The adult Brits are deciding today about their country’s position in or out the European Union, in a referendum that Prime Minister David Cameron was forced by his party’s ultra-Eurosceptics in January 2013 to promise to conduct it, should the Conservative Party win a majority in the 2015 legislative election. This promise was then thought it could secure a clear Tory victory and an absolute majority in the general elections of May 2015.
The absolute majority was actually achieved and Cameron won an electoral triumph, but still it’s not clear if the promise was needed. This kind of debate will surely follow whatever the outcome of today’s vote. As things stand now, the referendum will decide if Europe will continue united or Britain follows a separate way. There is more to it though.
Counting the cost
The cost of a Brexit may vary from a short run shrinking plus a long term recession of the British economy, to a global ‘Black Friday’ in the capital and money markets. Such a prospect can easily trigger a new financial black out, with the banks stopping to lend each other, until it becomes clear who is exposed to what risks. In this way, the western financial system may freeze for quite some time, with unpredictable repercussions to the real economy, an actual Armageddon, just like the 2008-2010 crash. It was like that in 2008, when Lehman Brothers went bust. Apparently, the heated discussion about who is to blame for a Brexit will encompass all the costly effects of such an unfavorable possibility.
That is why the whole world issued advice for Britain to stay in the EU, while many authoritative entities aired threats should the Britons choose ‘leave’. From the IMF, the OECD, the Bank of England, the Fed, the western banking conglomerates to the Washington, Berlin and Paris administrations, all stated how dangerous it is to try reshaping the world, after Britain chooses to sail alone in the open seas.
Reshaping the world
Unquestionably, Britain is a global player. Consequently, its repositioning in relation with the EU would have upshots spanning from a possible financial black out, to geostrategic reordering, none of which would be a smooth or peaceful process. In view of the cost of a possible Brexit, David Cameron decided to lead the ‘remain’ campaign. Quite understandably, he pondered all the dangers his country will be exposed to, if his 2013 promise turns sour. All along the past few months he fought to the best of his abilities for the ‘remain’ vote. He even went as far as to state that his government has not drafted a fully fledged contingency plan for the ‘leave’ eventuality.
George Osborn, the Chancellor of the Exchequer when asked last Monday, if he would think about stopping the transactions in the London Stock Exchange, if the market goes wild on Friday after a possible ‘leave’ vote on Thursday, he said “The Bank of England Governor Mark Carney and myself, have, of course, discussed contingency plans, but the sensible thing is to keep those secret and make sure you are well prepared for whatever happens.” He clarified though that “the government did not have a wider contingency plan for the UK beyond the immediate impact of a Leave vote” and solemnly added, “such plans can’t protect people from the shock” that would follow.
The cost of ‘leave’
In short, the London government told the Britons that there is no way to protect them from what is to follow, if they decide to ‘leave’. This was a very farfetched statement tantamount to an ultimate menace. Given that Osborn couldn’t utter such a threat without Cameron’s OK, it’s obvious that the British Prime Minister has used all the possible and even impossible means, to convince his compatriots to vote ‘stay’ and save him from the ordeal which may follow. Obviously, he dreads the ultimate consequences of his 2013 ‘promise’, which gave him an unexpected electoral victory, but may now drive his country to the rocks.
In many respects, the blame game in a possible ‘leave’ outcome, has already begun. The leader of the Labour Party, Jeremy Corbyn, has triggered it. He was never an EU ‘lover’ as he has repeatedly said, but clearly he supported the ‘remain’ side, although in a lukewarm political way. In this respect then his statement that he “wouldn’t take the blame of a possible ‘leave’ result” has de facto started this discussion.
The ‘remain’ also costs
As for the ‘remain’ probable result in today’s vote there is not much to say. Britain has got what Cameron asked for a few months ago. He negotiated that with the German Chancellor Angela Merkel and the French President Francois Hollande, when the three traded the terms for Cameron to assume the leadership of the ‘remain’ campaign. This was mainly a four years block of social benefit payments to immigrants from other EU countries, working in Britain. There would be nothing more for Britain, if the country decides to stay in the EU.
However there is more to Wolfgang Schäuble’s threat that “it’s either in or out”. He obviously meant that Britain in case of a ‘leave’ outcome won’t get a free trade agreement like Swiss or Norway. This was two weeks ago. Last Monday though, Schäuble left it to be understood that even a ‘stay’ outcome won’t be without repercussions for Britain. According to Brussels sources, Cameron’s decision to ‘promise’ in 2013 this in-out the EU referendum in order to win a general election, is not forgotten. A lot of people in Berlin, Paris, Rome and Brussels are furious about the easiness of the Brits to keep constantly ‘rethinking’ their participation in the EU.
Problems for Britain even if it ‘remains’
This British attitude is not without cost to the EU as a whole. Even a ‘remain’ outcome won’t completely cure the trauma inflicted to EU’s status by the UK challenge. So there would be problems even in the ‘remain’ event. In the future, the British demands for ‘special treatment’ will be briefly denied and London will have difficulties in the day to day business with Brussels.
Undoubtedly, there is a lot in this line, especially given the way the London financial markets and the banks work, as if the country was a real off shore state. If the Brussels bureaucracy, with only 4% Britons, decides to create problems to Britain, the sky will be the limit.
More in the British path?
On top of that, Cameron’s idea to risk the full EU membership of his country in order to just win an election may, and very probably will, open the appetite of certain political formations in Europe to do the same. That is to say, promising referendums about their country’s participation in the EU, in order to win an election. In Italy the Five Star Movement of Beppe Grillo, in France the National Front of Marine Le Pen, in Germany the AfD and other Eurosceptic extreme right, left or harlequin parties are surely getting similar ideas.
Then, it will be the end of the entire European edifice, and the national divisions will bring the Old Continent more than one hundred years back, to the era of the pre 1914 WWI period. Can the world stand it? Seemingly, Cameron didn’t think much about all that, when in January 2013 he ‘promised’ the in-out the EU referendum. A lot of elite people in Europe and elsewhere do not forget it.
As a result, not without reason, Cameron has avowed that he won’t contest a new term as Prime Minister and he will quit the leadership of his party before the next general election. His successors for the Tory leadership have started to compete. The ‘leave’ campaign helped Michael Gove, the No2 in the Tory leave camp, to challenge Boris Johnson, until recently the more probable successor of Cameron.
Finally, going back to today’s possible outcomes, a ‘remain’ result will be handled within known and well charted waters, while the ‘leave’ is to open Pandora’s Box, to say the least.