The Great Brexit Breakdown – The Wall Street Journal

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It is pantomime season in the U.K. This much-loved Christmastime ritual, characteristically eccentric, is a musical variety show that revolves around a very familiar plot, acted out in an over-the-top manner by cross-dressing lead characters, with references to historical and contemporary British events, all played out slapstick-style amid repeated moments of sheer farce.

There will be any number of excellent shows all over the country this month, but none will match the epic that will be enacted in Westminster next week as the longest-running pantomime in recent British political history reaches some sort of denouement. On Tuesday, as things stand (and as with anything to do with British politics at the moment, even that is uncertain), the House of Commons is scheduled to vote on whether to approve the deal that Theresa May’s Conservative government concluded last month with the other 27 members of the European Union on the terms of Britain’s withdrawal from the bloc, which is scheduled to occur on March 29 of next year.

In June 2016, the British people voted in a referendum by a narrow but decisive margin to leave the EU. Thirty months, two prime ministers, a general election, a hung parliament, dozens of ministerial resignations and millions of hours of diplomacy later, next week’s vote was supposed to be the end of it, the final parliamentary signoff to draw a line under all the wrangling that has riven the nation. But like waking from a nightmare to discover you are in fact at the controls of a nose-diving plane, the real horrors may be just starting.

Unless something completely unexpected happens in the next few days, Parliament will reject Mrs. May’s deal. What happens next is anyone’s guess. Indeed, the uncertainty will be even greater than it was before the referendum. Back in those innocent days, the choice was binary: in or out. After the vote next week, any of these outcomes is imaginable: another rushed negotiation that could result in a completely different sort of departure; the collapse of Mrs. May’s government; a general election; another referendum sometime next year; the complete rescinding of Brexit; or, at the other extreme, a British departure from the EU with no deal, with all the economic disruption that would cause. Instead of in or out, the choice is now roughly: in, mostly in, slightly in, neither in nor out, mostly out, completely out, no change at all, absolute chaos.

From afar, the spectacle of the U.K. undergoing the national political equivalent of a nervous breakdown has been a source of head-scratching. Many outside of Britain were puzzled by the vote to leave the EU in the first place; they will have been astonished by the unending agonies since. The country once defined by its stiff upper lip has been indulging in a kind of orgy of public histrionics more commonly associated with Latin American telenovelas. The nation that thumbed its nose at German bombs during the Blitz is crumbling like a soggy biscuit.

British Prime Minister Theresa May at Queen’s University Belfast, Nov. 27, amid a nationwide tour to whip up support for the Brexit deal.

British Prime Minister Theresa May at Queen’s University Belfast, Nov. 27, amid a nationwide tour to whip up support for the Brexit deal.


Photo:

Liam McBurney–WPA Pool/Getty Images

But as protracted, melodramatic and at times borderline insane as it might seem, there are good reasons for the mess.

The main one is that, while a majority of the British people voted for Brexit, their leaders mostly think it’s a terrible idea. The vast majority of members of Parliament, along with business leaders and other members of the establishment, voted against Brexit. Mrs. May herself—chosen by the Conservative Party following the resignation of David Cameron, who had called the referendum—was against Brexit.


Theresa May’s government has spent the past two years trying to deliver a Brexit that looks as little like Brexit as possible.

Mrs. May’s government has spent the past two years trying to deliver a Brexit that looks as little like Brexit as possible. The result pleases almost no one. Mrs. May’s deal would keep Britain in a customs union with the EU until a longer-term relationship can be worked out. But, critically, the plan involves a “backstop” to ensure that no hard border reemerges between Northern Ireland (a part of the U.K.) and the Republic of Ireland, which remains in the EU. Critics say this backstop—which can only be removed with the agreement of the EU itself—essentially cleaves off Northern Ireland from the U.K. and leaves it for most practical purposes in the EU.

The backstop “means all kinds of things to different people,” says Charles Grant, director of the Centre for European Reform, a London-based think tank. “The right hates it because it leaves open the possibility of being locked in a customs union. The left hates it because it leaves Britain outside the EU but subject to the rules of the EU and without a voice or a vote.”

In some senses, the Brexit crisis is a very British drama. Peter Hennessy, an English constitutional historian, has argued that the rifts are so deep and the gulf so wide because Brexit captures in one enormous, explosive moment all the major constitutional issues that have split the British polity for most of the last century or longer.

Those include, obviously, Britain’s uneasy relationship with Europe, never fully in but reluctant to be out, but also: the Irish question, how to deal with the fractured island across the Irish Sea; Britain’s uncertain place in the wider world; the domestic union, especially that with Scotland, a nation that has trod an increasingly divergent path in the past 50 years and is now much more pro-EU; the condition of the British people, especially the urban-rural divide, since the big cities voted heavily to remain in the EU while towns and communities in rural England and Wales voted heavily to leave; and finally the party system itself, the increasing inability of the U.K.’s two main political parties to reflect the political cleavage in the nation.

All this is true, but it would be a mistake to view Brexit as a very British curiosity. Indeed, the English pantomime may be the most protracted and at times farcical of dramas at the moment, but it is only part of a slower-developing danse macabre unfolding across Europe and indeed across much of the world, driven by a fundamental shift in the way nations are handling the shifting interplay of economic objectives and political and cultural forces.

What happens next week and what follows, then, have crucial implications not just for Britain, the EU and the rest of Europe but also for the world and the very future of the liberal democratic model. At the heart of the crisis—and the reason it has proved so intractable—is a basic tension that defines us in the 21st century: the tension between the economic benefits of international cooperation and integration, on the one hand, and the political urge for sovereignty, on the other.

Foes and backers of Brexit protest opposite Parliament, London, Dec. 3.

Foes and backers of Brexit protest opposite Parliament, London, Dec. 3.


Photo:

DANIEL LEAL-OLIVAS/AFP/Getty Images

The British government has been trying to balance its domestic political imperatives—as reflected in the majority opinion within the Conservative Party—to make good on the referendum vote to leave while still maximizing the benefits of being part of an economic union. It hasn’t been easy.

“You can have national sovereignty—and that’s fine. Or you can have economic integration—and that’s fine. But you can’t have both,” says Mr. Grant.


‘You can have national sovereignty—and that’s fine. Or you can have economic integration—and that’s fine. But you can’t have both.’


—Charles Grant, Centre for European Reform

Though some protagonists have tried to deny or ignore it, there is no doubt that economic integration among countries brings material benefits. It isn’t just the elimination of trade tariffs that reduce costs to consumers and ease cross-border frictions. Regulatory alignment removes separate layers of red tape for businesses; the free movement of capital improves the efficiency of financial markets; and the free movement of people creates a bigger, more flexible labor market able to fill shortages and relieve surpluses.

The U.S. is a prime example. A critical reason for the nation’s long-term success is that it encompasses a massive, internal single market. Regulatory alignment, ease of movement, a single currency—all have contributed significantly to America’s superior economic performance throughout its history.

Britain was, it is worth remembering, a principal advocate—and indeed driver—of European economic integration. Under Margaret Thatcher in the 1980s, the U.K. led the drive to rapidly integrate the European economy, removing barriers to trade in goods and many services. And despite the claims of some of the Brexit supporters, there is no way to leave the single market without losing some of those benefits.

But the economic benefits of integration must be weighed against the political loss of sovereignty. You could almost certainly integrate the entire world economy and achieve massive economies of scale and integration. Efficiencies in product, service and labor markets would improve productivity and generate higher overall income levels. But most people in the world wouldn’t tolerate the political implications, including free mass migration and the steady erosion of cultural identities through universally applied regulations.


Weak growth and widening inequality in the West have reduced the overall benefits of economic integration.

This tension has always existed, of course, but in Britain, Europe and much of the world, events in the last decade have intensified it. Weak growth and widening inequality in the West have both reduced the overall benefits of economic integration and significantly narrowed their distribution. Publics in many countries were willing to accept the tradeoff between sovereignty and prosperity until the 2007-08 financial crisis, but after a decade of stagnation and austerity—and continuing closer integration—the terms of that trade have deteriorated significantly.

Despite seven decades of attempts by the European leadership to largely eliminate national boundaries and create a pan-European political union, national identity remains a stronger bond for most people, and national sovereignty remains the only true source of political legitimacy.

“Britain’s involvement in this project was rooted in deception,” says Iain Martin, a former Journal reporter and Brexit supporter who is now the editor of Reaction, a pro-market media venture. “Mainstream political leadership from the 1970s made the pitch—there’s only a little sacrifice of sovereignty, but we are doing it for the greater good. That was false.”

Democracy functions on the basis of consent by the governed. Or, more accurately, it rests on the consent of the minority to be governed by the majority. Labour voters in regions that always return Conservative members of Parliament don’t challenge the legitimacy of those who govern them—because they respect the political integrity of the U.K. as a whole. Despite the political differences, there is a broader national solidarity. But if those voters are outvoted by people in France or Belgium, there will be much less willingness to accept the outcome because there is no broader solidarity across Europe.

The nation-state remains, despite 70 years of global integration, the political unit that commands the greatest legitimacy among people. It isn’t just Britain. The potential tragedy of the EU is that the continuing urge to integrate is not only ignoring this legitimacy; it is stoking the problem by further alienating voters.

The “yellow vest” riots in France in the past few weeks have ostensibly been about fuel prices, but they also tell us something important about the way the French see their economic condition—and the frustration they feel at having so little control of it. In Italy, a new populist government is trying to break out of the straitjacket of EU economic rules to stimulate its own economy. But the political tradeoff that the Italians have already made—locking the country into membership of the euro—looks even harder to reverse than simple membership in the EU outside the currency zone, like the U.K.

For now, though, the spotlight is on Britain.


Those who opposed Brexit may well push for another referendum to try to overturn the first one.

The economic risk of leaving the EU without any kind of deal is so large that, after next week’s probable parliamentary stalemate, we are likely to see a renewed push by those who opposed Brexit either to forge an even closer link to the EU than the one Mrs. May is proposing or to abandon Brexit altogether—perhaps by means of another referendum, which, they hope, will overturn the first one. Economists at

JPMorgan Chase

& Co. this week increased their estimate that Brexit wouldn’t happen at all to 40%.

That would be perilous for British democracy. The 2016 referendum was carried by 52% to 48%, on a turnout of the popular vote of 72%, the highest in any national vote for 24 years. Some 17 million Britons voted to leave the EU, the largest number of people to vote for a single cause or party in Britain’s history. At the subsequent 2017 general election, both the Conservative and Labour parties campaigned on a platform of honoring and implementing the result of the referendum—and between them won 80% of the vote.

It is never easy to discern what motivates people to vote, but exit-poll evidence and other survey data suggested that a significant reason for the vote to leave the EU was long-running resentment at what people saw as a lack of accountability from government and large institutions. There was a powerful sense that the very fabric of democratic politics had been torn as powerful people and institutions in London simply did whatever they wanted without deference to the will of the people, pursuing economic imperatives increasingly seen as favoring the advantaged.

If, somehow, the political stalemate that now prevails in the U.K. were to result in Britain staying in the EU, in spirit or in fact, the betrayal felt by many Britons would be unprecedented. The fear, then, must be that the farce of the past 2½ years may be but a prelude to an unimaginable tragedy.

Mr. Baker, who served in 2013-18 as editor in chief of Dow Jones and The Wall Street Journal, is editor at large of The Journal and the host of “WSJ at Large with Gerry Baker” on Fox Business Network.

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