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Is Brexit the start of a new war against globalization?

Britons may have voted for change, but what will it mean for the rest of the world?
Jonathon Gatehouse, Charlie Gillis and Sally Hayden
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Photo illustration by Laruen Cattermole and Richard Redditt, Reuters

The promised Elvis impersonator never showed up, but the bar was free and the mood triumphant. Up on the 29th floor of London’s Millbank Tower, overlooking the Thames and the Houses of Parliament, they wore party hats and Union Jack wristbands, and toasted Britain’s decision to leave the European Union with sparkling wine from Italy. The evening, hosted by the Leave.EU campaign, had started as a wake. Faced with an avalanche of last-minute opinion surveys predicting a comfortable victory for the Remain side, both the Conservatives’ Boris Johnson and Nigel Farage, the leader of the UK Independence Party, expressed their pessimism and regret as the polls closed. But as the count dragged on into the early hours of the next morning, the number of votes for Leave slowly caught up to the Remain total, and then began to pull away. Shortly after 4 a.m., with Britain’s TV networks having declared the previously unthinkable Brexit an electoral reality, a broadly smiling Farage appeared before a jostling mob of press and a crowd of drunk and ecstatic supporters.

“After 25 years of fighting . . . we didn’t dare to believe it would happen but the people have spoken,” he said. “We have fought against the multinationals, we fought against the big merchant banks, we fought against big politics, we fought against lies, corruption and deceit. And we will have done it without having to fight, without a single bullet being fired.”

Coming a week after the fatal shooting of Jo Cox, the Labour MP and Remain supporter, his victory speech managed to be both inaccurate and insensitive. (Farage apologized a few hours later.) But the UKIP leader wasn’t alone in gloating about the largely peaceful revolution. In the largest electoral turnout since 1992, 16 million Britons opted to stay in the EU, and 17 million voted to get out: a close 52 to 48 per cent split that appears to be sufficient to trigger a slow and painful divorce from Europe, and sent political and economic shock waves around the globe.

By the time dawn broke, the British pound was trading at a 31-year low. And before most people had their second cup of coffee, David Cameron announced his intention to step down as prime minister and let someone else deal with the fallout from his failed and faulty Remain campaign.

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For months, Britons were told that leaving the EU would be a mistake of historic proportions. A made-in-the-U.K. recession and massive job losses were only some of the nightmare scenarios conjured by the likes of Britain’s chancellor, the governor of the Bank of England, the head of the International Monetary Fund, U.S. President Barack Obama, European leaders, OECD economists and every cultural figure from Jude Law to Stephen Hawking. But “Project Fear,” as it was dubbed, lost out to a Leave campaign that focused on an entirely different set of terrors. Preaching a pressing need to limit immigration and protect the borders against migrants, in order to preserve both the U.K.’s culture and way of life, Leave proponents found a large and receptive audience. Even though their claim that the EU “costs” Britain $620 million a week was widely discredited, many voters warmed to the promise of bringing both control and money “back home” and reinvesting in spheres like education and the National Health Service.

The world’s fifth-largest economy turning its back on the globe’s largest trading block is momentous news regardless of the motivation. Many fear it may prove to be the destabilizing domino that knocks other, less robust, nations like Greece, Italy and Spain from the European Union. Could the backlash against the Continent play into a wider war on globalization?

Britain’s decision to rebuild its borders seemed to resonate around the world with leaders of various political stripes. Touching down in Scotland the morning after the vote for a business visit to one of his golf resorts, Donald Trump hailed Leave’s “great victory”  over the “rule of the global elite.” Linking it to his own crusade to ban Muslims’ entry into the U.S., build border walls and tear up trade deals, the billionaire and presumptive Republican nominee for president predicted the rise of a mass movement. “People want to take their country back. They want to have independence in a sense,” he said. “You see it all over Europe and many other cases where they want to take their borders back. They want to take their monetary [sic] back. They want to take a lot of things back . . . I think you are going to have this more and more.”

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He was not alone. Vladimir Putin spoke approvingly of Brexit too, calling it “understandable” that the British were concerned about security amidst Europe’s migrant crisis, and tired of paying for other people. “No one wants to feed and subsidize poorer economies, to support other states, support entire nations,” said the Russian president. Marie Le Pen, the leader of France’s far-right National Front Party tweeted her congratulations to the Leave campaign, making it clear she found inspiration in the result. “Victory for freedom!” Le Pen wrote. “As I’ve said for years, we need the same referendum in France and in the EU countries.”

From the opposite end of the political spectrum, Bernie Sanders applauded too. Appearing on MSNBC, the U.S. senator and socialist lamented the breakdown in international co-operation, but suggested the system made it inevitable. “What this vote is about is an indication that the global economy is not working for everybody,” he said. “It’s not working in the United States for everybody and it’s not working in the U.K. for everybody.”

Supporters of the Stronger In campaign react after hearing results in the EU referendum at London's Royal Festival Hall Friday, June 24, 2016. On Thursday, Britain voted in a national referendum on whether to stay inside the EU. (Rob Stothard/AP)
Supporters of the Stronger In campaign react after hearing results in the EU referendum at London’s Royal Festival Hall Friday. (Rob Stothard/AP)

One doesn’t have to scratch much below the surface of the referendum results to discover that the decisive ballots were cast by those who haven’t shared in EU’s vaunted benefits—namely older voters who live outside of Britain’s major cities. Of the 30 voting districts with the most residents aged 65 and over, only two voted Remain. The split was even starker when it came to education, with 66 per cent of those who left school at age 16 voting to leave, while 71 per cent of those with university degrees opting to stay.

The numbers square with pre-referendum polls that suggested 73 per cent of voters aged 18-29 wanted to remain part of the EU, while 63 per cent over 60 wanted to get out. It all goes a long way to explaining why young protesters gathered outside 10 Downing Street the morning after the vote, bearing placards with slogans like “Don’t f–k with our future.”

The Leave vote was also decidedly English. Remain carried the day in Scotland and Northern Ireland, raising questions as to whether the United Kingdom will survive the wrenching process of withdrawal. Cameron won his first referendum gamble, the 2014 vote on Scottish independence. But that campaign made much of the advantages conferred by Britain’s membership in the EU and now looks a bit shortsighted. Nicola Sturgeon, Scotland’s first minister and a proponent of Scottish independence, was quick off the mark following the Leave vote, noting that six out of every 10 Scots had opted for Remain. “We voted to renew our reputation as an outward-looking, open and inclusive country,” she said in a statement. “It remains my passionate belief that it is better for all parts of the U.K. to be members of the European Union.” A second referendum on a Scottish breakaway is now “highly likely,” Sturgeon added. Martin McGuinness, the deputy first minister of Northern Ireland, and a member of Sinn Féin, raised similar concerns and called for a vote to unite the Emerald Isle.

Whatever the deciding demographic, there’s little question that Britain’s gesture will sound alarm bells throughout the industrialized world. Last winter, Cameron used the threat of the impending referendum to negotiate a sweetheart deal with the EU, winning concessions on limiting migrants’ access to government benefits, and a guarantee the U.K. wouldn’t have to participate in future euro bailouts. But Britons still voted to flee a union that has been held up as a model of global economic integration, peace and prosperity. And in this case, who is pulling the plug matters every bit as much as why.

The U.K., a country of 65 million, punches far above its weight in international organizations like the G7, NATO and the United Nations. It is home to one of the world’s most educated populations and, in London, one of its most important financial centres—the key entry point for investment capital flowing into Europe. If a country like that sees no promise in a borderless, global economy, what nation possibly could?

The out vote is a stinging repudiation of ideas Western governments have pushed for decades: that economic globalization was a tide to lift all boats; that integration is good; that advanced economies will be the big winners of the globalized market, shedding smoke-belching industries in favour of specialized work based on skill and knowledge.

In some ways, argues Martin Ruhs, an associate professor of political economy at Oxford University, the U.K. has become a victim of its own success. Protected by its refusal to join the eurozone, the country’s economy has prospered while others in the zone have struggled to prop up Greece, Spain and the other weaklings, becoming a magnet for those seeking work. And the EU, which demands unfettered movement, hasn’t been quite so rigorous about standardizing wages or tackling laws and collective agreements that make it harder to hire and fire on the Continent. “The U.K. has both the most flexible labour market and the highest demand for low-wage workers,” says Ruhs, who studies the effects of migration within the EU. “The EU really hasn’t done a good job and recognizing those structural differences.”

Ruhs says there is really no hard data to back up the Leave side’s claims about a flood of arrivals from the Continent putting pressure on schools, housing and hospitals. But that really doesn’t matter since most Britons believe that it’s true. “The idea that it’s out of control and can’t be managed within the EU is what became so powerful,” he says. “At the end of the day, those concerns about immigration trumped the economic fears.”

John Helliwell, a professor emeritus of economics at the University of British Columbia, believes the referendum result will cause political leaders to reconsider the common assumption that greater integration is always better. Globalization is not going away, he says, but the preferable model for most countries may let them “keep the essential tools they need to manage their own societies in the interest of their citizens, while giving them friendly and co-operative contacts with the rest of the world.” In the case of the EU, a more workable solution might have been to give national governments greater control over the admission of EU-country passport holders and strike a balance between labour market needs and pressures on social welfare systems.

It might also help for proponents of globalism to stop overselling its benefits, and trying to engineer society to accommodate it, says Helliwell. “Most of economic and social life is lived pretty locally,” notes the professor, who explored these pitfalls in his 2002 book Globalization and Well-being. “You don’t need to align many of your institutions with those in other countries to get the main advantages from it. The world trade system has been a pretty open one for the last 50 years.”

People hold a banner that says "We love refugees" as they take part in a demonstration asking for a change in the refugee policy in Europe on the Republique square in Paris, France, September 5, 2015. (Philippe Wojazer/Reuters)
September 2015, Paris: A demonstration asking for a change in the refugee policy in Europe. (Philippe Wojazer/Reuters)

European cohesion has been under increasing threat in recent years. A report released this spring by the European Council on Foreign Relations found that the refugee and migrant crisis has exposed “deeply rooted divisions” and created “new political cleavages between member states.” (On June 23, the day of the vote, 40 vessels carrying 4,500 more migrants made their made across the Mediterranean from Libya, bringing the total number of overall arrivals by sea in 2016 to 215,000.) Denmark, Germany, Sweden and Austria have all reinstituted forms of border control, contravening the terms of the Schengen agreement and “ring fencing” to defend their national status quo. “Political populists all over Europe have sensed this change,” warned the think tank. And “as diverse as they otherwise may be, the new populist nationalists in Europe have one common view: that the pooling of sovereignty is a key problem.”

Amy Verdun, a University of Victoria political scientist who specializes in globalization and European integration, calls it a worrying trend. “If those groups become stronger, they could start asking to have [their own] referendums to vote their way out,” she says. “There might be a ripple effect because of this mass psychology.”

Europe’s nativist political parties have already found fodder in the steady flow of bad news out of Brussels over the past few years. The Greek crisis, with its attendant fears over the financial stability of Spain and Portugal, forced the EU to expand and deepen, notes Verdun, setting up new institutions to backstop and supervise the banking sector. Then came the refugee crisis, stoking fears over national identity and the stress on the social safety nets in countries like the Netherlands and Germany. Together, says Verdun, these events have overshadowed the benefits that average Europeans have gained through membership, which seem abstract next to the hard sums that rich EU countries pour into the organization each year.

Britain’s impending divorce from the union—a untried process that promises to be fraught and lengthy—might well make matter worse. Jan Techau, the director of Carnegie Europe, a Brussels-based think tank, says the EU is in crisis mode. “Overall, the sense is ‘Oh my God, what have we gotten ourselves into.’ ” Already, it’s clear that there will be two distinct camps with the union when it comes to the pending negotiations. One led by the presidents of the European Council and Commission, Donald Tusk and Jean-Claude Juncker, will push for a quick break and terms that are as difficult as possible for the U.K. when it comes to its future access to the Common Market. “They want to set a precedent, a very painful precedent, so that this entire thing looks like a very unattractive model,” says Techau. And while the other camp, led by the Irish, Dutch and Austrians, favours a much longer divorce process, their plan is pretty much the same: to maximize the economic pain for U.K. residents—albeit with a different end goal, showing British voters the error of their ways and forcing the next prime minister into some sort of revised, but continuing relationship.

Techau believes the EU will survive either way—few, if any, of its remaining members have the both the desire to leave and the leverage to extract themselves, he says. In many ways, he argues, the union remains a success story. “We tend to look at the horrible news, but in reality large parts of the EU are quite functional and producing public good for the member states that they don’t won’t to lose out on,” he says. “This doesn’t have to be existential at all.”

Reality also dictates that the U.K. will want to continue to pursue some common policies and goals with the EU, in areas like security and the fight against climate change. (Britain signed on to the bloc’s carbon-trading market as well as the 2020 emission reduction targets and last year’s Paris deal.)

The question then becomes whether Brexit is a revolution, or rather an evolution.

Britons will have plenty of time to contemplate the riddle. Estimates of just how long it will take to fully extract themselves from a 43-year marriage with Europe are generally in the seven- to 10-year range, making it an issue that will dog at least two more governments.

Dawn breaks over the City of London, Britain June 24, 2016. (REUTERS/Toby Melville)
Dawn breaks over the City of London, Britain June 24, 2016. (REUTERS/Toby Melville)

On the night of the referendum, there was a decent crowd at the Drum Wetherspon, a pub in the east London neighbourhood of Leyton. Part of a national chain owned by pro-Brexit multi-millionaire Tim Martin, who had ordered the distribution of half a million beer mats printed with his arguments for voting Leave. “He’s allowed to do what he likes, I suppose, it’s his business,” said David Tomlinson, resting his glass of Tuborg on Martin’s reasoning. The 60-year-old was on a visit from Liverpool, where he owns a business that manages multi-storey carparks. A trim man with a glinting, gold neck chain, he spoke animatedly about his distrust of politics and ineffective politicians. He said his business has benefited from Britain’s membership in the EU. A remain backer, the EU referendum marked the first time he had ever voted.

On Thursday nights, Wetherspoon sells itself as the “nation’s biggest curry house,” serving up chicken korma, lamb rogan josh, and chicken balti for less than $14, pint included. The famously cheap alcohol fuelled lots of chatter about politics. In the smoking area out the back, a 35-year-old named Lubo from Slovakia was leaning against a pillar while thoughtfully puffing on a cigarette. He said he came to Britain in 2005, “right away when they opened the borders. I wanted to change my life.” His friend Mark, a 48-year-old who also works in IT and has always lived in Leyton, debated with Lubo about what impact a Brexit would have for EU citizens in the U.K. before leaning forward to quietly admit: “If I was to be honest with you I’d say most people here don’t understand [what’s at stake in the referendum], I’d say most professionals don’t either.”

Neither, it might be said, do the elite.

Over at the Leave.EU party, Piers Corbyn —older brother of Labour Leader Jeremy—was excited when the final result came in for Birmingham, showing an unexpected Brexit vote. “[It’s] historic for the U.K. which means we’re now in control of our own lawmaking and our own borders . . . That is going to be better, and the key thing is the democracy,” he said. His younger brother now faces a non-confidence motion from dissenting members of his own party, upset at his lacklustre performance on behalf of Remain.

Piers, who was involved in the Leave.EU campaign from the beginning, maintained that his brother was still the best man for the Labour job, because he has been “quite rational” about the downsides of supporting Brussels.

As the victory party finally rolled up, Linda Stanbury sat on a bench outside the office tower, watching the sun rise. The 54-year-old, who runs a counselling and well-being business and lives in south London, said it was one of the greatest days of her life. “I feel elated, this is the happiest day since the Berlin Wall came down. This is the people speaking, and it’s fantastic,” she said. “We won’t be strangled by the noose around our necks of the European happy club . . . I’ve seen this country slip-sliding away.”

Britons have voted for change. Just how big a one, we’ll find out.

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