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martes, 23 de febrero de 2016

UNITED KINGDOM OUTSIDE THE EUROPEAN UNION?

THE MEANING OF BREXIT
AN INTERVIEW WITH IAN BREMMER


DAVID CAMERON completed his EU renegotiation just days ago and yet, as some of us predicted, already it is receding into the distance. As the campaign gets underway, the focus has moved off the prime minister’s respectable but inevitably modest achievements in Brussels and onto the big arguments. What would a Brexit mean for the country, and for Europe? Would it leave it stronger or weaker? What sort of role should Britain seek to play in the world over the coming decades? One particularly lively fault line in Westminster (albeit perhaps not on the doorsteps) divides those who would leave the EU to forge better relations with Anglophone and emerging powers on other continents from those who believe Britain’s EU membership is a stepping stone to the wider world. 

To help make sense of these choices, last week (as Mr Cameron was finalising his renegotiation) I sat down with Ian Bremmer, the president of Eurasia Group, a political risk consultancy, and a foreign policy guru. I asked him about what Britain’s decision on June 23rd would mean for its role on the global stage and why partners like the United States are taking such a close interest in the outcome. His answers together amount to a grave warning of the risks of an “Out” vote. 

Mr Bremmer argued that:

  • Brexit would bring the “further marginalisation of Britain as a power with influence”
  • the prospects of TTIP (the Transatlantic Trade and Investment Partnership) and the attractiveness of the British market would be hit “very dramatically” by Brexit
  • given the uncertainty about the EU’s future, now is a “very bad time for a referendum”
  • for that reason, and given the way the state is changing, it cannot be assumed that the referendum will settle the European question
  • another referendum in the medium term is a possibility
  • in a “world with more currencies” it is entirely possible for Britain to thrive in the EU without adopting the Euro
  • Britain should be doing “so much more” and “everything possible” to improve its relationship with India rather than obsessing about China, for which Germany will always be the best European partner
  • the notion of an “incredibly overbearing” EU getting in Britain’s way does not match the weak reality: “I really would not be very worried that the EU is stopping Britain from accomplishing so much”
  • Japan, not Britain, is best placed to sell services to the Chinese
  • by backing out of Europe and thus making itself a “second tier power”, Britain is undermining its own attempts to attract Chinese attention and investment 
  • it is dangerously short-termist for Brits to put “all of your eggs in the China basket”
  • London’s concentration on winning small concessions from Brussels illustrates its lack of ambition on the world stage: “The very debate that is being had over this referendum proves my point that Britain is not as relevant as it used to be”
  • Britain should be looking to set Europe’s course: “if you vote to stay in the EU the Brits can and should embrace a leadership role in what is a weaker Europe that needs Britain"
  • Brexit could put off Eurosceptics in other EU countries, because they will see how “painful” and “technically difficult to engineer” leaving the union is
  • Brexit would contribute to a much broader trend: the hollowing out of the transatlantic relationship and America’s associated turn towards the Pacific
NB: This interview has been lightly edited for clarity.

BAGEHOT: What would Brexit look like for Britain? What does it mean if we vote to leave?



IAN BREMMER: Well first of all it probably means a couple of years to unwind. The level of distraction, technically, to figure out how to do it with the Europeans is going to involve an enormous amount of political effort and resource, at the exclusion of many other things. We had a Supreme Justice who just died two days ago in the United States.


BAGEHOT: Scalia.

IAN BREMMER: Think about how much time that’s going to take; every other piece of legislation that you thought was relevant is suddenly thrown under a bus until they get through that discussion. Well, it’s that times ten. I think that’s one thing. The second thing is that it’s the further marginalisation of Britain as a power with influence, whether that is true diplomatically, economically or militarily (with the United States or more broadly). Now the US relationship is already weaker than it used to be, because the US see the Germans as generally more important and relevant, and the Brits have wanted to make themselves China’s best friends in the West. 

BAGEHOT: I joined George Osborne on his recent trip to Beijing. It was a whole different approach.



IAN BREMMER: It was quite something. I don't support that approach, for what it’s worth. But I do think, whether it means getting the TTIP done (which is important for the global economic architecture, the alignment of the West and trying to stop the fragmentation of values and standards in the international economy) or the attractiveness of the British market; all of these things will be hit very dramatically by Brexit. And that’s leaving aside the presumption that Scotland would leave Britain after Brexit (there would certainly be another referendum, because it reopens everything). So as much as I understand that Europe looks bad right now (and it does), I think that Brexit would be a truly unfortunate decision for the British nation.


BAGEHOT: Let’s pick over a couple of the counter-arguments put by the Eurosceptics. The first is that Brexit might seem like an uncertain prospect, but the status quo is not a known quantity either, in that Europe is changing, the Eurozone is trying to integrate, where Europe will be in five to ten years we don't exactly know…

IAN BREMMER: Sounds like a very bad time for a referendum. That is a very good argument for having the referendum when it is less politically expedient for Cameron. Unfortunately political figures are politicians, and that is their priority in all counts.

BAGEHOT: But Cameron having chosen to have the referendum now… What is the counter-argument to the “it’s riskier to stay in” objection?

IAN BREMMER: Have another one. If things get really ugly for you in five years time can’t you have another referendum? Are you legally blocked from having one?

BAGEHOT: Not at all, it’s up to the government of the day.

IAN BREMMER: Then explain to me why that argument [that Britain cannot hold another referendum in a few years] holds any water whatsoever. I just haven’t heard anyone actually say: “well why don’t you do one then”! I just don’t understand it. There’s nothing stopping you.

BAGEHOT: Eurosceptics would say that the Europhile establishment has somehow been pressured into giving us this referendum now, but that it won’t give us another one in five years. 

IAN BREMMER: If if becomes obvious that things are getting much worse… Look, I think it’s fair to say that the grounds for Euroscepticism have been getting larger over time. If Europe continues to deteriorate, that will not change. So it may be easier now to have a referendum than any time before - until tomorrow. I would think you would want as many referenda as possible. At the end of the day Quebec wasn’t satisfied with just one.

BAGEHOT: The “neverendum”.

IAN BREMMER: The neverendum! That’s right.

BAGEHOT: I think we need to use that word more. But you’re right: even if we vote to stay in by quite a large margin (which it might not be), the idea that this is going to settle anything is nonsense.

IAN BREMMER: It is! It’s dangerous to assume these things are settled. And I say that in particular because what it means to be a state is changing quickly. And that itself is going to have an impact on these discussions. There is so much decentralisation of power happening.

BAGEHOT: Within states?

IAN BREMMER: Within states. In terms of municipalities.

BAGEHOT: That’s certainly true here.

IAN BREMMER: And it’s true in the United States too. And in states in the United States. There’s just a lot of decentralisation. And I don’t see anything slowing that down. Again, in five or ten years time, if large democracies continue to see themselves as being controlled by special interests, incredibly ineffective, very slow moving, unable to respond to the demands of their constituents, then I think we have a whole different set of issues on our plate than the nature of Britain’s affiliation with the EU. You want to understand what the hell Britain is, and how it works. I think those are more fundamental questions.

BAGEHOT: To put another anti-EU argument to you, the Eurozone is going to have to integrate in some way, at whatever level. Britain is outside the Eurozone; Cameron claims to have some sort of protection built into the renegotiation. Formally, at least, every EU country but two (Britain and Denmark) is obliged to join the Euro eventually and although the likes of Sweden may take a long time about that it is possible to imagine a future in which the Eurozone and the EU look more and more identical. Admittedly, it’s quite an optimistic one from the Brussels point of view, but it is conceivable. Where does that leave a country like Britain, that looks extremely unlikely to join the Euro at any time in the next couple of generations? And a country that trades so much on its financial prowess?

IAN BREMMER: As long as you have a common market and the financial regulations themselves are more and more harmonised (between Britain and the rest of the European Union), then that actually allows London to stand quite significantly as a global financial centre. It is true that we are seeing more fragmentation, of the world over the long term, away from the dollar. Now in the last few years since the financial crisis the dollar has actually strengthened and more people have held it, but as the Americans unilaterally use the dollar as a tool of coercive diplomacy and use financial institutions (what I call “the weaponisation of finance”), lots of people are going to hedge. And they’re going to hedge towards the RMB (particularly as they [the Chinese] reform more). It’s going to be a world with more currencies. And I don’t necessarily believe that means that it’s a mistake for Brits to want to be in the EU but not have the Euro. I think that’s OK.

BAGEHOT: On that point about the country’s place in the world, some say Britain should cut itself free from the sclerotic EU and use the freedoms that it wins by leaving the union to build better relationships with the rising markets, with the Commonwealth. For example, because we get so much immigration from the European countries we can’t take as many computer engineers from Bangalore, or whatever. Do you see any merit in that argument? In the idea of Britain as a truly global rather than European player, aided by leaving the EU?

IAN BREMMER: I think the Commonwealth is extraordinarily important to Britain, and the Brits should invest more in it. The very fact that they decided to spend less on the Foreign Office and were able to coordinate their embassies and share resources with the Canadians and the Aussies and the Kiwis… I would have preferred it if the Brits had spent more themselves. But I’d still want them to be doing that sharing. I think it’s hugely important, like the Five Eyes agreement on cyber, which has been very helpful to the United States as well. You look at Britain’s ability to develop a stronger relationship with a country like India, given its ties, and it should be doing so much more. Because India is a rising country, a vibrant democracy and is finally starting to get governance in place. Right now the best relationship India has in the world is with Japan. Britain should not be happy about that. Britain should have been doing everything possible to get in that position; as opposed to China, where the Brits are never going to be able to compete with the Germans. The Germans will always have a better relationship with China than Britain.

BAGEHOT: But are you convinced that Britain staying in the EU doesn’t inhibit that?

IAN BREMMER: Not to a meaningful degree. Not to a degree that matters, compared with the dangers and downsides of leaving. Let’s be honest with ourselves: it’s not like the EU is getting stronger. The EU is getting weaker. Schengen is falling apart and countries are increasingly looking to themselves. Common values in Europe are falling apart. So in the EU that the Brits are thinking about leaving—because ostensibly it is so incredibly overbearing—those things are eroding. Europe doesn’t stand for what it used to. I happen to think that’s sad, because of course the supra-national, democratic identity that Europe took on was in many ways the most bold and courageous experiment that advanced industrial democracies have ever embarked upon. They failed. And you see that in Europe with governments moving away from rule of law, moving away from an independent judiciary. You see it in Hungary, in Poland, in Greece. You see it with the rise of populism in many of the larger European economies as well. In this regard, I really would not be very worried that the EU is stopping Britain from accomplishing so much.

BAGEHOT: You mention India and China. The argument for the great Osborne charm offensive towards the Chinese is that their economy is evolving: where once it had a seemingly unquenchable thirst for the machine goods, the hard engineering exports, in which Germany specialises, now as its middle class grows, as it starts building up a welfare state, Britain’s strengths come into play. Financial, educational, business services are suddenly a larger part of China’s imports. And Osborne’s thinking is that now is therefore the time to try and beat the Germans at their own game. What’s the counter argument?

IAN BREMMER: There are a few. One is that the Chinese take advantage of you when they think you’re desperate. And the Brits smacked of desperation a bit. Not just in joining the AIIB [the Asian Infrastructure Investment Bank] but joining it first and saying: “you see, we made this happen for you.” They drive tougher commercial bargains when that happens. The second point is that, long-term, the major economy that the Chinese will ultimately need the most is not Britain. It is Japan. Because Japan has by far the oldest population, they have a healthcare system that really works, they’ve got the most resilient infrastructure in the world. They know how to market to a much older population, develop consumer goods for it. And they’re right there. So good luck to Britain on that one. 

The third point is that, unlike Germany, the Brits actually play a geopolitical role. The Brits are much more interested in talking about human rights internationally, things like the Dalai Lama, Taiwan, Hong Kong. It is true that, for the time being, you have a British government that has jettisoned all that in favour of the Chinese. What happens when the next British government gets elected? Is Cameron able to promise that everyone who comes after him is going to have an equally benign view of a communist China? The Chinese absolutely know that what the Germans do is industrial policy. That’s what they focus on. So the Chinese feel much more certain, long term, that the Germans are not just a good bet; they’re a safe bet. Not only are the Brits not as good a bet, but they’re a very unsafe bet!

BAGEHOT: Let me play devil’s advocate. Britain is progressing towards a less geopolitically significant role. You’ve been saying that in this interview.

IAN BREMMER: Yes, I agree.

BAGEHOT: Meanwhile Germany at least seems to be aware of the fact that there is now more pressure on it, more expectation of it, to lead. The US picks up the phone to Germany rather than Britain for a reason. And OK, Cameron can’t bind his successors, but it looks like the Tories will be in power for quite a while. Aren’t we moving towards a place where Britain can play Germany at its own game?

IAN BREMMER: We are. I think those are both really good points. But I also think that you aren’t going to change a country’s stripes over a couple of years. This British charm offensive was virtually overnight. And British role on Hong Kong and Taiwan lasted a little longer than that. Those are places that are going to get more problematic over time. Yes, the Germans will play a more significant—even military—role. But the British role is more significant militarily in NATO, in the Middle East than Germany’s is today, and it will be in two years and in five years. The fact that the Americans are closer to the Germans is not because the Germans are doing so much militarily. In fact, in part it’s because Obama is becoming more German and the United States is moving in that direction. And also because Germany is clearly the leader of Europe, which by the way is the same reason the Chinese want to be with Germany; if you can make only one stop in Europe where do you go? You’re going to go to where things matter. To whoever’s taking a leadership role. 

The Brits are basically saying: you know what? We’re a second-tier power. Well the Chinese are very likely to take you as a second-tier power. And that’s not where they spend their money, it’s not where they spend their time. Let’s not pretend China is changing its SOE [state owned enterprise] stripes overnight, and the relationships that they continue to have with the big German manufacturers are going away; there’s still an awful lot the Chinese want to learn from and steal from them. And in that regard the fact the Brits are very aligned with the Americans on things like cyber, and the Germans are not, is also useful from the German perspective. Huawei can get into Germany.

BAGEHOT: Ironically one of ways the Germans are different to the Brits is their wariness about the surveillance state. Funny how these things work out.

IAN BREMMER: It is. It’s very ironic, is it not. Look, I’m very sympathetic to the Cameron-Osborne notion that Britain needs to have much better relations with rising powers. I’m very sympathetic to the notion that the Brits need to hedge and that the United States right now doesn’t really know what it is. And so the Special Relationship is not all that special. I get that. I think the China decision is a mistake. What you do is not put all of your eggs in the China basket. What you do is you play very hard with the fact that you’ve got the Commonwealth, in India and you basically do what the Japanese have been doing, which is that you go around planting flags and engaging. But it really should not be: “hey, the Chinese are writing cheques so let’s get the money now.” That’s a short-term strategy. That’s the kind of thing you do if you are the CEO of a company and are planning to retire in a couple of years. It’s not what you do if you’re the prime minister of a country and are looking for your legacy.

BAGEHOT: I think they’re almost explicit about that comparison: the chief-executive prime minister going around cutting deals and flogging British goods.

IAN BREMMER: That’s the problem. The average CEO lasts for less than five years, so they’re all looking at: what do we do to ensure we maximise shareholder value for now? How to we pump those stocks? Gotta make sure we make that money and right now. Doesn’t matter what it means in five or ten years. The problem is the British people are around longer than shareholders. And you can’t do that to your constituents, to your voters. That’s why this is not something they should be embracing. 

BAGEHOT: You mentioned the idea that Britain is becoming marginal and a “second-tier power”. To put the counter-argument, it’s spending its 2% of GDP on defence, it is an international aid superpower, Osborne has stopped the haemorrhage of funds out of the Foreign Office. Britain is still on the UN Security Council, we’re still in the EU. Is it exaggerating to say that the country is pulling back from the world?

IAN BREMMER: Philip Hammond’s speech at Munich was a hell of a lot better than the British statements last year. So I do think there’s something to it. I’m the one who tweeted that the most influence Britain has these days is what’s written in The Economist. And I meant it. Precisely because that is soft power, it does matter and Britain is seen as much more relevant on stuff that it has done for a long time than on what the British government is coming up with these days. The fact that you’re in the Security Council? Who cares. It’s an irrelevant, feckless organisation. 

Look, I think that there’s something to be said: if you vote to stay in the EU the Brits can and should embrace a leadership role in what is a weaker Europe that needs Britain. That needs Britain. Why is it that this entire debate is only about what Britain needs? That shows how much smaller Britain has become.

BAGEHOT: Insecure? 

IAN BREMMER: The very debate that is being had over this referendum proves my point that Britain is not as relevant as it used to be. It needs to get beyond that and say: Britain can be there for others and the Europeans need Britain. The Europeans really need Britain. The Germans, Merkel, need Britain. The French need Britain. The Italians need Britain. And Britain’s not there. Britain doesn’t care. (They need America too, and America’s not there.) Is that the world we want? I wrote about the “G-Zero”, so I’m fully invested in the fact that that’s the way the world is going. But I don’t like it. I don’t think it’s good. I don’t think it’s good for Britain.

BAGEHOT: At the start of this I asked you what Brexit would mean for Britain. What would it mean for the rest of the world? Why is there so much concern in Washington?

IAN BREMMER: There isn’t enough concern in Washington about this! Kerry made his first significant statement on this in Munich.

BAGEHOT: A “strong UK in a strong EU.”

IAN BREMMER: Exactly. And Obama’s going to make a statement, I’m sure. But this has been irrelevant to the Republican and Democratic primaries. There’s been a lot of debate on foreign policy but not on the transatlantic relationship. We [Eurasia Group] set out our top risks for this year and number one was the “hollow alliance”. We believe that it is weaker than at any point in the last 75 years. And it’s precisely because of all the dangers around the EU, including Brexit, that we wrote that. The Trans-Pacific Partnership, I think, is the single biggest thing Obama has done in seven years on foreign policy. It’s something that not only brings America closer to like-minded countries in the Pacific, but it will also, ultimately, help the Chinese integrate in that direction as well, because they don’t want to be left out. Let’s keep in mind that America is relatively new as an Atlantic power. Before World War Two it was focussed more on the Pacific. And it will be again, and it will be much more if Britain leaves the EU.

BAGEHOT: So Britain leaving the EU would help the “pivot”?

IAN BREMMER: Absolutely. The Europeans will be seen as less relevant as allies to Americans. Especially because so many bad things are happening in Europe. All of the geopolitical issues that don’t wash up onto American shores. People say they do, but ISIS is so much less of a problem for America than it is for Europe. Britain leaves the EU, and that is going to be even more so.

BAGEHOT: The fact that Trump is concentrating on Mexicans is telling. 

IAN BREMMER: Sure. That’s because we have an ocean; where with Mexico there’s actually a border.

BAGEHOT: Do you think that Brexit would create a domino effect in the EU?

IAN BREMMER: I certainly believe that other countries would look into having their own referenda; that that political process would gather steam. I don’t necessarily think that Britain leaving would suddenly lead to a wave. I don’t think it would lead to the end of the EU. Because people will also see how painful it is. And they’ll also see how technically difficult it is to engineer. I think that will scare them.

BAGEHOT: How do you think Cameron has handled this whole issue?

IAN BREMMER: He’s a strong prime minister. The Labour Party has imploded. His alliance with the Lib Dems has left the Lib Dems much the worse for it. I think you could say that politically he has handled things extremely well. His cabinet is mostly behind him. He’s a strong premier. But in terms of what that’s meant for Britain as a country, I think it has come off the worse. 

BAGEHOT: Ian Bremmer, thank you.

IAN BREMMER: Thank you.