Brexit for Americans

You may have heard of the term “Brexit.” Perhaps you know that it stands for “British exit from the EU.” But what does that actually mean? Why now? And most importantly, why does it matter?

What is this Brexit thing?

On the 20th of February, David Cameron, the Conservative Prime Minister of the UK, announced that his long-awaited referendum on whether Britain should stay in the EU or leave will take place on the 23rd of June, 2016. This puts a definitive final date on an issue that has raged in the UK ever since Mr. Cameron’s pledge in the 2015 general election to hold an in-out referendum on the UK’s membership of the EU after renegotiating the terms of Britain’s membership. The prospect of Britain leaving the EU has been poetically labeled “Brexit.”

Brexit, already a common topic in the news, has now flooded the British media and drowned out many other issues in a manner not all that different from the American presidential election. There are other parallels. Five days before Chris Christie endorsed Donald Trump, Boris Johnson, the Conservative mayor of London, defied his own party leader by declaring his support for Brexit. Nigel Farage, a racist, anti-immigrant right-wing populist who somewhat resembles a posh, well-spoken Trump with equally intriguing facial expressions (Google Image him), features prominently on the “Out” side. The population is fairly evenly split; the “In” side currently holds the advantage, with a 55-45% lead, according to a summary of polls by The Telegraph. However, the outcome is far from certain, especially as the “Out” campaign begins to form itself into a coherent opposition.

Cameron has succeeded in wrestling some reforms out of the notoriously slow-moving European Union, the two most prominent being restrictions on benefits for migrants from within the EU and an opt-out from the treaty clause of a commitment to “ever-closer union.” The latter is more symbolic than anything, but the Brexit referendum is as much about symbolism as about the concrete benefits of either course of action. In announcing the referendum date, Cameron said the issue “goes to the heart of the kind of country we want to be.” I can think of at least one other major English-speaking country facing a rather similar dilemma in 2016.

What’s the big deal?

Why is Britain’s membership of the EU such an important topic? The truth is, Britain has always felt somewhat uncomfortable in Europe, and this is not the first time it questions its membership. As an island nation, it has always been less European than its peers on the mainland. Its entry into the EU was rocky; it declined an invitation to be a founding member, only to be vetoed twice by France (who else but the French?) upon attempting to join later. Britain only joined what was then the European Economic Community in 1973 – 22 years after the European Coal and Steel Community or ECSC (the precursor to today’s EU and to the EEC of 1973 – Europeans love acronyms) was founded.

The relationship since has been volatile. In the 1980s, Margaret Thatcher, a Eurosceptic (a broad term used for those who are generally opposed to the European Union), caused significant tensions with the EU and within Britain; the issue was so divisive that her anti-EU stance played an important role in her eventual downfall at the hands of her (mostly pro-EU) party. The next decades saw ups and downs. Another significant rocky patch was the debate about whether to adopt the euro or keep the pound. As a result, Britain’s relationship with the EU today is complex; although it is a member, it has many special opt-outs, such as from parts of the Schengen area (passport-free travel), Europol (Europe’s equivalent of the FBI), and, of course, the euro.

Why is the referendum happening now?

Over the past years, migration has become a major political issue in the UK as migrants from Eastern Europe have entered the UK in ever larger numbers, and as many Eurosceptics claim, have been taking low-skilled jobs and claiming government benefits (sound familiar?). The EU’s policy of free movement has been primarily blamed for this. Additionally, increasing numbers of Conservative politicians have become Eurosceptic, often opposing Cameron, which has made it difficult for him to govern effectively. Cameron, who has been Prime Minister since 2010, thus promised an EU referendum by 2017 should he win the 2015 general elections in order to unite his party behind him. The strategy worked; the Conservatives under Cameron unexpectedly won a resounding victory, achieving the first Conservative single-party majority since 1992. Now Cameron is trying to hold the referendum as soon as possible, before the windfall from his election victory dissipates, hence the mid-2016 date.

Why should you care?

A Brexit would have profound implications, many of which would impact the US. The EU is the US’s largest trading partner and collectively by far its most important ally, so what happens there matters.

Britain is the US’s closest ally in Europe, and provides a pro-market counterbalance to the statist tendencies of many mainland European countries and the EU itself. An EU without Britain is likely to impose more regulation and be less pro-American, which may negatively impact trade and diplomatic relations with the US.

Crucially, a Brexit could have negative consequences on the Transatlantic Trade and Investment Partnership (TTIP), a comprehensive trade deal being negotiated, in the face of strong opposition by European citizens, between the US and the EU. TTIP would represent the largest bilateral trade deal ever, providing a boost to both economies. Cameron has from the start been a major proponent of the deal, pressuring his European colleagues into moving forward; Brexit would make a final agreement less likely.

Then there are many unpredictable factors. How will Britain reposition itself as a nation independent of the EU? Will it become a closer American ally, or look to its Commonwealth ex-colonies and to China? How would Brexit impact the EU; could it precipitate a full break-up of the Union? How might Brexit impact NATO?

And to tie it back to the only issue ever shown on American TV for the past year: how might it be (mis)interpreted by America’s presidential candidates as evidence of the benefit or harmfulness of a particular policy?

  • Richard

    I agree. A wise businessman in the Caribbean named Sir Kyffin Simpson always said that the key to success is progression and humility, and clearly he’s done very well for himself as a self made man!

  • John Andrews

    The Airgain IPO launches this week, and they’re a one-brand company.

    Some investors don’t think it’s a good stock though:

  • Cincinnati World Cinema

    Well said, Joe, and worth rereading on a regular basis! Another advantage of small-to-midsize city living is pace and competition. Living in NYC, LA and SF entailed a hectic pace, hallmarked by capital S striving, as one realized there were a ton of others doing what I do. Spending so much time in one’s car in SoCal meant much less time for quality pursuits and pleasures. A smaller pond with relaxed pace allows one to savor life and special moments.

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