By Robert Seidenschwartz
“To Brexit or not Brexit” That is the Question
That question was answered by the voters of Great Britain on June 23rd, 2016 – a slim margin of victory for the leave proponents. The only true winners at the moment were British pubs as large quantities of alcohol were consumed by both the elated and dejected.
The day after many in the leave camp surveyed their brave new world and wondered sheepishly what they had truly done. The stay crowd contemplated the consequences while pundits on both sides did their best to explain the ramifications of the vote.
To put some perspective on the vote, a brief summary of the European Union/EURO and its stated purpose is important to understanding the implications of the British vote.
The treaty on the European Union was signed on November 1, 1993. The treaty lays the foundation for a common foreign and security policy, closer cooperation on justice and home affairs, and the creation of an economic union including a single currency.
It should be noted that Great Britain never subscribed to the Euro, and maintained the pound as its national and global currency. What the agreement did within the European single market is create the “Four Freedoms” of movement: the movement of goods, services, people and money. These objectives in principle and reality have been implemented to varying degrees of success. From the original six founding countries to the present membership of 28 in the European Union, one may consider the concept of the EU to be successful on multiple levels.
Considering the enormity of scope and scale of the EU project, it is understandable and to be expected that issues would arise. The EU, from the beginning and to the present, continues to be a work in progress.
There are several distinct issues that need to be identified that are catalysts for the vote. Through the years, critics have pointed out numerous structural issues with the EU agreement. Weather it was the enforcement capabilities of members adhering to budget requirements, the issues associated with a common currency, or the ever-present under-current of nationalistic interests, the global financial meltdown in 2008 exposed these issues in the full light of day.
Many of the E U countries prior to 2008 were already stretched to the edge economically. Global real estate markets were booming in the US and Europe. Commodity demand and growth, particularly from China, fueled investment and commodity booms in many of the developing countries that depend heavily on commodity exports for their revenues. Over capacity and leverage was the coin of the realm.
In Europe, heavy government borrowing, bloated public sector growth, entrenched social covenants with its citizens, and overly burdensome regulatory requirements impinged upon business formation and capital investment. An issue that is often understated is the effects of aging populations across the continent that adds an additional layer of intransigence to needed structural change. The financial crisis revealed deep cracks in the Union, both economically and philosophically. It was Northern European countries (prosperous with budgets balanced) versus Southern European.
History plays its part in this drama. What we are witnessing is the long journey of people and events. Would there be a large Muslim population in France today, without the historic colonization of significant regions of the Middle East and North Africa?
The primary issues that are commonly cited by voters are class conflict, race and ethnicity, geographic disparities, nationalism and cultural Identity, along with governance and localism: these issues taken separately or together are worthy of a more nuanced and exploratory conversation.
Consider that for the last two decades this experiment called the EU could boast of great success. Rising living standards, limited warfare, rapid technological change and continued optimism of the spread of liberal democracy. Many those gains appear to be fading or failing.
Living standards are stagnating; wars across the Middle East drive millions on dangerous journeys seeking safety, economic and political freedom. Political opportunists fuel the simmering issues of race and the fear of waves of unrestricted immigration. Current trade negotiations on TPP and TTIP add to legitimate angst regarding jobs, sovereignty, widening income disparity and immigration. In a rapidly evolving technological world, worker disenfranchisement continues to grow.
The above economic and cultural phenomena culminated on June 23, 2016, as Great Britain voted to exit the EU. I will address in my next article the likelihood of a British exit, and its implications.
Robert Seidenschwartz served as Chairman of the Board for the Montana World Affairs Council for 13 years. He now serves as president emeritus. Seidenschwarz is an advocate for international education and is active in all aspects of program development with the council.