making process even slower and further tarnishing the EU’s credibility.

The referendum confirms a trend in Europe: the public do not trust their political leaders. Despite what politicians and officials say, and despite what is said (or not said) in the agreement, a majority of voters believe that the association agreement will eventually lead to Ukrainian EU membership: 73 per cent of anti-ratification voters believe the agreement puts Ukraine in the antechamber of the EU, as do one-third of the agreement's supporters. More than half of the voters feel the government should respect the outcome of the referendum, but a similar-sized group think the government will not.

A No would energise Eurosceptics across Europe, including in Britain. Not surprisingly, UKIP’s Nigel Farage is coming to the Netherlands two days before the vote to support the No camp. He claims that a Dutch No will help the UK to vote Leave. Some of the parallels between the two referendum campaigns are worth noting. Prime ministers David Cameron and Mark Rutte are both handicapped in their campaigns by divisions in their own parties. And in the Netherlands, as in the UK, the question on the ballot paper will not be the (only) one that voters will be answering. In the UK, voters may be expressing their opinions of the Tory leadership, the UK economy and migration, as much as their views on EU membership. In the Netherlands, voters will be influenced by their views on the government, Europe’s democratic deficit and Russia, as much as by a 2000-page association agreement that few if any will have read. 

The Dutch and British referendums may be the start of a trend towards direct democracy and away from representative democracy in Europe; that may be a natural response to the sense of alienation between electorates and political elites. But with rare exceptions, however good the intentions of those who propose them, referendums have unexpected consequences. They can easily be hijacked by demagogues. The Dutch referendum, like the British one, risks making both the EU and its eastern neighbourhood less stable.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

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