On June 23, the British people will go to the polls in a referendum to decide whether or not the country should leave the European Union (EU) — a move popularly known as ‘Brexit’.
Personally, I see the whole exercise as rather similar to the Scottish Independence referendum in which, for a heart-stopping moment, it looked as though the Scots might leave, but a last-minute convoy of big business guns up the M1, that threatened dire consequences in the event of a ‘Yes’ vote, helped persuade voters to stick with the United Kingdom.
But what will happen if the Brexit campaigners prevail, not only in the UK but globally?
Most research suggests that Brexit will be disastrous for British economy. Half of all overseas investment in Britain comes from the EU and much of the rest from Russia, China and the Middle East. The UK is China’s second most popular investment destination, with billions passing through London in transaction fees alone. Chinese investors have already said they will likely sell up and move on in the event of Brexit. So too have many Arab investors — Qatar owns half of London and the Saudis have upwards of $62 billion (Dh228 billion) invested in the UK. If little Britain finds itself separated from the EU flock, it will be at the mercy of the wily Russian President Vladimir Putin, who could certainly exert influence on his oligarch friends to park their fortunes elsewhere.
Multinational companies with ‘European headquarters’ in London will likely relocate and Britain’s role as a bridge between countries like the United States and China and the EU will be over. The US has already made it clear it will not do special ‘side’ deals with Britain if it leaves, but will go straight to the EU — the world’s biggest trading bloc.
The think tank Oxford Economics predicts a 4 per cent fall in growth by 2030 in the event of Brexit, investment at least $21 billion down and an average loss of income of £1,027 (Dh5,528) per head. The London School of Economics’ Centre for Economic Performance makes an even gloomier prognosis: Loss of trade could see a 9.5 per cent decline in Britain’s gross domestic product. By contrast, Britain’s net contribution to the EU budget was only 0.35 per cent of GDP last year. So any savings in the event of Britain leaving will only be minimal. In such a fiscal climate, the value of the Sterling and real estate will also slide.
In terms of fairness and justice, the EU puts the brakes on the voracious ‘free market’ championed by Britain’s right-wing and Brexit cheerleaders, imposing financial regulations and protecting workers’ welfare. Perhaps the Brexiteers view the UK as a new offshore haven for big bucks ... a sort of Atlantic Monaco without the sun. It seems to me that Brexit will see Britain and the EU politically and economically weakened on the world stage and no match for Beijing or Moscow.
The cohesion of the EU is already under pressure with tensions between the north and south — dating from the 2008 financial crash — and east and west over immigration. The near-victory of a far-right presidential candidate in Austria last week will boost burgeoning anti-migrant sentiments across Western Europe, and Britain’s ‘leave’ campaigners have just issued a poster warning of a ‘flood’ of low-paid economic migrants and ‘criminals’ if Turkey joins the EU.
Logically, it seems that if the UK border moves back to Dover from Calais and the French (angered by Brexit) no longer make the effort to contain migrants intent on crossing the Channel, the situation is likely to get worse.
Brexit could even lead to the dismantling of the UK itself; Scotland is determined to stay in EU and may revisit the issue of independence, as may Wales.
The regional balance of power with Moscow — which is already being tested in Ukraine and the Middle East — will go in Russia’s favour if the EU begins to struggle with cohesion. There may be a knock-on effect in the Syrian conflict if Russia, which champions Syrian President Bashar Al Assad, no longer has to worry about the combined might of the EU and its sanctions become less costly in a shrinking economy.
Further afield, several Arab states — feeling side-lined and betrayed by the administration of US President Barack Obama — are engaged in rapprochement with Moscow and choosing Russian arms suppliers over British and American ones.
In terms of the practicalities of the divorce, the EU is certain to make it as costly and difficult as possible to deter any other defections. European Commission President, Jean-Claude Juncker has warned that if Britain votes to leave, it will be treated as a ‘third country’ and its citizens as ‘deserters’.
The terms of withdrawal have to be unanimously agreed upon by the other 27 states and the European Parliament. The UK will not be involved in the debates around the terms of Brexit, which could last for years, creating long-term instability. When Greenland left, negotiations lasted three years, but whereas Greenland is a tiny nation of just 50,000 people, Britain is the EU’s second-largest economy and home to 64 million people.
Initial research into the ‘red lines’ the other countries will put up suggests that the UK may be forced to join the European Economic Area (EEA) to ensure the freedom of movement that other EU nationals currently enjoy. As a member of the EEA, Britain will still have to comply with many of the EU regulations that Brexiteers think they will be escaping, but without any say in future EU legislation. It will also have to go it alone on the many trade deals it currently enjoys with other countries as part of the EU.
In my opinion, if Britain decides to go ahead with this divorce, it will face a lonely future, unloved in a bachelor pad.
Abdel Bari Atwan is the editor-in-chief of digital newspaper Rai alYoum. You can follow him on Twitter at www.twitter.com/@abdelbariatwan.
