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.
Populism Bites Back
Political posturing is often expedient. But British Prime Minister Theresa May’s government is now being reminded daily of the far-reaching consequences of staking out positions that lack any meaningful regard for the future.
LONDON – This spring, British Prime Minister Theresa May’s Conservative government is being reminded of just how powerful – and long-lasting – the unintended consequences of policies can be. Two problems concerning the United Kingdom’s borders – one relating to immigration, the other linked to the frontier with the Republic of Ireland – have lately erupted. While they have not yet weakened support for the government, they probably will. And they are almost certain to diminish what is left of Britain’s soft power.
The immigration problem goes back some seven decades, to the arrival of the first waves of Caribbean immigrants in the UK. They had been invited by the government in the wake of World War II to help offset a labor shortage, taking hard-to-fill jobs in the National Health Service (NHS) and other sectors.
Named “the Windrush generation,” after the first ship that brought them, these immigrants entered the UK on their original passports. As citizens of British colonies, they were legally regarded as citizens of the UK as well. Thus, they did not need to take additional steps to acquire specifically UK citizenship; nor did their children, whose arrival was recorded only on paper landing cards.
Yet the UK government has now decided that these long-time British citizens are not citizens at all, because they lack the proper documentation. An administrative blunder seems to have resulted in the destruction of the old landing cards, which had been stored in crates somewhere at the Home Office.
May’s government is now scrambling to deal with one shameful incident after another. Elderly people have been refused re-entry to the UK – a country that they regard unquestionably as home – after visiting relatives back in countries like Jamaica. Others have been inhumanely detained and denied free NHS treatment, even for cancer.
Britain may not be fundamentally a racist country, but over the last several decades, right-wing nativist politicians have used inflammatory rhetoric to whip up anti-immigrant sentiment, targeting those from South Asia and the West Indies in particular. To name a particularly notorious example, 50 years ago this spring, Enoch Powell, a Conservative member of parliament, delivered his abhorrent “rivers of blood” speech, in which he warned that, within 15 or 20 years, “the black man will have the whip hand over the white man.”
Powell’s inflammatory rhetoric aside, his speech reflected the regular build-up of pressure on politicians to take a tough line on immigration – a process that continues to this day. May’s government now promises not just to reduce illegal immigration, but also to cut overall annual immigration to less than 100,000.
That figure is ludicrously low, amounting to about half the current level of immigration from outside the European Union (another 90,000 per year come from the EU). As if achieving that goal were not already impossible, May insists on counting foreign students as migrants, even though they are in the UK only for the duration of their studies.
But May’s problematic approach to immigration extends back further. In 2013, when she was Home Secretary, she advocated creating a “hostile environment” for illegal immigrants – a policy that many argued poisoned the atmosphere for anyone with darker skin. Political embarrassment mounts.
As for other government ministers, their shame-faced apologies for the Windrush scandal have been all the louder, because the story broke the same week that the heads of government of the Commonwealth met in London for their biennial conference. With reports of Home Office mistreatment of non-Caribbean Commonwealth-born citizens proliferating, indicating that the problem is likely to spread beyond the Windrush group, we can probably expect more apologies.
But managing immigration is hardly the May government’s only border-related challenge. It also must navigate the question of what to do about the UK’s land border with the Republic of Ireland after Britain withdraws from the EU.
When the May government announced its commitment to follow through with Brexit, it made clear that it would also depart the Single Market and the customs union, without thinking through the implications for the UK’s borders. That decision was in no way required by the result of the Brexit referendum in June 2016. Instead, that self-imposed red line, like the referendum itself, was meant simply to appease the Conservative Party’s most right-wing elements.
Such a “hard Brexit” would have serious consequences for the British economy. Customs unions typically bring together neighboring countries, which then trade across tariff- and quota-free frontiers and apply common tariffs for trade with other countries. There have been several customs unions around the world, but none as successful as the EU’s.
May’s government has said that leaving the customs union will enable the UK to make its own trade deals. But, as an EU member, it already has access to about 70% of the world’s markets on favorable terms. It is unclear how May’s government thinks the UK can do better on its own.
Making matters worse, as May herself declared when she was campaigning for the Remain camp ahead of the referendum, there is no such thing as a virtual border between countries with different tariffs. If the UK, including Northern Ireland, is out of the customs union, and the Republic of Ireland is still in, there will have to be a hard border.
Yet such a border risks undermining the Good Friday Agreement that has underpinned peace in Northern Ireland for two decades. And May’s government has proposed no plausible alternative solution for managing the relationship between two different customs regimes without a border.
Political posturing is often expedient. But May’s government is now being reminded daily of the far-reaching consequences of staking out positions that lack any meaningful regard for the future.
Breaking the Brexit Stalemate
The United Kingdom is now halfway through the formal process of withdrawing from the European Union, and there is still much work to be done to ensure a lasting and prosperous relationship across the English Channel. It is time to move past recriminations, and toward commonsense approaches that have worked for Europe in the past.
BRUSSELS – March 29 marked exactly one year since British Prime Minister Theresa May invoked Article 50 of the Treaty of Lisbon, thus launching the formal two-year legal process by which the United Kingdom will withdraw from the European Union. In the first year, it is fair to say that the Brexit negotiations have had their ups and downs. But, on a positive note, substantial progress has been made in recent weeks.
For starters, a draft withdrawal treaty between the UK and the EU is now close to completion, though both sides have made clear that nothing is agreed until everything is agreed. Once finalized, this treaty will establish the rights and obligations of both parties on a range of issues, including the “Brexit bill” – that is, the UK’s outstanding liabilities from its time as a member of the bloc – as well as the rights of EU citizens living in the UK, and vice versa.
EU and UK negotiators have also agreed to a 21-month transition phase, from March 29, 2019, to December 31, 2020, during which time the UK will effectively remain an EU member state, albeit without representation in the European Parliament or any other EU decision-making bodies. The key outstanding issue that has yet to be resolved – and which will dominate discussions in the coming months – is the border between Northern Ireland and the Republic of Ireland, which will remain in the EU.
In order to avoid the establishment of a hard border – meaning a return to customs and police-inspection stations at all border crossings – the final Brexit treaty will have to include legal and political commitments from both sides. The European Commission’s insistence on a “backstop option” would already ensure that a “common regulatory area” is maintained even after the UK formally withdraws. But that is a last resort geared toward preserving the Irish peace process. It would be far more preferable to find a solution based on the future EU-UK trading relationship.
Since the UK’s general election last year, and following a series of political speeches by May, the EU has finally begun to understand what the current British government envisions for Brexit and the future EU-UK relationship. Specifically, May has confirmed that Britain will be leaving both the EU single market and the customs union.
From the EU’s perspective, this is deeply regrettable. As Donald Tusk, the president of the European Council, regularly points out, this could be the first time in history that a trade negotiation results in additional barriers to commerce.
To be sure, it is the sovereign right of the British people and their government to leave the EU. But, as many are coming to realize, there is very little room to maneuver between the EU’s own core principles and values and the red lines that the UK has set for itself.
Throughout the Brexit process, the EU has criticized the UK for assuming that it could “have its cake and eat it.” Likewise, the UK has accused the EU of offering a bad deal: “the market access of Canada, with the obligations of Norway.” But if we are going to forge the close future relationship that both sides desire, we will have to move past such accusations.
The European Parliament, for its part, has adopted a more detailed conceptual framework for establishing the terms of the future EU-UK relationship, which would take the form of an association agreement. For some, that term might call to mind the recent EU-Ukraine Association Agreement. But an EU association agreement with the UK need not resemble its arrangement with Ukraine. In practice, an association agreement is merely a blank slate, upon which one can draw up terms of cooperation on trade, foreign policy, internal security, and other matters.
The inherent flexibility of EU association agreements should be familiar to Europeans and Britons alike. After all, the first-ever association agreement in 1954 was designed to foster cooperation between the European Coal and Steel Community and the United Kingdom, following the latter’s retreat from formal treaty negotiations.
History repeats itself, but never in the same way. Ultimately, it would be preferable to develop one overarching EU-UK governance framework to cover defense, economics, internal security, and other areas. The alternative would be the Switzerland model: a nightmarish thicket of agreements comprising more than 100 bilateral treaties.
I have no doubt that the upcoming phases of the Brexit negotiations will be complicated. But I am confident that reprising an association-agreement model that has proved successful in the past would allow the EU and the UK to enjoy a deep special partnership well into the future.
London Bridges to Nowhere
In December, negotiators from the European Union and the United Kingdom were able to conclude phase one of the Brexit negotiations by leaving key issues unresolved. But British leaders' apparent conviction that they can muddle through the Brexit process is setting up the UK for a rude awakening.
LONDON – Last week, British Foreign Secretary Boris Johnson resuscitated an age-old proposal for a 22-mile bridge to be built across the English Channel. The irony has escaped no one. Johnson is calling for a fantasy bridge at the same time that he is destroying his island country’s only true bridge to the continent: the European Union.
Johnson’s bridge proposal shows yet again that the Brexiteers’ entire project is based on a permanent suspension of disbelief. In December, the European Commission played along, allowing Prime Minister Theresa May to pretend that she can reach three mutually contradictory goals concerning the United Kingdom’s departure from the EU.
The UK’s first goal is to maintain a soft border and frictionless trade with the Republic of Ireland, which will remain an EU member state, subject to the rules of the European single market and customs union. The second is to establish identical regulatory regimes throughout the United Kingdom, including in Northern Ireland. And the third is to “take back control,” by leaving the single market, customs union, and the jurisdiction of the European Court of Justice.
Reaching any two of these goals seems eminently possible. But no one has any idea how to achieve all three. Nevertheless, EU and UK negotiators are now proceeding to phase two of the Brexit process, raising the distinct possibility that they will continue to muddle through without ever resolving the phase-one trilemma. In fact, experts in the European Commission are already predicting that the next round of negotiations will lead to three agreements with the UK before October 2018.
The first would settle the terms of divorce. Despite the uncertainty regarding Northern Ireland, negotiators have started to converge on other key issues, including the size of the UK’s exit bill and the future rights of EU citizens in Britain, and of British citizens in the EU.
A second agreement would establish a “stand-still transition,” whereby the UK would retain the benefits of EU membership, but also the obligations, such as contributing to the EU budget, allowing for the free movement of people, and adhering to European court rulings. The big difference is that the UK will lose its voice at the table. For Britons in the “Remain” camp, such a transition will allow the UK to stay in the EU in all but name. And for some of those in the “Leave” camp, it is a way to exit without falling off a cliff edge.
The third agreement in phase two will center around a roadmap for UK-EU relations after 2021. This will not be a free-trade agreement, but rather a political declaration about where both sides hope to end up. Most likely, the resulting deal will envision a future trade arrangement modeled on the Canada-EU Comprehensive Economic and Trade Agreement (CETA), together with agreements on foreign policy, security, terrorism, and law enforcement.
But this raises the same concern as in phase one. If the UK government is never forced to explain its long-term plan in great detail, then it could continue to fudge its way forward. The problem is that once the stand-still transition begins, it will be impossible to avoid a reckoning between the different tribes of Remainers and Leavers in the British Parliament. And even if there were a long-term plan that would pass muster with British parliamentarians, it is fanciful to believe that it would also be acceptable to parliamentarians and voters on the other side of the channel.
At a time when anti-globalization sentiment is running high, the remaining EU member states are unlikely to sign off on any trade deal that could undercut their own social and fiscal wellbeing. After all, whereas all previous EU trade deals were designed to achieve convergence between the EU and a third party, an EU-UK deal would be geared toward preventing divergences. Michel Barnier, the EU’s lead Brexit negotiator, has been eloquent on this point. The big question is not whether Britain leaves the EU, he points out, but whether Britain will “still adhere to the European model” of regulation.
It was easy enough for politicians and activists in Europe to oppose the Transatlantic Trade and Investment Partnership (TTIP), a monumental deal intended to defend Western trade standards in an increasingly multipolar world. But consider how much easier it will be to campaign against a deal with the UK, given that key figures on both sides of the British political spectrum pose a threat to the European model. On the left, Labour Party leader Jeremy Corbyn seems to welcome a return to 1970s-style subsidies and state aid. And across the aisle, far-right Tories openly dream of establishing a low-tax, low-regulation “Singapore-upon-the-Thames.”
Unfortunately, given the current Brexit timetable, a failure to agree on a long-term deal could well come after the UK has already passed the point of no return. The UK, having formally exited the EU and given up any say in EU decisions, would still be subject to EU laws. Its choice, then, would be between the economic calamity of a no-deal Brexit or the political calamity of a never-ending transition that leaves it no say over EU decisions. In either case, the UK will hardly have taken back control.
That brings us back to Johnson’s bridge to nowhere, which is the perfect metaphor for the Brexit movement. Rather than fall for the false promise of fantasy construction projects, British parliamentarians would do well to force a real decision on the UK’s post-Brexit relationship with the EU, before it is too late.