Die Another Day

As Britons start to feel the economic blowback of the Brexit vote, the European diplomats swear that this is just the start, and that a long winter of excruciating pain awaits the islanders. Saurabh Kumar Shahi reports from Amsterdam and Brussels.

The European Union is an incestuous institution. It has always been one. And present and past leadership have made sure that it would remain so in the years to come. Every journalist, including this correspondent, who has covered its proceedings from outside, and is not permanently based out of Brussels, has always been made to feel unwelcome. The media-EU relationship in Brussels is a perfectly symbiotic one. Each one lends succour to the other in a rather embarrassing way. While EU regulars are repeatedly given scoops and granted access inside the EU institutions, journalists pay back the favour by repeatedly doing stories that project European Union to be the last word on earth on everything, right from austerity measures to multiculturalism. Any outsider trying to do a story on its rather bureaucratic and sometimes dysfunctional nature are stonewalled in a classic manner.

Umm, not anymore…

Great Britain’s decision to withdraw from European Union – colloquially called Brexit – has turned the game on its head. Suddenly, the EU and its wheelers and dealers have realised the folly of ignoring the non- Brussels’ based media for long. Years of pandering to the incestuous echo chamber assured that none of the European stalwart Members of European Parliament (MEPs) predicted the Brexit vote in any way.

The folly has been realised and the correction is swift – at least for the time being. Consequently, the European Union appears uncharacteristically ready to entertain the “outsiders” these days.

In my meeting with several MEPs and officers, most of whom were not willing to go on record considering the sensitivity of the matter, the most repeated phrase was “Die Manipulieren gesellschaft”. Although there’s no direct translation of this German phrase in English that can exactly capture the sentiment, the closest translation can be “To manipulate the society”.

So why has a German phrase come to capture the mood inside the European Union? Partly because it exactly defines the phenomenon and partly because it is the Germans who are acting as the main bulwark against its collapse.

The European Union is worried sick that the populist and right-wing movements in Europe are cleverly manipulating society to make it more anti-EU every passing day. Many of these parties are either in power in their countries or are at the cusp of it. This has created a scenario for the EU that it had neither foreseen nor prepared itself to fight. The only good part in this entire episode is that the EU has accepted its mistake rather quickly, and humbly, and has started the fire-fight.

And one of the guys who is at the forefront of this fire-fight is, surprisingly, a very young Liberal MEP from Bulgaria, who it turns out is not only the youngest MEP in the liberal party family of the Alliance for Liberals and Democrats for Europe (ALDE), but is also the vice president of the ALDE Party. His name is Ilhan Kyuchyuk.

“Undoubtedly, populism, national populism and xenophobia are among the biggest threats that Europe is facing. My personal feeling is that populism could be as dangerous as terrorism. Therefore, we should fight it constantly. Unfortunately, I see more and more politicians who are using populist rhetoric and are not taking care of their responsibilities in order to gain temporary public popularity. For us (Liberals), populism is Europe’s destructive force and therefore we will continue to resist it with more tolerance, solidarity and integration,” he says.

While Kyuchyuk is measured in his tone and tenor, there are others who are seething with anger. This correspondent met a couple of German MEPs who were furious at Britain.

Since the interaction with them was purely informal, their names cannot be revealed. But this correspondent was taken aback at the kind of phrases and slurs they were using against Britons. The kind that you do not use in front of a journalist, and definitely not in front of one you are meeting for the first time. However, there was a method in their fury as well. After their initial passions cooled down, they also laid out the scenario of how Brexit will impact the balance of power inside the European Parliament.

When the next elections for the European Parliament are complete, there will be no British MEPs in all certainty. Britain’s contribution to the European Parliament is 73 MEPs, which is almost 10 per cent of its total strength. In absence of Britain, all these seats will be up for grabs.

EP’s biggest centre-right formation, European People’s Party (EPP), will be dealt a major blow with the withdrawal of support from British Conservatives. Their anti-Putin rhetoric and stronger transatlantic link will have one less backer now. This will shift the balance towards those who are not in a mood for any adventurism against Russia. Inside EPP, Sarkozy’s dominance will be complete. His penchant for populism has started to find traction among the right-tilting, but not yet fully bigoted, section of the French populace.

On the economic front, Brexit will lead to less support for the liberal economic agenda and more, say for right-wingers like Victor Orban.

For the socialist and social-democratic party family, S&D, withdrawal of labour party will be catastrophic. The centre-left, which is already reeling from crisis, will suddenly find itself even more squeezed. This will also impact the ALDE, with the withdrawal of Liberal Democrats from Britain.

However, this situation will once again force ALDE to work closely with S&D and EPP to keep the overall ideology of European parliament more centrist or even slightly Left to Centre than the rabid rightwing that it is tilting towards.

The ECR and EFDD, two of the mildlyracist, right-wing platforms, will vanish into oblivion with the departure of UKIP. However, this will only move the ultraright platform even further right. The Europe of Nations and Freedom (ENF), a Eurosceptic, racially bigoted lot, will suddenly find itself as the lone voice of ultra-right. With all sorts of nut-jobs like the French Front National, the Dutch PVV, the Lega Nord from Italy, the Austrian FPO and the Flemish Vlaams Belang performing better in surveys in their respective countries, its membership and influence inside EP will only increase from here onwards.

The situation is brilliantly summed-up by Angelos Chryssogelos, an EU expert, who says, “The effects of removing British MEPs from the Parliament will be wideranging, with sovereigntist forces potentially strengthened inside the centreright EPP, the centre-left S&D becoming more oriented toward an anti-austerity platform, and Eurosceptic forces more likely to consolidate around the ENF group led by Marine Le Pen.”

While Europe is trying to come to terms with the divorce, the situation on the other side of the pond is rather precarious. People who closely watched the entire campaign leading to the Brexit swear that it was mostly a farce, they. However, they also insist that the pro-remain group was too confident of its support and went rather lethargic in the dying days of the campaign. The result therefore, came as a huge shock to them, and everybody else.

The situation since then has changed somewhat. With the Pound Sterling crumbling to its lowest against the Dollar in the last 168 years, evidently Britons don’t look much enthusiastic about Brexit now. The spectre of a “Hard Brexit” looms large, many Britons have started to rue their vote. It is no surprise then that a poll from British Election Study, a bipartisan body specialising in voting trend research, has concluded that number of ‘Leave voters’ who now rue their vote (or “don’t know”) is significantly greater than the margin of victory for Brexit.

But nothing seems to have knocked more sense inside Britons than the ever increasing ordeals vis-à-vis their afternoon tea and supper. Products like Marmite, Bovril and PG Tips have either become inaccessible for lower middle class Britons or are simply no more available. Their manufacturer, Unilever, is threatening to increase the price by at least 10 per cent in the view of the new tax regimen that will come in place following Brexit. If that was not enough, Hellmann’s mayonnaise, Pot Noodle and Ben & Jerry’s ice cream are next in line. No wonder the British Election Study found out what it found out in its survey.

Then, there’s the issue of a re-referendum for Scotland’s independence. The sentiment was heavily against Brexit in Scotland and thus the result came as a shock for the Scots. However, they also see it as an opportunity to finally convince their compatriots to break away from Great Britain. Scottish National Party and its leader Nicola Sturgeon were crestfallen following the Brexit vote, but they quickly smelt the opportunity to use it in the benefit of Scotland. Since then, they have been demanding a referendum citing the changed scenario.

Nevertheless this is just the beginning. The full economic impact of Brexit on Britain is still unknown. But whatever little that has been accessed till now is not pretty. European Council President, who is supposed to be dealing with Britain over Brexit roadmap, Donald Tusk, maintained that “there could be no compromises on retaining benefits such as access to the single market and customs union, while rejecting the free movement of people”.

“In my opinion the only real alternative to a hard Brexit is no Brexit, even if today hardly anyone believes in such a possibility,” he added for good measure.

Many of the European MEPs, who talked to this correspondent in Brussels, maintained that the prevailing sentiment inside European Union is to make this divorce so economically painful for Britain that other nations shudder at the mere mention of it.

And EU does have the means to make Britain writhe in pain. The “divorce bill” being discussed ranges in the tune of a couple of hundreds of billions of Euros at the most, and several tens of billions of Euros at the least. The British economy has caught cold at the mention of such punitive measures. For example, Markit’s flash PMI readings for the UK’s economy showed that composite output fell to its lowest level since March 2009, when the global financial crisis had started to subside.

Speaking about the data, Markit’s chief economist, Chris Williamson, was reported as saying, “July saw a dramatic deterioration in the economy, with business activity slumping at the fastest rate since the height of the global financial crisis in early 2009. The downturn, whether manifesting itself in order book cancellations, a lack of new orders or the postponement or halting of projects, was most commonly attributed in one way or another to Brexit.”

That’s not quite encouraging assessment by any standards.

Other similar studies also indicate towards a painful time ahead for Britain, but they also maintain that the economic pain for those EU members whose economy is more integrated with Britain’s shall be no less. “We conclude that the member states most exposed to Brexit are the Netherlands, Ireland and Cyprus. Each has very strong trade, investment and financial links with the UK and in the cases of the Netherlands and Ireland, are closely aligned in policy terms. Among the larger member states, Germany would be affected through several channels, but perhaps most profoundly by the loss of the UK as a counterweight to France in policy debates. France may welcome the absence of the UK in policy debates, but like Spain, has substantial direct investments in the UK. Italy is less directly exposed to Brexit, while Poland’s interests are concentrated on the impact Brexit would have on the EU budget and the large number of Polish residents in the UK,” says Gregor Irwin, Chief Economist of Global Counsel, a think tank that specialises on the Britain- EU relationship.

If that is not enough, Britain will also have to figure in the vindictiveness that will come into play. A good example of the scenario was evident in India last month when the intelligence agencies of the EU member nations got wind that some British traders are trying to negotiate with the Indian government terms that are separate from those that guide European Union.

Since Britain is technically still inside the Union, the move was seen as not only below the belt but illegal too. Member nations swung into action immediately and apprised Indian authorities of the situation. The back-channel negotiation was quickly aborted.

Similar attempts are being made in Pakistan where British traders, especially those dealing in textiles and fruits, jumped the gun and tried to renegotiate the terms behind the back of European Union. The Germans in Islamabad were furious. Their anger stunned Pakistani authorities which, like the neighbouring Indians, were not aware that such a move was, in fact, illegal on the part of Britain. That negotiation too was aborted in huff.

Germany’s vindictiveness against the British vote is also evident in the comments coming from its law-makers. These statements, though not very prudent in their choice of words, are not unreasonable. Germany has historically seen itself as the de facto leader of the European Union and hence it sees its preservation as its duty. In spite of the right-wing surge inside its own boundary, Germany will see to it that “Leave sentiments” in other member nations is quickly placated, and their population assuaged.

The coming six months are very crucial in mapping the exact long term impact of Brexit on Britain and that continental club that it was part of. However, interactions in Amsterdam and Brussels suggest that whatever be the cost, EU will neither plead Britain to come back to its fold nor will it leave any stone unturned to punish it for its misadventure. This will insure at least a short-term era of acrimony, after which both Britain and the European Union will be left to live by their decisions.