Tag Archives: Brexit

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.

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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

 

 

Onward and Upward: Looking Back on 2016

Here at The Affiliate Network, wrapping up 2016 means looking back on the year to examine the issues that mattered most to the world, keeping in mind our goal to inform our readers, foster debate about the substance of global issues, and promote the expertise of our Affiliates.

With such a tumultuous year, our Affiliates had plenty to discuss about the year’s events. We published 13 pieces by contributors from around the world, each Affiliate lending their own unique perspective on issues in international policy, security, and diplomacy.

Human Security vs. National Security

The conflicts of 2016 continue to highlight the human cost of war and underscore the increasingly uncomfortable reality that some governments prioritize national security over the safety and wellbeing of their constituents. The fight against Daesh is a good example, leaving a trail of civilian victims in its wake and begging the question how the rest of the world can help the helpless in this terrible conflict. The atrocities in Syria and Iraq – as well as the resultant flight of tens of thousands of refugees to Western Europe – will be increasingly difficult to ignore.

Unfortunately, discussions of immigration in Europe often segue into concerns over terrorism. The year was marked by a rise in terror attacks across the globe, particularly in Europe. The Brussels Airport bombing in particular represented a decision point for the western world in the fight against terror. Stemming from this event and growing questions of interregional border security, Europe grapples with the realities of an increasingly complex security situation. Rein Westra underscores the importance of adapting to this circumstance in Securing Trade and Transportation.

As Navisio Global’s CEO, Lino Miani, highlights in a series of articles on the fight against Daesh, humanitarian concerns and terrorism in Europe are only one aspect of the challenges in the Middle East. In Making Mosul Great Again and The Gate, Lino describes the unfathomable strategic importance of two individual cities in Syria and Iraq as Russia, Turkey, the United States, Iran, and NATO wage what some believe is a proxy struggle for influence in the Middle East.

Nationalism & Populism in 2016

The presidential election in the United States captured attention the world over, but it was not the only political transition in the news. In Let’s Change, Jon Nielsen wrote about the end of the Kirchners and Peronism in Argentina. Though Argentina may be ending its tradition of power transfer from husband to widow, Mugabe’s Heart explores how long-time president of Zimbabwe, Robert Mugabe, may be following the same playbook as the Kirchners.

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Former British Prime Minister David Cameron stepped down as a result of a failed campaign to keep the United Kingdom in the EU

Elections were not the only political events captivating audiences in 2016. In the United Kingdom, the referendum to leave the European Union, also known as “Brexit”, dominated headlines and may have inspired similar movements throughout Europe. Prime Minister Matteo Renzi resigned after Italians rejected a constitutional change to the legislative balance of power, resulting in increased instability within the broader Eurozone. Elsewhere, President Recep Tayyip Erdoğan of Turkey narrowly avoided falling victim to his country’s latest military coup and has since consolidated power through purges and repression. President Dilma Rousseff of Brazil was impeached on corruption charges and President Nicholas Maduro of Venezuela is leading the resource-rich Bolivarian state into poverty and despair as he clings to power.

A Fractured Future?

The coming year will put to work the lofty campaign promises of those who won elections in the past year and focus our attention on additional ones the world over. France, Germany, Chile, South Korea and India will all hold presidential elections in 2017. Many of our readers are alarmed that trends of nationalism and populism will shape the character of the EU and the western world for the next several years but some of our Affiliates offer voices of calm in the storm. Portuguese diplomat and former United Nations Secretary General’s Special Representative, Victor Angelo, offers a contrarian perspective into the implications of the historic Brexit referendum in The Sky is not Falling on the European Union. Victor Perez-Sañudo makes a similar case from a law enforcement perspective in With or Without the EU. Nick Avila then follows up with an intelligent debrief into what Brexit truly means for the European Union and the European identity in The Spark to Redefine “Europe”.

Brexit aside, multilateral institutions continue to play an important role in international relations and security. Jon Nielsen identified important implications to the UN Convention on the Law of the Sea in A New Weapon in the South Atlantic. On the Pacific side of the world, overlapping claims to the South China Sea caused intermittent escalation of tensions. Lino Miani examines the complex dynamic between ASEAN and China using lessons from the conflict in Ukraine in Beyond Crimea.

The concept of international cooperation is reliant on a level of shared values and understanding within the international system but fear and distrust seem to be on the rise and misunderstandings abound. The east-west cultural divide rests at the foundation of many security issues that predominate. In Tangled Conflict, Caleb Ling points out there are still many misconceptions about unrest and conflict in the Kingdom and Mike Kendall highlights the often dangerous rhetoric used to describe China’s rise to power in Social Media’s Chinese Boogeyman.

The Affiliate Network would like to wish everyone a happy and healthy holiday, and we look forward to providing you the same quality of analysis in 2017 that we did in 2016. To our readers: a sincere “thank you” for all of your likes, shares and comments. The Affiliate Network team hope that like us, your holiday will be rich with constructive policy discussion at the family dinner table.


Patrick Parrish

Patrick Parrish is the Blogmaster of The Affiliate Network.  He is a U.S. Air Force Officer and Olmsted Scholar currently serving in Santiago, Chile.

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.