On 23 June, the United Kingdom voted to leave the European Union by a vote of around 52% to 48%. The front page of one major newspaper announced “Independence Day”.
There was an immediate seismic shift in the British political landscape. Prime Minister David Cameron declared he would be resigning in the next few months, a revolt was launched against the leader of the opposition Labour Party by members of his own party, the leader of the Scottish Nationalist Party raised the spectre of a second Scottish independence referendum, some in Ireland said they would be pushing for a vote on Irish “reunification”, the pound dropped and global markets had palpitations. EU grandees wailed that Armageddon had arrived.
The short-term implications seem negative. Systems don’t like change and they will bray and flail as they try to adjust and position themselves in the new reality. The EU will be worried about exit contagion and spew heated rhetoric to try to neutralise it. Turkey may try to push for advantage in the confusion, potentially adding to the tensions so that it can be brought in as “part of the solution”.
But the medium and longer-term implications are much more promising. To understand why, it helps to think forward ten years, to where the EU might have been without a Brexit.
WHAT IF BREXIT HADN’T HAPPENED?
Looking forward, it is hard to imagine a scenario in which the EU’s anaemic growth substantially revives, or its social challenges improve. With no domestic economic tools to adapt, countries like Greece remain captive to economic policies coming out of Brussels, or maybe Berlin, spurring more popular discontent and resentment. Infrastructure and social service planning becomes increasingly difficult as a mobile population tries to find work.
At the same time, there is a growing push for an EU army and increased intelligence sharing among the EU’s 28 or so members. What sort of a position might be backed by an EU military? Just a few days ago, Germany’s Foreign Minister publicly berated NATO for sending troops to the Baltic countries and Poland to reassure them in the face of concerns about a resurgent Russia (something the EU is now loath to do, especially given their mismanagement of the Ukraine situation). This means that, even without a military, one of the EU’s main voices was already undermining NATO, and sending conflicting messages about Western positioning. What would happen if an EU military and NATO were directing conflicting policies? And how would overlapping partners be expected to fully share intelligence under those circumstances?
Had the UK remained, it would have been one voice of over two dozen in shaping trade negotiations and foreign policy priorities in a zone of low growth and increasing social instability. At the same time partners like the US would have been increasingly concerned about its reliability as a military and intelligence ally.
WHAT DOES BREXIT MEAN NOW?
Once the UK officially declares its intention to leave the EU, it has two years to finalise the terms of disengagement. However it is not as if there is no safety net. All countries involved are members of the WTO, and so there are baseline trade agreements in place. Similarly all are members of Interpol and raft of other international organisations. In spite of all the sound and fury, the UK is not going to end up with a worse deal than, say, Canada, which benefits from visa free travel to European countries and market access.
The UK has a large trade deficit with the EU, and the EU won’t want to lose access to UK markets for German cars, French wine, Danish cheese, Italian pasta, and whatever it is Portugal sells to the UK. Ignore the noise. And there will be a lot of noise. Traders and speculators love volatility as they can make money when the market moves, whichever way it moves. At the end of the day, though, a deal will be struck.
LOOKING FORWARD, TO INDIA
Once the initial flux of the next two or three years is over, the UK can become more adaptable and nimble in economic development and foreign policy engagement. Rather than being tied to the EU, it can look globally for partners. Instead of being one of 28 at the negotiating table for a trade agreement, for example, it can create targeted bilateral deals.
An obvious focal point would be India, and its high growth, English speaking population and abundant, young professionals. Instead of being forced to take Spanish bartenders and Bulgarian drivers, the UK can prioritise the immigration of Indian doctors and engineers. Geopolitically, it can also start focusing on an “Anglosphere”, in which India, the UK and US, anchor a global partnership of like-minded English-capable countries. This takes the UK from being one of several biggish players (along with Germany and France) in a regional partnership, to being a uniquely valuable node in a real global alliance.
Of course, this is not inevitable. It will take leadership and vision, and a real understanding of the drivers and realities of potential partners, like India. The Empire is long gone. And the tone of the engagement will need to acknowledge that. But at least it is now possible. Had the UK stayed with the EU, the UK would have been subsumed into an increasingly dysfunctional Europe. Now it can decide for itself which partnerships it wants to build.
WHITHER, THE EU?
The EU is not a static structure. A lot will depend on how it responds to Brexit. If it doubles down on its bureaucracy-based political and military integration, the Brexit virus is likely to spread. If it takes the lessons of Brexit to heart and retreats and retrenches along the lines of its core identity—an economic bloc—it might buy itself some time. However it will still have to find ways to handle Turkey, and possibly Russia. The EU is evolving, the question is, will it also be adapting.
Cleo Paskal is Associate Fellow, Chatham House, London and Trudeau Visiting Fellow, CÉRIUM, Montreal. Views are her own.