#92: The Impact of Brexit on Trade

There is no question that Brexit will impact trade between the European Union and the United Kingdom negatively. This is not something that needs to be answered in the concrete. A simple history lesson will survive.

The European integration process that began after World War II led to the European Union and its component institutions, among them the Free Market, the Schengen Agreement, the Euro currency and common policies on economic, atomic, judicial, foreign and security policy.

The purpose of this integration process was to intensify cooperation and trade in Europe to make any future war between the member states very difficult if not impossible, but most of all, unnecessary. Every single border in Europe is the outcome of warfare and strife. Most currently existing European nation states have seen territorial changes in history, and many are recent creations of the 19th or 20th century.

It stands to reason that in order for there to be trade, there needs to be peace, and in order for there to be peace, that which has divided Europe – the quest over territory and dominion in Europe – needs to be removed as an obstacle. As the question of national sovereignty is tied to the question of territory, any attempt to secure peace and prosperity (which includes trade) needs to limit national sovereignty. Put differently, peace can be made if trade replaces war.

To facilitate trade, many barriers to trading were eliminated by the European integration process. That does not mean that trade did not exist prior to the European Economic Communities, but it was more difficult. Eventually the UK joined the EEC in order to facilitate trade.

If the UK leaves, it must mean that the barriers and obstacles to trade that were limited or removed by the EU will reappear. This is not because of European ill will, it is simple logic: European Integration means the removal of barriers, and if you undo that process, the barriers will reappear.

What does “barrier” mean in the context of trade? Typically, it means costs and time – through paperwork, tariffs, regulations, et cetera – basically all the boring stuff the European Union takes care of.

Thus it is not a matter of whether Brexit will hurt trade, but how much.

Does that mean that it will hurt peace? Hopefully not. Ask around in Northern Ireland. Blame those in the UK that for decades have pushed anti-EU misinformation, set up a non-binding (!) referendum, made a political decision to accept its imperfect conclusion on a strict 50-50 line, and ignored all advice to ameliorate the situation. But don’t blame the EU. Their message has always been clear: You may leave, but the price to pay will be higher than the UK’s already discounted membership rate.

There is a reason that Norway and Switzerland pay into the EU budget. They should really be members, but that is up to their populations. If being a quasi-member who has most obligations but no say-so is an attractive state of affairs, so be it.

If the UK ends up paying into EU budget as well to alleviate Brexit pains (or rejoin as a member), it will have achieved the most paradoxical result: similar monetary contributions with an even greater loss of sovereignty due to lack of true membership.

There are no words to describe this scenario that do not involve any real or implied insults. I’ll leave it there.

#64: The Illusion of Brexit

Brexit is not possible. That is, Brexit in any meaningful sense of the word. Whatever meaning may have hidden in the idiotic phrases and jingoism of “Brexit Means Brexit”, behind empty cries for sovereignty, taking the country “back” to wherever, whatever the original intention: A complete and clean break with the EU is simply not possible without seriously bad compromises.

Let us remember. The promise of those promoting Brexit – the exit of the United Kingdom of Great Britain and Northern Ireland from the European Union – was that finally, the UK would be outside the influence of the allegedly ever-more meddling EU, and able to trade globally, use the money they would have sent to the EU for the National Health Service instead, and finally “take back control” over their national fate.

Let us also remember: Brexit started as a dare and was never something that was seriously presumed to happen. Prime Minister David Cameron wanted to play the old game that the UK has always played in the EU – be part of it but not too much – and used the threat of a Brexit vote as a scare tactic to demand concessions from the continent, reminding everyone that British EU membership was not a matter of deep political and historical conviction, but that it came about due to pressures from the United States, the ignoble end of the Empire, and the cost of not being part of the single market. It was a business deal.

To be fair, to most other European members of the EU, it is a business deal as well – but there are also historical, cultural, geographical and other ties that make the European project necessary. The EU exists, after all, as a correction to the rampaging nationalism that ended up in the ethnic cleansing and genocides committed in two World Wars. The containment of Germany as the main perpetrator of these crimes could and can only happen if the historical fallacy of borders alongside clean ethnic or national lines was corrected.

But British exceptionalism was about to have its day, and Brexit was it. Before the vote happened, in 2014, Scotland had its referendum on whether to stay in the UK – based on the assumption that the UK would stay in the EU. Scottish voters dutifully obliged, and were betrayed later by a referendum that should never have happened; after all, there had been a referendum before in 1975 when entering the EC, and subsequent treaty negotiations happened with the people’s support through the representative democracy. The 2016 referendum was a political ploy, and Cameron – who agitate against Europe before claiming to argue in favor of membership – is ultimately responsible. The referendum, after all, was non-binding, but Parliament decided to act on it anyway.

Theresa May knew Brexit was not possible and did what she could to prevent the greatest of damage. Labor, under Jeremy Corbyn – always living in the shadow of accusations of antisemitism and extreme left-wing radicalism – was no help either. It fell to the Boris Johnson, an assumedly well-educated politician who enjoys playing the clown, and who seems to enjoy games with the highest of stakes.

According to Johnson, Brexit means to take back control. But to what degree is that even possible?

Firstly, let us look at the Irish border problem. Ireland is in the EU, Northern Ireland in the UK. Without Brexit, the border had become meaningless. Membership in the EU is a key component to maintaining peace in Northern Ireland. If the rules in all three parts (Republic of Ireland (A), Northern Ireland (B), United Kingdom (C)) are the same, then we could simplify this as A=B=C. The Irish border problem is solved if A=B (rules in Ireland the same as in Northern Ireland). UK unity is maintained if B=C (rules in Northern Ireland same as in Great Britain). Brexit means that B changes, and that cannot anymore equal A. If Northern Ireland cannot comply by single market rules anymore, then there needs to be a border regime on the island – or Northern Ireland complies with rest of the island. Johnson has categorically denied any distance between the UK and Northern Ireland. It’s an equation that will prove to be impossible to solve.

There either is or is not a single market, and any fudge solution will not work. Ireland will become the English-speaking voice in the EU, and will immediately be receiving support from the United States. England keeps forgetting that it is not really the “mother country” to the US that it thinks it is. Amongst Euro-Americans, 14% identify with Germany, 10% with Ireland, 7% with England, 5% with Italy, 3% with Poland. Joe Biden is Irish-Catholic. The Supreme Court is largely Catholic-Jewish by now. England is fading in American cultural memory. If Brexit Britain wants to retain its special relationship with the US, that may work within NATO and the Five Eyes, but economically, the EU (meaning, Ireland) will be a more important partner for American business interests.

Secondly, as mentioned before, Scotland agreed to be part of the UK only because of EU membership. Contrary to the Ireland case, there might actually be a cultural desire to indeed have a border between Scotland and England emerge. If Brexit happens finally, Scotland can leave the union and apply to become a member of the EU as an independent state. This is categorically different from the Catalan case (which is often brought up as a scare tactic), and more in line with the Czechoslovakian case. Czechoslovakia split up into Czechia and Slovakia before applying for EU membership. Catalonia seeks independence from an existing EU member, and to – assumedly – stay with the EU as an independent member state. This is a completely different scenario than the Scottish case. Scotland is forced out of the EU by an act of Parliament (remember, the referendum was non-binding originally till its decision was accepted by Parliament), and it only seeks to maintain the status quo vis-à-vis Europe.

Thirdly, the dreaded promises. The NHS will not be receiving the money that used to be going to the EU; that promise (which probably was key to the success of the referendum) was canned already. Support for regions like Cornwall and the North will now rely on Westminster, not Europe. In global trade, the weight of the UK outside the EU will be significantly smaller, and its negotiating power reduced. The empire is gone, and outside England, Australia and New Zealand, memories of the empire are not necessarily positive.

In the end, Brexit will mean reliance on the EU without the possibility to shape EU policy. It will mean being at the mercy of rising global powers, of Ireland, and the US. It will mean the threat of secession not just of Scotland, Northern Ireland, but maybe even Wales and Cornwall. Maybe there is a solution here. If Brexit has to happen, England leaves and the rest stays. Maybe India will offer Britain membership in its union as a crown colony?

Let us come to our senses. The time for nationalism is over. We’re all interconnected, for worse, but also for better. Whatever will come out of Brexit will not be the magic solution to all the problems for which the UK government has successfully blamed the EU. Britain is not leaving the continent geographically. It remains where it is. Joining the EU was the logical choice in the past, and it will still be there once Brexit has been revealed for what it really is: an illusion of the outdated concept of national control in a global world.

#14: The European Project Needs Both Unity and Disunity

Now in a major crisis, the European Union has a chance to lead. But how should such leadership look like, and how strong should such a union be?

It may well be understandable that currently, during the Coronavirus crisis of 2020, its individual member states are concerned about their own safety, and that they have seemingly fallen back on national thinking. But this would be a misleading conclusion that would fall in line more with those suspicious of the EU as an overreaching enemy of national identities.

But the European Union is not such a super-state, and it should never become one. The history of Europe teaches us two major lessons: First, without some form of unity, European states will defeat each other in their selfish quests for dominance. Many a war has been fought in pursuit of this, and it took several wars of global scope to demonstrate that point eventually. The Seven Years War, the Crimean War, World Wars I+II, and the Cold War have revealed Europe to be a danger to itself and the entire world that needs to be contained by some form of structure stressing cooperative and mutual success over selfishness and deadly competition. Yet second, history has also shown that national, regional, even tribal identities in Europe need to be respected as well, and that they need to also be recognized administratively.

Accordingly, the answer to European Integration can only be a form of supranational, very weak federalism. But this is not a weakness, it is a strength, and it is recognized already in the EU’s motto “united in diversity.”

Throughout history, many a charismatic leader has tried to unite the area that could be called Europe under a single ruler. The only stable approach to this has been the Roman Empire, but this was at a different time, under completely different historical circumstances that cannot quite be compared to our times.

Reasons for the failure of Rome are manifold, and always fun to discuss. There is no one factor to pinpoint. But maybe it helps to see that the great empires of antiquity – which would include Egypt, Persia, Seleucia, and Rome, acted as developmental drivers for the entire Mediterranean region. All these multicultural empires were enabling infrastructure, local development, science, and culture; but they eventually also enabled different regions to develop their own identity. While everybody focuses on the Germanic invasions later on as a cause for the breakup of Western Rome, it is more instructive to look at local independence movements in Gaul, Britain, Palmyra, and other areas. In the end, all subsequent attempts at unifying the entire realm by force would fail, thankfully.

The lesson here may be that large empires can be established when the provinces and regions are weak, but this is, of course, no sustainable economic model. Once provinces and regions grow stronger, centrifugal forces will keep creating division if the central authority is perceived as too strong. If there is any lesson history can provide us, it is probably that.

If we apply this to the European Union, we need to first provide the major caveat that the EU is of course not a structure created by force but voluntarily so. Its creation, however, was hastened by several factors, namely the legacy of World War II, the dangers of the Cold War, the external help from the United States, and finally, the legacy of Soviet oppression. If we simplify these forces, the lesson here is that democracy and freedom are drivers of unity, while authoritarianism is a danger against which European states will eventually rise up.

This reveals the following: Any attempt at European integration that aims for a unified super-state with state-like powers will fail. An all-powerful and intransparent central bureaucracy will kill the European project just as much as any authoritarian dictator will. Brexit surely was idiotic, but predictably so. In order to retain some form of European unity, some form of disunity will need to be tolerated.