The British History of Brexit
It is now all but certain that Britain will leave the EU in March 2019 without a workable divorce settlement. The only question is whether this outcome will be the economic catastrophe that most observers fear.
LONDON – Since June 23, 2016, when 52% of British voters backed withdrawing from the European Union, the “Brexit” debate has been tearing British politics apart. Although the Brexit referendum was non-binding, then-Prime Minister David Cameron’s government, expecting a vote in favor of “Remain,” had promised to honor the result. Britain, late to join the EU, will be the first member state to leave it, with the exit date set for March 2019.
Remainers alternate between blaming Cameron for his recklessness in holding the referendum and his incompetence in managing it, and castigating the Brexiteers for swamping the voters with lies. At a deeper level, the Brexit vote can be seen as part of a transatlantic peasants’ revolt, making itself felt in France, Hungary, Italy, Poland, Austria, and of course the United States. Both explanations have merit, but both ignore the specifically British roots of Brexit.
Britain had stood alone against a Hitler-dominated continental Europe in 1940, the moment of recent history recalled with most pride. Years later, Margaret Thatcher voiced a common British sentiment in her usual emphatic manner. “You see,” she once said to me, “we visit, and they’re there.” Despite former Prime Minister Tony Blair’s stated intention, Britain was never “at the heart” of Europe: it was. In their 42 years in the EU, the British have always been an awkward, Euroskeptical partner. Approval of membership has only briefly been above 50%, and by 2010 was dipping below 30%. A referendum back then most likely would have resulted in an even bigger majority for leaving.
The United Kingdom did not sign the 1957 Treaty of Rome, which joined the EU’s six original members – Germany, France, Italy, the Netherlands, Belgium, and Luxembourg – in the European Economic Community. True to its traditional policy of divide and rule, it organized the seven-member European Free Trade Association as a counterweight in 1960.
But the UK stagnated, while the EEC prospered, and Britain applied for entry in 1963. Britain’s motive was mainly economic – to escape the EEC’s external tariff against British goods, by joining a more dynamic free-trade area. But the motive of preventing the formation of a political bloc was never absent, and ran counter to the European founding fathers’ dream of a political union. In the end, French President Charles de Gaulle vetoed the UK’s membership bid, viewing Britain as an American Trojan Horse.
Remainers conveniently forget that when Britain voted in 1975 to remain a member of the EEC – after joining in 1973 – the referendum was based on the lie that membership had no political implications. In fact, the EU’s founders, especially Jean Monnet, saw ever-deeper economic union as a way to forge ever-deeper political union. In 1986, Thatcher signed the Single European Act (which set the objective of establishing a single market), apparently believing that it was only an extension of free trade in goods to services, capital, and labor.
But Britain’s semi-detached status was confirmed by the Maastricht Treaty of 1992, under which Thatcher’s successor, John Major, obtained (together with Denmark) an exemption from the requirement to join the euro. More obviously than anything preceding it, the single currency was a touchstone of willingness to proceed toward political union. After all, as the events of 2008-9 showed, a common currency without a common government cannot be made to work.
In the wake of the Brexit decision, Cameron’s hapless successor, Theresa May, has been caught between the demands of Brexiteers like her erstwhile foreign secretary, Boris Johnson, for “control of our borders” and the fears of the Remainers concerning the economic and political consequences of leaving. She hopes for an exit from the EU whereby Britain would retain the benefits, but avoid the costs, of membership.
This hope is embodied in the government’s just-published White Paper, “The Future Relationship between the United Kingdom and the European Union.” In it, the government seeks an “Association” that would leave Britain within the EU’s external tariff area for all trade in goods made in Britain and the EU, but free to conclude its own free-trade agreements with everyone else. The single market in services would be replaced by a special agreement allowing EU clients unrestricted access to London’s financial services, while avoiding a common regulatory system. A new “framework for mobility” would aim to continue to “attract the brightest and the best, from the EU and elsewhere,” while curtailing (in unspecified ways) EU citizens’ freedom to work in Britain.
Nothing is more certain than that the White Paper’s jejune attempt to have it both ways will fail to survive serious scrutiny on either side of the Channel. And that means that Britain will leave the EU in March 2019 without a workable divorce settlement. The only question is whether this outcome will be the disaster most observers fear.
I am unpersuaded by the Remain argument that leaving the EU would be economically catastrophic for Britain. The loss of settled EU arrangements would be balanced by the chance for Britain to rediscover its own way, not least in fiscal and industrial policy. Experience suggests that the British are most resilient, most inventive, and happiest when they feel in control of their own future. They are not ready to give up their independence.
My main worry is the loss of the chance for Britain to help shape the political future of Europe. The organization Britain will be leaving is far from marching confidently ahead to political union. It is riven with conflict. German Chancellor Angela Merkel is almost as powerless as May; neo-fascists are in, sharing, or close to power in several European countries. Almost the entire weight of the European project rests on the shoulders of French President Emmanuel Macron. It would have been good to have Britain by his side, rather than drifting out to the Atlantic.
The End of Global Britain
In the two years since the Brexit referendum, the United Kingdom's global influence has been significantly diminished. A country that once punched above its weight in international affairs now only punches down, and Brexiteers’ aspiration to lead the vast “Anglosphere” into a brave new world has become a comical delusion.
LONDON – Nowadays, Britain’s words and actions on the world stage are so at odds with its values that one must wonder what has happened to the country. Since the June 2016 Brexit referendum, British foreign policy seems to have all but collapsed – and even to have disowned its past and its governing ideas.
Worse, this has coincided with the emergence of US President Donald Trump’s erratic administration, which is pursuing goals that are completely detached from those of Britain – and of Europe generally. Trump’s abandonment of the Iran nuclear deal, combined with Russian President Vladimir Putin’s increasing belligerence and Chinese President Xi Jinping’s growing ambitions, indicates that the world is entering an ever-more confrontational and dangerous phase.
Trump’s evident lack of personal chemistry with British Prime Minister Theresa May – and the Anglophobia of his new national security adviser, John Bolton – ensured that this was never going to be the best of times for the United Kingdom. But it also doesn’t help that generations of British foreign-policy hands have regarded themselves as ancient Greeks to America’s Rome. To a Brit like myself, this analogy always seemed too confident. Having lived in America, I suspected that US leaders did not heed the advice of British diplomats nearly as much as those diplomats liked to think.
Still, if ever there was a moment for Britain to sprinkle some of its characteristic calm and resolve over world affairs, that moment is now. And yet, the UK appears to have checked out. Since World War II, Britain’s close relationships with continental Europe and the US have served as the two anchors of its foreign policy. But now, both lines have essentially been severed.
At the same time, the British government’s all-consuming preoccupation with untying the Gordian knot of Brexit has blinded it to what is happening in the rest of the world. And its blinkered view seems certain to persist. Negotiating the terms of Britain’s withdrawal from the European Union is likely to take years, and the outcome will inevitably have implications for the country’s unity, given the intractable issue of the Northern Irish border. Even if that issue can be sorted out, a campaign in Scotland to link it to the EU rather than to London will continue to command the attention of the government and civil service for the foreseeable future.
At any rate, the promise of a “global Britain” freed from the chains of the EU was never more than idle talk and sloganeering. At the recent Commonwealth Heads of Government Meeting in London, business and political leaders from Commonwealth countries around the world heard plenty of Brexiteer bluster, but little concrete talk of future trade deals.
A country like India could potentially be a major UK trade partner after Brexit. The problem is that Indians see Britain and Europe as one market. To them, Britain’s quest to adopt its own rules and standards amounts to a frivolous inconvenience. Before expanding trade and investment with Britain, India will most likely pursue a deeper relationship with the EU. Indeed, India never saw Britain as a particular champion of its interests inside the EU.
Likewise, most of those outside of the “Leave” camp regard the Brexiteers’ aspiration for Britain to lead the vast “Anglosphere” into a brave new world as a comical delusion. To be sure, the show of US and European support after the nerve-agent attack on a former Russian spy and his daughter in Salisbury, England, might suggest that Britain is still punching above its weight. The coordinated expulsion of Russian spies from the EU and the United States was a victory for British diplomacy; and suspicions that the Russians were exploiting Britain’s increasing isolation seem to have mobilized NATO. But the larger truth is that the Russians are right: Britain is now Western Europe’s weak link.
Thus, it is only a matter of time before Russian President Vladimir Putin probes British weakness again. And, as if the old sin of turning a blind eye to Russian oligarchs laundering money through the UK were not problematic enough, the suicidal act of quitting the EU leaves Britain with fewer tools to combat Russian meddling in its affairs. Britain is losing its influence over EU cybersecurity and energy policies just as cyber warfare and energy geopolitics are becoming key fronts for hostile state and non-state actors.
Worse, at the same time that Britain is giving up its seat at the EU table, it also seems to be giving up its liberal-democratic values. During the Brexit referendum campaign, the Leave camp openly stoked hostility toward outsiders. And the recent “Windrush” scandal over the government’s poor treatment of Caribbean-born legal residents has reprised the illiberal legacy of May’s previous tenure at the Home Office.
But equally insidious has been the government’s embrace of “Britain First” mercantilism, under which arms sales to Saudi Arabia are not a matter for caution, but rather an opportunity for profit. When the UK joins the Trump administration in putting trade and investment before human rights and good governance, it is journalists, opposition politicians, and human-rights activists around the world who bear the costs. By retreating from liberal norms, the May government has become, like the Trump administration, an enabler of authoritarian behaviors around the world.
The collapse of British foreign policy has come at a time of deepening uncertainty. The global re-balancing between the US and China is a generational challenge that will outlast Trump and even Xi, who is now unbound by term limits. In an increasingly off-kilter world, the duty will fall to Europe to serve as ballast. But a Europe without Britain’s traditional leadership, judgment, and diplomacy will be a lesser Europe. And Britain, by its own hand, risks being reduced to a footnote.
The Decline and Fall of Brexit
With the clock ticking on Britain’s departure from the European Union, Brexit Minister David Davis and Foreign Minister Boris Johnson have now resigned from Prime Minister Theresa May's government. May now has a full-blown political crisis on her hands – and all the while, the massive economic and social costs of crashing out of the bloc are beginning to sink in.
LONDON – In the beginning, British Prime Minister Theresa May had a plan: “Brexit means Brexit.” The idea was to withdraw the United Kingdom from the European Union so fast that voters would not realize they had been sold a bill of goods during the EU referendum campaign and should therefore not punish the Conservative Party for having lied to them.
The plan was to pretend that whatever deal was negotiated with the EU would be a “bespoke” and “best possible” Brexit, allowing Britain to quit the bloc while retaining unfettered access to the European market. In strictly partisan political terms, the plan made sense right up until the snap election last June, when May lost her parliamentary majority.
To be sure, May recently scored a victory when she faced down Tory Europhiles in the House of Commons. But it hardly matters. Since last June, British politics has been spinning around the same conundrum: how to avoid the sudden destruction of much of British manufacturing – which depends on European just-in-time supply chains – without also accepting the “Norway model” of obeying EU rules without having any say in making them.
To help the May government stave off disaster for British manufacturing, the European Commission has graciously agreed to a 21-month “implementation period” that will follow the UK’s official exit on March 29, 2019. The idea was that this period should be used to settle most of the details of the future relationship. Yet May has already squandered the opportunity by continuing to insist on so-called red lines, which include rejection of the jurisdiction of the European Court of Justice (ECJ).
While May is trying to replicate the benefits of frictionless trade within the European single market, her red lines make this impossible for the Commission to accept. As a result, the Brexit negotiations have gone nowhere, and reaching a final agreement in time for “Brexit day” has become virtually impossible. Moreover, even with the “implementation period” delaying “economic Brexit” until 2021, there simply is not enough time to restructure British manufacturing so that it can survive the introduction of the normal border controls that operate outside the EU.
Foreseeing disaster, pro-Europeans in May’s government have proposed a “Jersey model,” whereby British manufacturing alone would remain in the EU customs union, single market, and common value-added-tax area, while free movement of labor and services would be curtailed. But this is a non-starter for the EU, which insists on the inseparability of the “four freedoms” (free movement of goods, capital, services, and labor).
Nor can the vexing question of the Irish border be resolved within the confines of May’s red lines. In December, May agreed that there would be no physical or economic border between Northern Ireland and the Republic of Ireland, which will remain an EU member state. But she has also conceded to the Ulster Protestants that there will be no border between Northern Ireland and mainland Britain. These two promises cannot be reconciled, given that there is to be a hard border on the English Channel. May’s only way out, then, is to avoid a hard border with continental Europe by accepting the four freedoms (which also requires accepting ECJ jurisdiction).
Whether or not the Commission or the May government yet realizes it, the contradiction between their goals is absolute. The British want the EU to abandon its founding principles in exchange for €40 billion ($46 billion) and no hard border in Ireland. But, given that the UK has already committed to those concessions, the EU has no reason to listen to its special pleading. Were the May government to renege on the commitments it made in December, it would confront a “no-deal Brexit.” The UK would crash out of the EU, and many sectors of the British economy would be decimated.
Three possible outcomes remain, two simple and one complicated. In the first scenario, Britain would abandon its “red lines” and adopt a “Norway-plus model,” remaining not just in the single market, but also in the customs union. In the second scenario, the UK would accept an economic border in the Irish Sea and maintain its red lines for mainland Britain, by entering into a free-trade agreement with the EU. Paradoxically, both the European Commission and hardline Brexiteers could agree on this outcome for mainland Britain, except that the latter refuse to accept a border between the mainland and Northern Ireland.
The larger problem is that neither of these “simple” solutions will be agreed by May before the fall deadline. And the second outcome would spell disaster for British manufacturing, unless the transition period was extended by many years to give businesses time to restructure their operations.
The only way out, then, is through a political crisis. Such a crisis may well occur within Europe, as a result of conflicts between major member states or US President Donald Trump’s attempts to undermine the EU. But a European crisis would not come in time for May to secure a “Jersey model” for the UK as a whole. It is far more likely that before then, Britain itself will experience a crisis as the public grows increasingly aware of the massive economic and social costs of a looming no-deal Brexit.
Once the crisis erupts and British red lines begin to dissolve, any number of possible outcomes could follow. The transition period could be extended to, say, 2025, to be followed by a free-trade agreement and an economic border in the Irish Sea. Or Brexit itself could be delayed for a number of years, with the “Norway plus” model serving as the ultimate goal. Then again, either scenario might lead to a second referendum and a reversal of Brexit altogether. In any event, it is clear that Brexit, as the British side currently conceives it, is simply impossible. If it happens at all, it will not look like anything May has proposed so far.
Is Realism Trumping Populism?
With economic conditions returning more or less to normal around the world after a decade of financial crises, nationalist populism is now seen as the biggest threat to global recovery. But is it possible that this consensus has emerged just as the populist wave has crested?
NEW YORK – With economic conditions returning more or less to normal around the world after a decade of financial crises, nationalist populism is now seen as the biggest threat to global recovery. That was certainly true of the finance ministers who gathered in Washington, DC, this month for the IMF’s annual spring meeting. But is it possible that this consensus has emerged just as the populist wave has crested? Rather than populist politics undermining economic recovery, could economic recovery be undermining populist politics?
Looking around the world, populist economic policy appears to be in retreat, even though no clear alternative is visible. In the United States, President Donald Trump seems to be curbing his protectionist instincts, and economic relations with China are stabilizing. In Europe, despite the media focus on the success of xenophobic politicians in Hungary and Poland, the pendulum is swinging away from economic nationalism in the countries that really matter: France, Germany, Spain, and Italy, where the two populist parties that recently achieved electoral breakthroughs are now vying to show their devotion to the euro.
Even in Britain, where economic nationalism won its most spectacular victory over globalization and multiculturalism in the 2016 Brexit vote, the tide may be turning. The British government is gradually realizing that voters do not really want the complete rupture with Europe demanded by hard-core Euroskeptics. Neither of the two alternatives to EU membership presented in the Brexit referendum – an inward-looking, protectionist “Little England,” or a post-imperial “Anglosphere” based on the “special relationship” with America and the Commonwealth – is turning out to be economically feasible or politically attractive to voters. While only 3-4% of voters admit to changing their minds about Brexit, large majorities want to keep most of the benefits of free trade, easy travel, immigrant labor, and strong environmental, consumer, and health regulation.
Voters’ aversion to Brexit’s adverse consequences, analogous to the realism that gradually dawned in Greece after its 2015 referendum rejected an EU bailout, helps to explain the otherwise perplexing tactics of Prime Minister Theresa May and her Conservative Party. After starting out proclaiming a clear instruction from the people to “take back control” from the EU, May has gradually blurred and erased her red lines: an end to EU budget contributions, limiting European immigration, and an exemption from European rules and court judgments. Instead of strident demands for restoration of untrammeled national sovereignty in March 2019, she is now pleading for a transition, in which nothing noticeable to voters will change at all.
Surprisingly, May’s compromises have all been accepted by nationalist hard-liners who previously threatened her leadership. The zealots still hope for a total rupture with Europe eventually, but seem relieved about postponing the day of reckoning until the end of May’s “status quo transition” in December 2020. But if a “clean break” from Europe is too dangerous to attempt now, why will it be more acceptable in 2020? It won’t be – and presumably that reality will dictate extending the transition until after the 2022 general election, then beyond.
The upshot is that, as I wrote nearly a year ago, Britain’s belligerent Hard Brexit is turning into a docile Fake Brexit: Norwegian-style associate EU membership. Both Leavers and Remainers will be dissatisfied with that outcome, which will turn Britain into what Brexiteers justifiably call a “vassal state”: a country that abides by EU laws but has no voting rights or ability to influence those laws.
Why would Britain accept such second-class status? This is where we come to the relationship between nationalist populism and economics. The only remaining justification for the obviously inferior form of EU association that May is now proposing is the populist claim that “the people have spoken.”
Until recently, wielding this slogan allowed all opponents of government policy to be branded as internationalist elitists, “citizens of nowhere” who despise the “real people.” Delegitimizing political opposition made Brexit appear inevitable, which discouraged voters from even thinking about the issues that might change their minds.
But Britain’s political atmosphere is changing. With the Brexit deadline of March 2019 approaching, May’s “transition” extending into the distant future, and all of the tangible promises of Brexit receding like a desert mirage, both parliamentary and public opinion are shifting. The Labour Party is slowly coming to the conclusion that, even though many working-class voters supported Brexit, opposing it offers the only chance of bringing down the May government. As a result, May has repeatedly been defeated in Parliament and forced to concede a full parliamentary vote on whatever agreement she negotiates with the EU.
These parliamentary conflicts mean that opposition to Brexit is no longer discredited as anti-democratic and elitist. And public opinion is responding, with clear majority support for a “meaningful vote” in Parliament to decide whether May’s final deal with Europe is genuinely better than remaining in the EU. When this vote occurs, probably in October, a tactical alliance of all opposition parties with a dozen pro-European Tories could well defeat the government. If such a defeat looks imminent, May will probably move to avert it by herself proposing a referendum to make the final decision between her version of Brexit and the EU status quo.
But would such a referendum, now backed by a recently launched campaign for a “People’s Vote,” simply mark another descent into populism, instead of a genuinely democratic conclusion to the Brexit debate? The answer is no, because voters would be offered an honest choice between two well-defined alternatives: to accept whatever agreement for leaving the EU the government negotiates, or to stay in the EU by withdrawing the Brexit notification before the March 29 deadline.
By contrast, the 2016 referendum offered voters an illusory choice between reality and fantasy: a fair-tale Brexit, onto which they could project whatever hopes or prejudices they cared to imagine. The opposite of nationalist populism is not globalist elitism. It is honest realism, as Britain is now re-discovering.