Consequences of a Brexit.
Dr Robin Niblett CMG is Director of Chatham House, The Royal Institute of International Affairs, one of the world’s most influential policy institutes. The University of Pennsylvania Global Think Tank Index 2015 ranked them number one in foreign policy and international affairs. Based in the global city of London, Chatham House has a neutral platform and is a non-profit whose constituencies are governments, civil society, opinion formers and businesses all over the world.
Dr Niblett, what do you think about the Brexit referendum?
I think we are having this referendum for a combination of factors. The most immediate driver was tactical at a time of weakness for David Cameron and the Conservative party which was in a Coalition Government back in 2011-12. The economy wasn’t growing fast enough, and the UK Independence Party was on the rise. There were high levels of unrestricted immigration from the rest of the EU. Britain had estimated 20,000 immigrants in 2004-5 and completely miscalculated, ending up taking 800,000 to 1 million.
What has happened since then?
From 2012 onwards the British economy started to do better than the rest of continental Europe, and a second wave of migration from the rest of the EU drew another 150,000 a year. In this last year we had 330,000 in total, of which roughly half came from the EU. British citizens are constantly reminded that being in the EU means you cannot control immigration, and this has become one of the touchstone issues for those who want Britain to leave the EU. It is the most explicit manifestation of Britain not being a sovereign nation inside the EU.
What are the negative sides of voting to get out?
They are many. I would argue that for Britain the impact of not being able to control immigration from the EU is far outweighed by the benefits of being in, and of the risks of leaving.
What are the benefits of remaining?
They are many. The UK has the perfect deal in the EU. It’s outside the Euro, therefore able to manage its economy to its best interests, while retaining access with no barriers to the equal or second largest single market in the world. Amongst all the EU countries, for the last ten years the UK has been the largest recipient of foreign direct investment.
Why does the UK have this advantage?
Because the UK is a very open and liberal market, but it is completely interconnected, with no barriers of any sort, to the other 450 million people in the rest of the EU market. Today when you invest in the UK you are investing in a platform for the rest of the EU. If the UK leaves the EU, there is a risk that those rates of foreign investment will decline. There are many other economic reasons to remain.
What about the UK’s political considerations?
Again the UK has the perfect setup. It is not a member of Schengen, which like the Eurozone was not well designed, and yet it has opted in to specific aspects of border police and judicial cooperation, such as the European Arrest Warrant which means you can extradite people across borders, and the Schengen Information System for identity sharing on police databases. The UK controls its borders, unlike Schengen countries, but it can benefit from information sharing about risks.
How would you summarise the situation?
Economically we have the best of all worlds. In border security terms we have all the sovereign flexibility that a country would want. Thirdly, if the UK leaves the EU it would damage its own security and economic prospects, because the EU might be destabilised. If Britain leaves it would be like an earthquake for the EU and it would give ammunition to populist parties.
Would Germany be too strong?
The danger is that other countries would fear that Germany would be too strong and that they would try to prevent that. European governments might be more protectionist, and would need to overcome the insecurities of their people.
What would more populism in Europe mean for Britain?
A more populist continental Europe is likely to be one that would not undertake the economic reforms that Britain would benefit from. A more populist economic environment would be to Britain’s disadvantage, constrain growth and worsen cooperation against immigration. Brexit would make it more difficult for EU nations to share information and cooperate with the UK on measures to counter terrorism.
Why?
Because you need legal structures to share information about citizens across borders, and Britain would be excluding itself from that.
Was this the main issue that President Obama stressed when he came to England?
Obama’s angle was that Americans want Britain to remain in Europe, because Britain represents the kind of Europe that Americans appreciate; an open market, taking security seriously, and outward looking. If Britain leaves, Europe would be weaker as a partner, and Britain would be less influential in Europe and in the world. Washington would prioritise concluding geographic scale trade agreements like TTIP and the Trans-Pacific Partnership (TPP), rather than bilateral deals with relatively small economies like Britain. If Britain were to leave the EU it would have to rewrite 50 trade agreements.
If Britain leaves the EU would Britain become a much less relevant country?
That’s America’s fear, and that’s my fear as well, but you have to be careful not to overplay the effect for Britain. If Britain were to leave the impacts are highly unpredictable, but in my opinion all negative. The impacts on Britain would definitely be negative economically in the short term. Britain may look strong, but underneath the surface the British economy is still vulnerable.
Is Brexit going to happen?
If I had to make a bet, I would say no. There is at least a 10% majority of potential voters to remain. However what we don’t know is who will turn up to vote on June 23rd. Those who want Britain to leave will definitely turn out to vote, motivated emotionally by a heroic vision of a Britain of 50 years ago. It’s a chance to vote for the past. But those who want to remain may not turn out, because they are just voting for the status quo.
Europe has many problems, like migrants, terrorism, climate change, anti-Semitism, integration. Where are we today?
I am still an optimist about Europe. Everything is relative. Show me one part of the world that is succeeding today under the pressures of globalisation. We always beat up Europe, but why did Trump win the Primaries and Bernie Sanders almost beat Hillary Clinton? Because America is a divided society in which median wages have not grown since 1995. China is undergoing the most painful transitions, trying to become a middle income country; and it may not succeed. Brazil is going backwards. Modi has not lived up to his promise to take India forwards. Russia has an economy going backwards. Where are people investing their money? The answer is, in Europe, because it’s still a community of countries that are governed by the rule of law, that are relatively stable and that hold their destiny in their hands.
American investment is very strong?
American investment in Europe has risen every decade. America and Europe are still the two beacons of stability, more than China, Japan, the Middle East, Africa. Europe is trying to rebuild itself to succeed, and European policy makers must move beyond building fair-weather institutions to building durable and effective institutions.
Do they have the time to do so?
If they want to survive they have no choice. The question is, can they convince their populations of the risks of not doing so and of the opportunities if they do so? People don’t trust their governments and that is dangerous.
Now there are fascists and right wing parties again throughout Europe. Did we learn anything?
We will see. I might be wrong, but I think the institutions in the early 20th century were far more brittle and less transparent. I think people are better educated today and we have the benefits of history. That is why I think the Marine Le Pen Freedom Party movements are maximum 20% movements. In the old days 5 – 10% could take power. I don’t think 20% could take power today, as the institutions are far stronger.
What about the Trump vs Clinton contest for the next American Presidency?
Hillary Clinton is a traditionalist in foreign policy and a realist. If Britain remains in the EU we will see a focus on strengthening the transatlantic political relationship. In a world of uncertainties and steps in reverse, of rising authoritarianism, nationalism, even protectionism, Europe remains America’s natural ally. If Britain remains then it’s easy to rebalance back to Europe, but if Britain leaves then, under a Clinton administration, they would need to strengthen the EU more than Britain. Britain would move into second place for America. Otherwise the EU might fracture and then Russia takes advantage of it, and then this is bad at all levels.
And if Trump wins?
If Trump wins and Britain remains, it would be easier for the EU to answer the Trump demand that Europe takes care of more of its own security.
Do you think Trump will win?
I think Trump winning is like Britain leaving the EU. It’s very possible, but not probable. Therefore, if Trump wins and Britain remains in the EU, it’s easier for the EU to cope with a Trump demand that’s saying, look after yourselves. If Britain leaves then we have a much more early-20th-Century environment.
What do you mean by that?
An America that is not very interested in trying to manage a fragmenting Europe, and a Europe that isn’t as capable of looking after itself.
Is Trump dangerous for the world?
I don’t think he automatically is. He’s a businessman, and he only wants to close the deal. He will worry about the policy later. I have the feeling that he has got no idea what he will do as President. He just wants to be President, he wants to win, and to overcome the humiliation that Obama put him through.
Is he a bit like Berlusconi?
It is a similar dynamic, and Putin is very good at flattering those types of egos. He’s good at dealing with egotists, not with systems and processes.
Is Trump like Marine Le Pen?
I think Trump will turn out to be a 20 – 25%.
What do you think about Obama’s legacy?
He did alright. I think he managed the hand of cards he was given as well as he could. He didn’t manage relationships with Congress well, but Congress did not make it easy for him. His main failure was not observing his own red line in Syria. He has served as the necessary transition to a world that cannot be, and does not want to be, led by America.
Now the likes of Google control everything and the world has changed?
I think the Googles disaggregate political power, which prevents the 20% from taking real power. This is what the Chinese fear and why they do not let Google in; and the Americans don’t, because business and individuals dominate the country, not politics.
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London, May 2016
