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Aftershocks and Future Shocks: Brexit after Two Months

British Prime Minister Theresa May On Holiday In The Alps

British Prime Minister Theresa May On Holiday In The Alps
SWISS ALPS, SWITZERLAND – AUGUST 12: British Prime Minister Theresa May walks with her husband Philip John May while on summer holiday on August 12, 2016 in the Alps of Switzerland. The Prime Minister is due back to work on August 24. (Photo by Marco Bertorello – WPA Pool/Getty Images)

By Ronald J. Granieri*

Two months have passed since the British electorate surprised the world by voting to leave the European Union. Since then, observers of the European scene have been bracing for the expected aftershocks. Immediate drops on the value of the pound and in key equity markets, and stories of voter’s remorse among some who voted for “Brexit” led to a flurry of stories fanning an image of immediate crisis. With the passage of time, those immediate concerns have slowly faded as tempers cooled and summer vacation season heated up. Nevertheless, there are still significant questions before both the United Kingdom and the EU as a whole that are likely to bedevil the continent for years to come.

In Britain itself, the drama of the vote and the first days of crisis have given way to an uneasy sense of uncertainty. British politics is still trying to re-establish some kind of working equilibrium, as not only the government but also the opposition parties have had to adjust to the vote and its implications for Britain’s future.

Prime Minister David Cameron responded to his surprising defeat by announcing his resignation from office. After a few dramatic weeks of intra-party intrigue, in which leading Brexit advocates Boris Johnson and Michael Gove managed to torpedo each other’s chances to succeed Cameron, Home Secretary Theresa May emerged as the Conservative party’s candidate, both as head of the party and occupant of No. 10 Downing Street. Those decisions will be ratified at the Conservative party conference in early September. In the meantime, Prime Minister May, who had been a moderate supporter of staying in the EU, has assured her party that she plans to follow through on the voters’ will, though the details remain fuzzy. May appointed leading Brexiteers to key posts in her government—Boris Johnson as Foreign Minister, Liam Fox as Trade Secretary, and David Davis as the newly-established Secretary of State for Leaving the European Union. These three ambitious politicians have spent their first weeks in office jockeying for position, with each of them claiming to be the prime mover in future Brexit negotiations.

The problem for Prime Minister May’s government is that while she may say, “Brexit means Brexit,” no one really knows what Brexit means. The Remain camp spent much of the referendum campaign warning that Britain would find itself at a significant economic and political disadvantage without the benefits of EU membership, and would find it hard to work out any deals that would be anywhere near as good for the British economy. Enthusiastic Brexiteers such as Johnson, Fox, and Davis have expressed their confident belief that Britain is such a valuable trading partner that there will be no trouble negotiating excellent deals for an independent Britain. Even if the deals turn out to be brilliant, however, it will take a great deal detailed work to negotiate them, and that will take time.

There is a formal process for secession from the EU, based on Article 50 of the Lisbon Treaty, and which sets a two-year timetable for completing a member state’s departure, but offers no guarantee that any new arrangements would be completed by then. Thus any negotiations would be two-pronged—both completing the practical separation and working out the details of the future relationship. To offer an example of how hard the latter can be, Canada and the European Union have been working on a Comprehensive Economic and Trade Agreement (CETA) since 2008. Negotiations were completed in 2014, but it has yet to be ratified by all EU member states. If Britain hopes for a similar arrangement, it may be a long time coming.

Since this will be the first time any member has invoked Article 50, it’s not surprising that there is no clear guideline as to when a government must or will announce that it is invoking it. It is also unclear what role the British Parliament can or should play in any such negotiations. Since the Conservatives have been able to agree upon a leader, there is no need, as some had feared there might be, for early elections. The next national election is not formally required until 2020, which means that it could come after the invocation of Article 50 and the expiration of the two-year window for completing Brexit. That raises the possibility of the election being a kind of referendum on the result of the referendum, either rewarding the May government for its work, or punishing it.

What is not likely is that Parliament or the British electorate will get another chance to decide on EU membership. Many commentators, such as Max Fisher of the New York Times have speculated on how Britain could “Exit Brexit” through some last minute maneuver—perhaps through the intercession of the pro-EU government of Scotland, or the veto of the House of Lords, or even a decision by the House of Commons to refuse to ratify any formal Brexit agreements. Right now, none of those options seems likely. Whatever the British political elite may think about the wisdom of the electorate, it is hard to imagine any British leader being willing to provoke a constitutional crisis by explicitly rejecting it. Cameron committed a colossal and historic political blunder by calling the referendum; now, however, the British are stuck with the result. May’s decisions to delay formal invocation of Article 50 until sometime in 2017 will not resolve the issues, or dispel all uncertainty, but it may serve to allow the political waves to settle.

If Prime Minister May is content to let events move slowly, she will not be hurried along by the other major parties in Britain, each of whom is experiencing their own individual post-Brexit crisis. The main opposition, Labour, is still trying to find its feet. Labour leader Jeremy Corbyn had been elected a year ago as part of a leftist rebellion against the centrists of New Labour, the heirs of Tony Blair. Blair was an enthusiastic European, but Corbyn reflects an earlier generation’s suspicion of the EU as a capitalist cartel. Thus even though Labour was officially pro-Remain, Corbyn himself offered only tepid support. Many Labour voters claimed not to know their party’s official position, and even if they did, that did not keep them from voting in surprising numbers for Brexit.

Disputes about how Labour handled the referendum has led to a new leadership dispute within the party. Corbyn may hold onto his position, but Labour’s polls are abysmal, meaning that the party is in no hurry to demand a national election.

The Liberal Democrats, only a few years ago a part of the national governing coalition, present themselves as the one party that is unambiguously pro-Europe, but has gained little traction in the polls for its pains. Five years as junior partner to Cameron’s Tories left the party deeply weakened, accused of opportunism and a lack of principle. The Scottish National Party has tried to may hay out of the fact that Scotland voted strongly to Remain, but its threats of a new independence referendum in Scotland are weakened by slumping oil revenues.

The only party that can claim it got exactly what it wanted from the election is the hard-core Euroskeptic United Kingdom Independence Party (UKIP). Nevertheless, the party itself is in the midst of its own crisis. UKIP leader Nigel Farage has been trumpeting the success of his life’s work in speeches from London (where he was and remains a fixture on every political talk show) to the European Parliament (where he still happily collects his stipend and holds his seat) to the United States (where he recently appeared on stage with Donald Trump). At the same time, however, he also announced his resignation from his leadership position. His decision to leave the practical details of post-Brexit life to others is proof less of his political convictions than of his sense of self-preservation—Leave advocates have already had to walk back some of their more rosy promises, and are likely to earn further complaints from disappointed supporters as the real costs of Brexit become clearer. Rivals for UKIP leadership are in the midst of a serious political brawl, but Farage has successfully slipped away, and hopes not be held accountable for what happens either to his party or his country in the negotiations to come.

Where does all this leave the rest of the EU?

Enthusiastic Brexiteers wanted their vote to be about more than merely Britain. In the lead up to the vote, UKIP in particular expressed its solidarity with Euroskeptic parties elsewhere in Europe, arguing that British rejection of the EU should be a signal to others to do so as well. A motley collection of populist nationalists, from Geert Wilders in the Netherlands to Marine Le Pen in France to less prominent parties in Denmark, the Czech Republic, and Italy, joined the Brexit chorus. They have received material and moral support from various international quarters, from the Russian government of Vladimir Putin, who hopes a more fragmented Europe would present weaker opposition to Russia’s territorial and political ambitions, and even from conservatives in the United States, who denounce the EU as a socialist enemy of national sovereignty. Marine Le Pen has been welcomed warmly in Moscow, and her party, the Front National, has received importance financial assistance from Russian banks. Nigel Farage’s recent appearance in Mississippi with Republican presidential nominee Donald Trump, which followed Trump’s proclamation that he was leading a similar anti-elite campaign and should be called “Mr. Brexit” for his pains, is but the most overt expression of American right-wing support for Brexit.

Geert Wilders rushed forward after the Brexit vote to declare his desire to organize a “Nexit” referendum immediately. The Dutch government pouted cold water on that idea, and opinion polls suggest that the majority of the Dutch electorate still sees more value in staying within the EU. Nevertheless, Wilders continues to combine appeals to national sovereignty with worries about immigration and Islamic terrorism to mobilize against the EU, and is unlikely to let the issue go.

A similar situation has arisen in Austria, on the front lines of the immigration crisis from last summer. In its presidential election earlier this year, the two establishment political parties, blamed by the electorate for being unimaginative and out of touch, failed to make the final runoff. Instead, voters displayed their anti-establishment mood by selecting the candidate of the populist Freedom Party (FPÖ), Norbert Hofer and the former leader of the Greens, Alexander Van der Bellen. The FPÖ platform included not only tighter border restrictions but possible departure from the EU as well. Hofer’s candidacy thus alarmed observers inside and outside of Austria, who feared the impact of electing such a clearly right-wing candidate. Austria’s establishment hastily rallied to Van der Bellen in hopes of stopping Hofer, and appeared to succeed when the Green elder statesman won a slim majority. Irregularities in the counting of absentee ballots, however, led Hofer to file a successful challenge to the result, and a court has ordered that the election be re-run this fall, leaving Austria’s political future, and its EU membership, very much open.

Nor has Euroskepticism only taken root in the smaller counties of the EU. Even in the very heart of the Union, there are rumblings of discontent. Marine Le Pen has discussed a “Frexit” from the EU, but her sights are set higher than a symbolic referendum. French presidential elections are scheduled for 2017, and Le Pen sees a real opportunity to capitalize on the French public’s frustration with the ineffectual socialist president François Hollande, as well as their fears of further terrorist attacks, and ride the populist wave right into the Elysee Palace. From there, it would be much easier for a Le Pen administration to pursue a Euroskeptic course at the highest levels, which would be a historic turnabout for a country that was one of the initial leaders of European integration.

Italian PM Renzi meets British counterpart May in Rome
ROME, ITALY – JULY 27: Italian Prime Minister Matteo Renzi (R) and his British counterpart Theresa May (L) hold a joint press conference after their meeting at Villa Doria Pamphili in Rome, Italy on July 27, 2016. (Photo by Baris Seckin/Anadolu Agency/Getty Images)

One of the other founding states of the European Union, Italy, is also feeling the aftershocks of the Brexit vote. The “Five Star Movement,” a populist and Euroskeptic party led by Beppe Grillo, a comedian and blogger, began as a left-wing critic of the EU’s austerity policies to prop up the euro, and proclaimed its solidarity with the similarly left-wing populist Syriza movement in Greece. With a platform that denounces globalization and the power of the European Central Bank, the Five Star Movement would appear to have little in common with the right-wing sympathies of Farage or Wilders, but their denunciations of European elitism has helped blur old ideological lines. Five Star enjoyed great success in recent local elections in Italy, including electing 37-year old Virginia Raggia as mayor of Rome. Continuing economic weakness compounds Italy’s political crisis, as worries about Italian banks and wrangling over a possible bailout call into question Italy’s continued membership in the Euro. Although an “Italexit” from the EU is not on the immediate horizon, a banking crisis and departure from the common currency would be a calamity all its own.

One thing that all Euroskeptics appear to have in common is not only their contempt for Brussels but also their rejection of Germany’s growing economic and political hegemony within the European Union. German Chancellor Angela Merkel has indeed been a strong supporter of the EU, and is a driving force behind the EU’s most controversial policies, from austerity to protect the Euro to openness to greater immigration. Merkel’s popularity has long appeared unassailable as voters welcomed her steady and calm image. But Germany also faces national elections in 2017, and Merkel is under mounting political attack. Some of her more conservative fellow Christian Democrats, especially her Bavarian partners, worry that she has abandoned traditional national interest with her immigration policies. Further to the right, the populist Alternative for Germany is hoping to become Germany’s version of UKIP, rallying disaffected voters from small towns in the east with a platform built on national pride, rejection of immigration, and denunciations of the Islamist threat. On the left, Merkel is criticized for her support for sanctions on Russia and budgetary austerity. The German party landscape is as fragmented as it has even been since 1949, with as many as six parties having a good chance of entering the Bundestag next fall. That will make building a stable coalition and governing all the more difficult, even for a politician as adept as Angela Merkel. Her domestic weakness comes at a very inopportune time for Merkel, who for better or worse has come to be seen as the de facto leader of Europe.

With so many member states facing internal political challenges, it is not surprising that the EU as an institution has also been weakened in its response to the Brexit vote. The President of the European Commission Jean-Claude Juncker, as well as the President of the European Council Donald Tusk have each tried encourage more confidence in the future of the EU. Calls for reforms of the EU—to improve its democratic credentials, to streamline its bureaucracy, to reaffirm its global role—have been dusted off and repeated, but there is no specific timetable or agenda for any of them. The very fact that there are two men who can all themselves President of Europe (a subject that requires an article all its own), is itself strong proof of the lack of clear leadership in the Union.

The coming autumn will be a season of high level visits. Theresa May and Boris Johnson have begun a series of meetings in European capitals to discuss the next steps; Merkel and Hollande have met with each other and with Junker and Tusk.

The question hanging over all these discussions is: how hard a bargain should the EU drive in its negotiations with the British? Brexiteers such as Johnson and former Tory leader Iain Duncan Smith have been arguing that it is in everyone’s interest to make Britain’s departure and the establishment of new and favorable trade relations as smooth as possible, and want negotiations to begin now. Theresa May appears to be less sanguine about Britain’s negotiating position, and has hinted at the need to know the contours of any deal before formal talks begin.

In Brussels and in continental capitals, however, there is real fear that a soft line with Britain would encourage Euroskeptics elsewhere. After all, if leaving the EU has no significant consequences, why wouldn’t other states want to do it too? If EU membership is valuable, then abandoning that membership should have a cost. Furthermore, it is not clear as a matter of international law that Britain can even begin negotiating new trade deals until after it is no longer a member of the EU, which means that May’s hope to know the end of the journey before it begins may be futile.

Across the continent, we see efforts to balance recognition that the Brexit vote is historic and important with hopes to minimize the long-term damage to the continent and its members. Angela Merkel has shown some sympathy for May’s desire to slow down the process, and has expressed her belief that relations between Britain and its former EU partners should not be permanently damaged, even if the Brexit vote is a “deep break” in European history. Boris Johnson as well has argued, from the moment that the Brexit results were tallied, that Britain may leave the EU but will not turn its back on Europe.

Those are all fine sentiments, but they touch on a basic, unanswered, and perhaps unanswerable question. What should be the relationship between the European Union as an institution and Europe as a historical, political, or cultural space? For the last sixty years, the distinction between the two has been blurred. When we have spoken of Europe, we often have meant not the continent, but the institution. Advocates of European integration welcomed this. For them, the essential purpose of the EU has been to give concrete expression to the otherwise vague notion of European solidarity. Euroskeptics of the right and the left have each offered criticism of specific EU policies—that it has weakened national sovereignty, that it has imposed monetary unity and austerity, that it has created a thicket of confusing and idiotic regulations, to name a few. But they have been less adept at explaining their vision of a post-EU Europe. Some may welcome a return to the classical anarchic system of completely sovereign states of the early 20th Century, despite the evidence of how that system collapsed into war and genocide. Others may dream of a vaguely collaborative socialism of small communities, despite the realities of global economic competition and global security threats. Brexiteers may gave correctly gauged the public mood, but their emotional appeals to “send a message to Brussels elites” papered over the very real practical consequences of the vote.

Even the most committed Europhile has to admit that the EU has not yet achieved all that it was intended to achieve; indeed, it has not been very clear in articulating what it wants to achieve. Europhiles have often dealt with those concerns with the smug assurance that European integration was a one-way street, that the force of History itself would keep things moving forward. The Brexit vote is a stark reminder that there are no one-way streets. As long as people create institutions, people can changed or even destroy them. Advocates for Remain in Britain, and supporters of the EU in general, clearly failed to make a sufficiently positive case to win over the electorate.

As Britain and her partners negotiate Brexit, Europeans from Tallinn to Dublin will have a chance to consider the future EU, and to point the way forward. Those who want to tear down should be asked what they intend to build on the rubble. Those who want to reform need to be clear on the content and purpose of their reforms. Their answers to those questions will shape the destinies of both those who remain, and those who leave.

*Ronald J. Granieri is Executive Director of FPRI’s Center for the Study of America and the West, editor of FPRI’s The American Review of Books, Blogs, and Bull, and host of Geopolitics with Granieri, a monthly discussion program at FPRI.

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