[SCMP Column] Costly Divorce

May 09, 2016


Here goes: I am about to plunge into the middle of a debate I should sensibly steer well clear of – the debate over whether the UK should or should not stay in the European Union.

As a British national who has lived outside Europe for most of the past four decades, I am of course preposterously ill-qualified to engage the debate. The problem is that most local Hong Kong friends assume that simply because I was born in the UK, I should have insights that make my views relevant. For months, I have resisted the pull, seeing thousands of words a day being spilled on the subject, and telling myself that it is foolish to spill even more words – especially since I have no claim to knowledge.

But after a week in the English spring sunshine, seeing in the raw the virulent importance of the debate, I can hold off no longer. This really is important. Since most of the commentary I have read both in favour of and opposed to exit from Europe is driven by prejudice and ill-informed bigotry, I no longer feel embarrassed.

Overall, I feel this alarming sense that the political world is in the process of going crazy. It is surely no coincidence that at exactly the same time, Republican Americans are quite seriously considering opening the White House door to a blatently inappropriate President who would almost certainly wreak dreadful havoc both at home and globally. Both the eccentric Brexit campaign and the Trump bandwagon are courting dangers that no sensible people should ever consider. As Martin Wolf said in the Financial Times: “Avoiding needless and costly risks is how adults differ from children.”

For the British debate, there is of course an unusual convergence of bad things at work: eight years of post-2008 recession have fuelled unemployment and job uncertainty at a time when migrant worker flows from poorer eastern European economies have run strong. The recent tragic refugee floods across Europe, with the UK being a preferred target destination, has aggravated prejudice and xenophobia. People also seem to forget that this in-or-out debate on the EU has raged for decades inside David Cameron’s conservative party, and is as much as anything else an ill-conceived attempt to settle this battle. It is of course not helpful that the Brussels apparatus is such an easy whipping boy. Its combination of bureaucratic bombast and French legal opacity makes it easy to be irritated and angry about the unaccountable ways in which it works.

But Britain’s EU membership is a 43 year investment that has generated many invisible benefits both to Britain and to Europe. First and foremost is the role in rebuilding a broken and distrustful continent after the Second World War. An EU without the UK inside it is a continent dominated by Germany and France, with centuries of conflict behind them. Balancing this natural and inevitable dominance is an important UK role, along with the Nato-focused support of the US. Britain’s presence has made Europe an immensely more trade-liberalising region than it otherwise would have been. Its absence would almost certainly make Europe a more xenophobic and protectionist place – which would hurt the UK more than most economies worldwide.

As an FT correspondent working throughout the past four decades in Asia, this European priority has often been infuriating. So much has been developing here in Asia which British companies have failed to notice or take advantage of as they have obsessed over building strong and unified European businesses. Frustrating as it was for me to see British companies missing important opportunities in Asia, I always respected the serious-minded efforts to lower barriers to business across Europe, to tackle protectionism in many member economies. To walk away from this investment at this point can only be risky and counterproductive.

The argument over the economic consequences seem to be clear: horrid damage at first, with the Brexit supporters saying there will be benefits in due course. But that horrid initial damage – with currency devaluation, a collapse in manufacturing, and an earthquake for the UK’s world-leading financial services industry – could surely not come at a worse time. Most recent data says the UK economy has stalled. Making it worse right now is foolish to the point of wrecklessness. Outside analysts are unanimous over the damage likely to be wrought – from the IMF and the OECD, to Britain’s own Treasury and the LSE.

Former World Trade Organisation head, Peter Sutherland, has also made it clear that anyone expecting the EU to help the UK quickly build a new network of global trade deals is in cloud-cuckoo land. He says it would take 10 years of negotiations over dozens of trade agreements that would all have to be negotiated from scratch. At the very least there will be many in Europe who feel angry at the inconvenience the UK has caused. There is unlikely to be much goodwill in negotiating the divorce – not least because remaining members don’t want to give encouragement to anyone else considering a similar course.

Perhaps most ironical of all is that David Cameron and the UK leadership, who as a whole still sees themselves as a force of global power, have allowed themselves to show the world a deeply xenophobic and parochial country. Britain’s global influence would almost certainly be damaged as a result.

Britain’s conservative leadership has allowed a widespread apathy and indifference to Europe to transform into animosity. They have allowed a healthy and constructive Euroscepticism to degenerate into Europhobia. No-one is denying that after 43 years, this is a very tired marriage. And as with many couples trapped in long-lifeless marriages, there is definitely merit in considering whether to divorce, and walk away from the certainties and familiarities that have kept things patched together, rather than stick with the commitment. My own experience of divorces is that the only beneficiaries are the lawyers. If Britain were seriously to divorce, lawyers may be the only beneficiariees.
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