11:03 GMT +328 March 2017
    A British flag which was washed away by heavy rains the day before lies on the street in London, Britain, June 24, 2016 after Britain voted to leave the European Union in the EU BREXIT referendum.

    Why the UK Said Bye Bye to the EU

    © REUTERS/ Reinhard Krause
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    Pepe Escobar
    Britain Says 'Cheerio' to EU (461)

    So what started as a gamble by David Cameron on an outlet for domestic British discontent, to be used as a lever to bargain with Brussels for a few more favors, has metastasized into an astonishing political earthquake about the dis-integration of the European Union.

    European Council President Donald Tusk gestures as he briefs the media after Britain voted to leave the bloc, in Brussels, Belgium, June 24, 2016.
    © REUTERS/ Francois Lenoir
    The irrepressibly mediocre Donald Tusk, president of the European Council, posing as a “historian”, had warned that Brexit, “could be the beginning of the destruction of not only the EU but Western political civilization in its entirety”. 

    That’s foolish. Brexit proved that it’s immigration, stupid. And once again, it’s the economy, stupid (although the British neoliberal establishment never paid attention). But serious bets can be made the EU system in Brussels won’t learn anything from the shock therapy – and won’t reform itself. There will be rationalizations that after all the UK was always classically whiny, obtrusive and demanding special privileges when dealing with the EU. As for “Western political civilization”, what will end – and this is a big thing — is the special transatlantic relationship between the US and the EU with Britain as an American Trojan Horse.

    So of course this all goes monumentally beyond a mere match between a hopelessly miscalculating Cameron, now fallen on his sword, and the recklessly ambitious court jester Boris Johnson – a Donald Trump with better vocabulary and speech patterns.

    Scotland, predictably, voted Remain, and may probably hold a new referendum — and leave the UK — rather than be dragged out by white working class English votes. Sinn Fein already wants a vote on united Ireland. Denmark, the Netherlands and even Poland and Hungary will want special status inside the EU, or else. Across Europe, the extreme right stampede is on. Marine Le Pen wants a French referendum. Geert Wilders wants a Dutch referendum. As for the vast majority of British under-25s who voted Remain, they may be contemplating one-way tickets not to the continent, but beyond.  

    Show me the people

    Anglo-French historian Robert Tombs has remarked that when Europeans talk about history they refer to the Roman Empire, the Renaissance and the Enlightenment. Great Britain is somewhat overlooked. In reciprocity, quite a few Britons still consider Europe an entity that should be kept at a safe distance.

    To compound the problem, this is not a “Europe of peoples”. Brussels absolutely detests European public opinion, and the system exhibits an iron resistance to reform. This current EU project that ultimately aims at a federation, modeled on the US, does not cut it in most of Britain. Arguably this is one of the key reasons behind Brexit – which for its part has already disunited the kingdom and may eventually downgrade it into a tiny trading post on the edge of Europe.

    Lacking a “European people”, the Brussels system could not but be articulated as a Kafkaesque, unelected bureaucracy. Moreover, the representatives of this people-deprived Europe in Brussels actually defend what they consider to be their national interest, and not the “European” interest.

    Brexit though does not mean Britain will be free from the dictates of the European Commission (EC). The EC does propose policy, but nothing can be followed through without decisions from the European Parliament and the Council of Ministers, which group representatives of all elected governments of member states.

    Arguably Remain, in the best possible case, would have led to some soul-searching in Brussels, and a wake-up call, translating into a more flexible monetary policy; a push to contain immigration inside African borders; and more opening towards Russia. The UK would remain in Europe giving more weight to countries outside the eurozone while Germany would concentrate on the 19-member eurozone nations.

    So Remain would have led to the UK increasing its politico-economic weight in Brussels while Germany would be more open to moderate growth (instead of austerity). Although Britain arguably would wince at the notion of a future eurozone Treasure Minister, a European FBI and a European Minister of the Interior, in fact the whole notion of a complete economic and monetary union.

    That’s all water under the bridge now. Additionally, don't forget the mighty single market drama. 

    The UK not only will lose duty-free access to the EU’s single market of 500 million people; it will have to renegotiate every single trade deal with the rest of the world since all of them have been EU-negotiated. French economy minister and presidential hopeful Emmanuel Macron has already warned that, “if the UK wants a commercial access treaty to the European market, the British must contribute to the European budget like the Norwegians and the Swiss do. If London doesn’t want that, then it must be a total exit.” Britain will be locked out of the single market – to which over 50% of its exports go — unless it pays almost all that it currently pays. Moreover, London must still accept freedom of movement, as in European immigration. 

    The City gets a black eye

    Brexit defeated an overwhelming array of what Zygmunt Bauman defined as the global elites of liquid modernity; the City of London, Wall Street, the IMF, the Fed, the European Central Bank (ECB), major hedge/investment funds, the whole interconnected global banking system.   

    The City of London, predictably, voted Remain by over 75%.  An overwhelming $2.7 trillion is traded every day in the “square mile”, which employs almost 400,000 people. And it’s not only the square mile, as the City now also includes Canary Wharf (HQ of quite a few big banks) and Mayfair (privileged hang out of hedge funds).

    The City of London – the undisputed financial capital of Europe — also manages a whopping $1.65 trillion of client assets, wealth literally from all over the planet. In Treasure Islands, Nicholas Shaxson argues, “financial services companies have flocked to London because it lets them do what they cannot do at home”.

    Unbridled deregulation coupled with unrivalled influence on the global economic system amount to a toxic mix. So Brexit may also be interpreted as a vote against corruption permeating England’s most lucrative industry.

    Things will change. Drastically. There will be no more “passporting”, by which banks can sell products for all 28 EU members, accessing a $19 trillion integrated economy. All it takes is a HQ in London and a few satellite mini-offices. Passporting will be up for fierce negotiation, as well as what happens to London’s euro-denominated trading floors.

    I followed Brexit out of Hong Kong – which 19 years ago had its own Brexit, actually saying bye bye to the British Empire to join China. Beijing is worried that Brexit will translate into capital outflows, “depreciation pressure” on the yuan, and disturbance of the Bank of China’s management of monetary policy.

    Brexit could even seriously affect China-EU relations, as Beijing in thesis might lose influence in Brussels without British support. It’s crucial to remember that Britain backed an investment pact between China and the EU and a joint feasibility study on a China-EU free trade agreement.

    He Weiwen, co-director of the China-US-EU Study Centre under the China Association of International Trade, part of the Ministry of Commerce, is blunt; “The European Union is likely to adopt a more protectionist approach when dealing with China. For Chinese companies which have set up headquarters or branches in the UK, they may not be able to enjoy tariff-free access to the wider European market after Britain leave the EU.”

    That applies, for instance, to leading Chinese high-tech companies like Huawei and Tencent. Between 2000 and 2015, Britain was the top European destination for Chinese direct investment, and was the second-largest trading partner with China inside the EU.

    Still, it may all revert into a win-win for China. Germany, France and Luxembourg – all of them competing with London for the juicy offshore yuan business – will increase their role. Chen Long, economist with Bank of Dongguan, is confident “the European continent, especially Central and Eastern European countries, will be more actively involved in China’s ‘One Belt, One Road’ programs.”

    So will Britain become the new Norway? It’s possible. Norway did very well after rejecting EU membership in a 1995 referendum. It will be a long and winding road before Article 50 is invoked and a two-year UK-EU negotiation in uncharted territory starts. Former UK Chancellor of the Exchequer Alistair Darling summed it all up; “Nobody has a clue what ‘Out’ looks like.”

    The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.

    Britain Says 'Cheerio' to EU (461)


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    • Gold
      I know a lot of under 25s that are absolutely delighted we're leaving the EU, and so they should be. The outlook for the UK economy is so much brighter now we're free of the dead weight of Brussels legislation.
    • avatar
      It's time for ECB's Mario Draghi to lose even more his grip on monetary policy.
    • Vera Narishkin
      Since when do Norway and Switzerland contribute to the EU budget? They don't! See one-europe.info/switzerland-and-norway-an-alternative-to-eu-membership
    • avatar
      The brilliant, super-duper high IQ, social engineers of US/UK/Israel made a big booboo with their pet terrorists/failed-by-design states inspired mass refugee migration. Bwah, ha, ha, ha, ha. Far from swamping national identity, the common folk have stood up and demanded their countries back.
    • avatar
      I think lot of people are really afraid because there will be some changes in future. That is normal reaction as humans are afraid of changes even when they live under bad conditions. That is why many couples stay together or discontented employees don't look for a new job. This panicking of our "elites" looks a little bit like nobody expecting that result. And tusk is a liar - but that is no new discovery.
    • Theon Lyrealin reply tomaxxus(Show commentHide comment)
      maxxus, National identity? Are you kidding? Clearly you've never been to Birmingham.
    • avatar
      brexit iis the first step, then sweeping away the left, then not just stopping imigration but reversing it.
    • avatar
      Marques rouges
      It will take at least 2 years, and more probably nothing will move before 2020. Then things could have changed so much in Europe, that this question of Brexit doesn't mean much anymore.
    • avatar
      It is a time to pull together and all work to rebuild our national confidence which has been so badly damaged by Brussels.
    • avatar
      Hey, this was only a SUGGESTION that England should leave the EU! Give it a month, or a few and there will be no sign that a referendum ever happened.
      The EMPIRE, Washington, will not let England leave! Wanna bet?
      Ask the Dutch about THEIR referendum.
    • avatar
      When will people learn that "the empire" is NOT the U.S. but is the Rothschild cabal in its City of London? The U.S. is just their present kneecapper. Next year it could just as easily be your country, whatever it is.
    • avatar
      he Uk was one of the worst inspirers of the EU, when it was in. It was true both for the foreign policy and the immigration policy. After all, who was the initiator of the chaos in Libya and in Syria? Who was one of the main backer of the sanctions against Russia?? But the British government has always bee extremely hypocrital in its relations with Bruxelles. Remember the directives on the free circulation of the goods and services (ie financial services) in the Single Market: Lord Leon Brittan, you know the pedophile of Westminster and EU Commisionner, when the UK was dispensed from the regulation on the Single Market what concerns...the financial services! And so on, and so on!
      With regard to the yuan offshore trading, the reversal of attitude about the liberalisation of the capital markets by the Chinese government has been a HUGE blow to the Western financial institutions. In the context of increased capital controls and the supervision of the trading operations in yuans by the Chinese authorities, the trading business in yuan, inshore or offshore, has been killed before expanding as expected by the IMF. No need to count on the yuan to revive the derivatives market, as there is no free market of the interest rate instruments or the forex instruments in yuan. Too bad for the British and the Europeans, isn't it?
    • Jammy
      Open your eyes people, turn on the TV if you are in the UK because if you open your ears too then you would know that they are not leting us out of the EU and left-wing protestors who don't have jobs to go to are going nuts and screaming "We love the EU" in London

      The country is being split and both Scotland and Wales have stabbed us in the back because they both get handouts from the EU and fear that these will come to an end and this is why they say they want to be independanat from the UK and closer union with the EU and 56 SNP Mp's got there seats with only one going to UKIP after more people voted UKIP than votes SNP so what does that say about our broken democratic system.

      People in Scotland need to understand that these tax refunds we got from the EU where they tell us how to spend it all went to Gay pride, Scotland and Wales and will not continue once we are out so they need to think before they jump
    • Marc Nonnenkamp
      Excellent analysis and commentary, Pepe Escobar.
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