Prime Minister David Cameron gambled and lost on a Referendum to silence Euro-skeptics. With hindsight, he miscalculated the public mood and opened a Pandora's Box.
Many of the “Leave” voters, however, didn’t realize, or care, that the Referendum is not just about immigration, or taking back the country from Brussels. It’s nothing less than changing the historic composition, gravitas, and role of Britain, as well as the geopolitics in Europe and in the broader world.
For Britain herself, Brexit is likely to break up the union with Scotland and Northern Ireland. Demands for similar referendums elsewhere in the European Union are already being heard. A domino effect is likely to spell the beginning of the end of what has cemented European peace and stability after the Second World War.
The United Kingdom is the world's sixth largest economy with considerable financial and geopolitical assets. Without it, EU’s ability to harness responses to encroachments on European security, such as those from a resurgent Russia and a fractious Middle East, would be eclipsed. Its gravitas in other global or regional theatres will become less weighty. America will see its strongest ally cut off from the EU’s decision-making Click here. As pointed out in the New York Times, Britain would be rattling the Postwar Order as a pillar of stability .
The Brexit referendum outcome has scared many voters. Some 4 million people in the UK are petitioning for another Referendum. Some “Leavers” openly regretted their decision while some politicians call for Parliament to block its implementation. Click here
Technically, Parliament can ignore the Referendum, which is not constitutionally binding. But how can it legitimately overturn the will of a clear majority of voters? In any case, it is now up to a new Conservative leadership to formally invoke Article 50 of the Lisbon Treaty for Brexit to happen.
Article 50 will start the clock ticking on a two-year period to negotiate terms of departure. Even if no deal is reached, the UK’s membership will expire when this period ends. An extension is possible but only if agreed by all 27 remaining EU members. During this time, Britain would be debarred from EU decision-making. Any exit agreement must be unanimously approved by remaining EU members and endorsed by the European Parliament. With UK’s ambivalent and recalcitrant membership, the EU is in no mood to grant any more favours. “Pour encourager les autres”, so to speak. So once Article 50 is triggered, the UK will have little leverage on the outcome.
But there is no stipulated timetable when to activate Article 50. With rising European separatism and widespread market turmoil, the UK would have better negotiating leverage by not hurrying. Any Brexit arrangements are thus likely to come slowly, if at all. Click here
According to articles in Reuters and the New York Times, there can be many scenarios Click here and here how negotiations with the EU may play out before and after invoking Article 50, including the prospect of a second referendum to remain within the EU on negotiated terms. The prospect of an early General Election remains a possibility Click here.
While some in the EU want to get Brexit over and done with to minimize contagion, the problems plaguing the EU are a loud wake-up call to reform the current rigid one-size-fits-all model which seems past its sell-by-date. The EU is a “flawed construction” needing thorough restructuring to give it new life, according to George Soros. Click here The widespread remorse caused by the emerging bleak future of Brexit and the growing EU-wide realization of the faulty EU system, may drive a bottoms-up momentum to transform the EU. Click here
As the EU is not yet a political union, perhaps a differentiated multi-track and multi-currency model may better suit different Members in the light of experience? Just like a club with various types of membership or “EU a la carte”, according to Nataxis, a Spanish Bank. By taking time on implementing Brexit, the UK may be able to provoke reforms for a stronger and less divided EU. The possibility therefore exists for a better deal for the UK to remain. If this should come to pass, it would then make perfect sense for the UK to hold another Referendum.
In the final analysis, what better political capital a new Conservative or Labour leadership would reap if it is seen to galvanize the reform for a better EU of which the UK, with Scotland and Northern Ireland intact, can remain a staunch member?
Whatever Brexit may turn out to be, it is a powerful manifestation of a rising tide in the West of anti-globalization, xenophobic nationalism, and inter-generational divide Click here. Nothing illustrates this better than the Donald Trump presidential campaign on the other side of the Atlantic.
According to latest PEW polling data, 57% of Americans, and similar majorities in many European countries, want their country to "deal with its own problems and let other countries deal with their own problems." Some 49% of Americans believe that "global economic engagement is a bad thing because it lowers wages and cost jobs.” “Both Europe and the U.S. are turning inward, and the ramifications for the global economic system set up after World War II are profound", says Alan Murray, Editor of Fortune Magazine. Click here
The implications extend well beyond the economic sphere. While the West starts to look more inwards, China is advancing more outwards. China is set to become one of the world’s top outbound investor by 2020, with the UK being the largest European recipient, according to the Financial Times Click here. China's outward tilt is set to redouble with launch of the Belt and Road initiative. While this helps to reduce China’s excess capacity, it addresses the world's critical infrastructural shortfall Click here. It also tallies with the world's “Fourth Industrial Revolution” in a new era of digital globalization and "connectography".
With a slowing economy, hanging debt problems, widespread corruption, powerful vested interests and an uncertain trajectory towards reforms, China’s rise is by no means assured Click here. However, with these inward and outward paradigm shifts, changes in global geopolitical influence and power distribution are bound to ensue, from which, unexpectedly, China and Russia may stand to gain for different reasons.
