CHAPTER 6

Brexit and Globalization: Collateral Damage or an Accident Waiting to Happen?

Loukas Tsoukalis

In a referendum held on 23 June 2016, with a relatively high turnout by the standards of recent years, a majority of the British people voted to leave the European Union (EU). It was 52 against 48 per cent in a country divided along many cross-cutting lines. Arguably the most important political decision taken in the British Isles since the end of the World War II, Brexit will have major implications for the economy, foreign policy as well as for domestic politics, possibly also for the unity of the UK.

The withdrawal of the UK will, of course, also constitute a big loss for the rest of the EU in what may appear as a never-ending series of crises. Following the crisis of the euro and the refugee crisis, one of the big countries has now decided to leave, thus marking a dramatic reversal of an unstoppable (so we thought) process of integration with the addition of ever more members and functions. Negotiating the terms of divorce is difficult enough. Negotiating the terms of a new relationship between the UK and the rest of the EU following Brexit will be even more difficult. After all, Brexit cannot change geography. The British Isles are tied in many different ways with the rest of the European continent and such ties can only be loosened at a high cost.

In this chapter, we shall begin by examining the troubled history of Britain’s European relationship, a relationship that turned ever more problematic during the recent phase of globalization coinciding with a new push on the accelerator in European integration. Brexit did not come out of the blue, and we need to dig into history to understand why. We shall then proceed to examine the decision to hold the referendum, the nature and outcome of the renegotiation, the issues raised during the debate preceding the popular vote, and the real choice(s) facing British people. What were the dividing lines on the big question of Leave or Remain? Was Brexit really the result of a popular/populist revolt against globalization, a revolt that has challenged the established political order in many countries and brought Donald Trump to power in the United States? And what is the link, if any, between globalization and European integration? Is Brexit showing the way out for other countries, or is it likely to be a unique event? These are the main questions we shall attempt to address below.

No Love Lost

If Britain had chosen to do so, it could have played a leading role in European integration from the very beginning and could have shaped the European model much closer to its own image. Luckily, it chose not to, ardent supporters of European unity would hasten to add now liberated from the constraints of political correctness. Britain joined late in what has always looked from its side like a business affair, based mostly on a narrow calculation of economic benefits and costs: an arranged marriage if you prefer, certainly not an affair of the heart.1 There was little love at best, but also in crucial moments, real misunderstanding by British political leaders of the motives and intentions of their partners, notably those in the driving seat in European councils. Or, was it just lack of empathy?

In the words of Winston Churchill: ‘We are with Europe but not of it. We are linked but not comprised. We are interested and associated, but not absorbed’.2 In his famous Zurich speech, Churchill spoke in favour of the United States of Europe, but Britain was not meant to be part of it. Nothing much has really changed since then as far as many British citizens and their political leaders are concerned. Britain’s political elite has always been divided on European integration and not terribly interested in it, with some notable exceptions (more so among intellectuals and academics). When the Conservatives led Britain into the Common Market, as European integration characteristically used to be referred to on that side of the Channel, Labour was against. And then roles were progressively reversed, ending up today with a strongly Eurosceptic Conservative party and a mildly pro-European (although with a vocal Eurosceptic minority) Labour party that usually prefers to talk as little as possible about Europe.3

All along, genuine Europhiles have remained a small, persecuted (!) minority within Britain’s two big parties, the Liberal Democrats being the only consistent pro-European political force in the country, yet small. With a mostly Europhobic tabloid press owned by foreigners (not Europeans) and persistently low levels of public support for European integration (always among the lowest, if not the lowest, as registered in Eurobarometer surveys), and with even less interest in and knowledge of the European project, the latter has, understandably, never been treated as a vote winner by Britain’s political class. If anything, it has been like a poisoned chalice4 that has led several prominent British politicians to their premature political death. True, Britain was a late entrant to a club where the basic rules had already been set by others and it then had to fight successive battles in the name of reform to change the rules as regards the European budget, the common agricultural policy, and more. However, the problem goes much deeper: many British people and their political representatives simply do not consider themselves European,5 and only a minority speak any European languages except for their own. Not surprisingly, they are not at all keen to transfer money and power to European institutions or share their destiny with foreigners on the continent of Europe.

However, as a member of the EU, Britain succeeded in playing a determining role in important areas of European policy, such as the internal market, trade, enlargement, as well as foreign and security policy. For years, it used to find allies among those who appreciated British pragmatism, liberal views, and a strongly pro-Atlantic policy, as well as among those who looked for a counterweight to France (or France and Germany together), and in countries outside the Union eager to become part of the European project. For the British, further enlargement had the added advantage that it would make deeper EU integration less likely.

Given its relative weight as a country that had run a huge empire until a few decades previously, the quality of its civil service, with the Foreign Office as the Rolls Royce leading the rest, Britain’s influence in European affairs was hardly surprising, although usually not acknowledged by most of its politicians. Britain commanded respect, even from those who disagreed, and in turn respected the rules once adopted, unlike some of its continental partners for whom new legislation was just one more stage in the negotiation and obeying the rules a relative matter. The differences in political culture and legal traditions, not to mention institutional capacity in rule implementation and enforcement, were bound to cause more friction as integration deepened.

Britain was always on the liberal side in economic terms and keen on safeguarding the interests of the City of London as an international financial centre almost irrespective of the political colour of those who happened to be in power. It had a more global outlook than almost anybody else in Europe. But it also consistently tried to put its foot on the brakes and restrain the pro-integration zeal of its partners on different fronts, resorting to exceptions and opt-outs when everything else failed. This happened more and more as European integration shifted to higher gear from the early 1990s onwards. Exceptions and opt-outs in turn led to more isolation, thus preparing the ground for the grand exit.

A Divided Country

Many Conservatives blamed Thatcher’s demise in 1990 on a conspiracy of pro-Europeans inside the party and turned more Eurosceptic, while sterling’s forced withdrawal from the European Exchange Rate Mechanism in 1992, when the international financier, George Soros, won his bet and some billions at the expense of the Bank of England, hurt British pride and British pockets. To make matters worse, France and Germany were at the time leading the way towards monetary union. This was certainly one big step too far for the British. Feeling unable to stop it, they finally opted out. The creation of economic and monetary union without Britain has been a major turning point in Britain’s relations with the rest of the EU. Other opt-outs followed, notably from the passport-free Schengen area, large parts of justice and home affairs, and the Charter of Fundamental Rights. The British felt increasingly uncomfortable with the accelerating pace of integration in Europe and decided to distance themselves.

The arrival of New Labour, led by Tony Blair, the most European-minded prime minister since Edward Heath, did not fundamentally change the domestic scene. Despite constantly repeating his priority to keep Britain ‘at the heart of Europe’, Blair never invested much effort in trying to influence public opinion and tackle Euroscepticism head on, although, admittedly, this would have been a difficult task given the troubled history of Britain’s relationship with the EU.6

If anything, the opposite happened, albeit unintentionally. Strategic decisions taken during the Blair era later became catalysts for Brexit. The New Labour governments embraced wholeheartedly globalization and deregulated markets on the assumption that the expected tide would help to lift all boats, while (to be fair to them) also emphasising the need to empower citizens to better take advantage of the opportunities created. It is now clear that New Labour grossly underestimated the unequal distribution of gains and losses arising from free and global markets, which laid the groundwork for the subsequent revolt of the losers. Income inequalities grew during the last 25 years or so.7 On the other hand, the Blair governments decided not to take advantage of the long transitional period allowed by accession treaties for the free movement of workers after the big bang enlargement of the EU in 2004. This was based on the mistaken belief that relatively few citizens from the new members would take advantage of this freedom. In any case, immigration was supposed to be good for the British economy, hence for the country as a whole. The result was approximately one and a half million people who migrated from Central and Eastern Europe to the UK in the years that followed enlargement, and immigration became the most decisive factor for Brexit on referendum day. History sometimes plays strange games.

The bursting of the biggest international financial bubble since 1929 soon turned into an existential crisis for the euro. In many British eyes, Europe and the eurozone in particular were totally incapable of managing the crisis, stagnating economically yet integrating further, becoming more undemocratic in the process and run by Germans: a terrible combination indeed – and not far from the truth. British and US media, prominent economists and lesser mortals as well, predicted disaster and disintegration with a distinct element of Schadenfreude. However, they all underestimated, once again, the sense of commitment of Europe’s political leaders to the common project (or perhaps more accurately, their collective instinct of survival).

Britain felt marginalized in a union where the euro was at the centre, and risked becoming the recipient of policies (and failures) decided elsewhere. And it became increasingly isolated. The fiscal compact treaty and the election of Jean-Claude Juncker as president of the European Commission are only two examples of how ‘Perfidious Albion’ had apparently lost its knack of forming alliances on the European continent. Isolation is often a self-fulfilling state of mind.8

Meanwhile, on the domestic front Euroscepticism was growing. The UK Independence Party (UKIP) on the ultra-nationalist right9 succeeded in drawing support mostly from old age conservatives and nationalists but also from those who felt left behind during the big economic and social transformations of recent decades, including former Labour voters. It combined nostalgia for the past with a strong denunciation of European constraints on British sovereignty and a strong emphasis on immigration. UKIP succeeded in winning the largest number of votes at home in the European Parliament elections of 2014 and caused an earthquake in the British political system. Nigel Farage, the leader of UKIP, together with Marine Le Pen in France and politicians of the same kin in other countries, were mounting a frontal attack on the liberal political order and European institutions as well.

In the Conservative camp, an increasing number of MPs apparently decided that the most effective way of dealing with the mounting challenge from the right would be to adopt much of the vocabulary of their challenger. Under the leadership of David Cameron, the Conservative Party distanced itself further from the European political mainstream, while giving the distinct impression that he personally did not have much of an interest in what went on in Europe. In the words of the former president of the European Council, Herman Van Rompuy: ‘How do you convince a room full of people, when you keep your hand on the door handle? How to encourage a friend to change, if your eyes are searching for your coat?’.10 And while the Conservative party was shifting further to the right, in 2015 Labour elected a new leader, Jeremy Corbyn, from the far left of the party. In Britain’s increasingly polarized politics, Europe did not easily fit in.

There are many different kinds of Britain:11 a very international economy with a deregulated jobs market that attracts many people from the EU and beyond, with institutions and universities that are more open than anywhere else in Europe (speaking the lingua franca surely helps), a multi-ethnic and multicultural society, and London as the most global of cities, alongside New York. Yet, Britain (or, its greater part) is also an increasingly parochial country, with England withdrawing into a ‘Little England’ mentality, while Scotland diverges politically, is distinctly more pro-European and many Scots still think of divorce.

Britain is very much a divided country with large inequalities. It is certainly not unique in this respect, although more extreme than big countries such as Germany and arguably also France. Espousing globalization as an essentially neo-liberal agenda and with an emphasis on services and the financial sector in particular, Britain has ended up with more internal divisions and inequalities. Only a small minority of British politicians ever considered the European project as a means of collectively managing and taming globalization, a means of projecting a common model and defending common interests and values in a rapidly changing world where the relative weight of individual European countries, the UK included, is rapidly diminishing.

Renegotiation and High Stakes

Under strong pressure from within his party, Prime Minister Cameron announced in his Bloomberg speech in January 2013 that he intended to ask, if re-elected, for a renegotiation of Britain’s terms of membership of the EU on the basis of which he would later call an ‘in’ or ‘out’ referendum. A comprehensive review of EU competences and how they affect the UK had already been launched by the Foreign Secretary, intended to highlight the alleged over-centralization of powers in Brussels. It was a painstaking exercise and very comprehensive, as was to be expected from the British civil service. But having produced no spectacular results in political terms, the final report was quietly set aside.12 After Cameron won an (unexpected) outright majority in the 2015 election, he proceeded to outline the UK’s demands in the renegotiation. Thus, 40 years after the 1975 referendum, history was repeating itself: another renegotiation of the terms of membership for the UK, again for internal party reasons (this time it was the turn of the Conservatives), and with narrow terms of reference.

Cameron started by calling for a ‘reformed’ (and leaner) EU to suit British interests. But as the response from Brussels and the national capitals came loud and clear, he gradually scaled down the expectations. He wanted to be able to claim victory in the end and hence justify a decision to campaign for Britain to stay in. After all, the renegotiation was meant to be, at least in part, a public relations exercise for domestic (and mostly internal party) consumption. Harold Wilson had done more or less the same back in 1975.

There was very little time to renegotiate or simply address some of the fundamentals of Britain’s membership of the EU and precious little interest from its partners to do so: they were hardly keen on adding more exceptions to an already long list and even less keen on making concessions to a British prime minister who had previously succeeded in alienating almost everybody in European councils. Last but not least, the negotiating power of the two sides was highly imbalanced, an unpleasant yet inescapable fact that so many Brexiters have refused to acknowledge before or after the referendum. Domestic politics in Britain was, once again, out of kilter with European politics. But while the renegotiation was bound to be limited in scope, the stakes at the referendum were much higher. Britain was thus taking a big gamble with the most important relationship it has with the rest of the world, namely the one with the big regional bloc in its immediate neighbourhood.

Britain wanted a less regulated and more competitive Europe, open to global economic forces. At the time, many among its EU partners were only too keen to concur, and it did not therefore prove too difficult to agree on an appropriate wording to that effect. The European Commission had already launched a campaign to reduce EU red tape. Of course, the beauty of economic regulation is in the eye of the beholder. In the EU, it has been the object of ever-lasting negotiations on many different fronts in an attempt to reconcile different histories, institutions and the specific interests of member countries. Free trade, sovereignty and democracy make an explosive mix.13 In a globalising world economy, the EU has so far attempted, albeit with limited success, to reconcile all three at the regional level. Yet, for zealots within the Conservative party, it has always been difficult to accept that markets need rules and international rules need some form of joint management, hence also compromise.

Britain had decided back in the early 1990s to stay out of European monetary union for perfectly understandable economic and political reasons. But there was a price to pay for staying out, namely in terms of reduced influence in European affairs since membership of the eurozone also determined membership of the core group in the EU. During the euro crisis, Britain became marginalized and also got itself in a bind: rational people on the British side of the Channel could not really wish for the breakup of the eurozone knowing only too well that there was no way of insulating themselves from the negative consequences of a breakup; However, they should try to build fences to protect themselves as much as possible from the ongoing euro crisis and the decisions associated with it. This is precisely what Prime Minister Cameron (and his predecessors) tried to do, and he largely succeeded. He also tried to obtain formal guarantees for the City of London, but these were much more difficult, if not impossible, to obtain. The future of a large offshore centre in an increasingly regulated international financial environment and on the edge of a regional currency bloc is not entirely clear.

Britain wanted measures to reduce net migration from the rest of the EU and the welfare benefits associated with it, given the disproportionately large numbers arriving at its shores, only comparable to Germany within the Union. But it had to fight against the principle of inseparability of the four fundamental freedoms of the single market for goods, services, persons and capital. It was a principle elevated to a theological dogma in many European capitals. Had the other Europeans offered the British an effective emergency brake on intra-EU migration, the result of the referendum would in all likelihood have been different. Control of inward migration was to become the single most important issue in the referendum. But the rest of Europe was apparently not ready to pay the price to keep Britain in. In fact, most political leaders on the European continent had not even realized the danger until it was too late. Cameron at least won the right to restrict payments of in-work benefits and child support to immigrants from other EU countries, but it was not enough.

The British government also won an agreement that legislative proposals by the European Commission could be blocked in the future, if the majority (55 per cent) of national parliaments were opposed. And it obtained a formal exception to the ‘ever closer union’ objective enshrined in the preamble of the Treaty on European Union. This had been first introduced in the Maastricht version of the treaty back in 1992. ‘Where is the beef?’ the pragmatic British might have asked, but apparently pragmatism has its limits also in the UK.

However, behind anodyne phrases, behind flags, hymns, and all kinds of symbols, there has always been a wide gap between Britain and many of its European partners concerning the expectations that each has from European integration. While the British prime minister spoke of ‘network Europe’ and cooperation in a common market, the large majority of his partners already shared a common currency and took further steps in integration. Some even dared talk of political union, although federalist rhetoric had toned down, only to revive once again more recently. The gap is wide and goes far back in time. What had changed in the years preceding the Brexit referendum was the, reluctant or otherwise, readiness of the British to let others go ahead, if they wished, as long as their partners let the UK stay out of new integration projects. In other words, Britain had reconciled itself to a place on the outer periphery of European integration much before the referendum took place.

Questions Not Asked and the Unholy Alliance

British people were asked to choose in the referendum between ‘Leave’ and ‘Remain’, following a renegotiation that did not and could not alter much the fundamentals of Britain’s EU membership. Cameron obtained concessions from his European partners that could in no way be presented as a major change of the terms of Britain’s EU membership, especially as regards immigration. And he thus failed to rally a significant number of prominent and less prominent members of his own party on the Remain camp. The Conservative rank and file was deeply divided during the campaign, even though the majority followed the leader, while Labour leadership was at best lukewarm in favour of Remain.14

Those who wanted to leave the EU raised, first and foremost, the spectre of uncontrolled immigration. They also stressed the need to regain control of national borders and legislation, and they exaggerated the budgetary costs of Britain’s EU membership. On the other side, those who wanted to stay emphasized the likely negative effects of Brexit on the domestic economy; only a few dared praise the virtues of the common European project and Britain’s part in it. Numbers were thrown at each other indiscriminately and many people resorted to fake news and fake statistics: Turkey’s future EU accession, apparently unavoidable, would bring millions of new immigrants to British shores, while many economists who should have known better were only too ready to produce specific numbers in bleak scenarios for the British economy after an eventual Brexit. The debate often sank very low and truth suffered a great deal in a country that was deeply divided and in which political parties and politicians no longer enjoyed much respect, nor indeed did old venerable institutions, including the UK Treasury and the Bank of England, not to mention the IMF. The advice of world leaders, including President Obama, and all kinds of experts was not much listened to either. Demagogues had taken over.

The campaign leading to the Brexit referendum revealed big cracks in the British political system and British society in general. Something had gone badly wrong in previous years. Globalization and economic liberalization had produced big winners and many losers, while the ideological and policy convergence between the two main parties, the Conservatives and Labour, since the 1990s had left many of the losers unrepresented and with little trust for political parties and politicians.15 And then came the bursting of the big bubble in 2007–8, which exposed the fallacy of the prevailing neo-liberal ideology. Saving the big banks with hundreds of billions of taxpayers’ money was hardly consistent with economic liberalism. Years of austerity followed and incomes stagnated. But arguably the worst of all was that many people no longer felt they were in it together with the much better off. When a renowned economist, or indeed the Treasury, predicted a loss of GDP after Brexit, the instinctive response from many people was ‘It’s your GDP, not mine’.16

Pro-Europeans within the UK and the rest of the EU had laid their hopes in the conservative – with a small ‘c’ – instinct of the majority of voters. When it comes to the crunch, British people were expected to vote for the status quo rather than for an uncertain future, more out of fear of the unknown than out of love for what was on offer. The EU was surely not the object of love for most British people for reasons that often went far back in history, but at least this was the devil you know, so thought and hoped supporters of Remain. But it all depends on how you define (or better, perceive) the status quo. A key message, apparently successful, of the Leave campaign was that EU membership would lead to more (and even worse) change in the future, also less control in British hands.

Was Britain’s membership of the EU the victim of collateral damage caused by economic and technological developments as well as political decisions that went far beyond the EU?17 Was it, in other words, the victim of globalization on a neo-liberal agenda? I believe the answer is yes, but only partly so. In its more recent phase, European integration has become increasingly identified with globalization and liberalization. For those who consider rapid change and global competition as a threat, Europe is seen as part of the problem and not part of the solution. The rejection of the European constitutional treaty in the French and Dutch referendums in 2005 should have served as an early wake-up call, but alas, did not. The permissive consensus on which European integration had been based for so long was being eroded.18

In Britain, the problem was much worse because the reservoir of support for the European project had always been very shallow. Therefore, when things got really rough, as the big financial crisis and austerity followed on years of growing global competition, slow growth and rising inequalities, there was precious little support to draw from – and European institutions became a convenient scapegoat for popular discontent. Given the history of Britain’s relationship with the EU, the increasing number of opt-outs and recent crises, Brexit was like an accident waiting to happen. Cameron made the fatal wrong turn of the wheel by calling the referendum and mishandling both the renegotiation and the campaign, yet under extenuating circumstances: the road was in a bad condition and so was the car.

The evidence suggests that those left behind in an era of rapid economic transformation turned in large numbers against EU membership in the referendum, because the EU was identified with immigrants, open borders and loss of control. However, the losers from economic change ended up in an unholy alliance with right wing nationalists, with people yearning for old imperial glories and others daydreaming about Britain as an offshore island ready to strike free trade deals with the rest of the world. As a seasoned observer of the European scene has so aptly described it,19 it was an unholy alliance between members of golf clubs in the English countryside and the ‘sans culottes’ of globalization in the decaying heartlands of the British manufacturing industry.

Was it interests or values that brought such different people together in a broad-based alliance to vote for Brexit? The old dividing line between right and left was replaced by another one now, separating nationalists from cosmopolitans, social conservatives from liberals, those who try to resist change from others who see opportunities for themselves in rapid economic and technological transformation. Values overlap with interests, although of course not entirely. It was a combination of both that brought the unholy alliance together – and the fuzzier the terms of the alliance the better. Such alliances can win elections or referendums in times of political flux, but they are unable to deliver the goods once they have won. Within the alliance that won the British referendum, some talk of global Britain and free trade, while others yearn for protection.

The evidence from numerous exit polls, as well as from surveys and studies before and after the referendum, points to a deeply divided country along many different lines. The main parties were divided from MPs down to voters, although the respective majorities moved in opposite directions. According to the data available, 61 per cent of Conservative supporters voted for Leave and 61 per cent of Labour for Remain.20 Under-25s voted overwhelmingly for Remain and over-65s for Leave. The correlation in terms of education was also very strong: the more educated, the more pro-European.

Class was bound to be an important factor. But it also correlated strongly with education, income and wealth. In Britain, and other countries as well, notably the United States, the white working class contains many of those who lose out as a result of economic change. Not surprisingly, it produced large majorities for Leave, while members of ethnic and religious minorities opted mostly for Remain, apparently on the belief that a European Britain provides safer guarantees for their rights. It may look odd at first sight that people of Pakistani or Caribbean origin seem to trust Brussels and the European legal order more than white Brits, but there is logic in it.

Metropolitan London, big cities and university towns opted for open borders and Europe, while the English countryside, towns with large numbers of immigrants and/or low incomes and high unemployment voted for Leave. Last but not least, a large majority of Scots and a smaller majority of Northern Irish voted Remain. Europe has become an important factor dividing the UK.

Was the popular decision for Brexit, albeit with a small majority, the result of the populist tsunami that has also hit other European countries,21 not to mention the United States where it brought Donald Trump to power? If by populism we mean political movements or parties that fight against ‘the system’ by claiming the main division to be between ‘the people’ on the one side and corrupt or incompetent ‘elites’ on the other, while also offering simple solutions to extremely complicated problems, then surely there was a strong populist undertone in the Leave campaign, although led mostly by representatives of the privileged class. Yet, behind populism we usually find big political failures and accumulated popular frustration. Such movements do not grow out of nothing. And there were surely good reasons for many people to be unhappy, if not angry, with the old political order when the Brexit referendum took place.

The real choice facing British people in the referendum was between continuing on a special status or semi-detached membership of the EU with voting rights and opting for a new kind of relationship with the rest of the EU, a relationship to be negotiated, but with no voting rights. This choice had been shaped by the way Britain’s EU membership had developed over the years, and it did not change much as a result of the renegotiation. It was more complicated and nuanced than the black or white choice of leave or remain offered to voters in the referendum. Of course, referendum questions need to be simple, but there is a price to pay for simplicity – and the latter can often be misleading.

Other important questions were also left hanging in the air and never properly addressed during the campaign. One has to do with the trade-off between sovereignty and interdependence. If in the name of sovereignty, people choose to do away with the constraints of EU membership, are they also ready to do away with the constraints emanating from European and global interdependence, and what is the economic price they are prepared to pay? Another question has to do with power: how much negotiating power does the UK really have in or out of the EU? On these questions, the gap between myth and reality remained large during the campaign. After the referendum, myths began to explode, a process that is likely to be long and will surely be traumatic.

Who’s Next?

We learned that the transition team of newly elected President Trump called European political leaders asking which countries would follow the UK on the way out, apparently convinced that Brexit was only the beginning of an unstoppable process of disintegration.22 After all, Nigel Farage had been a trusted source of information on the UK and Europe for the incoming US President; hence no love lost for the European project in the new centres of power in Washington DC – and no deep knowledge either.

Europe had gone through a succession of crises with a cumulative effect morphing into an existential crisis for European integration: Brexit was the worst, no doubt, since the very beginning. The biggest international financial crisis since 1929 had threatened the very existence of the common currency, the euro, while the implosion of much of Europe’s immediate neighbourhood had brought increasing numbers of refugees, immigrants and also terrorists to Europe. The EU did not have the institutions or policy instruments to deal with such crises, and it was deeply divided between and within countries. The resulting cost was very high in both economic and political terms.23

The crisis of the euro and the refugee crisis came on top of long-term underlying trends that had been gradually undermining the capacity of European institutions to deliver the goods. There was the problem of overstretch, the product of continuous expansion in terms of both membership and functions – a sure sign of success. At the same time, the centre of decision-making remained weak and so did the legitimacy base on which the whole thing rested. Another related to the prevailing economic conditions during the last 25 years or so, characterized by intensifying global competition, slow growth and widening inequalities within developed countries, thus making the EU the (innocent?) victim of collateral damage caused by globalization and much more.

At the worst moments of these crises, Europe looked like an ungovernable post-modern empire whose neighbourhood had caught fire. Anti-systemic parties and Euroscepticism grew in several countries, EU politics turned toxic and common decisions were too often beyond reach. It was in this context that the majority of British people voted for Brexit. And a few months later, came the election of President Trump. Was the anti-systemic (or populist) tsunami unstoppable?

Yet, in the worst moments of these crises, there were enough European political leaders (notably in Germany, France and the other founding members, plus a few others when lucky), who thought that the cost of European disintegration would be absolutely prohibitive – and they also knew they could still draw support from large numbers of citizens across Europe. Even when the EU looked at its most dysfunctional and unhappiness among members reached new depths, a few but key political leaders tried to keep the whole thing together. They did so not so much out of love but more out of fear of being left alone in a rapidly changing world where size matters, and also out of fear of the high cost of divorce. The best illustration of the above are the successive emergency decisions (not always the wisest) each time the eurozone reached the edge of the precipice, and also public opinion surveys that show consistent popular majority support for the common currency, even in the worst moments of the euro crisis.

Conclusion

All countries in the EU are different, but the UK is more different than the rest. It is big enough to think it can make a difference, and there are enough Brits who believe, for reasons of history mostly, that they have a real alternative to being part of European integration. Future will tell who was right, although the price for knowing the correct answer may prove to be very high.

As for the rest of the EU, no country is expected to follow Britain on the way out, President Trump and others rest assured. Fear is indeed a strong unifying factor, but Europeans would be taking a huge risk if they were to rely on fear too much and for too long to keep the troops together. The European project needs to adjust to a rapidly changing environment within and outside the common borders. And there are rays of hope pointing in this direction. Adjustment will require, among other things, an agreement on a new special relationship with the UK: it will be a damage limitation exercise.

Notes

1.    Helen Wallace refers to a transactional approach, in Helen Wallace, ‘JCMS Annual Review Lecture: In the name of Europe.’

2.    The quotation is from an article penned by Churchill in the Saturday Evening Post on 15 February 1930.

3.    Hugo Young tells very eloquently ‘the story of fifty years in which Britain struggled to reconcile the past she could not forget with the future she could not avoid’. It is the story of Britain’s troubled relationship with Europe. See Hugo Young, The Blessed Plot: Britain and Europe from Churchill to Blair. See also Roger Liddle, The Europe Dilemma: Britain and the Drama of EU Integration from the point of view of an engaged European in the Labour party.

4.    ‘Poisoned chalice’ is the term used by Vernon Bogdanor in his Gresham lecture on ‘The Growth of Euroscepticism’ delivered in London on 20 May 2014, http://www.gresham.ac.uk/lectures-and-events/the-growth-of-euroscepticism.

5.    The question of identity keeps cropping up in the British debate on relations with Europe, more than in any other country, for obvious reasons of history and geography. Garton Ash writes about Britain’s multiple identities of which the European identity forms a part: Timothy Garton Ash, ‘Is Britain European?’, International Affairs, 77/1 (2001), 1–14.

6.    Roger Liddle laments New Labour’s failure ‘to transform how the British feel in their guts about Europe’ (Liddle, The Europe Dilemma, p. xxiii).

7.    Inequalities have become again a respectable subject for economists and there has been a rapidly growing literature with a new wealth of data and insightful analyses of causes and effects. One of the best works is by a British author, Anthony Atkinson, Inequality (Cambridge, MA: Harvard University Press, 2015), especially pp. 82–109 dealing with the more recent period in the United States and the UK.

8.    See also Loukas Tsoukalis, In Defence of Europe: Can the European Project Be Saved? especially pp. 135–45 from which I have drawn heavily for this chapter.

9.    Robert Ford and Matthew Goodwin, Revolt on the Right: Explaining Support for the Radical Right in Britain.

10.  In a speech he gave at the annual conference of Policy Network in the City of London on 28 February 2013, http://europa.eu/rapid/press-release_PRES-13-86. See also Anand Menon, ‘Littler England: The United Kingdom’s retreat from global leadership’, Foreign Affairs, 94/6 (2015).

11.  Helen Wallace, ‘Does Britain need the European Union? Does the European Union need Britain?’

12.  See Michael Emerson (ed.), Britain’s Future in Europe: Reform, Renegotiation, Repatriation Or Secession?

13.  Dani Rodrik, a Harvard economist, argues that countries today are faced with a trilemma consisting of global markets, sovereignty and democracy and they can only choose a combination of two out of three – unless they happen to be the hegemon, I would add. See Dani Rodrik, The Globalization Paradox: Why Global Markets, States and Democracy Can’t Coexist.

14.  Given the huge political importance of the referendum, the literature on the subject is already enormous and rapidly growing. Among the best sources, see Harold D. Clarke, Matthew Goodwin and Paul Whiteley, Brexit: Why Britain Voted to Leave the European Union; Geoffrey Evans and Anand Menon, Brexit and British Politics; Tim Shipman, An All Out War: The Full Story of How Brexit Sank Britain’s Political Class; Helen Thompson, ‘Inevitability and contingency: the political economy of Brexit’, The British Journal of Politics and International Relations.

15.  This is, of course, a more general problem that extends beyond the British Isles. See the seminal work by Peter Mair, Ruling the Void: The Hollowing of Western Democracy.

16.  Evans and Menon, Brexit and British Politics, p. 62.

17.  See, for example, Kevin H. O’Rourke, ‘This backlash has been a long time coming’, in Brexit Beckons: Thinking Ahead by Leading Economists.

18.  Tsoukalis, In Defence of Europe, pp. 45–54.

19.  I have borrowed this phrase from Iain Begg, professor at the London School of Economics.

20.  Evans and Menon, Brexit and British Politics, p. 81.

21.  See Cas Mudde, ‘Europe’s populist surge’.

22.  This information was revealed by outgoing US Ambassador to the EU, Anthony Gardner, at his parting press conference and reported in the Financial Times (Alex Barker), 13 January 2017.

23.  For a discussion of Europe’s multiple crises and the long-term underlying trends, see Tsoukalis, In Defence of Europe.

References

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Clarke, Harold D., Goodwin, Matthew and Whiteley, Paul. Brexit: Why Britain Voted to Leave the European Union (Cambridge, Cambridge University Press 2017).

Emerson, Michael (ed.). Britain’s Future in Europe: Reform, Renegotiation, Repatriation or Secession? (London, Rowman & Littlefield 2015).

Evans, Geoffrey and Menon, Anand. Brexit and British Politics (Cambridge, Polity 2017).

Ford, Robert and Goodwin, Matthew. Revolt on the Right: Explaining Support for the Radical Right in Britain (London, Routledge 2014).

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O’Rourke, Kevin H. ‘This backlash has been a long time coming’. In Richard E. Baldwin (ed.) Brexit Beckons: Thinking Ahead by Leading Economists. A VoxEU.org Book (London, CEPR 2016).

Rodrik, Dani. The Globalization Paradox: Why Global Markets, States and Democracy Can’t Coexist (Oxford, Oxford University Press 2011).

Shipman, Tim. An All Out War: The Full Story of How Brexit Sank Britain’s Political Class (London, William Collins 2016).

Thompson, Helen. ‘Inevitability and contingency: the political economy of Brexit’, The British Journal of Politics and International Relations 19(3) (2017) pp. 434–49.

Tsoukalis, Loukas. In Defence of Europe: Can the European Project Be Saved? (Oxford, Oxford University Press 2016) pp. 135–45.

Wallace, Helen. ‘Does Britain need the European Union? Does the European Union need Britain?’ Journal of the British Academy 3 (2015) pp. 185–95.

Wallace, Helen. ‘JCMS Annual Review Lecture: In the name of Europe’, The JCMS Annual Review of the European Union in 2016 (Oxford, Wiley 2017) pp. 8–18.

Young, Hugo. The Blessed Plot: Britain and Europe from Churchill to Blair (London, Macmillan 1998).