Brexit: What Comes Next?

Two weeks after the shock of the Brexit referendum result, we have to evaluate carefully where the UK and Europe stand today. The country had decided 52-48 to exit from the European Union, but there are two important remarks to be made: first, if we look at geography the majority of people in southern England, especially around London, Cambridge or Oxford, Scotland and Northern Ireland have opted to stay in. It is rural England that is lesser educated and in a more precarious economic position that voted to secede. Second, young people (those below 50) overwhelmingly voted to stay in. It is the more educated younger people, who see a direct benefit in visa free travel in Europe, and taking European integration for granted. The older people being more scared of immigrants and economic uncertainty voted for Brexit.

Now it is possible to construct a discourse around the follies of democracy, that we cannot entrust important decisions to be made by the plebeians, who don’t know what is good for them. There is probably evidence for the idiocy of David Cameron to haphazardly announce a referendum in order to quiet the Tory backbenchers, who were getting nervous about UKIP becoming more influential and taking Tory voters away by making a scare around EU immigrants and the evil EU bureaucracy. It has cost him his political career. But scoffing at democracy won’t help us here, because at least when we shift away temporarily from the parliamentary reality of representative democracy via a referendum, we get the barometer of what people generally think of their political leadership.

I argue that Brexit was not so much a knowledgeable decision by voters about “reasserting their national sovereignty” or stopping the flow of EU migrants. It was purely an anti-establishment vote. The political establishment told the people to vote for Remain and so people wanted to show the middle finger to the establishment by voting contrary. I don’t necessarily think that people were too convinced that all the migration or economic problems (low-paid jobs etc.) are going to disappear with a Brexit vote. All the plebiscite wanted to show was that they needed better leaders and better policies, so that people can have a positive future to look forward to. The British people are not given that, and ironically it will only get worse with Brexit, because Britain is in no position to solve the challenges of inequality, precarious labor and economic uncertainty on their own.

Let us consider the economic and political fallout of Brexit. I do not pretend to have the insight into a crystal ball, but a few thoughts are in order here. Economically, we have seen the pound devalue, but these are short-term events triggered by an investor sell-off. What Thomas Friedman had called the “electronic herd” is playing wild somewhat, but I expect that storm to settle down. The European Commission demands quick Brexit negotiations, while the UK is more interested in taking its time to start the negotiation because they are in a strategically weaker position. The quickness of the negotiation is justified by the economic uncertainty that would accompany negotiations that drag into the future.

Would Britain get a bad deal from the EU? That would naturally depend on the power of negotiators, but I very much doubt that the divorce proceedings will be bloody, because the UK and the EU need each other. A punitive EU would not be beneficial for German exporters, who have already complained about the rough wording used by Juncker, who said he wanted to make the negotiations with the UK so tough as to deter other countries from considering leaving the EU. But why would people want to leave? What Juncker and other EU officials still don’t get is that EU policy itself contributes to discontent against the EU. The EU is too weak to do good (as in providing social policy or fair refugee distribution) and misuses the few strengths for bad (fiscal compact, mishandling of Greek bailout cum austerity). An institutional halfway house like the EU will breed more political discontent, which will be the beginning of the end of the EU project.

Schulz and Juncker declare in an interview that they are committed to the European idea, because they don’t want to witness another European war. But the problem is that as time passes, the no war argument is not enough to galvanize support from the masses, especially as the last survivors of the war generation are dying and so does the memory of the war. What the EU needs is a vision of something positive: good jobs, strong social welfare, more cultural exchange. I don’t think that in the immediate future there will be further referendum that would result in a disintegration of the EU, but as time passes the inhibitions of right-wing groups will become smaller. If we have another Greek-style situation, then we could have a resurgence of anti-EU sentiment, which will bury the EU institutions. Ironically a resurgence of protectionism and nationalism might worsen the economic situation sufficiently to justify another fascist strongmen conquering living space abroad.

On a more positive note, the right-wing populists are being decimated the same moment that they reached their triumph. It has always been like that, because anger without good policy uncovers you as a charlatan once you get what you want. UKIP was the standard bearer of right-wing populism and they have campaigned vigorously for a Brexit since the beginning, and they had one-third of all the UK seats in the EU parliament, which was the biggest parliamentary faction for the UK. Their leader Nigel Farage was beaming with happiness in his EU parliament speech, because he was successful. But he did not and could not use this “success” of Brexit for his own political advantage. He resigned as UKIP leader the day after the referendum, and said he would back the next UKIP leader, who he hopes to do great things for the country. But whom is he kidding? UKIP has only one seat in the UK parliament (and a moderate figure at that!). Their power base had been the EU parliament, where the winner-take-all electoral system did not apply and allowed them to get many seats. Also, UKIP was a one issue party and now that they got Brexit, they have nothing that will go for them. Farage sees his mission accomplished. The British ship will steer into heady waters, and the instigator quietly bows down as a private citizen, who “never wanted to be a career politician” (he served for 17 years in the EU parliament, which makes him very much a career politician).

The Tories are also a joke. Boris Johnson and Michael Gove were the fratboys from Oxford, who wanted to serve their own political ambitions with their Brexit push, as they were hoping to punch out their party rivals, David Cameron and George Osborne, who campaigned for Remain. But when they won, they both lost. Gove declared his non-confidence in Johnson, who immediately withdrew his bid for Tory leadership. Gove announced his leadership candidacy only to be dissed by his party in favor of Andrea Leadsom and Theresa May.

Farage, Johnson and Gove were the trio that campaigned hardest for Brexit, and they blew their political fortunes with that. The reason is quite obvious: their promise to throw out immigrants and redirect 350 million pounds a week that go to Brussels to the NHS were empty and could not be kept. The negative economic fallout, which the Brexiters were silent about, is already recognizable in the falling value of the pound, which is only the beginning of what will happen to the economy. It is obvious that none of them want to captain the ship, which is what Michael Heseltine had suggested, and I very much support that proposal. Let the Brexiteers figure out what to do next, but they abandoned ship prematurely.

Whichever of the two (Leadsom and May) will be prime minister will have an unthankfully hard task to accomplish. May campaigned for Remain, but said she will respect the voter decision and negotiate the Brexit. There is naturally a lack of credibility. Leadsom campaigned for Brexit, but she is an unknown political animal around Westminster. She blithely thinks that Britain can retain access to the goods and service market without personal free movement, which would be anathema to the EU, which rightly sees the four freedoms as inseparable (goods, services, capital, people/ labor). So there is inevitably another credibility gap with her leadership bid.

The Labour Party is in apparent disarray, because the Labour MP’s accuse Jeremy Corbyn of not campaigning vigorously enough for Remain, even though most Labour voters had backed Remain. But that is no more than a cheap excuse. What is really going on is that the moderate Labour MPs were searching for a pre-text to get rid of Corbyn and his left-wing ideology, which they fear would not get him and the Labour Party elected, so they can’t get their cushy cabinet jobs back. But the Labour MPs are misreading the signs of their times. There are many people who want real political change, who don’t want to be fed with more New Labour and Tory conservative policies that do not serve them.

In any case, Corbyn’s predecessor, Ed Miliband, had made it easy for people to join the Labour Party by paying a nominal membership fee of 3 pounds. Within days of the Labour MPs coup attempt discovered, Corbyn’s supporters appealed to the public to join the Labour Party to back Corbyn, which promptly resulted in an increase of Labour Party membership to more than 500,000 (it was as low as 176,000 in 2007). With such a groundswell of popular support, the Labour MPs cannot defeat Corbyn, at least not directly.

Their only hope to get their moderate candidate as leader is to do what the Financial Times had suggested in an Oped (Ganesh 2016): split into a separate faction, thus making Corbyn be part of a Labour party without the parliamentary infrastructure. That would be a high-risk strategy. A left-wing faction split the Labour Party in 1983 with the founding of the Social Democratic Party, which did not get any support from the voting public and ensured Tory rule until Tony Blair came to power. Who would now vote for the moderate Labour Party?

Besides, one should consider what had galvanized the public and convinced so many to join or rejoin the Labour Party: it was the election of Jeremy Corbyn. Corbyn rightfully presents himself as the tribune of the people by forcefully advocating on their behalf against austerity and for public investments and the welfare state. A moderate faction of a Labour Party forming their own party would doom them to failure, and would ensure another two decades of uninterrupted Tory rule, precisely the outcome the anti-Corbyn Labour MPs fear about Corbyn at the helm.

In the mean time, the Labour grassroots should not stay asleep by only galvanizing people to back Corbyn in a leadership election, which appears increasingly likely. They also have to use their numbers to pressure the centrist Labour MPs to fall into line or risk deselection. The next challenge would be to recruit new parliamentarians, who would support a more progressive agenda. Critics of Corbyn claim that he is preaching an outdated economic and political model. What these critics don’t mention is that the Corbyn support largely derives from the failure of government policy to deliver real benefits to working people.

Brexit can be interpreted as a political renewal for Europe. Let no crisis go to waste, as a Chinese proverb says. But the odds of that being true get diminished by the day because we don’t know what renewal means.

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One Response to Brexit: What Comes Next?

  1. Pingback: 2016 Does Not Mean We Are All Doomed: Lessons for the Left | Mr Liu's Opinions

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