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Brexit: failure or opportunity?

 
Wednesday, 03 May 2017 06:45
 
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by Eleonora Lamio (EPOS)
EPOS Insights

 

How we got to this point and how will Brexit be implemented?

It was since 2014 that rumors of a referendum to leave the EU circulated in the United Kingdom. In 2014 UKIP Party had a remarkable success in the British local elections and with its nationalism and extremist rhetoric it begun “frightening” other Parties. Relying on the dissatisfaction of the citizens for the EU and on the effects of the 2008 financial crisis, UKIP and its leader, Nigel Farage, started propagating the idea of leaving the European Union.

David Cameron, who was the Prime Minister at that time, during the campaign for the election that would have taken place in 2015 promised that a referendum on the permanence of UK in the EU would have been organized if his party had won. In the aftermath of the success of the Tories at the election, David Cameron announced the referendum on Brexit, and the British Parliament approved the EU Referendum Act. Cameron decided to have such a referendum to address the demanding request of UKIP and its electorate, to ingratiate the opposition and to strengthen its national and European position, thinking that the result would have been obvious. In fact, 2016 Brexit referendum was not the first that the United Kingdom had on EU membership; the other one was in 1975, and 65% voted in favour of remaining.

The result of the referendum was a shock not only for the British citizens but for all the Europeans and the rest of the world: 51,9% voted to leave while 48,1% decided to remain. Even if it was only a consultative referendum, Cameron decided to leave and Theresa May took his place to lead London out of EU.

According to the European Treaty, article 50 of the TFUE contains the norms for the exit of a EU Member State. Article 50 focuses on three major points: first, any Member State has the right to withdraw from the EU; second, the Member State has to give the notification to the president of EU Council  after the recommendations from the Commission (according to article 218 from TFUE) and negotiate an agreement on future relations with EU which must have the consent of the Parliament; third, this  process should be at least two years long.

The procedure started on January 24th when the UK Supreme Court established that the EU notification of Withdraw Bill should have been approved by the Parliament. The Bill was adopted by the Chamber of Commons and by the Chamber of Lords in February and it got the formal approval of the Queen in March. Prime Minister Theresa May gave the official Letter of Withdraw to the President of the European Council Donald Tusk last March 29. Next steps will be the drawing up of a Negotiation Mandate by the European Council, and in the next Summit, London and Brussels will agree on an outline of the leaving agreement. The final Withdraw Agreement (which will also include a Financial Settlement) will have to be approved by all the Member States before the ratification.

Two other points need to be clarified. The first one is about the time-frame and the timing: Brexit has to be completed in two years, which seems a really short period to conclude the Agreement. Therefore, what will happen if the time will not be enough and will not be extended? Secondly, many experts have raised the question of the reversibility of the Brexit decision: would it be possible for UK to change its mind in the middle of the negotiations, or after, and decide to remain in the EU?

What does Brexit means for the United Kingdom?

It is clear that Brexit will have an enormous impact on the country and on the daily life of British citizens as UK joined the European Community more than 40 years ago, in 1973. The most relevant effect will be the legal vacuum that Brexit will leave behind. In fact, over the years, the European Union has influenced the national legislation in many sectors and has decreased the legislative power of the Member States. How is UK planning to fill the immense legal gaps that Brexit is leaving, especially concerning the European directives? This matter is one of the less debated by medias even if London has already taken some decisions. Last March 31st  a Bill was signed to incorporate, modify and adapt the European legislation into the national one and it has been established that new primary legislation is required. This means an unimaginable amount of work with likely legal consequences for several years.

Regarding British citizens' freedom of movement in and out of UK, it seems that a special agreement will be made to permit European citizens to enter UK without a Visa and vice versa. Plus, Europeans students who study in the UK will also have a favour treatment. In contrast, the real problem concerns the huge number of European citizens who are currently working in UK. In fact, if a European citizen works and pays taxes in UK he can demand for double citizenships but for all the other cases, which includes almost the majority of foreign European workers, the future is still unknown. At the same time, the future of the hundreds of British people who are working in the European Institutions is in doubt, and it is not clear how and when UK will replace them and will find a new occupation for them.

Moreover, Brexit also means to UK two serious internal legitimacy issues to be addresses: Scotland and Gibraltar.

Nicola Sturgeos, Prime Minister of Scotland, has stated that her nation does not want to leave the EU (the majority of Scotland citizen's voted to remain) and, according to the Scotland Act of 1998, Scotland must approve the decision to quit the European Union. Furthermore Sturgeos has said that if UK will definitely leave the EU, after the ratification of the Withdraw Agreement Scotland is ready to do another referendum for its independence, which will permit the country to apply for EU membership.

Gibraltar is the second sensitive issue: according to the latest Brexit negotiations, it is unknown if the future agreement between UK and EU will apply to Gibraltar since it needs to be approved by the 27 Member States, including Spain which could use it power of veto. UK has a very strong positions on the sovereignty of Gibraltar and its belonging to the United Kingdom. Theresa May, for instance, said that they will use the force if it will be necessary.

There are many confused rumors on the economic, commercial and financial repercussion of Brexit on UK. Regarding the commercial aspect, UK will be asked to renegotiate all the agreements that Brussels has signed for its Member States with third countries in the last decades, and London will have to draft new commercial agreements with the EU and with all the Member States. It will increase trade costs and competitiveness between the European and the British products, that may affect the internal UK prices. Moreover, British financial market might be more sensitive and fragile, which means a loss of liquidity and the weakness of the Pound. That could strongly hit a city like London, whose economy is largely based on financial trade. Additionally, as the leader of the Socialists and Democrats at the EU Parliament, Gianni Pittella, said, EU will not allow London to become a tax heaven.

Last but not least, Brexit might cause (and it is already doing that) some kind of instability in the internal UK politics and the undermining of the country in the global arena, as it may appear a confused and unstable country to many.

What does Brexit means for the European Union?

Brexit is a turning point in the history of the European integration. This historic event has shown both how much  the EU has still to do and how much it has already been done. Brexit has pointed out the fragilities and the weaknesses of the European system, it has proved that the EU has not reached some of its objectives and that many citizens do not still feel themselves as a part of the Union. Most of British citizens have demonstrated that they think their life and the future of their country will be better not being part of the EU anymore. This is because, apparently, the European Union has not been able to show them all the work that has been done and all the advantages that derivate from being a Member States.

Brexit has disclosed the crisis of legitimacy that has affected the European Union institutions in the last years: a lot of European citizens no longer believe in the European integration and no longer share the same European values. Most of them do not want their country to lose the sovereignty and do not want to be part of a Union which does not represent them. This is the most painful point, and it has affected the idea of a strong European Union within the Member States and the global arena, and it has weakened the so-called European Dream. It is a serious issues, and if we sum it up with the other international sensitive issues, such as the tensions between Russia and USA and between North Korea and USA, the crisis in Syria, in Libya and in other parts of the world, the future appears uncertain.

The success and the strengthening of populist and nationalist parties in Europe will be strongly affected by Brexit. Many of them are spreading an anti-European rhetoric in most of the Member States. This kind of propaganda against the European Union is very popular and it is having a lot of success because it is built up on the discontent of people in every country. The “domino effect" of populisms and nationalisms need to be monitored in order to avoid any other crisis.

It is now unclear how Brussels will deal with the Brexit procedure and how the Withdraw Agreement will be negotiated: will the European Union be accommodating, showing that it does not need strong manners, or it will be firm and uncompromising? It is quite hard to answer this question as the European Union does not have a single leader and many institutions are participating in the process. However, until now, we have seen a very determined attitude from the European Union that has not shown yet any signs of weakness, and that is trying to demonstrate how many advantages UK are losing by leaving the Union.

Furthermore, it is important to say that many people see Brexit as a new opportunity that EU must exploit. In fact, since its entry in the European Community, UK has set limits and vetoes on many projects and intents of a further integration in different sectors, especially the ones regarding the economy. It has almost always been UK to object the development of a common political, defense, and foreign policy system as well as the increasing of social and cultural integration. Plus, its "special relationship" with the United States will no longer stop the EU to draft new politics, especially in the defense sector. Moreover, without the Pound, the Euro will be the strongest value in the EU, which should have very positives consequences for the Member States.

Brexit is an extremely serious event which is leading the European Union to an unknown ground, hitting the Union in a very delicate historical moment. However, if the European Union will be strong enough, if it will have the courage and take the responsibility that its role demands, this crisis will be overtaken and it will rise stronger than before.

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DISCLAIMER: The views expressed in this article are the author’s own and do not necessarily reflect EPOS WorldView’s

Last modified on Wednesday, 03 May 2017 07:02
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