Brexit : A perspective

Although it’s true that Britishers have in the history, almost always done the best thing for their country, only time will tell about the impact of Brexit.

The expansion of the original Benelux and formation of EU had a far bigger objective to protect themselves from the aggressive Soviet (USSR) advances towards West. As a result, a lot of countries turned Socialists, generally known as East European Countries. EU had plans to one day create a common Defense Union as well, to protect themselves against any attack. Trade etc. were the means for that end. Indeed the scenario has changed since USSR has disappeared. So trade, commerce, economics have taken center stage.

The bargaining power of a large nation or a trade block is always high. EU as a whole has significantly achieved it. It will be near impossible to reach that as a separate nation. Small countries offer small markets. Other countries will have reduced interest for them. Britain, of all imperialists, had historically managed their colonies the best, and flourished. Now colonies are gone. This flourish has to be leveraged through a very intricate trade practice and a more sophisticated geopolitical diplomacy.

Here lies the catch. Does UK have such potential today? Answer is ‘very doubtful’. Then why did she vote exit? The split was horizontal mostly. The younger lot preferred to be more international, and the older lot more ethnic, and typical British-pride-seeker. The result in medium future is unlikely to be beneficial to them. Immigration, Refugees, Bureaucracy, Greece, Turkey etc. are relatively minor issues here, and short term ones. These could be internally dealt with as UK always had a strong say in things.

With EU, this country had always played a great deal of hide and seek. UK never gave any importance to EU when it was originally formed. In fact, they ridiculed the very concept. A delegation from the-then EU went to London to ‘request’ them to join the block. UK did nothing. The French representative said to UK press then, “the trouble with you Britishers is that you always fail to see the reality. Today we have come to you to request you to join us. A day will come when you will knock at our doors for an entry, but then ON OUR TERMS”. This exactly happened when much later in 1972, UK was admitted. Thereafter, again UK broke off when currency union took place. They forced their way for a dual currency in their country. Again, during US invasion of Iraq, they sided fully with US, unlike France, Germany who were at best, lukewarm. The conflict was on Iraq’s decision to trade oil in Euro, and not in Dollars. That reduced the value and importance of GBP.

Now comes Brexit. UK, more so Britain, even more so England will pay a very dear price for the error this time. It may lead to not just economic, but physical turmoil in the streets before the end of this decade. This happened in post-USSR Russia. But they could overcome it with their oil and other resources. North Sea oil at today’s price won’t give much cheer to UK at present.

My email discussion with Mr. Pradip Chakraborty (former professor of International Business at FORE School of Management, New Delhi)