Brexit and Bust: Britain Plunges Into the Unknown

The United Kingdom's decision to leave the European Union has shocked the world and is a wake-up call for the single market of 28 nations and more than 500 million people. The fury over economic and political cooperation that led to the referendum could intensify. “In unsettling ways, the June 23 referendum has put the future of Europe, the transatlantic alliance and the international liberal order itself in play, and done little to settle them,” writes Daniel Twining, director at the German Marshall Fund of the United States. He urges EU and global leaders to contemplate the disturbing trends for democracies – a backlash against globalization, fears about diversity and immigration, mistrust over trade agreements and uneven distribution of benefits, and fragmentation as nations withdraw from global challenges demanding cooperation. Twining suggests that rising populism and “domestic insurgencies will roil the ranks of the major powers, with potentially widespread strategic and economic consequences for the fragile international system.” – YaleGlobal

Brexit and Bust: Britain Plunges Into the Unknown

The UK votes to leave the EU, and fury over cross-border economic and political cooperation won’t subside
Daniel Twining
Thursday, June 23, 2016

Divided we quit: A sharply divided Britain voted to leave the European Union, with Tory leader Boris Johnson leading the Brexit group, top; Prime Minister David Cameron failed to persuade Britons to stay in the EU

EDITOR'S NOTE: The article was updated on June 24.
BERLIN: Britain’s vote to leave the European Union is emblematic of a wider shift in Europe’s geopolitics. As much as the British want to believe their islands have a destiny separate from that of the continent, they have in fact been pacesetters for Europe writ large, from the consolidation of parliamentary democracy to the industrial revolution to the market reforms of the 1980s. The “Brexit” debate, although in many ways peculiarly British, amplifies broader trends in European politics – including questioning the fundamentals behind the unity of the continent – that are likely to intensify rather than subside. In unsettling ways,  the June 23 referendum has put the future of Europe, the transatlantic alliance and the international liberal order itself in play and done little to settle them.

First, globalization has produced a backlash in which national and local identities are ascendant. The British referendum campaign has underlined how a country whose cosmopolitan capital is a hub of global finance nonetheless prizes a more narrow English nationalism – even as the likelihood of pro-EU Scotland threatening to secede from the UK grows in the aftermath of Brexit. Residents of London, a bastion of “Remain” voters, see a hugely successful city whose multiracial, multilingual population resembles the world in miniature with even more richness. By contrast, many Brexit voters apparently viewed such diversity as a threat, succumbing to nativist appeals to clamp down on immigration – even though it has made Britain more prosperous and dynamic. “Leave” voters were willing to risk economic calamity, including a collapsing stock market and currency as well as an expected serious hit to household incomes, to assert their “independence” from Europe – attesting to the reality that people can be motivated by considerations other than just prosperity.

Second, the British referendum has highlighted a wider divide over how best to prosper in a competitive global economy. Brexiteers argued that the UK could more nimbly seize overseas trade and investment opportunities by cutting loose from the EU – even though the Union is the world’s trading superpower, pursuing ambitious free trade agreements in Asia and America over the heads of more protectionist member states, and despite the fact that Britain sends nearly half its exports to Europe. “Leave” advocates painted a rosy picture of the dividends that would accrue from a UK-US free trade agreement – even as US leaders warned that England detached from Europe would go “to the back of the queue” in trade negotiations with the US. Brexit supporters invoked Elizabethan England, when buccaneers scoured the world’s seas for treasure, as if the piracy of Sir Walter Raleigh were a relevant recipe for prosperity today. Happily, the Leave campaign’s leaders did not promise the kind of protectionism that US presidential candidate Bernie Sanders has advocated by opposing free trade agreements, arguing instead that Britain’s liberal economic instincts were being suppressed by Brussels bureaucrats. Perhaps, but EU membership has probably been a more liberalizing force in the UK than a protectionist one; under EU rules, Britain could not impose unilateral tariffs to save its failing steel industry, for example.

Third, the hard reality of Brexit raises urgent questions about the future of European integration. According to Pew, nearly half of citizens of Germany, Spain and the Netherlands hold unfavorable opinions of the EU, as do 61 percent in France. Populist movements are on the march across the continent: The National Front’s Marine Le Pen is predicted to win more votes than any establishment candidate in the first round of the 2017 presidential election in France. Anti-immigrant, nationalist parties have the support of a quarter of voters in bastions of moderation like Sweden. Some on the continent actually supported Brexit as a way-station to a European fiscal union in a smaller but more integrated eurozone. But to halt the march of populist forces rallying against the “tyranny” of Brussels, British advocacy within the EU of more liberal economic policies within EU councils probably would have served as a better antidote. Shared Franco-German-British leadership of the EU is also preferable to the more Berlin-centric approach, and which Germans themselves do not want.

Fourth, Britain’s referendum raises questions about how smaller European nations can successfully engage with the big civilization-states of the 21st century. Leaders in both America and China, the reigning superpower and the rising one, publicly urged Britain to stay in the EU. For China, the UK is a gateway to investments in Europe and a financial hub for internationalizing the renminbi. The “golden decade” in UK-China relations promised by Chancellor of the Exchequer George Osborne is likely to be stillborn as Britain severs its access to the European single market. Britain is America’s closest ally in the EU. The “special relationship” between Washington and London has amplified the power and influence of both within European councils and in the wider world. A Britain unmoored from the continent is a less obvious top-tier partner for the United States. British officials should know that Chinese and Indian leaders may have less time for representatives of a small set of islands and 65 million than those embedded at the heart of the world’s largest economy, the European Union.

Fifth, Britain’s referendum raises warnings about how smaller European powers navigate a dangerous geopolitical environment. Brexit does not revoke Britain’s NATO membership. But even the prospect of breaking away from its EU partners would not in any way strengthen the alliance. Russia under Vladimir Putin is pursuing a concerted strategy of dividing the West. The fracturing of European and transatlantic solidarity risked by Brexit creates further openings for Russia to unpick the binding post–Cold War settlement. China is subverting the liberal international order, using the threat of military force to control the global commons of the South China Sea and building parallel institutions like the Asian Infrastructure Investment Bank as tools of geo-economic influence. The calamity in Syria has produced a world more awash in refugees than at any time since the Second World War, with many of them heading directly for safe havens in Europe. A Britain that exits the European Union is not obviously in a better position to deal with any of these daunting strategic challenges; it may find iself less able to shape international outcomes or leverage its US and European alliances to reduce threats to its security.

Britain’s voters have spoken. As one senior diplomat put it on learning of the Brexit outcome. "We were a great nation for hundreds of years before the EU and we will still be a great nation afterwards." But these broader dynamics remain – the tension between globalization and national identity, the imperative of economic competitiveness in a more multipolar world of diffused technology, the future of a troubled European Union beset by slow growth and populist politics, the imperative for smaller powers to combine their strength to engage with the Indo-Pacific superstates, and the fate of the liberal international order. Just as America’s Republican voters revolted against their elites by choosing Donald Trump as their party’s nominee, and just as British voters questioned the established European order, so further domestic insurgencies will roil the ranks of the major powers, with potentially widespread strategic and economic consequences for the fragile international system.

Daniel Twining is a director at the German Marshall Fund of the United States who previously lived in the United Kingdom.

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