“Brexit” Ripples Across the Atlantic?

Brexit

Alex Dunn

The US and indeed the world is currently obsessed with how the run up to the US presidential elections is developing.

In Europe, whilst this contest is followed with interest (and a mixture of amusement and fear whenever Donald Trump makes an appearance) Europeans have their own elections to keep them busy.

On June 23rd the UK will hold a referendum on whether to continue to be a member of the European Union.  Will Britain remain or will they “Brexit”?

For non Europeans who are still, understandably confused by Europe, such an event may not appear to be very interesting.

The EU is made up of 28 very different nations, so losing one should not make much of a different right?

In fact, the scenario which is currently terrifying Eurocrats, could well have implications well beyond the EU’s vast borders.

Should the UK leave, there is a very strong chance that the Netherlands would follow.  To lose one country might be considered unfortunate, but to lose two looks like carelessness.

Many commentators have suggested that other countries would soon follow, leading to the eventual break up of the European Union.  Again, why should this be of any concern to non-Europeans?

There is a strong argument for claiming that the European Union has delivered peacetime in Europe, with no member states fighting one another in the 58 years since the Treaty of Rome was signed.  It is difficult to prove that the EU is not a very expensive elephant spray, but the history books would seem to suggest that without some form of political union, Europeans would quite happily be trying to kill one another.  Certainly the former member states of Yugoslavia who have joined the EU, are hoping that they benefit from a peace dividend following the horrific Balkan wars of the 90s.

It is in everyone’s interest to maintain peace in Europe and this is where the US will probably sit up, as there are plenty of Americans still alive who cannot recall European place names without a chill.  London, Paris and Amsterdam will be picture post-card memories for some but Bastogne and Normandy are something else entirely.

How would Americans feel about being dragged into another overseas war, in a theatre that they had considered to be a stable place for their university age kids to tour before starting their careers?

A more tangible benefit of the EU is that it is a single market permitting the free movement of goods, capital and services between member states.  It also permits the free movement of people.  A bank worker living in Germany can have a drive to work which takes him through Belgium before reaching Luxembourg (a founder EU member) and the office.

A break up of the EU would also signal an end to the TTIP or Transatlantic Trade and Investment Partnership, which the EU and US have been working towards for some years.  The TTIP is an attempt at an EU/US trade agreement which optimists believe could result in economic benefits worth billions.  The TTIP is not particularly popular in Europe, but the US is particularly enthusiastic about the potential benefits and would be sorry to see such an initiative wither on the vine.

Probably the most recognisable symbol of the EU is the Euro, the single currency which has been adopted by the majority of the EU states (but not the UK, who still likes to see the Queen staring up at them from their wallets).

An inevitable consequence of the single currency is the tying together of EU countries at opposite ends of the economic power scale.  By joining the Euro, comfortably well off nations (Germany and France) have found their fates shackled to economic basket cases.

When the European debt crisis triggered in 2009 several of the smaller, weaker member states (Greece, Spain, Portugal and Ireland) were unable to pay off their debts and had to bail out their banks.  Their partners in the EU suddenly found themselves being asked to pay billions to help those in trouble.  Many of those in well off countries were already tightening their belts and were not at all enthusiastic about helping countries that they felt were the authors of their own misfortune.

If a Brexit was a catalyst to an EU break up, the Euro would disappear.  As the single currency is a competitor to the US dollar, it could be argued that the US would be one of the few parties to benefit from the death of the Euro.

I have only presented a very small set of EU characteristics which might be of interest to an internationally minded American.  The pro’s and con’s of EU membership currently being weighed up by the UK are many, varied and complex.

The fact that a referendum is necessary, shows that the European unity experiment has faltered.  In the future, the financial crisis years will probably be seen as a watershed moment in European history, where the good years ended and the thin veneer of European brotherhood was stripped away.  Is this the time when fiscally sound Germans start to resent perceived Greek profligacy and say no more bail-outs?  Do the British farmers say enough of the EU subsidies to the French and decide to go it alone?

The EU motto is “United in diversity”, but the financial crisis years have shown the word “United” may just be an empty epithet.

31 thoughts on ““Brexit” Ripples Across the Atlantic?

  1. I think this is a fair presentation of the picture. But when we speak of “benefits” we need to inquire “whose benefits”? Free trade provides jobs for people when European nations trade among themselves; not so beneficial if the goods are imported from low-cost-labor nations in Asia, etc. Reactionaries were moaning from Day One that the poorer nations, e.g. Greece, Ireland, Portugal (the “PIIGS nations”) would be subsidized at the expense of the richer, more powerful nations. Their debt crises have merely been temporarily papered over; we are far from seeing the final chapter in this saga written. As for continent-wide peace, the neo-Nazi political parties keep gaining influence and votes. What is there in the EU agreements that would prevent the rise of a newly aggressive nationalist regime right in the heart of Europe? (Oh, I’m sure there are pledges of non-aggression. Just like at Munich in 1938!) I think the whole EU experiment has been interesting. It was supposedly modeled on none other than the United States of America–where the citizens are less united than at any time in recent decades at the moment. But of course the whole thing was designed for the benefit of the respective Ruling Classes of Europe. No head of state, no holder of multiple advanced degrees in Economics (“the dismal science”!), no central bank official possesses a magic wand to cure the still lingering malaise of the Financial Crisis of 2008/09. They’ve all for too long been playing the game of kicking the can further down the road, only delaying the calamity looming on the horizon when the bills finally come due. Right now the UK Establishment is scared witless about the June 23 referendum, waging a rather hysterical propaganda campaign about Armageddon arriving the next day if Brits vote to exit the EU. So we know with great certainty that the British Ruling Class sees EU membership as benefiting themselves. This tells me that if I was a UK working class voter I would feel compelled to vote “Leave.”

      • “traven”–Before I pursue the link you provided, I want to say that “turmoil in the financial markets” was widely predicted, IF the vote to Leave triumphed. Thus I think the initial reaction is way overdone and I think markets will regain their bearings soon. Also, it’s being said it will take up to two years to unwind all the UK-EU agreements that had been in place. So, has the world changed drastically in a single day? ONLY AS A MATTER OF PERCEPTIONS, I would argue. For the moment, British-made goods should be “on sale”! Too bad I’m a pauper and can’t take advantage! I’d love to buy a genuine English bowler hat!

      • “traven”–I disagree with just about every point in the article you linked us to! (For what it’s worth.) The “special relationship” between the US and Britain has long struck me as peculiar. “We” (I wasn’t around to personally participate) threw off the yoke of the British Crown in the War of 1775-1783, then had to repel their troops again in the War of 1812, during which the bloody barstards torched our original national capital! Their influence in Canada was also deemed a problem for the US. As for spoken language, as G.B Shaw said, “We’re divided by a common language”! But it is plain as day that British customs, legal notions, etc. are dominant on this side of the Atlantic. After all, we had many German, French, etc. immigrants land here in the early years but their national tongues are not our “official” national tongue.
        The Conservative Party gets to name Cameron’s successor, without an election. A major difference in how the Brits are governed. So why the notion of ongoing instability in governance the article posits? And as I pointed out here on TCP prior to the vote, the UK’s role in NATO will continue to be considered a crucial bond to the US. One thing I will say is a tremendous irony is the fact that a few short years ago the world’s financial markets trembled at the idea of a “Grexit”–Greece being expelled from the EU because of its economic calamities; that didn’t happen (yet!) and the markets returned to their perpetually sunny outlook on the future. (Whether that’s realistic is too big a can of worms to open here.) But now we actually have a country leaving the EU voluntarily, and unlike poverty-mired Greece it’s one of the powerhouse economies on the planet. Who would have predicted this a year ago?!? Overwhelmingly the “experts” predicted the vote to Leave in the UK would fail. But the shock of the actual outcome will wear off in due time.

      • This is a reply to your posts below.
        I always thought you were a pessimist. What a disappointment to me, a fellow pessimist, to learn that like Pangloss.you are an unreconstructed optimist. “everything that happens, happens for the best”.
        My 92 years of experience has demonstrated to me that ” the evil that man does lives on but the good is oft interred amongst their bones.” I am afraid that the evil is living on and we will feel it deeply.

      • “traven”–Things have gotten confusing here as to who’s responding to whom. But if you are “accusing” me of being a Panglossian “optimist,” I reject the notion. I consider myself a realist above all. We’ll all know, in the fullness of time, how things are really going to shake out from the Brexit. At this point I maintain the initial reaction is way overblown. Oh, don’t worry, the world IS going to hell in a handbasket–just look at the refusal of world leaders to really tackle climate change–but I can’t see Brexit as leading to the Apocalypse….At least, not next week [wink, wink].

  2. Alex.. From what I know I think England should vote “REMAIN” and stay in the EU. In that respect I accept some of your arguments on the virtues of the EU. As an American my main reason for supporting this position has more to do with the effect LEAVE may have on our country’s economy, and world markets. The drastic move of England from the EU at this moment of very fragile world markets and economies as a result of chaos in the Middle East and Indian sub continent, combined with the austerity economic policies imposed by the IMF, World Bank, and right wing government policies in the US, Britain,Germany will have a profound destabilizing effect for years to come.

    I do not agree with your arguments that the EU has brought a stable peace to Europe. The EU has failed to establish itself as a separate entity with different aims than the United States. To a certain extent it has functioned as the US’s “poodle”. To allow itself to be corralled into the destabilizing US tactic of the aggressive slow encircling of Russia has brought chaos not peace to Europe. With our two right wing candidates running for President ,war with Russia could result from escalating sanctions which Russia will not accept. That is NOT peace.

    TTIP is not a trade deal made in heaven but rather one made to give oligarchical corporations supra national rights over the democracy of the people. If the EU accepts this piece of trash it will bring the end of democracy to both Europe and the US, Certainly not a better life for the citizens of either country.

  3. Ah Walter. That argument strikes me as the obverse of liberal women supporting Hillary because she is a woman in spite of her having a voting record against all the things liberal women are for.

    Europe is our largest trading partner and destabilization of the EU economy by a
    Brexit would hurt all of our citizens not just the 1% who would do fine as usual.

    • “traven”–How do you figure a “Brexit” will “hurt all of our citizens”? Opinion in the financial community is well nigh unanimous that the $US will rise vs. the Pound Sterling in the wake of such an event. UK goods will become cheaper here. Of course, that’s a two-way street, as US goods will lose sales in the UK, potentially causing some layoffs here. I don’t think US citizens “have a dog in this fight.” But this is probably soon to become moot, as I think it very unlikely the votes to “Leave” will prevail. Quebec failed to leave Canada decades ago, Scotland failed to leave the UK more recently.

    • traven.

      I heard a report – it might have been a pro-Brixit ad – stating that 60% of all laws/regulations governing GB now come out of Brussels. If true, can we say that GB is no more? However, I agree with Laxer that exit is unlikely to prevail. Whether here or there, government establishments are all-powerful, and our lives are so bought and paid for.

      • Walter–That is interesting, and I hadn’t heard this before. About the only British goods I’m aware of buying personally are occasional music CDs, which have long been labeled “Manufactured in the EEC” (European Economic Community). Since the UK was allowed the privilege to participate in the EEC without accepting use of the Euro as their currency, it’s possible they opted out of numerous other fine points accepted on the Continent. Why would they be granted all these privileges? Doubtless because London is still considered the financial center of the world (sorry, Wall Street, but it’s true) and the UK is a key ally of the US, key element in NATO, etc. So I imagine those on the Continent had to swallow hard and say, “Okay, we’ll grant the prideful bastards, former rulers of much of the world via the Empire, special privileges.” Though I am a vigorous opponent of the “Libertarian” notion that businesses should be allowed to operate with no regulation whatsoever, I have little doubt that the bureaucrats in Brussels HAVE gone overboard in their quest for uniformity of just about everything in the present European environment.

  4. If I recall correctly, the U. S. Undersecretary of State for European Affairs, none other than the architect of the coup in Ukraine, Victoria Nuland, expressed perfectly (in a bugged phone call) the American government’s view of the E.U. Do I have to repeat her exact words? I thought the entire world had heard them on You-Tube. As long as NATO remains to ensure weapons sales to Europe by American arms manufacturers, the U.S. could care less about the E.U.

    • It is wrong to suggest that the U.K.’s position is like Norway. Unlike Norway (who negotiated a way into the EEA via the EFTA ) the UK is leaving the EU. It is not clear what happens to countries which leave but the EEA is made up of EU member states, plus members of the EFTA. I am told the UK might have to try to negotiate to rejoin the EEA, as triggering article 50 of the Treaty of Rome, means they are altogether out. This has recently been hinted at by Jean-Claude Junker. Indeed it seems likely that the EU will not want to allow the UK an easy exit, lest that encourage other wavering nations that they can have their cake and eat it.

      I am astonished that you think that the economic consequences will be minor. Scotland are already talking about another referendum to quit the UK and Sien Fein have said that Northern Ireland (who voted to stay in the EU) can no longer be represented by the British government. There are huge repercussions for the UK, including a serious chance that it will break up, possibly by violent means. The pound is down to its lowest rate against the dollar (and has taken a drop against the euro) and uncertainty reigns, the worst possible situation for any economy.

      Finally, the EU fonctionnaires I spoke to are amused by the attitude of the Brexit politicians who say that they will negotiate a smooth exit. Perhaps these are the people who are the architects of this contingency plan you refer to? I think the response they gave was along the lines of the immortal words of Victoria Nuland,

      • Please do not astonish yourself by reading things into what I never said. I never said anything about the economic consequences of Great Britain leaving the E. U. because I don’t pretend to know either their nature or extent. I don’t believe that anyone else has figured out these things, either. I simply said that the United States only cares about NATO as a proxy vassal for undermining Russian sovereignty and for squeezing increased sales out of Europe for American arms manufacturers. And I’ve already elsewhere made reference to Victoria Nuland’s infamous quip about the European Union, which comment I believe accurately conveys official American views about the E. U. Not that I necessarily accept or endorse such views, but the U.S. government does indeed seem to harbor them. Just saying …

  5. May I offer a contrary perspective?

    Americans seeking to understand issues relating to the British referendum are not well served by this article. I understand that he is trying to be concise, but Dunn makes one point that is factually wrong. I do not agree with his other points either, but they are less important because they are more a matter of opinion than fact.

    Dunn writes, “A more tangible benefit of the EU is that it is a single market permitting the free movement of goods, capital and services between member states.” This is such a vague generalization that it cannot be considered accurate. It is misleading to anyone who is concerned about a possible British exit from the EU.

    The EU is a supranational government whose member countries are obligated to be part of a single market (more accurately, a common regulatory area) called the European Economic Area (EEA). To describe the EU itself as a single market is a gross oversimplification that actually obfuscates rather than aiding understanding. The reason for this is that the EEA extends beyond the EU’s borders and includes Norway, Iceland and Liechtenstein, who participate via a separate organisation called the European Free Trade Association (EFTA). Dunn writes that a German worker can drive to work in Luxembourg without facing any border controls, but exactly the same is true for a Norwegian worker (although it would be a long drive).

    Understanding this distinction is crucial to understanding the possible consequences of the UK leaving the EU, because it is possible for the UK to leave the EU but still participate in the EEA. In fact, the economic consequences of suddenly leaving the EEA would be so disastrous that no British government would ever even contemplate doing so. That option isn’t even on the table.

    The question on which the British (and some Irish) people will be voting on the 23rd of June is a very simple one: do you wish to remain a member of the EU, or do you wish to leave? The question of leaving the EEA, or as it is commonly known, the single market, is not even being asked. It isn’t going to happen. In the extremely unlikely event that the people do vote to leave the EU, it will be up to the British parliament to decide how to do so. I am familiar with the contingency plan currently being considered by the British government. It is of course the only sensible option: to negotiate to join EFTA and continue participating in the EEA.

    Since Britain will continue to participate in the EEA anyway, Brexit simply won’t cause the kind of economic shock that many people are worried about. Whatever economic consequences there are (such as traders selling the pound) will be relatively minor, and things will return to normal much more quickly than is commonly thought, because from an economic perspective nothing fundamental will have changed.

    If this comment is not unwelcome, and if discussion continues, I will comment further.

    • What, a contrary perspective offered on The Contrary Perspective?!? Shocking! But seriously, this is clearly a very complicated situation, and I would bet a lot of Brits voting Thursday are as under-informed on the details as most of us on this side of the big pond. It looks to me like this really boils down to a referendum of sentiment: “Shall we stand proud, waving the Union Jack or surrender to the bureaucrats on The Continent?” The nationalist crowd, I’m sure, is screaming that the surrender happened years ago and needs to be reversed. (Likewise, a certain element here would have us believe the USA went under a communist dictatorship the day Obama took office.) Will the murder of a pro-Remain Member of Parliament last week swing the vote? Perhaps. Then again, mass murders here in the US have yet to move Congress to pass sensible gun control laws. Stationary inertia can be very difficult to overcome. And right now that favors a win for Remain.

      • I apologize for thinking that your remarks applied to what I had said. Somehow our responses do not always appear where we think they will.

        Peace …

  6. Refero.. Thanks for the ‘nitty gritty’ details. They are certainly important but “perception’ alone is a powerful force that can overpower the details. How the political “perception” of a Brexit is taken in the EU and throughout the world may be quite different from the more sanguine result the details promise.
    It is still too close to call but the Remain or Leave vote, in itself ,will have a profound effect on English and European ppereceptions for a long time.

    • As you, too, probably know by now, the British have voted to leave the E.U. by a vote of 52%-48%. Stock markets have taken an early pounding, as has the British currency — as one would expect — since money scares easily and runs for cover (where?) whenever “uncertainty” breaks out. I would expect “bargain hunting” speculators to swoop in an attempt to make a quick killing before reason returns and international stock markets get back to their usual fraudulent speculations leveraging tsunamis of free money from the now-negative-interest-rate FED. Oh, well, “There’ll always be an England” and Oligarchs On The Run, Inc, will always have London to call home.

      • I had this one wrong, but I’m certainly far from alone. Trump landed in Scotland today to reopen a golf course he has an interest in. Stepping off the ‘copter, he declared the Brexit vote “Great, fantastic, great!” Some political wags have been saying all along there’s a parallel between Trump’s “isolationism” (more on that in a second) and “Britain for the British!” (as the assassin of MP Jo Cox reportedly shouted as he snuffed out her life). I warn the world right now that Trump is no isolationist. I believe a President Trump would be positively itching to “project US military power” anywhere on the globe where he perceives people as guilty of believing that the USA, and Trump himself, are anything less than “Great! Fantastic! Great!”
        I also did not expect PM Cameron to announce immediately that he is stepping down. It’s a pity we lack this tradition in the US! The only POTUS we ever had resign was one step ahead of the sheriff! Memo to Great Britain: here’s a suggestion for your next move. Get the hell out of the 6 northern counties of Ireland that you still control by force of arms! IRELAND FOR THE IRISH!!!

  7. Greg, Northern Ireland is not part of the U.K. by force of arms. Didn’t you know that Sein Fein are part of the government there ? Also, Ireland is for the Irish. The citizens of Northern Ireland are Irish, not British.

    • Alex–With all due respect, my stance is that the occupied Counties of Ireland are a colony of Great Britain. Sinn Fein was forced into painful compromises as the IRA’s armed struggle didn’t raise enough popular support to forcibly reunite these counties with the Republic. Several IRA prisoners starved themselves to death (before forced feeding was instituted on other hunger-striking prisoners), only to find the British Crown couldn’t find itself a conscience. Bobby Sands and other martyrs are not forgotten. I remain unashamedly a supporter of the IRA. I never mince words when stating my political views. Thank you for your feedback.

      • Sometimes a healthy argument stretches to a point where polarized views are so far apart that the different sides no longer hear eatch other.
        Certainly for me, that point is reached when the interlocutor professes a support for terrorism.
        Having “skin in the game” as I believe the Americans say, understanding someone who supports the IRA (or indeed the loyalist terrorists) is beyond my limited capabilities.

        It always disgusted the British that so many “plastic paddies” supported, often financially the IRA. For the uninitiated a plastic paddy is the Irish term for Americans who claimed they were Irish by virtue of the fact that 4 generations ago a relative once drank a Guinness.

        After 911 it was good to see a lot of this support fall away, one the Americans got a taste of what terrorism really was.

        As for Ireland for the Irish, how about America for the Native Americans? I doubt there would be many plastic paddies donating for pipe bombs being built in basements on those miserable ghettos called “reserves”.

      • Alex–I take it you are a British citizen. There’s no need to continue this discussion. I will merely remind you that George III called the American Colonists who turned traitor to the Crown terrorists, as well. Personally, I support the concept of returning this continent to its original inhabitants, as well. The natural environment (what’s left of it!) would sure as hell be better off.

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