Brexit To Nowhere?

Politics brings out strong emotions in everyone. Even the British, despite their reputation for pursuing their interests in a cool and calm fashion, apparently are not immune. Perhaps that reputation is merely a holdover from the long-gone British Empire. It surely does not apply to the United Kingdom of 2017.

Consider the political decisions Britons have made over the past year. Last June, they decided – albeit narrowly – to withdraw from the European Union. And in last month’s snap general election, they delivered an outcome that only reinforces the impression that British pragmatism is in retreat.

The election – in which the Conservative Party lost its majority, resulting in a hung parliament – suggests how far removed from the rest of the country the political class in Westminster has become. Indeed, the UK appears to be undergoing not just a political and identity crisis, but also a crisis of confidence in its political and economic elites, which began with the 2008 global financial crisis.

This will not make the ongoing Brexit talks any easier. The EU’s counterpart in the negotiation is a severely weakened government in a state of crisis. But the EU’s negotiators cannot lose sight of the fact that the UK will still be important to Europe outside of the EU. One of the biggest risks now, for the EU as much as for the UK, is that the latter will leave with nothing, and end up in an even worse state than it is already in.

Future historians will probably look back at 2016 and 2017 with great interest. It is unprecedented for a country to abandon a highly advantageous geopolitical and economic position simply because it is experiencing a prolonged identity crisis. Before Brexit got underway, the UK had a very strong hand to play within the EU, and thus on the world stage, owing not least to its special relationship with the United States.

Moreover, the UK has a tradition of liberalism and global engagement, especially with Europe and the eurozone. London has long been a financial center for the entire continent. And the British economy is – or, at least, was – a gateway for many international corporations seeking access to the EU single market and the eurozone, despite the UK’s refusal to join the single currency.

Still, it is worth remembering that by the early 1970s, the UK had lost its empire and the political clout that went with it; and that it only managed to reverse its economic decline by joining the European Community (the precursor to the EU) in 1973. Regrettably, Britons rarely acknowledge this fact. Instead, a vocal segment of Britain’s political class and electorate has long blamed the EU and its institutions – some of which require member states to cede part of their sovereignty – for all the evils of this world.

But now that the UK is withdrawing from the EU, it is becoming increasingly clear that it stands to lose a great deal, economically and politically. And for what?

The UK’s Brexiteers demand “sovereignty,” but without considering what that could possibly mean in an era of ever-advancing globalization and market integration. Given the Trump administration’s protectionist rhetoric, the importance of maintaining access to Europe’s single market would seem to be more acute than ever.

But the UK will not be the only loser from Brexit. The EU will lose its second-largest economy and primary guarantor of security. One hope now is that Emmanuel Macron’s election to the French presidency will blunt some of the pain from Brexit. Macron’s election, along with positive economic news from the eurozone, represents an unexpected opportunity for a fresh start within the EU, which could begin as soon as Germany holds its general election in September.

As it happens, the UK might very well be leaving an EU that is quickly moving toward renewed political stability and economic growth – which is, ironically, what the Leave camp imagines that it can achieve with Brexit.

Fortunately, the UK’s recent election may have provided a starting point for negotiations. To many observers, the outcome showed that British voters oppose a “hard Brexit,” whereby the UK would quit the single market and customs union with no deal in place, and revert to World Trade Organization rules.

Divorce proceedings are rarely pleasant. But they are far worse when the parties involved do not behave like adults. When emotions run free, former affections can quickly turn into spite and a desire to inflict deep wounds.

But for countries, as for people, life goes on after divorce. The EU and the UK will remain geographically close, and thus geopolitically dependent on one another. Ongoing issues relating to security, terrorism, and refugees will force both sides to work together; and trade will continue, even if it faces more hurdles.

It is thus in both sides’ interest not to inflict deep wounds, instigate confrontations, or embarrass and threaten the other side. Above all, issues relating to common UK-EU security should not be part of the negotiations. Both sides need to acknowledge their mutual dependence and be prepared to show generosity.

The EU, for its part, should be generous with respect to the timeframe for withdrawal, new trade regulations, and any transitional arrangements that could soften the impact of the separation. And the UK should be mindful of the many EU citizens currently residing in Britain, and honest about its financial commitments to the bloc.

If there is one thing to keep in mind, it is that people change theirs. And, because people’s sentiments change, countries change direction. No possible future should be ruled out, including one in which both parties say, “Let’s try again.”

Republication Forbidden. Copyright: Project Syndicate 2017 Brexit to Nowhere?