Category Archives: Europe

Death of Brexit: Return from the Right

The 2016 Brexit referendum in the United Kingdom (UK) was the surprising outcome of a national plebiscite. Initially dismissed as a long shot by many political scientists, there is now a degree of consensus that the result reflects a delayed response to the effects of globalization in general and to the 2007-2009 Great Recession in particular. The problem is very real as large groups of blue-collar workers see their opportunities decreasing and their jobs moving to cheaper labour markets in Asia and elsewhere. As the dust settles on the referendum, the question remains whether Brexit is really the cure for the malaise that led to it or whether more sober voices in the United Kingdom will drive alternative solutions.

Project Fear Redux

In the campaign before the vote, the Remain argument relentlessly focused on the likely economic consequences of Brexit, arguing that living standards would fall and jobs would be lost as investment dried up. Brexit campaigners labelled this “Project Fear” and mocked the professional economists that issued warnings as “know-nothings”. For a time, it seemed the Brexiteers were right.

After Brexit day in June 2016, the United Kingdom’s economy continued to prosper and showed little evidence of damage other than an immediate 12-15% fall in the value of the British Pound relative to both the US Dollar and the Euro. In fact, in 2016 the UK’s economy remained one of the best performing of the G7 large Advanced Economies, growing at 1.8%. It was as if the ship had hit an iceberg but nothing had changed up on deck. Though Brexiteers continued to ridicule the “know-nothings”, by the end of 2017 a very different story was emerging.

The United Kingdom is now one of the slowest growing of the G7 Advanced Economies, likely to register only a 1.5% growth rate for 2017. Investment is down and inflation is now over 3%; the highest in the G7. Inflation adjusted wages and consumer confidence are also falling with particularly dramatic decreases in car sales, down over 12% year on year in October 2017 according to the Financial Times. As the threat of Brexit grows imminent, the International Monetary Fund is very clear about Brexit’s increasingly negative effects on the United Kingdom’s economy. More worrying, the British Government cut its own economic growth forecasts for 2018 to 2022 more heavily than it has for any other five-year period in the last 40 years. Private forecasts are also broadly of the same view.

It is now abundantly clear that the so called “know-nothings” were not so much wrong as simply guilty of underestimating the strong forward momentum of the British economy at the time. A sharp fall in the exchange rate following the June 2016 referendum, combined with the Bank of England’s accommodative decision to cut the UK Base Rate from 0.5% to 0.25%, certainly aided the economy’s short-lived momentum. If the central bank did this with the intention of softening the blow, it did not last long. Project Fear it seems, is making a comeback.

The Will of the People

At this point, avoiding Brexit will not be easy. Any reversal of Brexit depends upon a significant and sustained shift in public opinion. Without it, Parliament is highly unlikely to vote down the Government’s impending deal, due in late 2018, that will set the terms for the UK’s exit from the European Union (EU) in March 2019. The earlier deal with the EU in December 2017 provided proof—if it were required—that the UK is being out-negotiated by a much better prepared team in Brussels. Indeed, on all main points of agreement so far, the UK has accepted the EU’s demands; something many Brexit supporters are starting to see as a sign of the UK’s weak negotiating position.

brexit
British Prime Minister Teresa May meets with Jean-Claude Juncker, European Commission President at the EU headquarters in Brussels. Photo credit: https://www.voanews.com/a/eu-brexit-talk-next-phase/4154812.html

However, Britain’s poor negotiating performance in the halls of the European Commission in Brussels will not turn the tide alone. This will only happen when ordinary men and women begin to suffer from Brexit’s negative consequences. Given the way the economy is now slowing, it seems the average Briton is in for some very poor economic news over the course of 2018. In the initial referendum, 48.5% voted to remain in the EU but polls suggest the British are changing their minds. The most recent poll taken just before Christmas shows 53% now wish to remain in the EU, with a noticeable shift by middle and working class women concerned about potential impacts on jobs and family finances.

As this national change of heart accelerates in response to bad economic news, calls for a second referendum will become louder. The Government can and probably will ignore them initially but once the polls start showing 60% in support of a second referendum and/or a desire to stay in the EU, the dam will break. Just as “the will of the people” was used by the pro-Brexit media to bludgeon the current Government into a Brexit-at-any-cost policy, so too will public opinion embolden Parliament to stop the Government on this reckless path.

Different Solutions

Addressing the challenges of globalization, the Great Recession, and the loss of secure jobs for average to low-skilled workers remains a critical policy challenge for all Western governments. And whilst the populist spasm that resulted in Brexit is understandable, it is surely not the solution. The alternative to the low tax and small government mantra of right wing populism is likely to be a centre left agenda comprising more state intervention and investment in public services such as healthcare and education. Experimentation with more radical ideas such as a citizens’ basic income may also become more widespread, especially as artificial intelligence and other job destroying technology washes over the economy.

All this favours Jeremy Corbyn’s Labour Party, which is committed to a more radical, anti-globalization agenda than the current Brexit-supporting Tory Party. With the British anti-globalization fight thus championed from the left rather than the right, it is possible the same phenomenon could take place in the United States, reversing the rightward trend occurring in politics there since 2012. If events in the UK continue this way—a prospect which seems likely—the death of Brexit could mean a return from the right. This effect will be felt not just in London, but in Washington too, producing a global impact that will make an increasing number of British voters very proud indeed.


Adam Pharaoh is a former Auto (Volvo & GM) and Pharma (J&J) industry executive that now runs Pharaoh & Company SPRL, a consultancy on Strategy and Organisational challenges, mainly in Europe and Asia. He is a close observer of UK and EU politics and contributes regularly to debates in The Financial Times. He lives in Brussels.

For more on Brexit from The Affiliate Network, please see:

The Sky is not Falling on the European Union by Victor Angelo

The Spark to Redefine “Europe” by Nick Avila

With or Without the EU: Brexit and Security by Victor Perez-Sañudo

 

 

Future Vision: Europe’s Image Problem

Since the end of the Second World War, Europe has put its security in the hands of supranational organizations. These institutions, whether economic, military, or political, have deterred the wars between states that plagued European security since the Peace of Westphalia in 1648. In that period, the march of uniformed armies decided conflicts and knowing where those armies were and how they were deployed was paramount to victory. For this there is no more powerful tool than an eye in the sky; satellite imagery in the hands of western governments. But today’s security challenges seem to invalidate collective intelligence systems.

Threats today are insidious. The massed armies of old have given way to environmental degradation, terrorism, and “hybrid” military threats designed to operate in the seams within Allied decision-making. Big states like France, Great Britain, and particularly the United States, hold a monopoly on imagery intelligence (IMINT) and distribute it through Allied intelligence structures at NATO and the European Union. With NATO’s Afghanistan mission winding down and a Euroskeptic administration in the White House, the old model of sharing IMINT is no longer flexible, responsive, or reliable enough to address the modern security needs of most European states.

A Transitioning Reality

The end of 2014 marked the transition from NATO’s United Nations-mandated International Security Assistance Force (ISAF) in Afghanistan to Operation Resolute Support. The new mission focuses on building the capability of Afghan structures through training and financial instruments. These efforts are funded via the Afghan National Army (ANA) Trust Fund, the United States Afghanistan Security Forces Fund (ASFF), and the Law and Order Trust Fund for Afghanistan (LOTFA). The reduction of western troop levels and the primacy of Afghan institutions that cannot meet strict and expensive requirements for access to Allied intelligence, has reduced the urgency that previously drove the sharing of IMINT within NATO.

Satellite Imagery
When current and in high-resolution, photos like this one can provide salient intelligence; like the fact that the second Russian bomber (from the bottom) has recently run its engines. Photo Credit: DigitalGlobe – https://twitter.com/DigitalGlobe/status/829404552092905473

The election of Donald Trump may further restrict cooperation within NATO. During his first one hundred days as President of the United States, the Trump Administration made it clear it expects its NATO allies to increase their contributions to the organization. Though this is poorly defined and President Trump appears to be softening his position, intelligence sharing is not likely to increase during his administration leaving European allies to consider available options. Fortunately, advances in technology and the genius of the free market have generated alternatives in what was previously locked in the rarified world of classified military technology.

20/20 Hindsight

Commercial satellite solutions have come a long way since 1962 when the first privately sponsored mission sent the Telstar communication satellite into orbit. Today, high-resolution commercial earth observation and advanced geospatial solutions are useful across the many sectors of defense and intelligence, public safety, map making and analysis, environmental monitoring, oil and gas exploration, infrastructure management, and navigation. These options are inexpensive and rival legacy military capabilities in terms of resolution and coverage. When coupled with geographic information systems and internet technologies such as cloud computing and database management, commercial satellite imagery is a powerful tool in the hands of a growing community of potential clients.

Satellite Imagery
Satellites like this one, DigitalGlobe´s WorldView 4, are among several of the options that may provide European nations with the imagery that they need for the future. Photo Credit: DigitalGlobe – http://worldview4.digitalglobe.com/#/main

Outlook for the Future

The Brexit referendum in the United Kingdom as well as the strong showing of nationalist parties in France, the Netherlands, Hungary, Poland, Greece, Turkey, and the United States are making it harder to implement complex supranational intelligence sharing arrangements. Terrorist attacks and the continuing influx of economic migrants and refugees continues to fuel growing discomfort with the risks inherent in “open door” policies. In this time of crisis, intelligence services, militaries, and police forces are under increased pressure to provide security and have already begun exploring unilateral solutions to the problem. Their task will be impossible however without the right tools for the job.

For now, European imagery comes from the combined abilities of the European Space Agency (ESA), the EU Satellite Centre (EU SATCEN), and the contributions of individual states. European leaders depend upon the abilities of the Copernicus Earth Observation program and the Sentinels to provide them with many of their imagery needs but these are legacy systems. The Copernicus constellation lacks the technological capability of newer commercial satellites like Worldview 4, and the nations are acutely aware of Copernicus’ shortcomings. For those countries lacking a space program or a military IMINT capability of their own, private sector solutions will be an increasingly important component in the defense and security of their nations.


 

Johnathon RickerJohnathon Ricker is an account manager with Navisio Global LLC, CEO of Prospective International, and a student of international security, intelligence, and strategic studies.

The Spark to Redefine “Europe”

The results of today’s referendum in the United Kingdom present an unprecedented situation for a strained European Union. For the first time in its history, a member state voted to leave the Union. In an organization that grew exponentially, the exit of a powerful contributor will force remaining nations to make some tough choices. The UK will also need to make some hard decisions about how to move forward outside of “Europe”. Needless to say, the Brexit will not be an easy process for anyone.

The UK has historically played balancing role on the continent, but this referendum represents a decisive departure from Britain’s neighbors and a vote of no-confidence in the European Union. Eurosceptic voters of the UK have many reasons to want to sever ties with Brussels: the aftermath of the economic dysfunction made manifest by the near-miss of the Grexit, the inconsistent and frantic response to the refugee crisis, and the resurgence of a bold and unpredictable Russia. British voters, however narrowly, ultimately lost faith with the European Project.

In choosing to leave the union, the UK has lost its privileged position as one of the leaders of a modern, unified Europe. Great Britain had a unique position in the Union as one of the only states with a balance of political, economic, and military might – a position it built over the decades through active diplomatic and economic engagement in continental affairs. It was arguably the most independent of EU members, enjoying many of the benefits of Union membership without the risks of the Euro, or the borderless society of the Schengen Agreement. Britain’s options for influencing the continent are now weakened, and the benefits of Union membership lost –a unilateral disarmament of what was once a formidable diplomatic and economic arsenal.

Centrifugal Force

Europe had a lot to lose from a British exit. Strong and independent Britain played a stabilizing role: ensuring no single country –namely France or Germany– could push a unilateral direction upon the EU. It was a role only the UK could play. Italy and Spain are prone to economic and political instability; the Low Countries and Scandinavia, though economically formidable, do not have the clout or muscle needed to balance their larger neighbors; and the Višegrad economies of Eastern Europe are too new, many with elected governments more interested in moving away from Europe than towards it. Germany is the de facto leader of the EU, which is a source of great discord among the smaller, more economically-vulnerable nations that do not appreciate Chancellor Merkel’s heavy-handed style or the historical aftertaste of German leadership.

Though division within the EU is not new, the departure of its great offshore stabilizer starts the political centrifuge spinning. Right-wing leaders in France, and the Netherlands are already demanding independence referendums of their own. Spain’s call for dual-sovereignty of Gibraltar is a sign that some disputes between the UK and other EU member states may reemerge after being held dormant by a spirit of intra-Union cooperation. In the immediate aftermath of the vote, prominent leaders in many of the EU’s major nations called for their nations to follow Britain’s lead.

Not surprisingly, independent-minded regions within European nation-states will also ride the winds of change to clamor more loudly for their independence. In a bizarre twist, Scotland may have voted to remain in the EU, but may not want to stay in a non-EU Britain. No doubt Basques and Catalans in Spain will watch closely if a second independence referendum takes place in Scotland, and aspiring EU members in the Balkans are unlikely to tolerate a long and painful application process while the more developed countries are voting to leave.

The Brexit may well be the spark that brings about the dissolution of the European Union. Its erosion and potential breakup would deprive its member states of a useful venue for cooperation to solve common problems; an international political situation closer to 1914 than 2016. At a time when transnational issues are more relevant than national ones, it is not at all clear why European leaders are divesting themselves of international tools to deal with them. Europe should take a moment to reflect on its fractured past.

Opportunity in Discord

As noted European diplomat, Victor Angelo recently predicted: Europe will survive Brexit. What is not clear is whether the EU or the UK will survive their divorce intact. Perhaps the Union grew too quickly, haphazardly attempting to unify the continent in the wake of the collapse of the Soviet Union, pushing “Europe’s” borders ever outward. In this manner, Brussels hardwired weaknesses into the future unity of the European Union.

But, as I’ve said before, there is opportunity in crisis. Challenges can break a weak union or strengthen a strong one. Perhaps this is the kind of shock Europe needs to wake up and implement further democratization and a unified fiscal policy towards a federal union. Any other course could doom the entire project to failure, and erase all the good Europeans have built, together.

Nick Avila Associate Blogmaster, Navisio Global. Brexit.LT Nick Avila is a U.S. Naval Officer and Olmsted Scholar in Belgrade, Serbia. He received his B.A. in History with a focus on American Diplomacy from Amherst College in 2008. He is an MH-60S helicopter pilot by trade and has military experience from two deployments in the western Pacific to include operations in Guam, Japan, and Australia. The views expressed here are his own and not those of the US Navy or the George and Carol Olmsted Foundation.