Just another BRIC in the wall?

In my last article, Don Quijones, who is an Internet journalist, raised the idea that the UK could exit the EU and join the BRICS. Perhaps he was only making a wise-crack.

But wait a minute, let’s look at this idea a little closer.

After going through months of agonizing and analyzing the merits of a Grexit, firstly in support of it and then finally coming round to believe that an Oxi was the better choice, I had decided to sit out the Brexit debate. However, I think that at least one post on the subject would be in order, since it does impact on the EU political scene.

The real substance of the issues concerning a Grexit and Brexit are very different, although on the face of it, there are similarities. However, not having studied a Brexit in any depth, I do not intend to try to discuss it here. What is far more interesting, from my point of view, is what sort of strategy is the UK government employing here and are there any lessons to be learned from the Greek experience?

Firstly, have the Brits got themselves to this point of having to decide about a Brexit or not, by accident or design?

By accident……the Conservative Party needed a game-changer to win the last parliamentary election and they have always been pro-EU. However, I am of no doubt that promising the voters a referendum on a Brexit, won enough extra votes to give the Tories a parliamentary majority. Over the past few years, the opinion of the British public has been wavering around the 50/50 mark, although recent events in the EU/Eurozone has started to shift public opinion towards a more hardened, pro-Brexit view. The Conservative Party have committed themselves to “re-negotiate the terms of the UK’s membership in the EU” after which they would have an In-Out EU Referendum. Prior to the 2015 elections, it is very possible that the Conservative Party were confident that the majority of voters would continue to support the pro-EU view, especially if the UK’s EU membership terms were renegotiated favorably. Perhaps there might even have been covert, “behind-the-scenes” promises that the UK would get a favorable response from the EU. Therefore, the Tories believed that the majority of the UK voters would most likely vote no for a Brexit.

By design…..the top dogs in the Conservative Party have read the writing on the wall and have come to the conclusion (in secret, of course, since this would otherwise signal a reversal of policy) that the EU, in its current form, is not necessarily the best thing for the UK. Also, not being (total) fools, they saw what happened with Greece’s EU negotiations. You must be prepared to go into the battle with your biggest guns or not start the war in the first place. Therefore, they have decided to use a strategy, which was once put forward as a strategy for Greece, although events overtook Syriza too quickly for this strategy to have been implemented properly.

 Prepare for a Brexit, and then not do it!

In some ways, this strategy is also a bit of a gamble, since the decision of a Brexit is going to hinge on the outcome of the referendum. Nevertheless, in order to get some serious negotiating power on your side, you will have to agree that the real threat of a Brexit will certainly make those EU bureaucrats sharpen their pencils. We will have to wait and see if this is the strategy being followed here.

Lastly, how about this for a radical idea?

The UK leaves the EU and joins BRICS! The UK becomes another bric in the wall.

In many ways, Brazil, Russia, India, China and South Africa represent the new, vibrant emerging economies in the world. The USA is in slow decline and the rag-tag European bunch simply cannot get their act together. The emerging Eastern European countries are a bit stuck in between all of these “clubs”. Perhaps just hedging their bets at the moment, if they are smart, until the future looks a little clearer and brighter.

The problem is going to be what we would call this enlarged group….BRICKS?

If you are a little bit hazy, like me, on this Brexit issue, here is a nice concise guide, courtesy of The Economist:

A background guide to “Brexit” from the European Union

by The Data Team (19th October 2015)

SIX months ago the chances of ”Brexit”— Britain departing from the European Union—seemed remote. Today, largely because of Europe’s migration crisis and the interminable euro mess, the polls have narrowed. Some recent surveys even find a majority of Britons wanting to leave.

David Cameron, Britain’s Conservative prime minister, is partly responsible. Although he has repeatedly urged his party to stop “banging on about Europe”, his Eurosceptic backbenchers, scared witless by the rise of Nigel Farage’s virulently anti-EU UK Independence Party (UKIP), have constantly hassled him to adopt a tougher line with Brussels. His response has generally been to appease them. One early morsel he threw them was the 2011 European Union Act, which requires any EU-wide treaty that passes substantive new powers to Brussels to be put to a British referendum. That sounded like a big concession, but no new treaties were then in prospect. In January 2013, Mr Cameron promised that, if the Tories were re-elected in May 2015, he would renegotiate Britain’s membership and hold an in-out referendum by the end of 2017.

Fresh from his election victory in May, the prime minister claims now to have embarked on a renegotiation to fix what he says is wrong with the EU. Yet he has been deliberately vague about what changes he wants, partly for fear that if his shopping list leaks Eurosceptics in his own party will rubbish it as inadequate. At the most recent European summit on October 15th-16th, however, he was told by his fellow heads of government to produce a list of precise demands in November if there was to be any chance of the negotiations being concluded, as he at one time hoped, at the December European summit.

The two campaigns, “Britain Stronger in Europe” and “Vote Leave”, that are likely to form the offical lobby groups for each side in the referendum have set out their positions on the main topics that will form the basis for the referendum (see table).

Britain’s uneasy relationship with the European Union has a long history. In 1950 only 10% of Britain’s exports went to the six countries that formed the European Coal and Steel Community (ECSC). Concerns about the Commonwealth, the welfare state and sovereignty led it to miss the boat at the Messina conference in 1955, when the ECSC countries decided to form the European Economic Community, the precursor of today’s EU. Instead, in 1960 Britain cajoled six much smaller European countries into forming the European Free-Trade Association (EFTA). But in 1961 a Tory government under Harold Macmillan, impressed by the EEC’s superior economic performance, decided to submit the first of several British applications to join. Britain eventually joined in 1973 under Edward Heath.

British trade with other EU countries has risen rapidly since 1973, though as the European economy has slowed, its share of the total is declining (the EU now takes over 51% of British exports of goods, and close to 45% if services are added in). Yet whether Britain is in or out, the EU will be a key partner. For non-members such as Norway or Switzerland, trade with the EU makes up a bigger share of the total than it does for Britain. The effects of EU membership on trade patterns are difficult to measure, but John Springford of the Centre for European Reform, a London-based think-tank, and colleagues have carried out a modelling exercise which concluded that Britain’s trade with the rest of the EU was 55% greater than it would have been if outside.

Regulation is perhaps the Eurosceptics’ biggest bugbear. When trying to show how much Britain might gain from leaving the EU, they tot up all the costs of EU regulation, assert that there are no benefits from it and assume that, after Brexit, the whole lot could be scrapped. The OECD club of mostly rich countries has compared the extent of regulation in product and labour markets among its members and finds that Britain is among the least regulated countries in Europe. Indeed, Britain compares favourably with non-EU countries such as America, Australia and Canada. And there is little to suggest that, if it were to leave the EU, it would tear up many rules. Moreover, if a post-Brexit Britain wanted to retain full access to the single European market, it would almost certainly have to stick with most of the accompanying rules.

What are the options if Britain decided to leave the EU? Most of the alternatives to full membership are unattainable, unappealing or both. The EU will not disappear as an institution or a big market. A post-Brexit Britain will have to form a set of trading and institutional relationships with it. The uncertainty is over what these would be—and how long they might take to negotiate.

Broadly, there are five models to choose from. The first is to join the European Economic Area, a solution adopted by all but one of the EFTA states that did not join the EU. But the EEA now consists of just one small country, Norway, and two tiddlers, Iceland and Liechtenstein. The second option is to try to emulate Switzerland, the remaining EFTA country. It is not in the EEA but instead has a string of over 20 major and 100 minor bilateral agreements with the EU. The third is to seek to establish a customs union with the EU, as Turkey has done, or at least to strike a deep and comprehensive free-trade agreement. The fourth is simply to rely on normal World Trade Organisation (WTO) rules for access to the EU market. The fifth, preferred by most Eurosceptics, is to negotiate a special deal for Britain alone that retains free trade with the EU but avoids the disadvantages of the other models, but it would be extremly hard or even impossible to negotiate this in an atmosphere, post-Brexit, that would hardly be a warm one.

http://infographics.economist.com/2015/euromap/

In fact Britain has influenced the EU for the better. The European project it joined in 1973 had obvious flaws: ludicrously expensive farm and fisheries policies, a budget designed to cost Britain more than any other country, no single market and only nine members. Thanks partly to British political clout, the EU now has less wasteful agricultural and fisheries policies, a budget to which Britain is a middling net contributor, a liberal single market, a commitment to freer trade and 28 members. Like any club, it needs reform. But the worst way to effect change is to loiter by the exit.”

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About Peter Smith

A "foot-soldier" in the wider Post Capitalism Movement. First task - keep spreading the words of change, hope & inspiration.
This entry was posted in EU & Euro, Humourous and Serious and tagged , , . Bookmark the permalink.

One Response to Just another BRIC in the wall?

  1. Pingback: Running for the Exits | Thoughts on European Politics & Economics

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