Essential Business

Brexit: Stronger together

 In Opinion

Chitra Stern is a Singapore-born Indian real-estate and hotel entrepreneur with dual British and Swiss citizenship.  She has lived in Portugal for the last 17 years.  She is a strong believer in the European Union and believes that the United Kingdom should remain in the EU. This analysis represents her opinion as a British citizen and not any of the institutions she is part of.

 “I assume also that no great power would shrink from its responsibilities … if that country from a perverse interpretation of its insular geographical position, turns an indifferent ear to the feelings and fortunes of continental Europe, such a course would, I believe, only end in it becoming an object of general plunder.

“So long as the power and advice of England are felt in the Councils of Europe, peace I believe will be maintained, and maintained for a long period.”

 

These words uttered over 100 years ago by British Prime Minister Benjamin Disraeli (1874-1880) have an even greater significance today than in the late 1800s, when Britain was a global colonial power.

In 1973, Great Britain joined the European Economic Community (EEC) under Prime Minister Edward Heath.  The country was in a recession at the time as was referred to as “the sick man in Europe” – while the GDP per capita in West Germany, France and Italy had grown by 95% between 1958 (just after forming the EEC) and 1973 (the year the UK joined).  In the same period, the UK’s GDP per person had only grown by 50%[1].  The country then became an automatic member of the European Union (EU) in 1992 when the EU was formally constituted with the Maastricht Treaty.

I moved to London in 1989 in order to pursue my undergraduate education at University College London in Electronic Engineering.  Moving from modern and rapidly growing Singapore, where I was born, to London in 1989, felt as though I was moving backward in time.  It had been 16 years since the UK joined the EEC and although the country had already experienced progress, there were still remnants of poorer times.  The electrical supply in the ironing room was operated using 2p coins – a remnant of olden days in London.  We had to get rubber shower hoses to fix to the archaic bath taps – not mixer taps, mind you – in order to have a shower squatting in the bathtub.  Difficult to imagine but these are just small examples of what we students faced in London at the time in university dorms – I had moved from a modern Singapore to a country in Europe from another era.  Food culture was not where it is today.  Only a couple of my course-mates at the time were from Belgium and Germany – early Erasmus students who contributed positively to the course and the culture.

In the years that followed, things changed rapidly.  There is no doubt that Britain benefited immensely from being a member of the EU.  Its competiveness and openness to other markets changed the way things were done in the UK.  Competition within the EU is cited as one of the top reasons for the innovation and changes that happened within British industry.  In 1986, Margaret Thatcher pushed through some deregulations and legislations (commonly known as “the Big Bang”) that forced positive changes for the London Stock Exchange and banks enabling London to become the global financial centre for Europe which brought a lot of wealth into the nation.  The integration of Europe, free movement, Erasmus programs and the global demand for a British education brought lots of money, new cultures and ideas into the UK’s main cities, making them far more cosmopolitan than they ever had been before.  Free movement enabled the growth of the economy through other Europeans doing jobs that could not be fulfilled by British people.  Throughout its membership, however, the UK was perceived as the “reluctant member” as it sought several exceptions, including staying out of the Euro.  However, there was no doubt that the UK was a strong contributing member of the EU and that there were several benefits to Europe’s and its own economy, security and culture through its membership of the European Club for over four decades.

In June of 2016, something monumental and unexpected happened in the United Kingdom.  Prime Minister David Cameron, who had offered a referendum on the question surrounding the UK’s membership the EU to placate the Tory Eurosceptics and to quell the rise of the Eurosceptic political party UKIP, had to face the outcome of the “In/Out” referendum held on 23rd June.  The world was in shock as the results came out on 24th June with 52% of the British public having voted to leave the EU.  Cameron immediately resigned and after some weeks of a leadership contest, Theresa May (a Remainer) became the Prime Minister of the United Kingdom.

A series of events and decisions had already happened, or followed the Brexit referendum, which would make things more difficult for the Brexit process led by Theresa May.

The first issue is the current leadership of the Labour party and its move from centre to extreme left in the last years.  Ed Miliband had won the Labour leadership against his brother, David Miliband, back in 2010.  The resignation of Ed Miliband after the Labour party lost the elections of 2015 left a large hole in the centrist Labour leadership.  MP Chuka Umuna, also centrist, a favourite to win the leadership of the Labour party, stepped out of the leadership race for personal reasons.  English society, especially outside of the wealthiest South-East of the country, had felt the socio-economic impact of the economic crisis from 2007 – 2012 and austerity years.  The unequal distribution of wealth in the UK was becoming stark.    In this ambience of the growth of poverty and homelessness in the UK, the extreme left Labour leader Jeremy Corbyn came into power.  While the Labour party is for remaining in the EU as a whole, Jeremy Corbyn is not clear on where he stands and is perceived as “a reluctant Remainer” who has a lot to say against the EU.

The second issue in British politics is a weak Liberal Democratic party – which is the most liberal and pro-Europe party.  The coalition government between the Conservatives and Liberal Democrats was not viewed as a success by the LibDems (Liberal Democrats) and Nick Clegg’s resignation in 2015 due to huge losses in LibDem seats left a hole in their party.  There is a feeling that centrists and liberals do not have a voice in any party at the moment.

Next Theresa May’s own key actions since the assuming power can be criticised.  She triggered Article 50 within months of her becoming PM, which set in motion a timer which set the date of 29th March 2019 as a departure date, without thinking through and presenting what the possible forms of Brexit could be.  She called for a snap election in June 2017 as she thought that the Conservative party would be able to increase their majority in parliament.  However, the exact opposite happened and she was forced to go into a coalition with the Democratic Unionist Party (DUP) in Northern Ireland in order to stay in power. This coalition has presented its problems in the highly contentious Irish Border issue as the DUP wants to have the same rules as mainland UK, while no hard border can exist between Northern Ireland and the Republic of Ireland as a result of the hard-won Good Friday Agreement negotiated over several years.  Northern Ireland had been embroiled in “the Troubles” – between Unionists and Republicans – for many years until a peace deal was signed in 1998 after tough negotiations.  A core part of this treaty is to have no hard border between Northern Ireland and the Republic of Ireland, which was never considered seriously enough by the Brexiteers before-hand.

There is acceptance that the very union of England, Scotland, Wales and Northern Ireland is being tested with Brexit.  Scotland had held a referendum as recently as 2014 on the question of whether Scotland should be an independent country – the result of which was to remain in the union of the UK.  However, in the Brexit referendum, the Scots voted to Remain 62% to 38%.  This has given Scotland’s First Minister Nicola Sturgeon reason to revive the topic of Scotland becoming independent and becoming part of the EU.  What will happen to Northern Ireland is also being tested by Brexit as another element of the Good Friday Agreement is coming up again after 20 years – the referendum on Irish Reunification – in other words the unification of Northern Ireland with the Republic of Ireland.  The majority of Northern Ireland, 56%, also voted to Remain in the EU even though the party that is in coalition with the Conservatives at Westminster is the DUP, which is against the EU.

May’s mantra “Brexit means Brexit” and continued placation of the Eurosceptics in her party, despite it being clear that Brexit has already started negatively impacting the economy, has led to a mediocre stance and solution. The Brexiteer boast during campaigning that the UK will develop on its “special relationship” with the US fell flat soon after the referendum, but especially when President Trump declared a trade war against China.

May’s appointment of the less than capable Dave Davis as Brexit secretary and Boris Johnson as Foreign Secretary seemed to be a ploy to show up Brexiteer incompetence rather than an attempt at arriving at a viable solution for Brexit.

Then there is the question of the next referendum which has growing support in the UK – also dubbed “Peoples’ Vote” – to have another referendum on our membership of the EU.  Several voices are against another referendum as it is seen as “undemocratic”.  Any country which regularly has referendums understands the importance of rational discussion of the issues at hand and having another vote, especially if new information has surfaced since the first event.  We should hold another referendum, now that we have all the facts on the table in order to ensure that everyone is clear on the consequences of actually leaving the EU.

I was at the latest Financial Times Brexit conference in December 2018, where Tony Blair was one of the speakers.  He had been Prime Minister of Great Britain for 10 years and he admitted to knowing much more about the Customs Union today than he did at the time of his premiership.  How are we, as “the common man”, expected to know enough about any of the details on the Customs Union, Irish border issues and so on – we rely on the experts to know about such matters so that we can get on with our own work.  The Brexit debate has forced us to become more knowledgeable about some of these important details.  The last referendum was more than 30 months ago and lots of facts have emerged since 23 June 2016 and these must be incorporated in a next informed decision.  In my opinion, it is completely democratic to hold another referendum.

Having some knowledge of the Swiss system of government and legislation, as a Swiss citizen through marriage, I often compare the referendum as an instrument of direct democracy in both countries.  The Swiss model operates heavily on direct democracy and people can bring popular initiatives to referendum with a relatively small number of petition signatures (100,000).  The Federal Council and Parliament discusses the initiative intensely and recommends whether the proposal should be accepted or rejected. For a proposal of popular initiative to be accepted a “double majority” is needed – at the national level as well as at the local “Cantonal level”.  A double majority is also needed for a mandatory referendum for changes to the constitution.  Such issues are also discussed heavily and rationally at local levels.  The Swiss have had a total of around 30 referendums in the last 3 years alone.  The UK has had one in the last 3 years and is in general not used to having referendums.  Granted that they are different constitutions and systems of government.  However, even Ireland has had more referendums in the last 10 years than the UK.  Ireland has had 10 referendums since 2007, while in the same period, the UK has held only 4.  After all, Ireland voted twice on the Lisbon Treaty – they voted a second time after gathering more facts, intense discussion and reflection.  We should not be ashamed of a second referendum.

This is especially relevant in our era of “post-truth politics”.  In this style of politics, it does not seem to matter what the real truth is and emotions have become much more important.  People’s fears were stoked – the dilution of “Britishness”, the survival of the National Health Service, immigration’s strain on public infrastructure.  Several obvious untruths were brought into the debate such as the ascension of Turkey into the EU, instead of only a rational assessment of facts.

It was a shock for me that some British owners of properties in the Algarve voted for Brexit.  People who benefit from free movement and the reciprocal healthcare arrangements between the EU and the UK, who are connected to a member of the EU that had been a net beneficiary – had been successfully persuaded by the Leave campaign.  Probably decades of the “Tabloid Press” ridiculing the EU and Brussels bureaucrats and the Brexit promise of “£350 million more for the NHS” (which has subsequently been denied by lead Leave campaigners) persuaded these older voters.  It was clear after the Brexit referendum that several people in areas such as Wales, that were net receivers of EU subsidies, had voted to leave.  This exposes a huge lack of communication by local politicians to the public.  Having lived in Portugal for 17 years, I know that even the man on the street here knows what “fundos comunitários” are and how their region has benefited from EU funds.

The disengagement of the youth in politics is also to blame for our fate.  Can we blame them though?  We have not shown them the importance of a democracy and we do not educate them to be part of these processes.  One of the very successes of the EU – peace for over 70 years – has made us all comfortable.  There are 2 generations in Europe that have never felt the effects of war thanks to the EU.

We are going through a political and socioeconomic crisis in the UK at the moment.  The future holds the potential breakup of the United Kingdom.  Racism against immigrants and foreign cultures has increased since the referendum.  The political parties as they stand are feeling the cracks in their own parties.  Threats against MPs have increased in the last days and “Jo Cox”, the MP who was assassinated just before the referendum in June 2016 by a man who held far right views, has become a verb for extreme right-wing threats against MPs.  We have also not been able to spend government time on crucial issues that should be focused upon.

There are certainly no immediate answers to the problems facing the UK.  The spread of wealth to poorer regions takes decades.  The filling of empty political shoes in the centre will take years.   I can only say that it is high time that the young are educated on our political processes and the importance of them.  We need to understand the value of democracy.

There have been some positives because of Brexit for the other EU countries.  Banking is one large area.  As financial institutions in London will not have “EU passporting rights” anymore, some have already made the decision to move parts of their operations to other EU cities.  There has already been an exodus of £800 billion worth of staff, operations and customer funds out of the UK to the rest of the EU because of Brexit[2].  Dublin, Frankfurt, Amsterdam and Paris are cities quoted in the press as having benefited from “Brexodus”.

Portugal itself is attracting families and companies looking for an open, tolerant, liberal society within the EU which promises a good lifestyle with a good economic future.

However, let us be clear.  The EU needs the UK as much as the UK needs the EU.  We are stronger together and no man is an island.  It is important for all parties to understand that the EU is a “positive sum game”.  Especially when one looks at today’s wider global scenario, there is no doubt that we need to be a strong unit in order to face the large economies of the world.  The world’s larger problems such as defence, cybersecurity, terrorism, global warming, sustainability, human rights and so on warrant tighter co-operation and intense discussion.  The EU needs the UK to be strong going forward and vice-versa.  Over the next days, let us see what happens in the UK.  I for one will continue to root for my beloved UK to remain in my beloved EU.

 

 

[1] Financial Times, “What has the EU done for the UK?” by Chris Giles, March 31st 2017

[2] Financial Times, “UK financial services sector shifts £800bn in assets to Europe”, Madison Darbyshire, January 7th 2019


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