A word about #Brexit

Posted on June 24, 2016

Like many others, I was surprised when I woke up this morning to discover that a majority of British voters had cast their ballots for an exit of the UK from the European Union —  the event that pundits had not-really-charmingly dubbed “Brexit.” The conventional wisdom had been that “Remain,” the option to stay within the EU, would win a narrow victory, and this reading had been supported by most polling. So to see “Leave” win the vote came as a shock.

I don’t know how closely most of you have been following this issue, but as an official degree-bearing political science nerd I feel a responsibility to say a little bit about why this is a Big Deal and what it may mean for both the British and for us. So here’s a short post on that subject.

Why Brexit is a Big Deal

The best way to understand the EU as it relates (related?) to Britain is as a giant free-trade zone. Similar to the way an American business can set up in California and then do business in any other U.S. state without having to deal with the kinds of hassles (customs duties, tariffs, different sets of laws and trade regulations, etc.) that international commerce can involve, the EU provides a legal and regulatory framework that makes it easy for trade, commerce and capital to flow from one member state to the others within the EU’s “internal market.”

Now, the creation of this internal market is not the only thing the EU does. But it’s the main thing the EU means to Great Britain, because the British have always had one foot firmly planted outside the EU. For example, while most EU member states abandoned their national currencies in favor of the EU’s single currency, the Euro, the British chose to hold on to the pound sterling instead; and while most EU nations allow EU residents to move back and forth across their borders without having to show a passport, Britain does not extend such courtesy. So Britain leaving the EU is less of a seismic change than, say, France or Germany leaving would be.

But it’s still a Big Deal, for a number of reasons. First is that the UK is (was?) the third biggest nation in the EU; even if their participation was half-hearted, it was still participation, and having such a big participant drop out of any project is going to be a big blow to the credibility and prospects of that project. It also poses a potentially major threat to the British economy, since leaving the internal market will mean that businesses in the UK could now lose access to all those trade privileges described above; and if it really does become harder for British businesses to sell and buy on the Continent, the result could be severe economic dislocation as profits fall and jobs disappear.

The biggest reason, though, is that the Brexit vote has highlighted stark divisions within the United Kingdom itself. Overall the vote tilted towards Leave, but this was not the uniform result across the entire country; in Scotland and Northern Ireland, majorities actually voted to Remain in the EU instead. This is important, because the overall result has people in those parts of the UK asking themselves whether they’d be better off leaving the United Kingdom and staying within the EU instead of the other way around.

This isn’t an idle line of thought, either. Less than two years ago, the Scots actually had a referendum of their own on whether to stay part of the UK or seek Scottish independence; at the time a majority voted to stay, but the prospect of England dragging them out of the EU has them revisiting the question today. And Ireland, of course, has always been famously restive under British rule; Northern Ireland has deeper ties to England than the rest of the island does, but it’s not impossible to imagine them pulling away either, choosing to become part of a united Ireland within the EU.

What Brexit means

In the immediate term, it doesn’t actually mean anything. The vote yesterday was only a referendum; technically speaking it doesn’t legally bind the British government to take any action, it’s just a way for the people to inform the government of what they think.

That being said, there will be consequences. The value of the British pound started dropping precipitously since it became clear that Leave would win, for example; the possible economic consequences described above have traders thinking a pound is going to be worth less — maybe a lot less — in the future than it was worth yesterday. A weak pound is great news if you want to take a British vacation, but it’s less great if you’re a British business that has to buy materials overseas or pay employees in other countries.

While the referendum is technically non-binding, it would be political suicide for the British government to just ignore it. The Prime Minister, David Cameron, has already resigned, which will set off a scramble within his Conservative party to replace him. How aggressively the UK chooses to go about pursuing an exit will depend a lot on who wins that scramble.

The long-term economic consequences are less clear. It’s unlikely to be the kind of economic apocalypse that some have suggested, but if exit becomes a reality there will definitely be a period of adjustment, possibly severe. Businesses that do a lot of their business in the internal market may choose to leave Britain and relocate within the EU; talented young people who feel that the economic future is in Europe may follow them. Those that stay will have to deal with a period of uncertainty as Britain and the EU negotiate the new terms of their relationship. The longer that period of uncertainty drags on, the more damaging it could be to the British economy.

But for me, the biggest risk isn’t economic, but political. It’s the risk that Brexit may set in motion forces that could pull the United Kingdom itself apart. If Scotland and Ireland decide to pursue independence, that would be the end of the UK as a unified state. England and Wales are unlikely to want to fight a civil war to keep them under English rule — imagine the destruction and damage such a war would wreak on everyone involved! — but the alternative would be to just quietly let the United Kingdom dissolve, leaving behind a rump English state stubbornly sticking out of the EU while the Scots and Irish rush to return. Such a dissolution would be a world-historical moment, the final end of an empire that took hundreds of years to build.

What would such a dissolution mean for everyone else? It’s difficult to say. We are well and truly entering uncharted territory here.

For Europe, it could mean an EU with Germany even more strongly entrenched as its leading member, or it could mean an unraveling of the European project itself as other states that feel disadvantaged within the EU decide to follow the English example.

For America, it could mean watching our most important ally in the region come apart at the seams, with the obvious but unpleasant follow-up question being whether we stick with them or try to find some other country with which to have a Special Relationship. (And who would that be, exactly?)

All in all, Brexit raises more questions than it answers. The only thing that’s absolutely clear is that history, as it is wont to do, is suddenly happening in a rush. And nobody really knows who will keep up and who will fall by the wayside.