‘BREXIT’: REGIONAL AND GEOPOLITICAL CONSEQUENCES

Author : Admin | Friday, March 25, 2016
Posted in category Special Analysis
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The “United Kingdom European Union membership referendum”, also known as the EU referendum, which is scheduled to take place in the United Kingdom and Gibraltar on 23 June 2016, is seen by many local and international observers as an important moment in the history of both the United Kingdom and the European Union (EU), with significant (even if not wholly predictable) consequences for the world’s economy and security.

It will be the second time the British electorate is asked to vote on the issue of EU membership, after the one in 1975, when the EU was known as the European Economic Community (EEC). In that referendum membership was approved by 67% of voters, but the nature of the EU has changed substantially since then.

According to those in favor of a British withdrawal from the EU (commonly referred to as a ‘Brexit’, from “British exit”), being a member of the mostly republican European Union undermines Britain’s sovereignty, while those in favor of membership argue that a theoretical loss of sovereignty is compensated by the benefits of membership of the EU.

Those that support withdrawal argue that ‘Brexit’ would allow the UK to be better able to control immigration, be in a better position to conduct its own trade negotiations, and be free from what they believe to be unnecessary EU regulations and bureaucracy. Those in favor of remaining in the EU argue that leaving the EU would risk the UK’s prosperity, diminish its influence over world affairs, make the UK less safe, and result in trade barriers between the UK and the EU.

The move toward a ‘Brexit’ began in 2013, when the country’s Conservative and then-Euroskeptic Prime Minister, David Cameron, promised to give British voters a chance to leave Europe. Since then, he has demanded from Brussels a reform package that would end what he termed “benefit tourism”, a system that allows EU citizens to come to the UK and immediately claim welfare benefits.

The new package would also eliminate EU regulations on employment law that Cameron says prohibits business. He wants Britain to be exempt from the goal of an “ever closer union” of Europe that – he believes – impedes British sovereignty and gives too much power to Brussels.

The referendum was called after Cameron completed the renegotiation of the terms of Britain’s membership at a marathon EU summit in Brussels that ended late on February 19th. In all areas where he demanded change, he won significant concessions – and consequently he now pleads in favor of remaining in the EU – but which are not seen as representing a fundamental change in Britain’s relationship with Europe.

The deal was heavily criticized by Britain’s Euroskeptic press and even by many members of David Cameron’s Conservative Party (Tory). An even heavier blow for David Cameron came when six of his 29 senior ministers confirmed, after a special cabinet meeting on February 20th, that they would campaign to leave. On February 21st, Boris Johnson, the popular mayor of London and aspirant to the Tory leadership, announced that he too would campaign for ‘Brexit’.

 

A complex geopolitical history
Britain’s membership of the EU has always had a geopolitical side to it. Britain has sought to use its membership as a way to shape the direction of EU’s politics, economics and non-traditional security cooperation. Shaping the politics of the continent will not change as a priority for UK governments. Whether it can best continue to do so as a member or from outside will be a defining issue of the referendum campaign.

In this context, the Strategic Defense and Security Review (SDSR), presented by Prime Minister David Cameron to the British Parliament at the end of 2015, signals a return to strategic maritime thought by the government of the United Kingdom and signals the United Kingdom’s intent to reclaim a position of global naval leadership.

In the foreword of this document, Prime Minister David Cameron stressed that “as a trading nation with the world’s fifth biggest economy, we depend on stability and order in the world. With 5 million British nationals living overseas and our prosperity depending on trade around the world, engagement is not an optional extra, it is fundamental to the success of our nation. We need the sea lanes to stay open and the arteries of global commerce to remain free flowing.” In the same line, the document opens with line 1.1.: “Our vision is for a secure and prosperous United Kingdom, with global reach and influence.”

The June referendum will also mark a turning point in the complex relationship between Britain and the European continent, since it is an island and it is less than 35 kilometers away from continental Europe. In past centuries, the UK had two options: either to focus on the geopolitics of the European continent or to concentrate on being a global merchant empire.

The Second World War exhausted Britain, which could not maintain its domination of faraway countries anymore. The U.S. had become the global power and the new role Britain found was to be the junior partner of the United States. Britain chose to invest in the “special relationship” with the U.S. rather than the project of European integration, where it saw its role as sponsor and not a member.

In a famous 1946 speech delivered at the University of Zurich, Winston Churchill called for the creation of a “United States of Europe” , but without the UK. “In this urgent work, France and Germany must take the lead together,” he said. “Great Britain, the British Commonwealth of Nations, mighty America [...] must be the friends and sponsors of the new Europe and must champion its right to live.”

Over time, the increasing success of the Franco-German-led European integration caused Britain to realize that it would be better to be in than out, for economic and geopolitical reasons. In 1973, Britain joined the EU and became, despite recurrent waves of discomfort, a pillar of European integration. In the mid 1980s, Margaret Thatcher played a key role in setting up the single market, a space in which people, money, goods and services can move with relative ease. The second major British contribution to the EU has been its engagement for EU enlargement after the cold war.

However, on the internal scene, the Conservative party was split over the question of EU membership ever since Britain joined the bloc in 1973. Lord Nigel Lawson, the Chancellor of the Exchequer under Margaret Thatcher in the 1980s, is now leading the ‘Brexit’ supporting group “Conservatives for Britain”.

After the UK ratified the Maastricht Treaty in 1992, British politician Nigel Farage left the Conservative Party and founded the UK Independence Party (UKIP). Since then, he has made leaving the EU his life’s work (even though he takes full advantage of all the privileges of being a member of the European Parliament).

Some senior members of the cabinet are also pushing to abandon the EU and many within Cameron’s own Conservative Party are angry that he has not secured enough for British sovereignty, and the rightwing news media accused what they perceived as Cameron «selling out» to EU integrationists.

 

ARGUMENTS FOR ‘BREXIT’ AND ALTERNATIVE SOLUTIONS
Winston Churchill is said to have shouted at Charles de Gaulle before the D-Day landings, “If Britain must choose between Europe and the open sea, she must always choose the open sea!” Later on, the idea was echoed during the early 1970s debates about membership of the European Common Market, when it was argued that Britain would become a mere “province” in a federal and republican Europe, bringing to an end “a thousand years of history”. Many opponents invoked the Commonwealth as an alternative trading partner and source of influence and as a community towards which Britain retained distinct obligations. However, fear of the implications of Britain remaining outside the Common Market outweighed the sentimental and economic arguments for the Commonwealth.

One of the factors that made Europhobia persist in the UK is to be found in the tabloid newspapers, which are read by millions of people, and which are predominantly anti-European, the most visible example being the Australian-American media tycoon Rupert Murdoch, owner of several newspapers and the UK’s most important private television news channel. The anti-EU campaign is also favored by the fact that Britain’s postwar abandonment of empire, after centuries of colonialism and imperialism, was hardly traumatic, leading to no disruption of its economy or political system or even to any nostalgia. Today, there is scant evidence to suggest that withdrawal from the EU after a much shorter experience of membership would lead to political or economic disruption either, far less any nostalgia for rule from Brussels.

 

EU failures stressed by the ‘Brexit’ campaign

The ‘Brexit’ campaign argues that in terms of both politics and economics, the EU has proved a bad bargain for Britain.

Politically, it is seen as an undemocratic entity, run by a commission of overpaid, under-taxed and unelected bureaucrats. The European Commission oversees the formulation of EU policies and orders national bureaucracies all over Europe to execute them and there is no way that its directives can be reversed by national parliaments. Nor is it possible to discover how the Commission gets its plans approved by the European Council, since discussions in the council are secret.

Moreover, under the Lisbon Treaty, the council is no longer an independent, outside body of heads of government, but simply one more institution of the EU, accountable like all the others to the European Court.

While commissioners wield extraordinary power, they are unelected and have usually been failed politicians from member states who, due to their highly lucrative jobs, become politically indebted to the EU. The whiff of corruption surrounds the EU as well, with many EU leaders fingered for fraud or worse. One head of the European Central Bank had to wait until his trial for corruption in France was over till he could take up his post. And the European Court of Auditors has refused to sign off the EU accounts for nineteen years running.

The European parliament has no official opposition, and its elections are quite meaningless. The role of the Commission does not change as a result of European parliamentary elections, in which only 40 percent of voters take part, and in countries like France and Britain, the largest number of votes goes to parties (the National Front and UKIP) that oppose the EU.

In international affairs, despite its dominance of member states through its powerful bureaucracy, the EU has never achieved its political aim of becoming a superpower exerting major worldwide influence. Despite a large and very expensive foreign service, it is by no means clear that the European Union can solve any of its major foreign-policy challenges.

While the EU has boasted of being ultramodern by exercising “soft power”, involving the use of foreign aid and the support of human rights as instruments of influence, there have been too many cases of the aid being diverted, while at the United Nations, support for human rights has steadily diminished. The result is that few states bother very much about EU foreign policy, especially since its own leading member states can rarely agree on key issues.

In fact, it was NATO that kept the peace in Europe since 1945, with considerable and up-to-date armies and weapons on the ground backed by the threat of nuclear war. The EU, in contrast, has always been irrelevant to European defense. In the ‘Brexit’ campaign, this is another reason for Britain to abandon the EU membership.

In the field of economics, the campaign reminds that in the Sixties, then-Prime Ministers Harold Macmillan and Edward Heath told Britain that discussions over European Economic Community membership amounted merely to “commercial negotiations” and that there would be no loss of sovereignty involved. Britain accepted all the EEC’s demands, including a new Common Fisheries Policy (CFP), which surrendered all its fishing rights. All this was done to secure “the political leadership of Europe” (which never materialized) and to help Tory governments use Europe to end Britain’s relative economic decline.

In fact, the EEC brought economic problems, among which the membership in the Exchange Rate Mechanism, which cost the country billions; masses of red tape on industry and finance; higher food prices caused by the Common Agricultural Policy, the disappearance of Britain’s fishing fleet and fishing communities. These policies also caused Britain to contribute increasing sums to the EU budget and the overall cost of EU membership has been estimated to be the equivalent of 4 percent of GDP (£40-100 billion annually).

After 2008 crisis, British economy was saved by Britain’s own actions – nationalizing banks, undertaking quantitative easing and having its own currency – that prevented the country of becoming a debtor country in the euro zone, faced with a policy of austerity and forced to deflate internally amidst social penury and massive unemployment.

 

Prospective benefits

‘Brexiters’ stress that once “delivered” from EU membership, a number of benefits would accrue to the UK. As a normal, self-governing democracy again, it could negotiate its own free-trade treaties with other countries and trading blocs; it could represent itself in international trade organizations (presently, being only one of twenty-eight EU member states, its own interests are submerged and overlooked); it would not have to impose EU health and safety regulations on the 95 percent of companies that are not involved in trade with the EU; it could concentrate on boosting its exports to the wider world (where it has a trade surplus); it could reclaim its fishing grounds; and its government would not have to spend 40 percent of its time on EU business. Certainly, exporters to the EU would continue to have to abide by EU regulations, but they already have to do this with regard to the regulations of any external single market, whether it is that of the United States, China or Japan.

The ‘Brexit’ is also presented as a chance for Britain to strengthen ties with the 53 countries that were previously part of the British Empire.

Speaking at a conference in Auckland, New Zealand’s ex-deputy prime minister Winston Peters, who leads a group of MPs in the New Zealand parliament, said that ‘Brexit’ was “an excellent opportunity to heal a rift dating back to 1973” and suggested New Zealand’s free trade agreement with neighboring Australia as the possible basis for a pan-Commonwealth deal.

 

The Commonwealth and the ‘Anglosphere’ alternatives
Economic analysts and historians point out that, with 63 million people on a small island, the British economy is service-oriented, with limited manufacturing and not self-sufficient in foodstuffs, energy or raw materials. Its natural trading partners are countries with abundant raw materials, energy and cheap food. As of 1960, Britain had such trading partners, in the countries of the Commonwealth, both the white-dominated Dominions and the ethnically varied, but impoverished remainder.
Until the Bretton Woods Conference of 1944, Britain benefitted in those relationships of the so-called “Imperial Preference”. That system, which erected a modest tariff wall around the Empire and Dominions, while promoting free trade within its borders, was a viable alternative trading bloc to the heavily protectionist United States itself. Even by 1960, while the structure was mostly gone, the trading relationships with the newly independent ex-colonies remained. However, with Britain choosing the European Union, Canada joined the United States and Mexico in NAFTA, Australia and New Zealand have become almost wholly Pacific-oriented and the African ex-colonies are torn between a somewhat indifferent United States and a possibly abusive China.

a) While currently, the former Commonwealth partners see Britain as another part of the bureaucratic and protectionist EU, many ‘Brexiters’ see the Commonwealth as an economic alternative for the UK after leaving.
Canada and Australia have perhaps realized the dangers of being excessively tied to their powerful neighbors in the United States and China, respectively, and they might be open to a new arrangement. As for Africa, while some countries (notably South Africa) have not yet emerged from their inevitable post-colonial angst, there are an increasing number that have. Indeed, many African countries have capabilities that are nicely balanced against Britain’s. As for India, which appears to be getting over the half-century of socialist post-colonial angst represented by the Congress party, it may well be interested in entering into at least a limited arrangement with Britain. However, on Britain’s side, matters such as mutual migration would be very difficult to agree on.

In fact, the modern Commonwealth is less economic-oriented than many ‘Brexiters’ would like it to be. It was born in 1949, partly thanks to Jawaharlal Nehru, independent India’s first prime minister, who had declared his country a republic but wanted to stay friends with the former imperial power and other former British dominions. As other ex-colonies joined, “Commonwealth values” (never precisely defined) were promoted, especially in the 1970s and 1980s, when Southern Rhodesia (later Zimbabwe) and South Africa struggled to shed their white masters. From 1975 to 1990, the grouping gained clout in world councils.

The main decision-making forum of the organization is the Commonwealth Heads of Government Meeting (CHOGM, pronounced “choggum”), organized every two years, where Commonwealth heads of government assemble for several days to discuss matters of mutual interest. The last was in November 2015, in Malta.

In 1991, in Harare, Zimbabwe’s capital, that heads of government declared that the Commonwealth should bolster human rights and democracy. The organization gained respect for the teams it sent to observe elections. In 1995 a group was set up to deal with “persistent and serious violators” of those principles. Since then several offenders, including Nigeria, Pakistan, Fiji, the Gambia and Zimbabwe, have been ejected or shamed into withdrawing, usually temporarily.
The Commonwealth has also suffered from its newer members’ perception that it is run by a coterie of “white” countries, led by Britain, Australia and Canada. However, the Commonwealth is still a club that countries want to join. Though South Sudan is the only one formally on the waiting list, a string of others have been mentioned as being “possible”: Algeria, Burma, Burundi, Ireland, Kuwait, Nepal, Palestine and Yemen.

As its proponents often boast, the Commonwealth encompasses a third of the world’s population, a quarter of the UN’s membership and a fifth of the world’s land mass. Most members share a legal heritage and language (though Mozambique broke the English-speaking mould by joining in 1995, followed by Rwanda in 2009).

The Commonwealth’s real force is the fact that it is a unique network, whose embrace includes trade, education and an array of 180-odd professional bodies, from law to dentistry. In the recent CHOGM in Malta, Jonathan Marland, a British peer and tycoon, re-launched the Commonwealth Business Forum, gathering 1,200 people from 70 countries, including 25 ministers and 15 heads of state. Britain’s Prime Minister David Cameron praised the club’s ability to “bring Pakistan and India together in a useful format”; its support for his campaign against global corruption; its climate-change advocacy in the run-up to the global conference in Paris late last year; and its “forum for discussions in Africa and in the Caribbean, which can feel ignored and unloved”.

b) Another concept seen as being able to provide the governing intellectual framework for the Euroskeptic campaign to quit the European Union in a post-election referendum is the “Anglosphere” – and the policies and strategies pursued by some of the political leaders of its constituent countries.

The idea of an Anglophone future for Britain re-emerged inthe mid-to-late 1970s as a feature of some of the libertarian currents influenced by the American ideas, reflected in the work of a powerful set of foundations, think tanks and intellectuals in the UK. The “Anglosphere” concept as an alternative ambition was advanced by a powerful alliance of global media moguls, outspoken politicians, well-known commentators and intellectual outriders, who all shared an insurgent ideological agenda against mainstream conservatism.

In his work Reflections on a Ravaged Century, the historian Robert Conquest argued that the political arrangements of the west were all increasingly deficient, the EU included. The answer was “a more fruitful unity” between the “Anglosphere” nations. Margaret Thatcher endorsed Conquest’s vision, noting how such an alliance would “redefine the political landscape”. What appealed most was the prospect of the UK finding an alliance founded upon deep, shared values, the antithesis of the position it faced in Europe.

The “Anglosphere” idea came back to the political circles with the establishment of the coalition government in 2010. Speaking during an official visit to Australia in 2013, then-foreign secretary William Hague argued for closer ties between Britain and Australia and made reference to one of the most important, enduring political expressions of the link between them – the close co-operation enjoyed by their intelligence services and the experience of finding much common cause in relation to the US-led interventions in Iraq and Afghanistan. During his own trip to Australia in 2013, London Mayor Boris Johnson argued that when Britain joined the Common Market, it “betrayed our relationships with Commonwealth countries such as Australia and New Zealand”.

The concept of an “Anglosphere” reflects the long-held belief that Britain’s best interests lie in forging closer relationships (and perhaps even some kind of institutionalized alliance) with those countries that have broadly similar political structures and systems; and that also tend to cherish the values of parliamentary government, individual liberty, the rule of law and the free market.

At the core of the “Anglosphere” are the English-speaking “Five Eyes” countries of Australia, New Zealand, Canada and the United States. Each of these was once a British colony and can be included in a theoretical group of countries united by a shared political and economic culture, nourished from the roots of British parliamentary institutions, economic liberalism and Protestantism. In modern view, the “Anglosphere” offers a framework in which an independent UK can prosper in a global economy dominated by the rise of Asia. Such a framework constructs a new account of free-market geopolitical co-operation, anchored in the institutional alliance of the “Anglosphere” with deep roots in the Commonwealth tradition, which emerged as a shared point of reference after the Second World War.

The appeal of the “Anglosphere” idea is not just a reflection of growing disillusionment with Europe. For many, the rise of China, the increasing threat of radical Islam and the uncertainties of the global economy all make the question of locating political allies and sympathetic states much more imperative for the UK. The future of the west, some argue, may be contingent upon a closer coalescence of the “Anglosphere” countries.

While the growing unpopularity of the EU has made the Anglosphere a more important alternative ideal, some obstacles have yet to be addressed.

In the United States, the political class remains convinced that the UK should stay in the EU. States such as Australia and New Zealand are all involved in managing their growing orientation to Asia, while anti-monarchist republican sentiment periodically animates their politics. Above all, there are important class interests lined up against ‘Brexit’, among them major multinational corporations trading in Europe and the City of London.

While the impossibility of a formal alliance among these countries is clear, the notion of the “Anglosphere” is seen as an alternative political ideal and a source of ideas about policy, strategy and leadership. As such, through what political science terms “policy transfer” and the informal exchange of ideas and people, far from being a nostalgic idea, the “Anglosphere” will play a bigger role at the heart of a re-emerging political world-view.

 

Other alternatives

While Britain is large and robust enough to survive as an independent economic entity, it does not have its strength of 1862 and its colonial possessions of that date, and, as appealing as they might be, the Commonwealth and the “Anglosphere” models are yet to be materialized.

a) Among the alternative economic big groups that Britain might join after a ‘Brexit’ from the EU there is an enlarged NAFTA. However, this alternative is seen as possibly involving almost an equal loss of independence as was involved in connecting to the EU. As a part of NAFTA, Britain would have equally little ability to affect the terms of the arrangement as with the EU.
b) There are also the four countries of western Latin America that have formed the Pacific Alliance – Mexico, Colombia, Peru and Chile. There are no significant long-term cultural ties with these countries, but an excellent economic fit. The Pacific Alliance has both resources and cheap labor. Its alternative partners, China and the United States, both have a track record of domination that it will find unattractive. So a loose arrangement with Britain could well be desirable to it.
c) In the recent years Qatar has become Britain’s biggest supplier of imported liquefied natural gas (LNG). As North Sea oil reserves diminish, the tiny Gulf state has become pivotal to Britain’s future energy security.
Qatar owns some of the most visible buildings in London, among which the Shard (Europe’s tallest building) and parts of the Canary Wharf financial district through its majority holding in Songbird Estates plc. Also Qatari-owned is the world’s most expensive block of flats at No. 1 Hyde Park, as well as the nearby famous Harrods department store.

When Barclays was in trouble at the height of the banking turmoil, the Qatar Investment Authority (QIA) became its biggest shareholder. A sovereign wealth fund with tens of billions of pounds in assets and a global reach, QIA invested £10 billion in Britain, with more planned. After the 2012 Olympic Games, QIA took ownership over the buildings of the Olympic Village at Stratford. Qatar is the major investor in Sainsbury, the second largest chain of supermarkets in the United Kingdom, and it owns 20 per cent of the London Stock Exchange. In 2015, Qatar Airways spent £1.2 billion buying 10 per cent of International Airlines Group (IAG), the parent company of British Airways.
In this context, it was not surprising that recently, the Qatar National Bank (QNB) issued an economic commentary stressing the risks of ‘Brexit’. According to QNB, “the economic arguments against ‘Brexit’ are substantial. The long-term economic impact of leaving the EU would most likely be negative for the UK”.

d) The recent re-opening of the British Embassy in Tehran and the prospects for economic and trade developments following the lifting of the sanctions make Iran a prospective interesting trade partner, although the bilateral relationship was never easy or simple.

The Embassy re-opening was followed shortly by the announcement that the Bank of England officially reactivated the licenses of three Iranian banks – Persia International Bank, Melli Bank and Bank Sepah International – to resume operations in London after the years of sanctions. The three banks, which together have about €1bn of combined assets, will be able to operate in the UK once they have met the Bank of England’s criteria for financial firms.
However, for a positive development of the bilateral relationship, Britain has to address the deep mistrust of the Iranian political class and society, where the UK is often called “the old fox”.

Iran’s attitude towards Britain is explained by the fact that, while, on paper, the country was always independent and never part of the Empire, in reality, London ran the place. Britain needed Iran as a source of oil and a buffer state to protect India from Russian expansion, but in this case the method of control was veiled and indirect. Instead of conquering Iran, Britain made itself the power behind the “peacock throne” of a succession of pliant Shahs. This meant that Iran never had an Independence Day, marking a clear and unambiguous transfer of power.

Some Iranians still question whether their country is genuinely the master of its fate and put every event down to the work of cunning outsiders. Iranian rulers, Shahs or Ayatollahs, tend to think the British are out to get them, and ordinary Iranians often believe that whoever might pretend to be in charge of their country is actually a puppet of shadowy foreigners.

The last Shah, Mohammad-Reza Pahlavi, went to his grave believing that Britain had masterminded his downfall by organizing the Islamic Revolution in 1979. Three decades later, Ayatollah Ali Khamenei, the Supreme Leader, bluntly declared that Britain was behind the mass demonstrations in 2009.

The Islamic Republic resents the UK’s lingering presence in the Persian Gulf region and the wider Middle East, and spends considerable effort at countering regional British influence. Also, the UK’s clandestine intelligence role in sabotaging Iran’s nuclear program, in addition to its leading diplomatic role in the imposition of European Union and United Nations sanctions, were specific sources of Iranian anger and outrage.
REGIONAL CONSEQUENCES

When Prime Minister David Cameron set out, in November 2015, Britain’s aims for a renegotiated relationship with the European Union, he did so at Chatham House. The location (The Royal Institute of International Affairs) helped convey his message that part of the European question in UK politics was one of national security. However, the wider implications of such a move – for the EU, Europe, transatlantic relations, NATO, and wider international relations – have often been ignored by the local and foreign media.

The withdrawal of one of the EU’s largest member states would almost certainly be a defining moment in the history of the EU with wider effects for NATO, European security and international relations.

One of the main implications of a ‘Brexit’ would be in the United Kingdom itself and it is seen as mainly consisting of:

- The risk of serious internal political instability, since it is unlikely that David Cameron could maintain his position for long. He has already announced he won’t seek a third term, and the ‘Brexit’ group, if winning, is unlikely to trust him with the task of negotiating a complex separation settlement.
- The risk of the end of the political union among England, Scotland, Wales and Northern Ireland.

In Northern Ireland, the deputy first minister Martin McGuinness (former IRA chief-of-staff and Sinn Fein leader) already declared that Britain’s departure from the EU should lead to a border poll on a United Ireland, since, if Britain voted to leave the EU then there was a “democratic imperative” to allow people on the island of Ireland to vote on reunification.

Another ‘Brexit’ consequence is the risk of destabilizing the peace process in Northern Ireland. The Irish government has repeatedly argued that EU membership has played a significant role in bringing peace to the province. The prospect of establishing a new external EU border along one of the most volatile political fault lines in Europe could stoke new tensions in the province.

A ‘Brexit’ is also bound to trigger demands for a fresh vote on Scottish independence, since most polls suggest Scots back continued membership of the EU, and leading figures from both sides of 2014’s independence referendum will be campaigning to keep Britain in the EU. The Scottish National Party is campaigning to stay in. If the ‘Brexit’ side wins, the SNP will demand another independence referendum, which it expects to win.

 

Implications for the European Union

The first problem the EU would face from a ‘Brexit’ is the unprecedented experience of negotiating the withdrawal of a member state . The very idea of withdrawal is a taboo, representing a reversal and challenge to the idea of European integration as a process that moves forwards not backwards.

The EU procedure for withdrawal is set down in Article 50 of the EU’s Treaty. It provides a withdrawal timeframe of two years, possibly longer if both sides agree. The EU negotiating team would be nominated by the Commission and approved by the Council. Article 50 also requires that any withdrawal agreement contain both a deal for the withdrawal of the member state and a framework for a post-withdrawal relationship with it. This whole deal would have to satisfy the remaining EU member states through a vote in the European Council, and receive the support of the European Parliament. In the case of the UK, any deal would also require the support of the UK Government, British Parliament, and possibly the British people if there was pressure for the deal to be subject to approval by another referendum.

According to economic assessments, in case of a ‘Brexit’, the UK would need to re-negotiate or start new bilateral negotiations on 124 trade agreements, plus one additional trade agreement re-defining its own trade status as a third country vis-à-vis the EU.

The possibility of the European Court of Justice becoming involved should not be overlooked, since it offers the possibility for private individuals and/or companies to challenge the withdrawal deal.

Any such negotiations could also be set against the backdrop of ongoing negotiations to deal with the problems in the Eurozone and Schengen. The context within which a UK withdrawal takes place could therefore be another period of considerable EU institutional change and tense relations between individual leaders and national elites.

The EU also needs to make changes to its own institutions and procedures to fill the gap left by Britain. The EU would face the task of negotiating changes to the voting system used for making decisions in the European Council, a reallocation of seats in the European Parliament, changes to staffing quotas, and increases in budgetary payments to make up for the loss of the UK’s large net contribution (£8.5 billion in 2015). When combined with possible changes to the Eurozone, a ‘Brexit’ could add to shifts to the EU’s balance of power and changes to the EU’s policies and outlook.

 

Domino effect: Frexit, Nexit, Öxit, Itxit…
One of the most dramatic consequences of a ‘Brexit’ is seen to be the pressure that it will put on the unity of the EU. The EU’s unity has come under considerable pressure during the Eurozone and migration crises. If the UK and other non-EU members thrived and the Eurozone continued to struggle, then Britain’s withdrawal could trigger centrifugal forces leading other member states to question their membership and commitment to integration, in turn stalling integration and beginning a process that unravels the EU.

Analysts at the U.S. Center for Strategic and International Studies assess that the Greek flirtation with leaving the EU, combined with the U.K. referendum, has made the prospect of abandoning the alliance a possibility for other members who don’t want to deal with broader European issues or be part of an “ever-closer union.”

Any such ‘domino theory’ by which a ‘Brexit’ makes other EU members states question and abandon their membership or commitment to integration, has to be set against the likelihood of another domino effect within the EU should the UK secure a renegotiated relationship that provokes envy elsewhere. Other states could then demand concessions, creating the so-called EU ‘a la carte’.

There is already support in other countries for EU membership referendums. According to recent polls, in France 53 percent of the questioned people would like a referendum, and in Sweden, Germany and Spain the percentage is around 50 percent. In Poland and Ireland however, more people were against than in favor.

- In France, the National Front led by Marine Le Pen is already starting to capitalize on the growing skepticism and dissatisfaction towards the European Union. Marine Le Pen, who is seen as having considerable chances for the next presidential elections, has already called herself “Madame Frexit.” Should Marine Le Pen be elected president in 2017, there were two possible outcomes of the renegotiation process. The first one, caused by an ‘intransigent EU’ would lead to France quitting the EU under the Article 50 procedure. The alternative would be a successful renegotiation, leading to new treaties and the creation of a ‘Europe of Free Nations’.

- Already in 2014, Geert Wilders, the leader of the Dutch Party for Freedom (PVV), presented a study outlining the implications of a ‘Nexit’. Claiming that the Netherlands would in fact benefit from leaving the EU, he advocated for the country to regain ‘independence’. A few days before Cameron announced the referendum, he praised the Conservative leader’s choice, hoping that other countries will follow his example.

- The Freedom Party of Austria (FPÖ) also reacted to the British PM’s renegotiation by suggesting that Austria follow in his footsteps. While they did not call for a referendum, the FPÖ’s EU delegation leader, Harald Vlimsky claimed that Austria should renegotiate its relationship with the EU and, should this be impossible, the only route left would be ‘Öxit’.

- In Italy, Matteo Salvini, leader of the Northern League (LN), launched the idea of a referendum in December 2015. In February, he welcomed Cameron’s deal and stated that Britain was ‘lucky’ to be given the chance to vote.
- Also, the Czech Republic’s EU experience has not been all that happy. Its government had to abandon plans to join the euro, because of strong public opposition. Its open-border policy under the EU Schengen Agreement exposed the country to unwanted refugees and EU sanctions against Russia have restricted trade with a natural market of greater long-term potential than the EU itself.

It was reported that the Czech Republic’s prime minister Bohuslav Sobotka has warned that if Britain decides to leave the EU, the Czech Republic may follow , adding that a “Czexit” could trigger an economic and security downturn and a return to the Russian sphere of influence.

 

A shifting center of power in Europe

The centre of power in the EU could also shift. Germany’s already strong position could be further strengthened with implications for the Franco-German axis. France could be left facing an EU where the centre of gravity has shifted further eastwards and where Germany’s preference for geo-economic thinking over the geopolitical, comes to shape the EU’s international standing. Germany might also be left feeling uneasy at the withdrawal of an ally that has helped it push an economically liberal, free-market agenda.

On the other hand, Germany has suffered the setback of having sacrificed her own currency and being committed through the euro to funding high-spending states. The desire in certain quarters to split from the Eurozone and to form a separate hard currency zone remains, though currently it is out of the news headlines.

If the UK votes to leave, Germany’s position changes significantly. Germany could well be attracted by the freedom to re-issue her own currency and to make her own trade agreements as well. There can be little doubt that splitting from Italy, Spain, France and others will involve having to write off some or all of the massive debts owed by them to Germany. Alternatively, continued membership of the Eurozone and therefore of the EU, will eventually render her bankrupt, for the third time in one hundred years.

Also, in the run-up to the Greek crisis, there was significant domestic political pressure for Germany to abandon the euro and to cut her losses. Therefore, if a ‘Brexit’ happens, Germany might be open to negotiations, as well as probably the Netherlands, Finland, and it seems the Czech Republic.

If a “Brexit” happens, contingency planners are likely to agree it will mark the beginning of the end of the European experiment and of the Euro as a viable currency. The relative stability of Germany, the Czech Republic, Slovakia, Austria, the Netherlands, Finland, Poland and the Baltic states would be best secured under new arrangements, in line with today’s geopolitical realities. The logical solution, assuming going down with the euro ship is recognized as not an option for these states, would be to negotiate a new trade alliance with the UK, a twenty-first century version of the Hanseatic League based on commerce rather than politics.

The political and geographical centre of the EU could shift eastwards and southwards. Some member states may gain from a withdrawal, seeing it as a chance to enhance their position within the EU. Others, such as the Irish Republic, more heavily linked to the UK than others, may face significant challenges.

In this context, sources close to the British government mentioned that groups were formed to work on a so-called “Plan B” (in case of a ‘Brexit’ vote) involving senior civil servants from the Treasury, Foreign Office and possibly the Department for Business. The team is bound to contact its opposite numbers in the other major European states to feel its way through the issues raised by ‘Brexit’, so that the transition to British independence will be managed with as little fall-out as possible.

 

Collateral victims: the foreign and security strategy for Europe and the TTIP
a) One of the “victims” of the ‘Brexit’ referendum is the foreign and security strategy for Europe, which was due to be presented next June by Federica Mogherini, the EU High Representative for Foreign Affairs and Security Policy.
Since the first – and only – strategy, which was launched in 2003, has lasted for too long, and is out of date, in June 2015, the European Council recognized the need for an updated strategy, and called on Mogherini to prepare a new foreign and security policy, to be submitted within a year. To maximize their chances of success, Mogherini and the European External Action Service have kept the expert-led development process discreet, avoiding public debate.
Meanwhile, Europe was confronted with difficult challenges, most notably, the ongoing refugee crisis, which altered the environment in which the strategy is to be introduced. A process that was intended to enable Europe to respond better to external changes now must be rethought to reflect the recognition that it is the EU which is now set to undergo a fundamental transformation.

The new strategy would be simultaneous with the ‘Brexit’ referendum. If the UK leaves – taking its diplomatic, military, economic, and cultural prowess with it – the hit to the EU, in terms of its capacity to influence its external environment, is obvious. If the UK stays, it will require the formalization of a looser conception of the EU – one that will raise core questions about the future of European integration.

Releasing a new foreign and security strategy at the same moment will not just doom the plan to irrelevance; it will reinforce the perception that the EU institutions are out of touch with the real world, exacerbating the Union’s already-acute existential crisis.

In this context, the postponement of the strategy was proposed, since it would generate a broad discussion on what the new Europe, with or without the UK, should look like. Beyond producing a relevant and useful foreign and security strategy, such a discussion can give the EU a new narrative, thereby invigorating public support for the European project.

b) The Transatlantic Trade and Investment Partnership (TTIP), which Britain has been at the forefront of efforts to create, is also seen as a possible victim of a ‘Brexit’. TTIP negotiations have progressed, but questions remain as to whether EU member states or the U.S. Congress might become problematic in ratifying it.

While a TTIP without the UK would not be impossible – indeed, the USA and EU have warned this could happen – Britain’s large economic and political relations with the USA (larger than any other EU member states) mean it would be more difficult and a lesser deal if secured, and potentially a more difficult sell to the US Congress.

Given the aim of TTIP is to expand to include other states such as Canada, a UK outside the EU could secure some form of partnership. However, what this partnership with other countries might entail is not yet clear. Nor is it clear whether the EU would allow the UK anything less than a backseat role. For the EU the partnership would be a bilateral one between Washington and Brussels.

The TTIP is seen as giving a vital boost to American exports to Europe – whose total population is nearly twice that of the US. However, there is much resistance among EU citizens to the TTIP because it is seen as giving too much power to US capital over European workers’ rights and food and environmental standards. Britain under Cameron is a big fan of the TTIP, intensively lobbying the rest of the EU to sign up to the pact. So, if Britain were to exit the European bloc, there is a risk that the TTIP would fall through, which would be a major setback for Washington.

 

Future failure of the European project

According to several Stratfor analyses, including the 2010-2020 forecast, the ‘Brexit’ referendum is a step in a process in which the European project is bound to fail, since Europe is a continent characterized by geographic barriers and any project attempting to fuse these disparate cultures into one monolithic state over the course of just 70 years was by its very nature doomed. The EU crises stem from the fact that citizens ultimately prize their national and regional identities over the supranational dream. The sovereign debt crisis and repeating ‘Grexit’ scares, born of the introduction of the euro in 1999, have exposed Northern Europe’s unwillingness to subsidize the south.

Amid the ongoing immigration crisis, national leaders are appeasing their populations by bypassing European rules and re-erecting border controls to stem the flow of refugees across their territory. In all of these situations, the same factors are at work: The driving forces within Europe are national in nature, and countries will ultimately put their own interests first.

The most likely post-EU scenario, according to Stratfor, would see the EU transform into several smaller alliances, with several countries completely left out. The persisting “core” will be formed by the Benelux countries, France and Germany, but without Italy and Spain. This “core” bloc will be the Continent’s center of gravity in the future. In the times that it has been whole since its unification in 1871, Germany has dominated the Continent, and it appears set to keep doing so for at least the next decade or two.

One of the countries most pleased with the new European arrangements will be the United Kingdom, assuming it can hold itself together long enough to enjoy them. Having dedicated much of the last millennium to keeping the Continent divided and playing one side off another, the United Kingdom was forced to join the European Union once the organization’s unity was truly unquestionable. With a Continent divided once more, the United Kingdom will be able to return to its preferred long-term strategy, maintaining a balance of power while at the same time attempting to develop a trade network that mixes regional with global.

 

GEOPOLITICAL IMPLICATIONS

A possible ‘Brexit’ was listed among the top ten risks for the global prosperity in the most recent register of the top ten risks issued by the Economist Intelligence Unit (EIU) for April 2016. While it was considered as smaller than Donald Trump winning the White House next November, the EIU analysts mentioned that both events would shake global prosperity if they were to occur.

‘Brexit’ is ranked as a ‘high impact’ event but reflecting its lower score, the EIU said it is a ‘low probability’ event. However, the EIU analysts noted that the result of the referendum is likely to be close, given the general hostility among the UK public and much of its press towards the EU. They warned a Brexit would harm both the UK and the EU and added that the shock of a ‘Brexit’ could also exacerbate the ongoing global currency instability, notably in the West.
‘Brexit’ was also seen, at the recent G20 finance ministers’ summit in China, as a major risk to the world economy, according to the British Chancellor of the Exchequer George Osborne. He declared after the summit that fellow finance ministers and central bank chiefs had unanimously concluded that a vote to leave the EU by Britain would be one of the biggest economic dangers this year.

 

Strategic shifts

A ‘Brexit’ would remove from the EU one of its two military powers capable of operating and thinking on a global scale. Britain’s military capabilities, however reduced, along with its diplomatic, intelligence, international aid and soft power remain considerable. The UK has long been one of the mainstays of EU efforts at cooperation in security, defense and foreign policy, with UK-French defense cooperation being extensive.

Without the UK, France would be left as the only major military power in the EU, and may make renewed efforts for an EU-led cooperation, opening up opportunities for Germany to develop its own and the EU’s military capabilities and geostrategic thinking. France, Germany and Poland – the Weimar Group – could develop into the heart of EU cooperation on such matters. However, whether Germany would be willing or able to engage in such a role is open to doubt.
With regard to NATO, it is assessed that while the shared links between the U.S. and EU mean the two are likely to work around a ‘Brexit’, the disappearance from the EU of one of its major military powers could further strain efforts at Europe-wide defense cooperation, whether through the EU or NATO.

One significant example is the fact that a ‘Brexit’ would also put the question of Scotland’s independence back on the agenda, and might trigger a difficult, controversial public debate with Scotland’s leaders over the stationing of nuclear weapons and submarines on their territory at a time when Russia is again seen as a threat to Europe.

Countries such as Canada, Australia, New Zealand, Singapore and Japan – allies of the UK, the USA and the rest of the EU – are likely to be just as uneasy as the USA at an EU without the UK. They would prefer a UK inside the EU, fighting for reform and standing as a reliable ally. They too will fear the prospect of an EU that becomes more inward looking or divided, seeing in it a weakening of Europe’s position in the world and in turn a weakening of the Western alliance.

The outcome could make more likely a scenario of a Europe that risks being pulled between the United States and Asia. Hopes the EU might develop a serious military capability would likely prove very difficult without the UK’s military, but this is already difficult enough. The EU already finds itself in a Europe that is being torn in different directions, what has been termed a ‘multipolar Europe’ with Turkey and Russia as the other two European poles. A ‘Brexit’ would add – or perhaps make clearer – another pole. Should the EU continue to develop, these three poles would surround the larger pole of the EU. This EU pole could develop into a more robust European arm for NATO, or, as some fear, an alternative to it.

 

 

Germany: a reluctant hegemon
Germany would be more powerful within the EU if the UK were to leave simply because its relative weight – expressed, for example, in voting in the European Council or seats in the European Parliament – would be increased. Indeed, some officials from other EU member states say in private that this is precisely why they do not think it would be in their interests for the UK to leave.

Chancellor Angela Merkel has made it clear that she thinks a British withdrawal from the European Union would be bad for Germany. She told the Bundestag that keeping Britain in the EU was “not just in Britain’s but also in Germany’s interest”.

Since the euro crisis began in 2010, there has been much discussion about German “hegemony” within the EU. The events of the last six years, in particular the refugee crisis, have demonstrated the limits of German power as much as the extent of it. That is the reason for which some fear that were the UK to leave the EU altogether, Germany would become a hegemon that could not be balanced by any of the other four large member states (France, Italy, Poland and Spain).
The perception of dominance and therefore resistance is seen through the formation of coalitions to balance against German power: the south has resisted Germany on economic policy and the east has resisted it on refugee policy. In both cases, Germany has been accused of “imperialism”. A British withdrawal from the EU could increase this perception of German dominance and the pressure on other countries to form coalitions to “counterbalance” it. Meanwhile, given its greater relative weight, expectations from Germany would likely increase, leading to even greater anger at Germany than at present for its inability or unwillingness to solve Europe’s problems.
The United States: losing in Europe
British inclusion in Europe is of paramount geopolitical advantage to Washington, since the “special relationship” allows the U.S. to use Britain as a member of the European Union in order to avoid the danger of Europe – especially Germany – getting too close to Russia.

For the United States, a decision by the United Kingdom to exit the EU would be undesirable. One reason why the US values its ties to the UK is the UK’s role in Europe. Britain is important not just as a bilateral partner, but because it can be counted on to argue for and support, in Brussels, positions consistent with, or at least not far from those of the U.S.

The USA could face a double loss from a ‘Brexit’ if this led to a more awkward relationship with the EU (combined with more complex EU-NATO relations) and a reduced standing of the UK in the world. There would be no shortage of applicants to fill the position of claiming to be the USA’s closest friend inside the EU. While such applicants might not offer a relationship that could claim to be as ‘special’ and intimate as that with the UK, for the USA they will be of increased importance due to the considerable interests of the U.S. in the EU.

As President Obama made clear, already during his state visit to the UK in 2011, Europe remains the cornerstone for US global engagement and the greatest catalyst for global action in the world today.

In a BBC interview in 2015 , President Obama said that UK membership of the EU, “gives us much greater confidence about the strength of the transatlantic union and is part of the cornerstone of institutions built after World War II that has made the world safer and more prosperous… the values that we share are the right ones, not just for ourselves, but for Europe as a whole and the world as a whole”.

On 2 February 2016 , President Barack Obama phoned David Cameron to insist on a strong campaign for EU membership and to reaffirm the “continued US support for a strong United Kingdom in a strong European Union.”

According to Downing Street 10 sources quoted by British newspaper The Independent on Sunday, President Obama will visit the UK as an extra leg of a trip to Germany next April and might intervene on the EU vote. He is scheduled to open the Hannover Messe 2016 technology fair on 24 April. The source said: “It would be pretty shocking if he didn’t ask voters to stay in the EU.”

Rumors started when Bob Corker, the chairman of the US Senate foreign relations committee, said that Mr. Obama was planning “a big, public reach-out” to persuade British voters of the merits of staying in the EU. Several government and “Remain” campaign sources have confirmed the timing and added that he will fly into the UK to make a direct appeal to the British electorate.

This prompted an angry reaction of the ‘Brexit’ group, which launched a pre-emptive online petition with nearly 16,000 signatories who want to “Stop President Obama from speaking inside our Westminster Parliament concerning Britain staying inside the European Union.”

A British withdrawal would likely add to US worries that Europe lacks the unity or political energy to think in geostrategic terms about the rise of powers such as China and Brazil. These concerns have been fuelled in recent years by the EU’s focus on its internal problems such as the Eurozone crisis.

The USA will also view a ‘Brexit’ in the light of long-running fears that Europe will continue to take for granted the US security guarantee provided through NATO. The result could be more frustration for the USA at Europe’s inability to deal with security issues in its near-abroad, for example in the Middle East, North Africa (the Libyan War being a clear example of Europe’s divisions and military weaknesses) and with Russia over developments surrounding Ukraine.

If developments in Ukraine mean Europe becomes again a security importer, changes to the configuration of U.S. defense capabilities mean the USA is likely to provide at best a minimum contribution while continuing – likely in vain – to shift some of the burden of dealing with issues in Europe’s near-abroad towards Europe.

For the foreseeable future the US will continue to work through NATO or through coalitions of the willing on key issues. But in the longer-term, the United States will likely need a strong and coherent European Union to advance common interests in the face of emerging powers.

 

Russia’s interests

In a recent speech at the Chatham House, where he launched a government report that rejects each of the alternatives to EU membership, foreign secretary Philip Hammond said that “the only country, if the truth is told, that would like (Britain) to leave the EU is Russia. That should probably tell us all we need to know.”

In fact, a ‘Brexit’ which would undoubtedly weaken the EU, the UK and the transatlantic relationship is in Russia’s interests. Moreover, a smaller Britain (without Scotland) would be weaker and less influential, not to mention the question of the future of Trident, Britain’s nuclear deterrent system. That would definitely would be in Russia’s advantage.

Consequently, media observers noted that, since Prime Minister David Cameron and European Council President Donald Tusk held talks on reforming the UK-EU relationship, the Russian government’s English-language TV station, RT, and news website, Sputnik, have conducted systematically one-sided coverage whose effect has been to magnify the “Out” campaign and marginalize the “In” campaign.

According to some analysts and geopoliticians, a ‘Brexit’ may also signal Britain’s disposition to revert to a status of global maritime power, thus avoiding the possibility of being drawn in terrestrial conflicts, or of a confrontation with Russia (especially in the energy domain).
* * *
So far, the ‘Brexit’ debate has been mostly emotional, focusing on the historical greatness of Britain, the horrors of foreign tyrannies, or, conversely, fears of what might happen if the status quo were to be upset.

Significantly, the odds for ‘Brexit’ narrowed up to 6/4, or 40 percent, even to 45 percent, after the 22 March attacks in Brussels that killed at least 34 people and ‘Brexit’ advocates claimed the EU’s open border policy had allowed the attacks on Brussels’ main airport and a rush-hour metro train to take place. According to bookmakers, “the average man on the street doesn’t really understand the ins and outs of a Brexit, and border control seems to be one of the primary concerns.”

In this context, in the wake of the Brussels attack, Sir Richard Dearlove (MI6 director between 1999 and 2004) said that Britain’s borders could be strengthened in the event of a ‘Brexit’ and extremists could be more easily deported. He stressed that Britain may even experience “security gains” from ‘Brexit’: “Whether one is an enthusiastic European or not, the truth about Brexit from a national security perspective is that the cost to Britain would be low. Brexit would bring two potentially important security gains: the ability to dump the European Convention on Human Rights – remember the difficulty of extraditing the extremist Abu Hamza of the Finsbury Park Mosque – and, more importantly, greater control over immigration from the European Union.”

His intervention – which came in contradiction with the claims from the Prime Minister and the Home Secretary that EU membership made Britain safer – was quickly taken over by the ‘Brexit’ campaign.
There was little mention in the campaigns about the strategic choice that the UK has to make: between isolation and integration, between regaining a position inside the EU from which it can co-shape geopolitics – or becoming an object of the geopolitics of others.

Instead, as elsewhere in the European Union, there is a general discontent with political elites associated with “Brussels.” Many citizens feel that they have lost control over their political affairs. Democratic national governments look more and more impotent, and the EU is not a democracy. The desire for referendums is not only a sign of internal national divisions; it is yet another symptom of a global populist demand to “take back our country.”

This may be (outside the EU, Britain may have less power over its fate than if it stays in), but the crisis of confidence needs to be taken seriously. The referendum’s consequences are much more important than the vote itself.

Britain’s exit from the EU could have devastating results not only for the UK, but for the rest of Europe, too. Seen in a global context, the ‘Brexit’ might be a step towards the end of the West, if one contemplates the chances of a Donald Trump U.S. presidency and of the Front National winning in the French presidential elections in 2017. According to columnist Anne Applebaum , “we are two or three bad elections away from the end of NATO, the end of the European Union and maybe the end of the liberal world order as we know it.”

 

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