Britain’s divorce from the European Union will be a tortuous affair.* The British establishment losers in the June 23 Brexit referendum were shocked by the vote to leave, as were the financial markets: sterling’s value slumped some 10 per cent on the foreign exchange markets and the UK’s credit rating was cut. But even many victors looked shocked too. Some, including several leading Conservative Party Members of Parliament, only wanted to gain some appeal with their populist stance against the EU, not really to go ahead with such an uncertain venture. Perhaps more importantly, world leaders were bemused that the British government could have let things come to such a pass. Long having been able to pose as the knowledgeable consigliere to the major powers and others, advising on disputes and helping to negotiate deals, the UK now looks like a reckless troublemaker. For them, the aftermath of the Brexit referendum is another unwelcome upset in an already crisis-ridden imperial landscape.
The formal exit process begins when the UK invokes the never yet used Article 50 of the EU’s 2009 Lisbon Treaty to inform other members of its decision. In normal clubs, there is a procedure for a member leaving. But, as far as I know, this Treaty for first time gave one for the EU. (Let no one be so impolite as to mention that there is still no procedure at all for leaving the euro group of countries, since, of course, membership of the euro currency area is ‘irrevocable’) Article 50 is the explosive device, but it turns out that the UK does not have to trigger it any time soon. Even if it did so next week, to begin formal negotiations on the terms of exit, then there would still be a period of some two years before the final farewell. The latest reports suggest that it will not even be triggered until 2017.
There is now a developing conflict of interests between the UK and the European Union. In the referendum campaign, the UK ‘Leavers’ claimed that they could achieve more or less full access to the European single market, while making good trade deals elsewhere. Above all, they promised to get these advantages while stopping the unwanted immigration of workers from the EU, whom they claimed were putting ordinary Brits out of jobs, while adding to the queues for housing and welfare services. What never got a look in during these debates was the idea that capitalism, dysfunctional and averse to economic security, might be responsible for the problems, not the EU.
On the EU side, the last thing the main European powers want to do is to make an exit seem like an easy option, especially since they are also faced with political opposition to the EU and/or the euro in France, Spain, Italy and Greece. They have been cautious in their approach; perhaps thinking that the British Parliament might somehow disregard the result of the referendum, although this is politically a non-starter. But there have also been signs of irritation that the Brits do not just get on with the process of leaving.
Most observers reckon that a UK exit from the EU will not occur before the end of 2018 at the earliest, with German, French and Dutch national elections in 2017 likely putting a constraint on how flexible the UK’s partners will be for their sadly departing friend. Even if the main EU powers were conciliatory, they would be faced with the problem of a lack of clarity on the UK side. A recent Financial Times story cited an EU diplomat who was exasperated at this: ‘They have to sort themselves out. They come from London and they don’t know what they want. They don’t know what their government wants, what their parliament wants. They have not prepared.’ All this could be part of a cunning plan by the wily Brits to increase their room for manoeuvre in negotiations. But it looks more like reflecting that, beyond vague generalities, they do not yet really know what they are going to do.
So much for a Brexit vote, one might think. However, changes are afoot, nonetheless. Already, Lord Hill, UK European Commissioner for Financial Stability, Financial Services and Capital Markets Union, resigned his post in the wake of the referendum. This means that there is more leeway for the EU’s other powers to try to undermine the position of the City of London in European financial affairs, something already attempted by the European Central Bank and France in 2011-2015. It will be plus c’est la même chose, plus ça change for the Brits in the next few years, because being not quite an EU member will mean British interests will be less protected by EU single market rules.
While things on the UK Brexit front have been very far from sorted out, some of the recent vagaries of British politics have been more neatly varnished over. The governing Conservative Party swiftly resolved its leadership contest in favour of Theresa May, after former Prime Minister Cameron resigned when his ‘Remain’ position failed. This was deftly executed and made the opposition Labour Party, under embattled leader Jeremy Corbyn, look like a bunch of nobodies going nowhere.
New Prime Minister May stamped her authority with an inaugural speech on the steps of 10 Downing Street that claimed to care for all in a striking one-nation approach. She gave her policy goals as improving social justice, being anti-the privileged few and helping workers. This was a clear appeal to the Brexit working class, especially in England, that had voted both against the establishment line and against EU immigration, and was effectively calling on the British state for support. It also further undermined the opposition Labour Party’s claims to speak for the mass of people, a claim already weakened by its poor performances in the 2010 and 2015 general elections.
The Three Brexiteers
Theresa May has appointed three campaigners for Brexit to handle negotiations with the EU, although she will retain the commanding position on the British side, chairing the government’s Cabinet committee on Brexit. A major position, Foreign Secretary – Secretary of State, in US terms – was given to a Brexiteer, Boris Johnson, who had been the de facto head of the Leave campaign, and one-time challenger for the position of new Prime Minister after the Brexit vote. This former major of London is widely known internationally for his image-prepared tousled blond hair, his populist rhetoric and his PR prowess. But his new position puts him in a tricky spot, one so elevated that it will leave him gasping for air.
Like other celebrities who have captured popular attention, Johnson is known often only by his ‘first’ name Boris, although his real moniker is Alexander Boris de Pfeffel Johnson. He has joint UK-US citizenship, and is an alumnus, like others in the British elite, of Eton College, Oxford University and its infamous Bullingdon Club of riotous upper class yahoos. In contrast to many of his social peers, who are also in opinion-forming or government circles, his political career has been characterised by well-timed clowning and bombast to distract attention from his lack of attention to detail – or, commonly, his invention of details – plus his jibes at a multitude of world leaders when writing columns as a journalist. His qualifications for the position of UK Foreign Secretary, one that demands diplomatic nous, are so precisely wrong that the phrase ‘square peg, round hole’ comes to mind.
In one of his first international media encounters in his new job, alongside US Secretary of State John Kerry, Boris had to deal with journalists who wondered whether he still thought that Hillary Clinton was someone with ‘dyed-blonde hair and pouty lips, and steely blue stare, like a sadistic nurse in a mental hospital.’ The comment might have been a reference to Louise Fletcher’s role as Nurse Ratched in the movie, One Flew Over the Cuckoo’s Nest. If so, Boris must now fear he might suffer the same fate as Jack Nicholson’s character.
Just in case Prime Minister May’s chess strategy of putting a potential challenger in a zugzwang position became too problematic, she has downgraded this otherwise top political job. She has invented two more ‘foreign’ posts to distribute the burden, and the blame if things go wrong. Each of these has gone to other Brexiteers, as if to prove that she was not reneging on her democratic responsibilities.
Brexiteer Number Two, really Number One in practical terms, is David Davis, the new Principal Secretary of State for Exiting the European Union. Don’t worry if you have not heard of him; most people in the UK outside of the political circuit feel the same way. In his favour, he has a better record of keeping a consistent political position than the more famous Boris and, surprising though it is to note, he has even sometimes been progressive in his opinions. For example, he criticised a British policy of outsourcing torture to Pakistan.
Davis is unreasonably optimistic about the ability to secure favourable new trade deals quickly with non-EU countries, but in a recent article he showed a commitment in line with Theresa May’s new Brexit working class orientation. It was EU regulation of trade, not regulation of the labour market that, he said, that was stifling growth:
‘All the empirical studies show that it is not employment regulation that stultifies economic growth, but all the other market-related regulations, many of them wholly unnecessary. Britain has a relatively flexible workforce, and so long as the employment law environment stays reasonably stable it should not be a problem for business.
‘There is also a political, or perhaps sentimental point. The great British industrial working classes voted overwhelmingly for Brexit. I am not at all attracted by the idea of rewarding them by cutting their rights.’
This stance fits neatly into the slightly more conciliatory approach of the British ruling class in the economic crisis. They sense the need to be cautious about political implications when there is a potentially disruptive populace. It has already led to a stepping back from the previous more direct approach to reducing government spending deficits. For example, instead of agreeing to balance the budget in the next few years, the new Chancellor of the Exchequer (Finance Minister), Philip Hammond, has said he would weigh up the evidence before committing to new spending plans in the Autumn. This was widely seen as a retreat from austerity policy, which, for similar reasons, is being followed in other rich countries. On 4 August, the Bank of England complemented the new post-Brexit policy with a cut in interest rates, promising more to come, and to expand so-called quantitative easing, including a plan to buy bonds from companies that ‘make a material contribution to the UK economy’. The latter pledge completely contradicted the ‘level playing field’, ‘free and fair market for all’ rhetoric of economic policy in recent decades. It is another sign, albeit a small one in this case, of a move towards a more nationalistic policy framework.
Liam Fox is Brexiteer Number Three, taking the newly invented position of Principal Secretary of State for International Trade. A return to frontline politics was always on the cards for this political operator, despite his previous misdemeanours. The black marks on his copybook have included him having to repay money that he had ‘over-claimed’ on expenses as a Member of Parliament – an easy mistake that all busy people are prone to commit when they view their profile in the state hierarchy as a source of unlimited funds for themselves. More damning for his reputation, and an issue forcing his resignation in 2011 as Defence Minister, was that he invited a business friend to numerous official meetings with diplomats and defence contractors. That friend posed as a government consultant to gain contacts, which was a step too far from official protocol.
Five years in the political wilderness was enough for Fox, and he saw his opportunity with the post-Brexit Conservative Party turmoil. His tactics were neatly executed: he put himself forward in the Conservative Party leadership election, although there was no chance he would win, then pulled out early and declared himself in favour of Theresa May, who was clearly set to top the poll. As a result, Prime Minister May rewarded him with the international trade position.
Fox has had no previous experience of the politics of dealing with international trade, unless one includes his promotion of arms deals, both when in office as Defence Secretary and when in a corresponding opposition role. It will be instructive to see if he can do his new job of reworking the web of UK-EU trade relationships – alongside promoting the much-vaunted non-EU trade deals too, of course. However, it has not been surprising to hear very little from him in his first month in office.
Plan 9 From Outer Space
One might wonder whether the new UK Prime Minister’s appointments for managing the Brexit process are part of some devious plan. Is the aim to string out the EU negotiations, helped by inept UK negotiators? But, if so, what would be the point? While settling a comprehensive deal quickly with the EU is not feasible, especially one that would be favourable to the UK, why muddy the exit route when British-based business would prefer a clearer path? However, the problem is not simply that the relevant expert negotiators are not available. It is worse than that: there is no easy, and perhaps no real solution to this impasse. In some form, the UK’s EU relationships will certainly continue, but the question is in what form? Political and economic factors offer plenty of room for conflict on both sides of the coming debates and, to say the least, there are no precedents from which to make a confident judgement on the likely outcome.
If it looks like the ruling elites in Britain, Europe and elsewhere are making it up as they go along, then that is because they are. At best, capitalist policymakers can exhibit something that could, very generously, be called ‘tactical flair’, as happened in the wake of the 2007-08 financial collapse and detailed in numerous memoirs by those involved. For example, in the famous ‘Lehman weekend’ in September 2008, the US Treasury and the Federal Reserve were faced with trying to rescue the financial system. They summoned banks and investment funds to emergency meetings and made desperate calls (including to the UK) to bolster their support for several US financial companies that were collapsing at the same time. Other examples abound, including many in Europe, from the European Central Bank’s policy initiatives to those of the Bank of England.
The Brexit aftermath is not as acute for the UK as was the 2007-08 debacle, but managing to avoid another collapse is hardly a sign of health. British economic policy is changing, as it is in other countries. This reflects how policy has adapted to what medical practitioners might call the chronic phase of an illness, after its acute phase, in this case the malady of modern capitalism. The patient – the British or other major economies – may now have good days along with the bad, leading to some short-lived optimism about recovery. But the illness is not going to go away and debt levels continue to rise. From the perspective of most of the population, economic ‘growth’ will look like stagnation at best.
This helps explain why politicians seem so incompetent or powerless these days. It is not a sign of a mysterious viral infection that especially impacts the closely-knit elites, however plausible that might sound, especially when looking at the choice US voters face in November. Instead, note that the current generation of politicians has been brought up not to question the operation of capitalist markets that seemed to bring them some prosperity. It is now faced with far more difficult choices. The ones that might now look more attractive – tactically, strategically, who can tell? – often threaten to dismantle the framework on which they have relied, with unpredictable consequences. This results in political disarray, with prolonged, bumbling hesitation and wild recklessness, even from the same politician. If the post-Brexit developments in the UK are beginning to look like scenes from a poor B-movie, with wooden actors spouting unconvincing dialogue and walking around crashing into the wobbly scenery, then that is just one reflection of a crisis-ridden world.
Note: * This article first appeared in the New York journal BrooklynRail, in the Fieldnotes section.