Global Watch

Also for SA, Brexit could deliver a very different world

Brexit two.jpg

If Britain later this week in a referendum decides to leave the European Union it could, especially economically and strategically, and also for South Africa, leave behind a very different world – or will it?

Late last week the prospects of Britain leaving the EU – popularly dubbed Brexit – looked to be dominating, judged by opinion polls as well as equity, bond and currency markets. Bookies, in the odds they offered on bets, were pointing the same way.

Looking at the myriad of analyses on the subject from almost as many ‘experts’, a very confusing picture emerged in which uncertainty of what to expect is the only certainty.

For instance, on both sides of the campaign – the ‘leavers’ and the ‘remainers’ – economic theories, aimed at scaring voters, were being thrown around – from the foreign migrants robbing Brits of job opportunities to shrinking economic growth and prosperity should they be blocked from coming to Britain in future.

The fact that the whole question of migration from Europe has become such a central theme in campaigning is indicative of the reality that for the British voting public economic and strategic factors played second fiddle to social, cultural, political and historical factors.

As the columnist of The Telegraph, Jeremy Warner, wrote last week: “For many citizens, there are much greater issues of principle and interest at stake in this referendum than the economy.” .

It just might be true that the EU has fulfilled its primary mission in history – preventing a recurrence of a World War II situation in Europe – but that the dream of turning the union into a unified ‘super state’ is just a bridge too far for such a culturally diverse collection of nations.

History

As far as the last of these factors (historical) is concerned, it is important to note that the relationship between Britain and the European members of the union has never been a comfortable one.

It started off with Britain withdrawing early from the talks, which in 1957 would lead to the signing of the Treaty of Rome by the six founding nations, France, West Germany, Italy, Belgium, Luxembourg and the Netherlands.

When, six years later in 1963, Britain wanted to join the Common Market, it was vetoed by France’s Charles de Gaulle, who accused Britain of deep-seated hostility towards Europe. The late statesman almost seems vindicated in his view now.

It took another ten years for Britain to join the then European Economic Union (EEC), only to the next year again end up in dispute with, especially France, over the Common Agricultural Policy and the way the EU budget was financed.

Then only two years after it joined, in 1975, came the first British referendum on continued membership, with a two-thirds majority for staying, but splitting the Labour Party.

The battle over agricultural subsidies surfaced again and prime minister Margaret Thatcher in 1984 threatened to halt contributions before winning a rebate from Brussels.

In 1990, eleven years after it was created to harmonise Europe’s financial systems to make a single currency possible, Britain joined the EU’s Exchange Rate Mechanism, only for it to withdraw in 1992 in the wake of failing to stem intense currency speculation at the time.

When the single EU currency was finally introduced in 1997, Britain decided not to join it. Clashing agricultural market interests were back on the agenda when in 1999 France banned the imports of British beef when ‘mad cow’ disease broke out.

In 2007 Britain missed the signing of the Lisbon treaty giving greater powers to Brussels and it 2011 there was a clash over planned levies on banks and restrictions on London’s financial sector.

In 2013 David Cameron promised Britain a referendum on EU membership before the end of 2017 in the run-up to the 2015 general election. And that is where we are now.

Geopolitical implications of Brexit

 A member of a panel of the International Institute for Strategic Studies, Lawrence Freedman, concluded among other things: “It was weariness with managing decline, marked by the end of empire and stuttering economic performance, that led a reluctant UK towards Europe in the first place.

“The origins of the UK’s belated but persistent applications to join what was then the Common Market lay in the view that the country was stuck in a post-colonial rut and being left behind by the continental economies.”

He further wrote in an article: “Leaving now would send a signal of withdrawal, of a country, once at the heart of every great international debate, now content to fall back on its favourable geographical position, strong culture and economic health, protected by the Channel and a nuclear deterrent.

“The UK would bother far less than before with the problems of the rest of the world. It is this prospect that has prompted the leaders of Britain’s allies and partners to line up to say how unwelcome Brexit would be”; and

“The most serious risk of Brexit is that it would lead to a more general unravelling. Instead of traditional rivalries being contained and expressed through the everyday workings of the EU, the UK’s departure would show a way forward for other countries also frustrated by the constraints of membership.”

Another one of the panellists, Nigel Inkster, wrote that a Brexit means a loss in quality of intelligence on terrorism, presently available from the “special relationship” between the UK and the USA. In the event of Brexit, the US intelligence community would (also), “rightly or wrongly, see the UK as a diminishing asset”.

“When it comes to counter-terrorism, European states suffer from a number of weaknesses which, if not absent in the UK, are notably less pervasive there. These include a lack of expertise in languages such as Arabic and a lack of engagement with Islamic communities which hinders the ability to develop human-intelligence sources,” he wrote.

South Africa and a Brexit

The UK is still one of South Africa’s larger trading partners, and South Africa is Britain’s biggest trading partner in Africa. All of that trade is governed under the free trade agreement with the Economic Partnership Agreement, signed in 2014 – following a decade of difficult negotiations – by South Africa, Botswana, Lesotho, Mozambique, Namibia and Swaziland.

As the website Stock Shop Daily News pointed out, if Brexit does happen, it might mean that agreements with Britain will  have to be renegotiated, with all the disruption and  uncertainty that goes with it.

But there is also the other side of the coin. For one it is pointed out by some analysts that a Brexit might leave the British economy “critically short” of some forms of labour, which might open up opportunities to groups of South Africans.

And as Stock Shop reports, under EU rules: “South Africa is not allowed to export certain products, under their more conventional names, to Britain. The most common examples include the alcoholic spirits Port wine and Champagne.”

This is among other things, to protect Portuguese Port against the superior product from South Africa.

“Should Britain exit the EU it is possible for South Africa to renegotiate trade agreements with Britain in a more favourable light and also export to Britain products that are currently prohibited for reasons not relevant to Britain, such as Port wine,” Stock Shop reports.

As for the cost of travel to the UK in terms of visas, nothing should change. The present multi-country visa for Europe does not apply to the UK and a separate visa is already needed if you want to include the UK in a European tour.

In short, to try to predict the full impact of a Brexit at this stage is virtually impossible, but most likely, on a number of fronts the world will be a different place for a while.

by Steve Whiteman

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