Many interpret the Leave vote as xenophobic; while that clearly was a component, we may find, as we pick over the entrails of the campaigns, that fear and loathing alone would not have been sufficient to have given us the result that is, in essence, a repudiation of the EU project and a vote of no confidence in both seemingly unaccountable European institutions and national politicians.
Ask most people who their MEP is and I doubt many could give you an answer; nor, I suspect, do they much care; that's the opposite of the US where citizens are generally more familiar with their federal representatives than those who represent them at the state level.
Looking back
Perhaps one reason for the vote is that political leaders failed to see that they needed to re-sell the benefits of EU membership on an on-going basis. The burden of EU regulation was clear to small business owners; large businesses probably gained more than it cost them but those that didn't trade much with Europe may have seen only bureaucratic costs and constraints. And of course the media made hay with all the negatives because that's what the media does. So as a climate of resentment was being gently cultivated for years, politicians took the benefits for granted and failed to draw attention to them on a consistent and regular basis. And now that simmering cauldron of irritation has boiled over.
Britain has never been an enthusiastic European. It joined late (after being blocked by the French at the EEC's inception, which now doubt set the tone for Britain's relationship with European relations many years), it got the thin end of the wedge early on in terms financial flows, for example benefiting little from the Common Agricultural Policy (CAP) which rewarded French but not British farmers, it joined and then fell out of the exchange rate mechanism (ERM), a precursor to the single currency, and it stayed out of both the Schengen Area and the single currency. Taking Britain's membership of the EU as the default position was a mistake made by politicians not just during the campaign but for many years before.
Looking forward
That many European officials, politicians and business leaders are talking about a wake-up call suggests two things; first the realization that their assumptions about the inevitability of the European project may be flawed and that Europe in its current form faces an existential crisis; and second that despite the dire warnings issues across the board before the vote things look rather different after the fact.
What is clear is that we are in for a period of great uncertainty, something reflected in the market jitters over night and this morning. That being said, the FTSE recovered much of the shock-related "chute", down only 2.5%; if the markets are a guide and given that some of this may simply be an uncertainty discount, British businesses may suffer less than "Remain" had been suggesting. Of course it won't be plain sailing particularly for companies embedded in European supply chains (Airbus for example), but the flip side is that there is a strong economic incentive to make Brexit as painless as possible.
Of course, that is in stark contrast to the political; those working in European institutions (the European Commission, the European Parliament, and the ECB) have a strong vested interest in maintaining the status quo, regardless of the benefits to the citizens of European. Not only do their jobs depend on those institutions continuing in their current from, but they are emotionally invested in the project and will have a hard time seeing issues through any lens other than that they have been using for a generation. Ross and Staw (1993) have a very useful model in this regard
My guess is that as long as large businesses' profits are at risk from Brexit, economics will trump politics, particularly when politicians realize, as many now appear to be doing, that they do not have widespread backing from their electorates. Although punishing Britain for upsetting the apple cart may seem like a good way to keep things together, this is short sighted. If other countries (and many do) share many of Britain's concerns with lack of accountability and central government over-reach, forcing them to remain "in" will do nothing to enhance those politicians' re-election prospects in the longer term.
That's why it matters to Britain not to invoke Article 50 of the Treaty of Rome immediately; once done, the two year clock starts ticking, and time is Britain's friend. The longer Brexit implementation takes, the better the terms are likely to be. A rush to the exit will lead to ill-thought out arrangements, driven by those who want to make sure there are "consequences", to use Francois Holland's term, for leaving the club.
I suspect that over time, as emotions subside, and hopefully clearer heads prevail, proposals for a pragmatic arrangement that benefits both Europe and Britain may emerge. Whether Europe can get behind such a practical solution with one voice is an open question, indeed one that itself speaks to the long term viability of the European project.
No comments:
Post a Comment