The Global Zeitenwende
How to Avoid a New Cold War in a Multipolar Era
In a historic act of self-harm, the British electorate has chosen to leave the European Union. Brexit—as it is called—will do severe damage to the United Kingdom’s economy and its strategic interests. Brexit will also deal a heavy blow to the project of European integration. The EU will survive, but it will never be the same. Leaders of far-right parties across Europe cheered the referendum result, as did Donald Trump. Meanwhile, the United Kingdom’s allies shuddered, and financial markets in the country and across the world plummeted.
With negotiations beginning over the terms of the United Kingdom’s departure, much is uncertain. But one thing is clear already: the Leave campaign’s claim that the EU had robbed the United Kingdom of its sovereignty was false. If nothing else, the vote shows that the country was sovereign all along and that it was free to make disastrous decisions.
A TOXIC CAMPAIGN
The Leave victory marks the culmination of a poisonous debate. Although the Remain campaign was responsible for some distortions of its own—such as claiming that Brexit would make British households 4,300 pounds (over $5,000) worse off per year—the Leave campaign was premised on lies and empty promises. Proponents claimed that EU immigrants were to blame for the strains on Britain’s public services, when in fact they made net contributions to the Exchequer, to the tune of 20 billion pounds (over $27 billion) between 2000 and 2011. Leave stoked xenophobia, suggesting that the EU was opening the United Kingdom to a flood of refugees and would soon allow millions of Turks to immigrate to Britain. Neither was true. In fact, London had complete control over how many refugees the United Kingdom accepted. Turkey is not “set to join the EU” as the Leave campaign claimed, and in any case, Britain had a veto over Turkish membership.
Leave leaders also appealed to “Little England’s” worst nationalist instincts—repeatedly comparing the EU with Nazi Germany. The campaign’s only real parallel with Nazism was UKIP leader Nigel Farage’s “Breaking Point” poster, which closely resembled Nazi propaganda picturing a column of refugees.
Of course, the Remain campaign was lackluster. Although Prime Minister David Cameron spoke passionately for continued British membership in the EU, he and his Conservative pro-Remain colleagues lacked credibility after years of scoring cheap points by bashing Brussels. Labour leader Jeremy Corbyn, a long-time eurosceptic, damned the union with faint praise when he declared that he was “seven out of ten” for Remain. Polling in the run-up to the vote revealed that nearly half of Labour supporters were uncertain of their party’s position on the referendum.
The Remain side lost despite enjoying the backing of labor unions, business leaders, universities, doctors, the governments of all of the United Kingdom’s allies, celebrities ranging from David Beckham to J.K. Rowling, and the leadership of every party aside from UKIP. The Bank of England, the IMF, and an overwhelming majority of economists warned that Brexit would severely damage investment, growth, and jobs in Britain. A majority of voters just didn’t care. Brexiteer Michael Gove was on to something when he said, “I think people in this country have had enough of experts.”
To be sure, the Leave side was fueled by a populist backlash against elites. But the campaign itself was led by consummate members of the Tory party elite such as Etonian former London Mayor Boris Johnson and Lord Chancellor Gove. Also, the anti-establishment mood didn’t seem to guide young voters: large majorities of those under 50 years old voted to stay, while it was those over 50 who pushed the United Kingdom out. Many frustrated young voters will feel that the old—nostalgic for a bygone Britain—have robbed them of a European future.
More than anything, though, the Leave vote was a vote against immigration. The closing days of the campaign revealed more starkly than ever just how central opposition to immigration was to the Leave campaign. Initial polling showed that nearly three-quarters of voters who saw immigration as the most important issue facing Britain favored Brexit, whereas strong majorities of those who saw economic issues as the main concern supported Remain.
The day after the vote, Britons—those who got any sleep—awoke to the sight of Cameron announcing that he will step down as prime minister in time for the Conservative Party conference in October. Although Cameron originally promised to stay on regardless of the result, that position was untenable after he led the losing Remain campaign. Whether or not Boris Johnson replaces Cameron, it is clear that the new leadership will come from the Brexiteer wing of the Conservative Party. And so, Cameron lost the gamble of his life. Having called for a referendum in hopes of staving off UKIP and containing the anti-EU wing of his own party, he will end up handing them control. The Labour Party is in turmoil as well, with Corbyn facing a leadership challenge from his backbenches.
But divisions within the Conservatives and Labour are the least of the United Kingdom’s worries now. With the pound plummeting to its lowest value in decades, stock markets around the world tumbling, and Standard & Poor’s planning to strip the United Kingdom of its AAA status, the short-term economic consequences of Brexit are already apparent. The long-term economic and political consequences, although more uncertain, are potentially far more troubling.
Voters also awoke to a disunited Kingdom: the referendum map revealed a sharply divided nation, with Scotland, Northern Ireland, and London voting overwhelmingly for Remain, whereas most of the rest of England went for Leave. Scottish leaders have already declared that they should not be dragged out of the EU against their will by English voters and have called for a second referendum on Scottish independence. In Northern Ireland, too, some Sinn Fein leaders have called for a vote on leaving the United Kingdom to enter a union with the Republic of Ireland.
And as they begin to feel the economic pain of Brexit and contemplate the potential disintegration of the United Kingdom, it may also begin to dawn on Brexit supporters that the Leave campaign sold them a false bill of goods. Even before breakfast the morning after the vote, Farage declared that it had been “a mistake” to claim that the 350 million pounds a week (a widely discredited figure) that the United Kingdom would supposedly save by not paying into the EU budget would be directed to the National Heath Service. Brexit campaigner and Member of the European Parliament Daniel Hannan also clarified for voters that Brexit would not mean an end to EU immigration into Britain; instead, the government would now have control over who comes in and migrants would no longer enjoy the rights of EU citizens. Ultimately, Leave voters who were venting anger over economic insecurity, declining living standards, and recent cuts to public services will discover that structural changes in the economy and Conservative government policies—not the EU or migrants—were at the root of these problems.
IN A BIND?
Legally speaking, the referendum result is not binding. But politically, it would be practically impossible for the new leadership that replaces Cameron to ignore the result. In other words, the United Kingdom will soon set about the process of leaving the EU.
The EU treaties set out clear procedures in Article 50 through which member states may leave. According to the process, the United Kingdom must notify the European Council of its intention to leave the Union, which would then instigate a process of negotiation lasting up to two years—or longer, if all member states agree—to determine the terms of withdrawal. Cameron promised to launch Article 50 immediately after the referendum, but in announcing his resignation, he declared that Article 50 should only be invoked by his successor in the autumn. Some Brexit campaigners have hoped to avoid the procedure altogether (and with it avoid the proviso that the European Parliament must endorse any deal) and to negotiate informally with the European Union. But EU leaders have already stated their position emphatically: the United Kingdom must follow the Article 50 procedure, and start doing so as soon as possible.
No one can say for certain what the outcome of the negotiations will be. The Leave campaign was notoriously vague on the issue, but there are a few main options—each problematic in its own way. First, if the United Kingdom wants to retain full access to the EU’s single market, it could follow the so-called Norwegian option and opt into the European Economic Area (EEA), which is an existing arrangement linking some neighboring countries to the EU’s single market. Otherwise, the United Kingdom could follow the similar Swiss option, through which it would create a bilateral deal with the EU similar to the EEA arrangement.
But in these models, in exchange for access to the single market, the United Kingdom would have to allow free movement of labor, pay into the EU budget, and follow the EU’s accumulated body of regulations—all things the Leave campaign promised would end with Brexit. In short, the United Kingdom would still be subject to single-market rules, but lose any role in shaping them. If, instead, the United Kingdom chooses to leave the single market entirely, it could trade with the EU like any other country that is a member of the WTO (the so-called WTO option). But in this case, British firms would face tariffs as well as substantial non-tariff barriers to trade. Given that 44 percent of British exports go the European Union’s single market, such an outcome would be damaging indeed.
In negotiating with the United Kingdom, the EU will face contradictory pressures. On the one hand, given the size and importance of the British economy, the EU will want to maintain a vibrant trading relationship. A deep recession in an economically isolated Britain would hurt continental Europe as well. On the other hand, the EU needs to drive a hard bargain with Britain to discourage any other member states from considering withdrawal. The EU must send a strong signal that leaving has costly consequences and demonstrate, as Jean-Claude Juncker put it on the eve of the referendum, that “out is out.”
In a European Union beset by problems—economic and monetary breakdown, refugees, and democratic backsliding in the east—Brexit is the greatest of them all. Support for the EU is at an all-time low, and the Leave victory has been cheered by far-right leaders, from France’s Marine Le Pen to the Netherlands’ Geert Wilders, who have called for referenda of their own. Still, although concerns about the potential break-up of the EU are understandable, the union will likely hold together.
Brexit will deal a huge blow to the international prestige and self-confidence—whatever is left of it—of the European project. European leaders may heed the populists and the lessons of Brexit by placing more restrictions on access to social benefits for EU migrants. Indeed, there is growing support for such policies across the political spectrum in Germany. If the EU is to regain its standing, its leaders must also get a grip on the refugee crisis and move away from its single-minded promotion of austerity, which has been both self-destructive and deeply unpopular across much of Europe. But ultimately, no other member state is likely to leave the union. For those in the eurozone, exit would simply be too costly. And new members in eastern Europe depend too heavily on EU funding to contemplate exit. Only in Sweden and Denmark is EU exit imaginable, although still unlikely because large majorities in both countries still believe they are better off inside the EU than out.
Above all, the union will not disintegrate because—despite all its current troubles—it remains, as German Chancellor Angela Merkel’s chief of staff Peter Altmaier tweeted, “the best thing that happened to us in more than 200 years.” If the EU didn’t exist, European leaders would be trying to invent something like it. Certainly, many EU policies and institutions, above all the flawed regimes governing the eurozone and the Schengen zone, are in desperate need of reform (reform that some member governments have been blocking). But for all these faults, the EU has played a key role in promoting peace, prosperity, and democracy across Europe over six decades. Voters are frustrated with the EU, but most are even more frustrated with their national governments. Mainstream political parties across Europe remain deeply committed to the union, and we can expect European leaders to reaffirm that commitment in the days to come.
The United Kingdom has always been a reluctant member state, its marriage to Europe one of convenience, not love. Late to join the European Economic Community, ambivalent from the start, and constantly demanding and securing opt-outs from the euro and the Schengen free-movement zone, the United Kingdom has been drifting away from the union for years. Even as the country held its European partners at arm’s length, those partners have sought to embrace it. Citizens across Europe overwhelmingly supported the United Kingdom remaining in the EU, as did their leaders.
Luxembourg leading the pack in hoping the Brits stay in. (edging out Estonia) pic.twitter.com/vMRroWbE4n
— ian bremmer (@ianbremmer) June 21, 2016
In the waning days of the campaign, Continentals quite literally tried to show the United Kingdom their love with grassroots campaigns such as #HugaBrit that saw Europeans hugging British friends and pleading with them not to go. In the end, though, all the hugs and policy concessions were to no avail.
British politicians—and many voters—have blamed the European Union for their problems for years. Now they will have to find something new to bang on about as they deal with an economic downturn and increasing strains on their own political unity caused by the decision to leave. Soon enough, the British will discover whether they truly prefer life outside the union. Having divorced in haste, they may end up repenting at leisure.