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Mel Gurtov: The extent of Brexit fallout

Can Stock Photo##
Can Stock Photo##

To judge from a New York Times front-page article that appeared two days after the British vote to withdraw from the EU, the entire post-World War II global financial and political structure that the United States led into existence is now imperiled.

Western democracy, financial institutions, liberal trade and immigration policies, and alliances are all under challenge now. Right-wing populism is pushing forces opposed to all these arrangements, especially when they are presided over by a supranational structure such as the European Union (EU) that may impinge on national interests. In short, the article contends, Brexit will not only dramatically reduce Great Britain’s influence, economic growth, and even size (if Scotland gains independence); it will turn the world as we know it upside down. However, I think it is much too early to sound the alarm bell.

Guest Writer

Mel Gurtov, syndicated by PeaceVoice, is Professor Emeritus of Political Science at Portland State University and blogs at In the Human Interest.

To be sure, the impact on the United Kingdom is bound to be severe and long-term. It will now be “on the other side of the negotiating table” from the EU, as one observer said. That means prolonged and potentially painful new trade, travel and work arrangements that will end up dearly costing British consumers and firms. Both the Conservative and Labour parties will be in turmoil for some time, their leaders blamed for failure at the polls and new leaders struggling to find a way out of a huge mess. Social conflict may escalate, particularly anti-immigrant violence.

But will Britain’s pain extend to others? The EU may well be weakened as it loses a major international player, particularly when it comes to dealing with Russia over Ukraine and Syria, China over human rights and trade, and large-scale economic assistance to troubled economies such as Greece’s. Even more fundamentally, Brexit may be imitated, as nationalist parties in France, Netherlands and Sweden gain followings for closing their doors to refugees and pulling out of the EU. In the worst case, we might see the renewal of autarky and the emergence of dominant right-wing, neo-fascist parties (look at the recent vote in Austria and Marine Le Pen’s rising popularity in France) — echoes of prewar Europe.

It is far too early, however, to indulge in worst-case thinking. At the least, it remains to be seen whether Britain and other countries embrace trade protectionism or liberalization. It remains to be seen whether the UK becomes “Little Britain,” a bit player on international political and economic issues, or continues to be a strong voice in NATO, the World Bank and other multilateral organizations. It remains to be seen whether Britain’s economy shrinks badly or, as the Chancellor of the Exchequer maintains, has in place the tools to weather the coming storm and sustain a strong economy. It remains to be seen if the EU can close ranks, demonstrate the value of integration and continue to be a prominent international voice on climate change and human rights. It remains to be seen whether the imitation effect of Brexit actually comes about elsewhere in Europe, not to mention in the UK itself. Le Pen may appear to have a clear road to the prime ministership in France, for instance, but she, like Trump, may face strong reactions against the National Front’s thinly disguised racism, France-first sloganeering, and promises to overturn the ideals of multiculturalism and community.

And if you want to think about worst cases, consider the possibility — slight now, but perhaps much greater in coming months—that Brexit causes so much pain for the British people that populism turns against it. According to the Washington Post, three million Brits (and climbing steadily) want a second referendum on leaving the EU. That’s very unlikely at the moment, but if negotiations with the EU result in a further dramatic fall of the pound, sliding middle-class income, high unemployment, and other developments that put the British economy in the tank, might not the next British PM have to call for new elections and another referendum?

Key figures in the “leave” EU campaign are already walking back some advertised promises, such as that the approximately £350 million a week that Britain sends to the EU would be used to fund the national health system, or that immigration to Britain would actually decrease. An intriguing comment in The Guardian under the name “Teebs” raises another possibility: that David Cameron, having resigned without giving official notice of British withdrawal under Article 50 of the EU treaty, has left his successor with the option of treating the Brexit vote as a nonbinding referendum which Parliament, dominated by “remain” members, can ignore. Well, who knows? Even Boris Johnson, a vociferous Brexit supporter and likely Cameron successor, has said there’s no need to hurry about invoking Article 50. Maybe he wants to see if his optimism about Brexit during the leave-or-remain campaign was actually warranted.

What about the impact of Brexit on the U.S.? Yes, there will be an impact: the Trans-Pacific Partnership may be dead whoever wins the presidential election, since Hillary Clinton had long since promised to renegotiate it and now must contend with Bernie Sanders’ pressure to abandon the TPP altogether. U.S. exports are likely to suffer some (though Britain is not among the top U.S. markets), the U.S. trade deficit will widen some, and Tea Party-ers may feel a surge of energy. But most observers I’ve read do not see a major threat to the American economy from Brexit; and people who believe that Donald Trump’s “America First” message will get a great boost from Brexit are going to be sorely disappointed, since virtually every day he says something that reminds us of just how un-American his message is.

We also ought to consider Brexit’s potential silver linings for the US, at least “silver” from a human-interest point of view. One is that Britain will probably substantially reduce its concrete support of US policy in Afghanistan, Iraq and Syria. Such a shift, though disputed by some leaders of the “leave” campaign, could be desirable, since it might prod the next U.S. president to reassess commitments to endless war in the Middle East. On the U.S. domestic side, ditching TPP and reassessing the North American Free Trade Agreement (NAFTA) would be welcome news for U.S. workers, unions, and many workers abroad, as well as for the environment. A refocusing of the globalization debate on social and economic justice in the U.S. is sorely needed.

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