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The Brexit issue

Giancarlo Elia Valori

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The issue of Brexit, namely Great Britain’s exit from the European Union, regards the age-old issue of what really drives the electorate: myths, real or imaginary identities, or short-term material interests? For the great political science and philosophical school of Italian elitism, ranging from Pareto to Gaetano Mosca, the political mechanism is substantially identity-based.

As the Genoese sociologist and economist Vilfredo Pareto maintained, there exist six classes of residues that he positivistically listed as follows: the instinct for combinations; the persistence of aggregates or group persistences (regarded as the old ideals and political myths); the need for expressing sentiments by external acts (activity, self-expression); the residues connected with sociality; the integrity of the individual and last – at that time but not today, with the full obsession of primary instincts and urges – the sex residue.  

With specific reference to derivations, the actions are not logically connected to the result, but they are always so in the conscience of those who take action. Regardless of the political form of the State, democracy, oligarchy, totalitarianism, communism, both residues and derivations provide a logic to the pseudo-rational instincts and symbols which drive to action.

Hence, again for Pareto, the Brexit choice regards two myths: the myth of economic growth for those who still want the United Kingdom to remain in the European Union or the identity myth of the old British Empire, or the de facto UK extraneousness to European politics and economics, in short, to the myths which created the European Union.

These myths regard the end of the long European civil war, as, from the French Revolution (or from 1914) to the Second World War, historians such as Ernst Nolte or, from another political perspective, Enzo Traverso called it.

The myth of peace in Europe through the expansion of trade and domestic revenue, as well as the creation of another myth, namely the myth of Europe as new homeland. Two geopolitical and economic myths in danger. Income growth is not recorded and will not be recorded for a long period of time. The European homeland entails the creation of rituals and symbols replacing the national ones, which has not happened yet.

But Great Britain is de facto alien to the logic of the European civil war: it certainly fought the two world wars, but with mindset, interests and heroism connected rather to its founding myths as autonomous Imperium. Only to yield its global empire to the United States, so as to repay the credits granted for the war, namely to a country which had backed the war effort and participated in it significantly and, with the Cold War, had to keep the dual global confrontation with the USSR. A translatio Imperii which, probably, has not been digested yet by British voters, at Pareto’s “residues” level.

In Gaetano Mosca’s opinion, the ruling class is the whole of hierarchies that materially or morally run a society. Today, in a context of universal globalization, of Pareto’s residues and derivations which are all defined and expressed in the same symbolic languages, where are Mosca’s ruling classes within nations? Can these ruling classes and “moral and material” hierarchies support the inevitably different needs, interests, myths of the various peoples, not yet united in a global large liquid mass?

In each EU Member State globalization has created asymmetric shocks which, managed by mediocre ruling classes, have been magnified in the individual nations, thus creating real transfers of sovereignty. Needless to say, this is Italy’s case, while it is not the case of Great Britain which, during the years of Thatcherism, had followed a crash diet to participate in the defilé of globalization before it began. This is also a central theme to understand Brexit from the philosophical and political viewpoint.

Hence is it currently possible to have cultural globalization applied to the development of political myths and their para-rational connection to interests? Is a unified political myth otherwise possible – a myth which, for irrelevant details, is defined and expressed in the symbolic language of every country? Yes, it is possible with specific reference to the myths of consumption, sexualized and reduced to instinctual images from the mass-media, but certainly not as regards the myths and modes of production, which cannot yet be universalized.

Suffice to consider the differences existing between the made in Italy craftsmanship and the Manchester-style factory. In this regard, Geminello Alvi spoke of the standardizing and impersonal “Chinese ideal” of “capitalism”. This is what I would currently call “Gaetano Mosca’s dilemma”. Are today the ruling classes truly such and are they able to put myths and interests together? The issue lies in establishing whether globalization entails a specific political mythology and its Mosca-style ruling class or not.

Let us revert, however, to Brexit in a strictly economic and financial sense.

Considering that foreign trade is the driver of all contemporary economies, Britain is no exception to the rule: exports, including financial products, account for about 30% of the British GDP. The EU, however, accounts for over 50% of all British exports.

On the other hand, over 50% of UK imports come from the European Union, with over half of these imports coming from Europe which serves as “intermediate asset,” namely useful to produce other made in England goods and services.

About 10% of the total EU exports go to Britain, with a share of goods and services which is about 36% (for services) compared to 64% for manufactured goods. Hence, in bilateral trade between the UK and the EU, trade issues are proportionately more important for Great Britain than for the rest (the rest?) of Europe. Furthermore, within the EU, Great Britain is the largest user of Foreign Direct Investment (FDI), with about 50% of FDI coming from Europe and 30% from the United States.

Moreover, it is well known that, since the end of the British rule in Hong Kong – which Margaret Thatcher accepted in 1997, with the last Governor, Chris Patten, who burst into tears – the real financial boom of the London Stock Exchange has started.

The London Stock Exchange is the one which regulates (or owns) most of European financial markets. A record achieved in spite of the EU and certainly not thanks to it. British industrialists point to collapse scenarios, should Brexit be voted by the UK electorate. The Confederation of British Industry (CBI) maintains that UK’s leaving the EU would lead to zero economic growth as early as 2017 and the following year.

Without a free trade agreement following Brexit within 2020, the British GDP might fall by 5% while, according to other scenarios defined by the City investment banks, the GDP would anyway decrease by 3% even with a new trade agreement with the former European partners.

The number and quality of British jobs would be particularly affected, with unemployment which would rise from the current 5.1% by additional three percentage points. Over 80% of the companies associated with CBI believe that Brexit would be a disaster for the British economy, with an estimated cost of 100 billion pounds. In many ways and to many extents, the opinions against UK’s stay in the EU are not less rational.

Obviously the UK exit from the EU would lead to the use of tariff barriers for British goods and services in the European single market, not to mention the difficulty in renegotiating the trade flows with the United States and China, after becoming an economy without the EU size, mass and volume. Obviously the Brexit advocates know this and do not deny the data reported by those who support the British presence within the European Union.

There are the British contributions to the European budget, which are remarkable – and we can still hear the Thatcherite cry “we want our money back!” at the EU meeting of 1980, as well as the speech delivered by the British Prime Minister in Bruges in 1988, when she thundered against “the European super-State exercising a new dominance from Brussels”. The UK contributions to the EU are certainly substantial: for 2015, they amount to as many as 10.4 billion pounds, with an increase equal to 1.3 billion pounds compared to forecasts. However, they account for 0.5% of the UK GDP.

Hence, first and foremost, the UK would save on contributions, but the Brexit advocates think that the difficult action of reconciling the interests of 28 different countries could never foster the British economic interest in global trade negotiations. Furthermore, the Brexit partisans believe that the UK exit from the EU would even foster the economy, since it would enable the British industry to avoid the EU countless laws and regulations. Hence the UK would lose part of the EU-28 market but, by capitalizing on its ties within the Commonwealth, it could enter the new market-world, without the fetters and constraints, reins and restraints of EU regulations.

The Brexit advocates also say that if the large European market is designed – as maintained – to reduce prices, optimize competition and stimulate trade and economic competitiveness, this holds true only if all EU countries are economically identical and work to their full potential. Otherwise for some EU Member States there may be – and, in fact, there are – forms of protectionism hidden in so many regulations which seem to benefit everyone. In fact, considering data, Great Britain’s new growth has the same shape and the same pace as the United States, and not as Germany or the rest of the European Union.

As the Brexit partisans say: “It is Europe that needs us, not the opposite”.

And here the rationality of Pareto’s derivations meets the old mental residues of the Rule Britannia and the special relationship between the United States and the United Kingdom, two countries united by many interests and separated by a common language. Here Great Britain’s traditional geopolitical obsession, namely Germany, comes back again. For the Brexit advocates the EU real problem is not Britain, but precisely Germany. Greece has very quickly turned into an export country through the collapse of imports. And this is what Germany wants, because it has to manage its booming exports and it uses the EU as its domestic market, without anyone requiring Germany to reduce its trade surplus.

Hence, for the Brexit partisans, there is a geoconomic problem, namely Germany; a purely free-trade matter, namely the impossibility of really serving the interests of all 28 EU Member States; and, ultimately, the fiscal union – a subject matter never denied before – which never works to promote underdeveloped areas, as is easily demonstrated in the European context.

The British observers who support Brexit view the Union as a giant floundering in an irreversible crisis: in 1973, when Britain adhered to the EU, and many countries were not yet members, the European GDP accounted for 37% of the global GDP. According to the most favourable estimates, in 2025 the EU will only account for 22% of the global GDP. The countries which currently dominate the market-world are the United States and China; even the Commonwealth, as a whole, is larger and performs better than the EU.

In 2020, the workers/pensioners ratio will be 3 to 1 and in 2050 it will be 2 to 1 – namely impossible to sustain – due to technological backwardness, but above all to the generalized aging of the European population.

For the Brexit advocates, the mass of regulations and restrictions for goods made in the UK is hard to swallow and digest: since 2010 the EU has adopted 3,500 new laws which somehow relate to UK companies and their interests. For Great Britain alone, the cost of bureaucracy amounts to approximately 4-5 billion pounds – and this cost is not comparable to the national contribution to the European Union. Dysfunctional bureaucracy, always looking for a sort of “preferential clause” for some Member States, which generates an indirect cost of trade rules for Great Britain equal to 7.6 billion pounds per year.

And since the Lisbon Treaty entered into force in December 2009, the cost of regulations for British companies has amounted to 12.2 billions in terms of extraordinary standards. Furthermore, the Brexit advocates argue that Great Britain’s weight within the EU has dropped sharply: in 1973, when the UK adhered to the European Union, it had 20% of votes, while currently the British government can rely only on 9.5 votes.

Again at financial level, the Brexit partisans do not want the financial transaction tax, the FTT based on the old Tobin Tax model, a tax enshrined in the EU regulations last January. All the analysts who are in favour of Brexit, however, agree on a geopolitical factor: Europe’s irrelevance for Great Britain. This geopolitical factor is connected to the opinion that the British strategic ideal is a balanced Europe, without a leading country, in which the role of power brokers, mediators and strategic leaders can be played.

On the other hand, the advocates of UK stay within the EU maintain that Brexit would diminish the role played by the London Stock Exchange on the rest of European financial markets, attracted by the Stock Exchange of Frankfurt or Paris. Moreover, Ireland would pay a very high price for Brexit, considering it supplies 35% of British agricultural and food products, and it will also be affected by the British natural gas imports after Brexit. Furthermore, Brexit impact on the pound could strengthen the Euro against the British currency, as is already happening.

In short, if Brexit occurs, the EU will lose a large economic market, the second of the European Union, over and above the euro area. It will become increasingly irrelevant at geopolitical level and, above all, it will point the way out to all dissatisfied EU countries, thus creating a likely domino effect which could lead to the end of the European Union or to its economic and political irrelevance.

But there is more: will Brexit – the full recovery of British sovereignty – favour the creation of a single European State to better manage strategic and economic emergencies, in addition to huge immigration flows?

Or will the union rely on a “United States of Europe” model and perspective so as to avoid the EU collapse, but at what pace and for which purposes?

Great Britain is an independent military power; it retains a seat in the UN Permanent Council and, regardless of Brexit, it has no evident interest in adapting to European strategic unification processes.

We could even think of an exchange, with which Great Britain avoids every discrimination against the City, in exchange for UK’s greater involvement in Europe’s collective security. Not to mention the new tensions which would emerge within NATO after Great Britain’s exit from the EU. If identity wins – which, as we have seen, is also based on rational grounds and arguments – we will have Brexit. Conversely if, in the forthcoming referendum, we have an at least apparently “rational” vote, Great Britain’s exit from the EU will be avoided. At least for now.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. In 1992 he was appointed Officier de la Légion d'Honneur de la République Francaise, with this motivation: "A man who can see across borders to understand the world” and in 2002 he received the title of "Honorable" of the Académie des Sciences de l'Institut de France

Europe

Le Pen’s under-plot for the French President

Mohammad Ghaderi

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The President of the French National Rally political party, Marin Le Pen, is trying to take little stances on the new protests in her country. Some French politicians have accused her of interfering in the recent protests in favor of the French National Rally. Meanwhile, many analysts believe that, ultimately, the outcome of Macron’s removal from power will be the presence of far-right nationalists (led by Le Pen) at the Elysees Palace.

 In any case, Marin Le Pen and the French National Rally continue to make lots of propaganda in their country’s political and social atmosphere. It should be acknowledged that the recent protests in France have doubled their chance to win the public vote, and he has greatly encouraged Le Pen and her entourage to win the European parliamentary election which is to be held in June.

In 2014, the French National Rally was able to shine exceptionally well in the European parliamentary elections and overcome other French political parties. In the 2017 general election, Le Pen was able to reach the final round of the presidential competitions for the first time since the establishment of the French National Rally. However, at that time, Le Pen couldn’t act against the broad opposition of the Socialist and Conservative parties. But the equation seems to have changed now!

Polls conducted in France suggested a decline in the popularity of Emmanuel Macron as the country’s president. This is while only 18 months has passed since Macron’s presence at Elysee Palace. Under such circumstances, Le Pen and her companions will naturally try to change the French citizen’s mind to the benefit of the French National Rally.

 This is a very good time indeed, as many of the French citizens no longer trust Macron and his promises for making economic, social reforms in France. Le Pen and the senior members of the French National Rally, argue that the Socialist and Conservative Parties won’t be able to redefine themselves in the near future, given the crisis that has stuck the two traditional French parties.

 The removal of Socialist and Conservative candidates in the 2017 general election, was well indicating the political and social isolation of these two traditional parties in French society. As a result, French citizens should once again choose between Macron and Le Pen. Le Pen believes that indicating a new face in France political scene as an independent politician is not possible under the current situation, and that’s because the bitter experience of Macron’s presence at the Elysée Palace prevents the formation of such a phenomenon.

 Le Pen is now trying to remove Macron from power through holding an early elections; “It is necessary to implement proportional representation and dissolve the National Assembly in order to hold new proportional elections”.

 Simultaneously, she attempts to attract the attention of French citizens to herself as France’s next president.

“We believe that the way out of the crisis is essentially political. This decision excludes any use of violence that only adds chaos to adversity,” Le Pen said in a letter published on the party’s website.

Le Pen also emphasized that the political solution to the recent crisis depended on the French officials, while uttering that French President Emmanuel Macron “is deprived of sympathy for the people, constrained by arrogance and indifference of the elites.”

It is not clear, however, that Le Pen’s calculations would all come true. The French National Rally President opened a special account on Macron’s former supporters to change their minds, and as a result, their votes to her benefit! This is while some of these votes may turn into silent votes or white votes.

 Also, it’s quite possible that France political atmosphere in 2017, would once again repeat in 2022, or during the country’s possible early elections. In this case, to right-wing extremists of French National Rally are going to lose the elections again. Therefore, Le Pen is really cautious about her positions right now, though she believes that Macron’s incapability provided the ground for her political and social success in Paris.

First published in our partner Tehran Times

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Europe

Will there be another referendum over Brexit?

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Brexit continues to be an implicit term in the Britain’s political equations. Complicating the process of the British withdrawal from the European Union is a joint measure taken by the British government and European authorities.

At the same time, the British government, with its widespread negative propaganda against the Brexit, is seeking to re-arrange a referendum. In other words, the European authorities are trying to direct the public opinion about the Brexit.

Recently, some western news sources are speaking of an issue called “repeating the Brexit referendum”, and name it as a possible option! An option that had been previously denied by British authorities, including Theresa May, the Prime Minister of the country. According to the France news agency, regarding the increasing doubt about the British Prime Minister’s efforts to conclude an agreement with the United Europe, the possibility of holding a second referendum on Brexit has multiplied.

This source has also announced that there are major obstacles on the way of confirming this agreement between Theresa May and European leaders, which has, in turn, intensified this trend. The existence of legal complexities in this agreement made its implementation difficult for both sides.  Meanwhile, it is possible that the members of the parliament will vote in favor of Theresa May’s decision.

Although it seems that Theresa May is trying to convince legislators to give a positive vote to this agreement, not only members of the Labor Party, but also some members of the Conservative Party are opposing it. The MPs argue that the Brexit is basically contrary to the interests of the UK.

Meanwhile, supporters of the “People’s Vote” campaign, who are now very active in England, believe that the parliament’s negative vote will pave the way for a new referendum on the Brexit. This issue is no way contrary to the demands of Theresa May and the Conservative Party, but it’s secretly supported by them. The negative propaganda of the Theresa May’s government against the Brexit since 2016 is known to everyone. After the British citizens voted to leave the European Union in 2016, the two Labor and Conservative parties (as UK’s two traditional parties) tried their best to change the general vote on this issue. The active role played by people like former British Prime Minister Tony Blair can well indicate the dissatisfaction among British authorities over the Brexit.

Supporters of the People’s Vote campaign are currently trying to convince the public for holding a new referendum on Brexit. “The People’s Vote campaign seeks to ensure that the government’s Brexit deal is put before the country in a public vote so that we can decide if a decision that will affect our lives for generations makes the country better or worse off. Good deal or bad deal, it’s definitely a big deal – and that’s why it should be put to a People’s Vote”, that’s how the campaign’s supporters define their goal.

Proponents of this campaign believe that the parliament’s negative vote to May’s plan is the best opportunity to hold another referendum. On the other hand, Theresa May doesn’t intend to violate the people’s vote in the 2016 referendum explicitly, so she tries to appear to be opposed to a new referendum, but she set the game in a way that it will eventually lead to the UK’s remain as part of the European Union.

Labor Party officials led by Jeremy Corbin have also agreed to vote again on the Brexit, and have officially backed this issue. The fact that Britain’s two rival parties have come to an agreement on holding a new referendum has provided the ground for its ultimate realization.

First published in our partner MNA

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Europe

West return to 2007: Europe’s anger over incompetent politicians

Mohammad Ghaderi

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The anger and discontent of European citizens over European politicians is increasing day by day. While more than ten years have passed since the economic crisis in Europe, we are still witnessing austerity plans in this block.

France’s recent round of demonstrations isn’t limited to this country anymore, and we’re now witnessing demonstrations in countries such as Belgium and the Netherlands.

Many European citizens spent the years between 2007 and 2012 with the hope that the austerity policies would affect the devastated economy of United Europe and the Eurozone. That’s why they tried to cooperate with their own governments (which were mainly the far-right and social-democratic administrations). However, after 2012, we witnessed the end of European citizens’ patience towards politicians like Merkel.

Part of this dissatisfaction revealed itself in cases such as the European Parliamentary Elections in 2014, where more than 100 right extremists managed to enter the European Parliament. Now, in 2018, we are witnessing the continuation of the economic crisis in Europe in the security, social and political spheres.

It’s not without a reason that the number of nationalist groups’ supporters has increased in the mentioned areas. The security crisis is strongly felt in today’s Europe. Common policies which were adopted by European authorities couldn’t improve the security crisis within the Schengen borders and other European borders.

During 2015 and 2016 (and somehow in 2017), the Immigration and security crises in Europe caused other issues such as the economic crisis to become marginalized. But now it’s shadowed over the whole of Europe. Under such circumstances, the main question of European citizens is that what was the impact of austerity policies adopted for ten years inside the EU borders?

They can clearly see that the adoption of such policies has had no effects on improving their economic conditions. The existing economic crisis continues to be felt in everyday life of European citizens. The rise of the signs of the financial crisis in Europe, and the decline in credit ratings, and the growth of unemployment in countries that continue to be affected by the financial crisis have created many social crises in Europe.

The protests that are taking place today in France and other European countries are not merely an objection to rising fuel prices or tax increases for low-income groups. It is a protest against the unstable economic structure of the European Union and the Eurozone.

Emmanuel Macron, the young French president, as an economist, promised to redefine the existing economic structure in the Eurozone, with regard to the current economic crisis. However, Macron himself has now become the symbol of crisis in Europe!

The economic crisis in European countries doesn’t limit to austerity policies! The external debt crisis in the European countries should also be added to the economic and credit crises in the West. The crisis is heavily extended in countries like Italy, causing a lot of trouble for other member states of the Eurozone. The economic cohesion of the Eurozone member states has fueled this trend.

In any case, it seems that the patience of European citizens has come to an end. As noted, according to the predictions, these crises were to be resolved before 2012, and economic growth symbols was to be replaced by austerity symbols. But at the moment, there is little indication of economic growth in European countries, and austerity policies remain strong.

Finally, it should be concluded that the European countries, especially the EU member states, have no choice but to “self-destruct” their economic foundations and replace them with new patterns. If European officials continue to insist on existing methods and economic models, they will be doomed to failure in the near future. In this case, nationalist groups and far-right extremists will dominate Europe’s political, economic, social and security equations, and this would definitely be a terrible nightmare for those like Merkel and Macron.

First published in our partner MNA

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