Understanding Brexit
A primer on the split that has now been set into motion.
This article is from Dollars & Sense: Real World Economics, available at http://www.dollarsandsense.org
This article is from the
May/June 2017 issue.
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In the United kingdom on June 23, 2016, 52% of those casting ballots voted in favor of ending the UK’s membership in the European Union—generally referred to as “Brexit” (Britain + exit). Voters in England (population 53 million) and Wales (3.1 million) supported “Leave” (in both about 53% voted to leave), while Northern Ireland (1.8 million) and Scotland (5.3 million) gave majorities for “Remain” (53% and a landslide 62%, respectively).
These results came on a high voter turnout of 72% (compared to 66% in the 2015 national election). Whether the outcome was “close” is a question of opinion. Those of us in the losing camp think so, while the winners consider the outcome “decisive.” It is with some reluctance that I concede that many may have voted to stay with little enthusiasm, balanced perhaps by “Leave” voters who did so to protest government policies while believing Brexit would lose.
Various hypotheses have come forth to explain why a majority of those voting chose “Leave”: national sovereignty (however defined), dislike of the European Union, revenge of globalization “losers,” and anti-immigration sentiment. While anger over the inequalities generated by globalization and fears of immigrants may have prompted many in the working and middle classes to vote for Brexit, this and other anti-EU motivations must be placed in the longer context of British relations with the continent.
At the end of World War II, British politicians and the public viewed the United Kingdom as among the winners of the war, and the continental countries (with the obvious exception of Russia) as the losers, either defeated and occupied by Nazi Germany or being themselves allies of the Nazis. When the governments of Germany, France, Italy, and the “Benelux” countries (Belgium, the Netherlands, and Luxemburg) formed the European Coal and Steel Community (ECSC) in 1951, the UK’s Labour government, by far the most progressive in the country’s history, declined to join, choosing instead to maintain a “special relationship” with the United States.
Twenty years later, the Conservative government of Edward Heath sought to join the ECSC’s successor, the European Economic Community (EEC). Led by the trade unions, the vast majority of progressives opposed entry, rhetorically labeling the EEC as a “capitalist club.” However, in 1975 two-thirds of those voting supported joining the EEC (notwithstanding the infamous 1967 veto, by French President Charles DeGaulle, of Britain’s first attempt to join in 1967).
Over the next forty years all British governments, Conservative or Labour, would vacillate in their approach to the European Union (created from the EEC by the 1993 Maastricht Treaty), from lukewarm to overtly hostile. The xenophobic and chauvinistic right-wing of the Conservative (Tory) Party opposed the EU on principle. The Tory mainstream favored membership, but opposed the protection of worker rights and civil rights enshrined in the EU treaties (then in the so-called Social Chapter). The Labour government of Tony Blair in 1997 signed onto the Social Chapter, but only half-heartedly, committed as the Blair government was to a neoliberal “flexible” market.
The EU treaties and legislation by the European Parliament facilitated and even accelerated many progressive reforms in the United Kingdom, most obviously for gay and lesbian rights and guarantees of employment rights such as paid vacations. However, for the last twenty years both the Conservative Party leadership and that of the Labour Party emphasized the advantages of the single European market with only rare mention of worker and civil rights. When the referendum campaign began, the mainstream of both major parties focused narrowly on the alleged economic advantage of EU membership, with only a minority of the electorate aware of EU protection of citizens’ rights.
The anti-EU right wing campaigned by harping on the myth of a European super-state that would bring tyranny to Britain and, its trump card, the putative dangers of immigration. Of the two, the free movement of labor within the European Union stands out as the strongest motivation, basically as a result of consciously created confusion. Pro-Brexit propaganda misrepresented intra-EU migration as equivalent to all immigration, shamelessly exploiting fears of Islamic refugees. In contrast to the free movement of citizens guaranteed within the European Union, migration from outside the Union is severely restricted.
In the months leading up to the referendum, debate over refugees from war-torn Syria—most going to neighboring countries, some to continental Europe, and very few to the UK—dominated politics in the European Union. The issue became all the more explosive in the wake of the November 2015 terrorist attack in Paris. Had the UK vote occurred a year earlier, the anti-EU campaign would have found it much more difficult to whip up anti-immigrant hysteria, though a majority of voters might still have supported Brexit for the reasons explained above. Understanding “what Brexit means” in practice begins by accepting the irreversibility of the referendum result under present political conditions. The House of Commons of the UK includes three political parties with more than ten seats—Conservatives (330), Labour (229), and the Scottish National Party (SNP, 56)—while all other parties have a total of 35 seats. In none of the big three is there a majority in favor of a second referendum, even less to treat the June 23 vote as non-binding (“advisory”). Reversing the referendum outcome is politically impossible at this time.
While the SNP favors remaining within the European Union, it would achieve that goal by creating an independent Scotland via a referendum planned for 2018. The Northern Ireland situation is far more complex. Some form of federation with Eire (the official name of the Republic of Ireland) would maintain open borders between North and South, which many on the island want. However, it is hard to imagine the large Protestant majority in Northern Ireland surrendering any political decisions to the government of the Catholic South.
While leaving the EU may prove complex in procedure, its meaning and consequences are no mystery. The frequency of the question “What does Brexit mean?” results not from lack of clarity about the answer but from the unwillingness of parts of the British media to accept the irreversibility of the referendum. This is especially the case for The Guardian, the least reactionary daily newspaper in Britain, whose approach to Brexit seems designed to convince readers that the process will be unmanageably complex and prone to a disastrous outcome.
The major issues are 1) trading and investment flows after formally exiting the EU, 2) the status of citizens of EU countries who work in Britain, and 3) replacing the EU legal framework within domestic legislation. Despite receiving more publicity, the first two are likely to be considerably less problematic than the third. With regard to the first, both Britain and the EU have open capital markets that allow free flow of funds.
On trade, both the United Kingdom and the European Union are subject to the rule prohibiting discrimination among trading partners. That implies that, after Brexit is complete, British exporters and importers would face the same trade rules as those in the United States or any other WTO member. Anxieties about post-Brexit tariffs would seem exaggerated given that the trade-weighted EU levy on imports is just 2.3%. The EU share of UK total trade in goods has been falling for over a decade, and is now less than 50%. The non-EU trade deficit is considerably smaller than that with EU countries both for goods and for services. Net foreign investment of all types into the UK has fallen consistently since the mid-2000s, more so from EU countries than the rest of the world.
Before joining the then-EEC there were no visas required among Western European countries, an arrangement likely to continue after Brexit. While the current uncertainty forced upon EU citizens working in Britain by the Tory government is appalling, it would be astounding if relatively free movement of labor is not maintained, given the importance of those employees to the private and public sectors and the large number of UK citizens working on the continent.
The core strategy of mainstream pro-EU groups is to represent leaving the EU as a disaster in the making. This strategy extends the counter- productive approach taken during the referendum campaign, that fear of the unknown would prove the most effective defense of EU membership. Stressing purely economic effects allows the pro-EU neoliberals to avoid discussion of the most serious danger of Brexit: the loss of protections of civil rights and employment rights.
Further obfuscation of the consequences of leaving the EU has come in the form of the adjectives “hard” and “soft.” Determining the cognitive meaning of these modifiers presents a daunting task, but the message comes across clearly—“hard Brexit” is “bad,” verging on disastrous, while “soft Brexit” is “good” and the route of reason, with no Brexit being considered best of all.
These clichés are easily translated into simple English. “Hard Brexit” refers to a complete break with EU institutions, placing Britain into the category with the countries of the world that are neither EU members nor associates. (The EU currently has 28 members and four other associates, either through the European Economic Area or by bilateral treaty.)
The right-wingers inside and outside the Conservative Party favor this option, complete withdrawal. A group of far-right ideologues, Economists for Free Trade (formerly Economists for Brexit), provide the putative intellectual justification for a complete break. Their goal in a complete withdrawal is to end legal constraints and regulations on UK business set by EU environmental law, the employment rights protected in EU treaties, and civil and human rights enforced by the European Court of Justice. To be politically appealing, right-wing politicians package “Hard Brexit” as the anti-immigration option. It should be more accurately named “Hard-right Brexit.”
A “soft Brexit” strategy seeks to maintain association with as many aspects of EU institutions as possible consistent with the referendum outcome. Were it possible, the softest of soft Brexits would have Britain become an associate rather than a member, and retain all the putative advantages of membership. Political conditions in both Britain and among EU governments make the softest option impossible.
By EU treaty, access to the common market (the so-called “single market”) requires accepting free movement of labor from member countries and associates. Opposition to immigration played a dominant role in the referendum campaign. So effective were far-right efforts to equate intra- and extra-EU migration that no British government could accept a continuation of free movement of EU labor and survive electorally.
Even if a British government were to accept free movement, the governments of several EU countries, especially the German government, would reject the full-privileges associate membership option. The great fear among EU politicians is that other countries might follow Britain, with a possible Italian exit from the euro the greatest anxiety. German banks hold substantial public and private debt from other euro countries, which goes far to explain opposition by Chancellor Angela Merkel and her finance minister to any form of debt restructuring.
A joke circulating in the corridors of EU office blocks in Brussels is that the greatest uncertainty facing the British government is whether it can exit the European Union while there is still a Union to leave. The joke correctly suggests that Brexit is not the most serious problem confronting EU leaders in the foreseeable future.
The refugee crisis, elections in France and Germany, and the resurgence of fascism (trivialized as “populism”) do not merely complicate negotiations over Brexit, but render it secondary to European domestic debate. In this uncertain context, the priority for the EU side in Brexit negotiations will be to prevent further defections; to make sure that if some version of Brexit is going to happen, it will have to be “hard Brexit” to send a message to others considering defection.
On the British side, the government appears strong because of an ineffective opposition, but has a weak negotiating position due to divisions within the Conservative Party. The First Minister of Scotland, Nicola Sturgeon, has made it clear that an unfavorable outcome of Brexit negotiations would provide a strong argument for independence to Scotland’s strongly pro-EU population. With the Conservative Party deeply split, staggering into “hard Brexit” and blaming the German government for it may be the least-worst outcome from the point of view of the May government.
To non-Europeans, the British exit from the European Union may seem incomprehensible. After all, with its opt-out from joining the eurozone (otherwise mandated by EU treaty), a position it shares with Denmark, the British government and people need never fear Brussels-imposed austerity policies like those that so devastated Greece. The opt-out from the eurozone was reinforced by the UK in 2014, under the Conservative government, being the only EU member that refused to sign the dysfunctional Treaty on Coordination, Stability, and Governance, which contains the enforcement mechanisms for EU fiscal rules.
Brexit should become comprehensible when one realizes that no British government has given strong support to membership other than as a trading arrangement. Complementary to this narrow approach to EU membership, Conservative governments have consistently attacked the broader aspects of EU membership, while the Labour Party leadership has largely ignored them, treating them as a political embarrassment.
The impact of decades of attacks on the “bureaucrats in Brussels,” repeated and successful demands from all UK governments for special treatment (“opt-outs”), and the 2003 condescending rejection of membership in the eurozone left public support for the European Union shallow and volatile. A recent opinion poll indicated that barely 50% of those aged 18-30 in Britain identified themselves as “European,” a share far below that in continental countries.
As for so many issues in the neoliberal age, the impact of Brexit differs by class. For the Conservative government, leaving the EU offers UK business an unexpected opportunity to remove employment rights and workers’ rights in general. This is a long-term project, dating back to Margaret Thatcher’s war on the trade union movement in the 1980s.
In the British legislative system, Parliament can by simple majority enact any law (there is no hierarchy of laws such as in the United States—no need for laws to pass muster of a written constitution, and no supermajorities required to amend such a constitution). Facing a divided and near-dormant opposition Labour Party, a Conservative victory looms likely in the coming parliamentary elections. The incompetent but entrenched Tory government faces no legal barrier to revisiting the Trade Union Act of 2016 and adding the draconian limits on strikes that the House of Lords judged to be in conflict with EU law.
In all the large EU countries, reactionary neoliberalism is as strong as or stronger than in the United Kingdom. There is a major difference—on the continent the power of capital is restrained by the European Convention of Human Rights and the employment guarantees in the Treaty on the Functioning of the European Union (for example, Article 157 prohibits pay discrimination).With the Labour Party weakened by ideological conflict, an effective strategy has yet to emerge to prevent a Brexit disaster for workers’ rights and human rights. Progressives are fortunate that, due to its incompetence and internal divisions, the Conservative government has failed to establish negotiating priorities or clarify exit goals. There is clarity on one thing—for the foreseeable future the progressive fight is to prevent the worst outcome, a post-Brexit neoliberal Britain with business interests hegemonic.
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