Japan Institute for National Fundamentals

Speaking out

【#383】What We Should Learn from Brexit

Yasuo Naito / 2016.06.29 (Wed)

June 27, 2016

     Voters supporting Britain’s leave from the European Union won in a national referendum on June 23. The result came as a great shock to the world, triggering a global stock market decline and sharp foreign exchange rate changes including the British pound’s plunge. Some observers predict the Brexit will lead to a more serious financial crisis than the 2008 Lehman Shock. Ironically, Britain, which had been leading globalization, has inclined to counter-globalism and nationalism. However, there are some lessons we can learn from the development.

Too rapid globalization
     Britain’s divorce negotiations with the EU are expected to take long. This is because the EU is expected to take a tough position in the talks to help prevent any other EU member from seceding from the EU following Britain that would be the first country to leave the union, which has increased the number of member countries to 28. Nevertheless, the EU and Britain as a major country have no choice but to sustain active economic and human exchanges as neighbors.
     Will the British leave trigger a setback from postwar globalization? Dominant among supporters for Britain’s secession from the EU were those who have failed to benefit from globalization making the world more affluent and been concerned that national identity could be lost due to an excessive number of immigrants. Citizens supporting the leave from the EU are seen not only in Britain but also in the rest of Europe. The British vote demonstrated that such citizens’ opinions cannot be shrugged off. A similar tendency is seen in the United States across the Atlantic ahead of November’s presidential election, indicating a growing counter-globalization movement.
     Globalization will decelerate from its too fast pace, but will never stop. This is because about a half of people especially those in younger generations still support globalization as indicated by the British referendum. A swing back from the deceleration will surely come.

Crisis solutions failing to be found
     Given that Britain is the second largest economy after Germany within the EU and boasts great political and bargaining power developed through its involvement in the creation of the postwar world order, the EU will weaken inevitably after Britain’s leave. The victory of Brexit supporters has encouraged those critical of the EU in France and Germany. Russia could try to split a weakened EU in a bid to lead the EU to lift sanctions imposed over Russia’s annexation of Crimea.
     The EU may not collapse as easily as the Soviet Union. However, the EU plunging into critical conditions has no fundamental solutions to difficult problems including how to compromise the inflow of massive refugees from Syria and other countries with human rights issues and how to address the Greek debt crisis.
     Britain has excellent intelligence capabilities known for the 007 spy films and an extraordinary political balancing sense that could be described as artful. In a bid to overcome the current crisis, Britain may shift diplomatic priority to Asia including China. Japan should continue to deal and enhance relations with Britain and the EU to serve its national interests.

Yasuo Naito is International News Editor for The Sankei Shimbun.