Brexit and globalization
Collateral damage or accident waiting to happen?
This is an excerpt from the Policy Network book The crisis of globalization, published by IB Tauris, an imprint of Bloomsbury.
In a referendum held on 23 June 2016, with a relatively high turnout by the standards of recent years, a majority of the British people voted to leave the European Union (EU). It was 52 against 48 per cent in a country divided along many crosscutting lines. Arguably the most important political decision taken in the British Isles since the end of the World War II, Brexit will have major implications for the economy, foreign policy as well as for domestic politics, possibly also for the unity of the UK.
The withdrawal of the UK will, of course, also constitute a big loss for the rest of the EU in what may appear as a never-ending series of crises. Following the crisis of the euro and the refugee crisis, one of the big countries has now decided to leave, thus marking a dramatic reversal of an unstoppable (so we thought) process of integration with the addition of ever more members and functions. Negotiating the terms of divorce is difficult enough. Negotiating the terms of a new relationship between the UK and the rest of the EU following Brexit will be even more difficult. After all, Brexit cannot change geography. The British Isles are tied in many different ways with the rest of the European continent and such ties can only be loosened at a high cost.
In this chapter, we shall begin by examining the troubled history of Britain’s European relationship, a relationship that turned ever more problematic during the recent phase of globalization coinciding with a new push on the accelerator in European integration. Brexit did not come out of the blue, and we need to dig into history to understand why. We shall then proceed to examine the decision to hold the referendum, the nature and outcome of the renegotiation, the issues raised during the debate preceding the popular vote, and the real choice(s) facing British people. What were the dividing lines on the big question of Leave or Remain? Was Brexit really the result of a popular/populist revolt against globalization, a revolt that has challenged the established political order in many countries and brought Donald Trump to power in the United States? And what is the link, if any, between globalization and European integration? Is Brexit showing the way out for other countries, or is it likely to be a unique event? These are the main questions we shall attempt to address.
No love lost
If Britain had chosen to do so, it could have played a leading role in European integration from the very beginning and could have shaped the European model much closer to its own image. Luckily, it chose not to, ardent supporters of European unity would hasten to add now liberated from the constraints of political correctness. Britain joined late in what has always looked from its side like a business affair, based mostly on a narrow calculation of economic benefits and costs: an arranged marriage if you prefer, certainly not an affair of the heart.1 There was little love at best, but also in crucial moments, real misunderstanding by British political leaders of the motives and intentions of their partners, notably those in the driving seat in European councils. Or, was it just lack of empathy?
In the words of Winston Churchill: ‘We are with Europe but not of it. We are linked but not comprised. We are interested and associated, but not absorbed’.2 In his famous Zurich speech, Churchill spoke in favour of the United States of Europe, but Britain was not meant to be part of it. Nothing much has really changed since then as far as many British citizens and their political leaders are concerned. Britain’s political elite has always been divided on European integration and not terribly interested in it, with some notable exceptions (more so among intellectuals and academics). When the Conservatives led Britain into the Common Market, as European integration characteristically used to be referred to on that side of the Channel, Labour was against. And then roles were progressively reversed, ending up today with a strongly Eurosceptic Conservative party and a mildly proEuropean (although with a vocal Eurosceptic minority) Labour party that usually prefers to talk as little as possible about Europe.3
All along, genuine Europhiles have remained a small, persecuted (!) minority within Britain’s two big parties, the Liberal Democrats being the only consistent proEuropean political force in the country, yet small. With a mostly Europhobic tabloid press owned by foreigners (not Europeans) and persistently low levels of public support for European integration (always among the lowest, if not the lowest, as registered in Eurobarometer surveys), and with even less interest in and knowledge of the European project, the latter has, understandably, never been treated as a vote winner by Britain’s political class. If anything, it has been like a poisoned chalice4 that has led several prominent British politicians to their premature political death. True, Britain was a late entrant to a club where the basic rules had already been set by others and it then had to fight successive battles in the name of reform to change the rules as regards the European budget, the common agricultural policy, and more. However, the problem goes much deeper: many British people and their political representatives simply do not consider themselves European,5 and only a minority speak any European languages except for their own. Not surprisingly, they are not at all keen to transfer money and power to European institutions or share their destiny with foreigners on the continent of Europe.
However, as a member of the EU, Britain succeeded in playing a determining role in important areas of European policy, such as the internal market, trade, enlargement, as well as foreign and security policy. For years, it used to find allies among those who appreciated British pragmatism, liberal views, and a strongly proAtlantic policy, as well as among those who looked for a counterweight to France (or France and Germany together), and in countries outside the Union eager to become part of the European project. For the British, further enlargement had the added advantage that it would make deeper EU integration less likely.
Given its relative weight as a country that had run a huge empire until a few decades previously, the quality of its civil service, with the Foreign Office as the Rolls Royce leading the rest, Britain’s influence in European affairs was hardly surprising, although usually not acknowledged by most of its politicians. Britain commanded respect, even from those who disagreed, and in turn respected the rules once adopted, unlike some of its continental partners for whom new legislation was just one more stage in the negotiation and obeying the rules a relative matter. The differences in political culture and legal traditions, not to mention institutional capacity in rule implementation and enforcement, were bound to cause more friction as integration deepened.
Britain was always on the liberal side in economic terms and keen on safeguarding the interests of the City of London as an international financial centre almost irrespective of the political colour of those who happened to be in power. It had a more global outlook than almost anybody else in Europe. But it also consistently tried to put its foot on the brakes and restrain the pro-integration zeal of its partners on different fronts, resorting to exceptions and optouts when everything else failed. This happened more and more as European integration shifted to higher gear from the early 1990s onwards. Exceptions and optouts in turn led to more isolation, thus preparing the ground for the grand exit.
A divided country
Many Conservatives blamed Thatcher’s demise in 1990 on a conspiracy of proEuropeans inside the party and turned more Eurosceptic, while sterling’s forced withdrawal from the European Exchange Rate Mechanism in 1992, when the international financier, George Soros, won his bet and some billions at the expense of the Bank of England, hurt British pride and British pockets. To make matters worse, France and Germany were at the time leading the way towards monetary union. This was certainly one big step too far for the British. Feeling unable to stop it, they finally opted out. The creation of economic and monetary union without Britain has been a major turning point in Britain’s relations with the rest of the EU. Other opt outs followed, notably from the passportfree Schengen area, large parts of justice and home affairs, and the Charter of Fundamental Rights. The British felt increasingly uncomfortable with the accelerating pace of integration in Europe and decided to distance themselves.
The arrival of New Labour, led by Tony Blair, the most Europeanminded prime minister since Edward Heath, did not fundamentally change the domestic scene. Despite constantly repeating his priority to keep Britain ‘at the heart of Europe’, Blair never invested much effort in trying to influence public opinion and tackle Euroscepticism head on, although, admittedly, this would have been a difficult task given the troubled history of Britain’s relationship with the EU.6
If anything, the opposite happened, albeit unintentionally. Strategic decisions taken during the Blair era later became catalysts for Brexit. The New Labour governments embraced wholeheartedly globalization and deregulated markets on the assumption that the expected tide would help to lift all boats, while (to be fair to them) also emphasising the need to empower citizens to better take advantage of the opportunities created. It is now clear that New Labour grossly underestimated the unequal distribution of gains and losses arising from free and global markets, which laid the groundwork for the subsequent revolt of the losers. Income inequalities grew during the last 25 years or so.7 On the other hand, the Blair governments decided not to take advantage of the long transitional period allowed by accession treaties for the free movement of workers after the big bang enlargement of the EU in 2004. This was based on the mistaken belief that relatively few citizens from the new members would take advantage of this freedom. In any case, immigration was supposed to be good for the British economy, hence for the country as a whole. The result was approximately one and a half million people who migrated from Central and Eastern Europe to the UK in the years that followed enlargement, and immigration became the most decisive factor for Brexit on referendum day. History sometimes plays strange games.
The bursting of the biggest international financial bubble since 1929 soon turned into an existential crisis for the euro. In many British eyes, Europe and the eurozone in particular were totally incapable of managing the crisis, stagnating economically yet integrating further, becoming more undemocratic in the process and run by Germans: a terrible combination indeed – and not far from the truth. British and US media, prominent economists and lesser mortals as well, predicted disaster and disintegration with a distinct element of Schadenfreude. However, they all underestimated, once again, the sense of commitment of Europe’s political leaders to the common project (or perhaps more accurately, their collective instinct of survival).
Britain felt marginalized in a union where the euro was at the centre, and risked becoming the recipient of policies (and failures) decided elsewhere. And it became increasingly isolated. The fiscal compact treaty and the election of JeanClaude Juncker as president of the European Commission are only two examples of how ‘Perfidious Albion’ had apparently lost its knack of forming alliances on the European continent. Isolation is often a selffulfilling state of mind.8
Meanwhile, on the domestic front Euroscepticism was growing. The UK Independence Party (UKIP) on the ultranationalist right9 succeeded in drawing support mostly from old age conservatives and nationalists but also from those who felt left behind during the big economic and social transformations of recent decades, including former Labour voters. It combined nostalgia for the past with a strong denunciation of European constraints on British sovereignty and a strong emphasis on immigration. UKIP succeeded in winning the largest number of votes at home in the European Parliament elections of 2014 and caused an earthquake in the British political system. Nigel Farage, the leader of UKIP, together with Marine Le Pen in France and politicians of the same kin in other countries, were mounting a frontal attack on the liberal political order and European institutions as well.
In the Conservative camp, an increasing number of MPs apparently decided that the most effective way of dealing with the mounting challenge from the right would be to adopt much of the vocabulary of their challenger. Under the leadership of David Cameron, the Conservative Party distanced itself further from the European political mainstream, while giving the distinct impression that he personally did not have much of an interest in what went on in Europe. In the words of the former president of the European Council, Herman Van Rompuy: ‘How do you convince a room full of people, when you keep your hand on the door handle? How to encourage a friend to change, if your eyes are searching for your coat?’.10 And while the Conservative party was shifting further to the right, in 2015 Labour elected a new leader, Jeremy Corbyn, from the far left of the party. In Britain’s increasingly polarized politics, Europe did not easily fit in.
There are many different kinds of Britain:11 a very international economy with a deregulated jobs market that attracts many people from the EU and beyond, with institutions and universities that are more open than anywhere else in Europe (speaking the lingua franca surely helps), a multiethnic and multicultural society, and London as the most global of cities, alongside New York. Yet, Britain (or, its greater part) is also an increasingly parochial country, with England withdrawing into a ‘Little England’ mentality, while Scotland diverges politically, is distinctly more proEuropean and many Scots still think of divorce.
Britain is very much a divided country with large inequalities. It is certainly not unique in this respect, although more extreme than big countries such as Germany and arguably also France. Espousing globalization as an essentially neoliberal agenda and with an emphasis on services and the financial sector in particular, Britain has ended up with more internal divisions and inequalities. Only a small minority of British politicians ever considered the European project as a means of collectively managing and taming globalization, a means of projecting a common model and defending common interests and values in a rapidly changing world where the relative weight of individual European countries, the UK included, is rapidly diminishing.