Wednesday, June 22, 2016 at 5:33 AM

Brexit: Forget Leaving, Britain a Greater EU Contagion if It Remains

Posted by Anthony L. Hall

pigsJust years ago, Grexit had the European Union reeling with existential angst.

Notably, the fear was not that Greece would leave, but that its chronic indebtedness posed too great a communal burden to allow it to remain. Further that bailing out Greece would create a domino effect – with other poor, debt-ridden member states (aka PIGS) queuing up for similar bailouts.

I commented on the hysteria back then in “If Rescuing Greece is Necessary to Save Europe, Europe’s in Big Trouble,” October 15, 2011, and “Greece: a Tumor Growing in Europe,” May 15, 2012.

The following is an excerpt from the latter, which should be instructive in light of Brexit.

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I find it stupefying that Greece is causing so much existential angst in Europe. Mind you, I used to accept the prevailing view that, like JPMorgan Chase, Greece is just too big to fail; moreover, that if it failed others would surely follow.

I am now convinced, however, that this transformative logic simply does not hold. Not least because the more appropriate analogy is not the risk of a big bank failing, but the fear of a little tumor growing. And in this context, cutting Greece out of the Eurozone is the best way to forestall the self-fulfilling prophecy of its failure triggering a contagion/domino effect; you know, the way one might excise a metastasizing (malignant) tumor out of the body.

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Of course, Brexit refers to the debate on whether the UK should leave or remain in the EU.

Screen Shot 2016-06-16 at 7.15.21 PMBritons have been engaging in this debate for decades. But they will finally decide the issue in a referendum tomorrow, June 23.

The leadership of the Remain Campaign is composed of the head of every EU member state.

These “Remainers” fear that Brexit portends the same kind of moral hazards and portends the same kind of domino effect Grexit portended. In fact, a report in the May 10 edition of the Telegraph validated this fear:

Nearly half of citizens in eight European Union countries want a referendum on the union like the one due to be held in the UK next month, according to a new poll.

In the Ipsos Mori survey, more than 50 per cent of French and Italian citizens wanting a vote on the union and half of those asked believed that if Britain left the EU, there would be a domino effect with other countries following its exit.

The leadership of the Leave Campaign is composed of a motley bunch of famous Eurosceptics, xenophobes, and nationalists/neo-fascists. (That so many are following their led shows how condemned we are to repeat the worst mistakes of history.)

These “Leavers” declare that Britain can survive well enough as an island unto itself. Except that a report in the February 20 edition of the Independent debunked this declaration:

If Britain votes to leave the European Union against the wishes of Scotland then a second independence referendum is likely inevitable, says Nicola Sturgeon [leader of the Scottish National Party and of Scotland’s devolved government]…

Ms Sturgeon said she supports staying in the EU, and that polls show the majority of Scots also back this view.

This would mean that Britain couldn’t be an island unto itself even if it wanted to: from the halcyon days, when the sun never set on its empire, to this?

BN-MR809_BREXIT_8S_20160219172453In any event, I am equally stupefied that “this sceptered isle … this England” is causing so much existential angst in Europe. Granted, if one were to rank “indispensable” member states, Britain would rank near the top, Greece at the bottom.

But the EU could survive, and even thrive, without Britain. This, notwithstanding fears that leaving could ignite a tinderbox of nationalism on the continent not seen since the days of Germany’s Third Reich – with all of its potential for armed conflict.

Which is why the analogy in this case might be that of an NBA team – like the recently crowned champion Cleveland Cavaliers. Specifically, if Kevin Love (UK) decides he wants to leave (Kevxit?), I doubt that would cause much angst among team members like LeBron James (Germany), Kyrie Irving (France), J.R. Smith (Italy),  you get the point. Cleveland would do just as well, if not better, without Love.

Incidentally, I couldn’t care any less whether Britain leaves or remains in the EU. But I think the Remainers will carry the day. What’s more, I see no point in commenting on the polarizing issues that have animated this referendum debate.

356F8E4500000578-0-image-a-34_1466328712120But I would be remiss not to note that chief among them are:

  • Migration – particularly the free movement of people and the xenophobic fears ongoing Arab and African migration to Europe has incited (a melting pot causing loss of national [white] identity, and terrorism?).
  • Jobs and wages – particularly the impact an influx (from aforementioned migration) of unskilled workers will have on available jobs and livable wages (cheap labor for the rich, but hardship for the poor?).
  • Public Services – particularly the impact “benefits tourism” will have on the National Health Service (ignoring the contribution migrants have made to London’s rise as a world financial center and the UK’s rise as the fifth largest economy in the world?).
  • Sovereignty – particularly the loss of national self-determination from too much EU regulation (ignoring sovereign opt-outs Britain has already negotiated for itself, among other things, to retain its own currency and maintain border controls against the 26 EU countries that have abolished them throughout the Schengen Area?).

It is also noteworthy that:

The purported benefits from Brexit are uncertain and may prove illusory, while the risks are much greater if voters choose to leave. Similar sentiments led Britons to vote to stay in the European project in 1975, and Scots to remain in the union in 2014. And yet the outcome in June seems more uncertain.

(The Economist, February 27, 2016)

Remarkably, incomprehensibly, nothing is more uncertain than what relationship Britain will have with the EU if it leaves. More concerning, perhaps, is that the same might be said for its relationship with the United States.

606x340_335286In fact, apropos of angst, President Obama caused quite a lot of it for the Leavers during a recent trip to London.

Barack Obama has warned that the UK would be at the ‘back of the queue’ in any trade deal with the US if the country chose to leave the EU, as he made an emotional plea to Britons to vote for staying in.)

(London Guardian, April 22, 2016)

So much for that often-touted “special relationship,” eh….

Meanwhile, the irony seems lost on both sides in this Brexit debate that Britain poses a far greater threat to the EU if it remains.

After all, Britain planted the seeds of disintegration years ago, when it began negotiating all kinds of opt-outs from EU legislation and treaties. I mentioned the Eurozone and Schengen Area above, but other opt-outs include everything from fiscal and monetary policies to employment law and the Charter of Fundamental Rights. And it does not bode well that three other countries have negotiated similar opt-outs.

This is what compelled me to write “A Dead EU Constitution Resurrected as a ‘New Treaty,’” November 27, 2007. In it, I warned that Britain’s imperial and mercantile intent to carve out a “special status” constitutes a cancer that would eventually metastasize throughout the EU.

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Nothing justifies my ‘eurocynicism’ quite like the Sisyphean attempts by British Prime Minister Gordon Brown to reconcile the contradictions inherent in this treaty. Because, according to the BBC, he boasted in recent parliamentary debates – without any hint of irony – that he had secured ‘special treatment for the UK in a range of areas’ at the European summit and that Britain would keep opt-outs on foreign policy, labor rights, tax and social security.

But if Britain has already established the untenable precedent that it can ‘opt-out’ of all of the key provisions of the treaty, then what is the legal and substantive effect of this ersatz constitution?!

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Yet Brown’s successor, David Cameron, has predicated his Remain Campaign on securing even more opt-out concessions from the EU.

Continuing my NBA analogy from above, this is rather like Kevin Love (UK) saying he will remain with the Cavaliers (EU) only if he’s guaranteed more play, pay, and perks than every other player on the team, including LeBron (Germany).

unnamedClearly, the only sensible EU response should be:

Don’t let the door hit you on the ass as you … Brexit!

Frankly, the way Cameron brags about his country’s “special status,” you’d think the EU needs the UK more than the UK needs the EU. Whereas, arguably, it’s the EU that should be holding a referendum on whether to allow the UK to remain…. Instead the EU is allowing the UK to do in blithe spirits what it chastised Greece for trying to do in desperate straits, namely, trying to have its cake and eat it too.

But I reiterate: if Britain remains, the feared domino effect would not be one country after another leaving, but one country after another negotiating opt-out provisions. This would make a mockery of the EU’s categorical imperatives of integration and harmonization, rendering the EU more of a confederacy than a union.

Also, lest the Remainers forget, the Grexit debt that had the EU in its death throes a few years ago remains a contagion:

[T]he so-called ‘PIGS’ (namely, Portugal, Italy, Greece, and Spain) have been arguing that the sovereign debt crisis that is threatening to plunge their respective countries into bankruptcy is a burden all of Europe should bear. And everybody knows that a default by any of these PIGS will cause the disunion of the European Union.

(“A Europe Divided by Debt Cannot Stand,” The iPINIONS Journal, March 25, 2010)

The point is that, just as the EU cannot stand with every chronically poor member state depending on Greece-style bailouts, it cannot stand with every politically influential member state demanding Britain-style opt outs.

The EU has 99 problems but Brexit shouldn’t be one. In fact, no matter the outcome of Thursday’s referendum, the Remainers should take it as a wake-up call to reform the EU Constitution to manage a common market (the feasible original intent), not to govern a United States of Europe (the quixotic adapted intent).

Related commentaries:
Greece: a tumor
A Europe divided by debt cannot stand
Greece just another panhandling PIG
A dead EU Constitution resurrected

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