24 June 2016
In the wake of the vote by the British to leave to the EU (i.e., “Brexit”), the UK and the EU both have many options on how to manage the transition, and the vote in and of itself is not enough to predict how exactly British exit from the EU will occur. We have to wait and watch if we are to understand, and to correctly interpret, the subtle clues and telling details in a political landscape defined by a lack of subtlety and a barrage of trivia no item of which is a telling detail. Whatever happens, and however it happens, we are seeing geopolitics played out on a grand scale.
As a divisive political confrontation, the immediate fallout of the “Leave” vote will be accusations and recriminations, short term market fluctuations, dramatic public statements being made, a painstakingly detailed analysis of the demographic breakdown of the vote, and so on. The press will focus on these immediate consequences, and as the press was enthusiastic in backing “Project Fear” it is more or less obligated to report the worst possible news that it can find in order to confirm the narrative that the world will come to an end in the event of a “Leave” vote. The immediate consequences are the “white noise” of political conflict, and must be set aside in order for a more rational assessment of short-term, mid-term, and long-term consequences.
In a previous post on futurism I cited the “futures cone,” which depicts the arrow of time flaring outward into the future, with the probable future in the center, the plausible future just beyond the center, the possible future farther yet from the center, and the preposterous future at the outside edge of the futures cone (see above — I have adopted this language from Joseph Voros’ exposition of the futures cone). We can employ the futures cone to distinguish classes of outcomes from the Brexit vote.
Some of the most obvious outcomes neatly fall into the categories of the futures cone:
● Probable The UK negotiates a trade deal with the UN that allows both Britain and the EU to continue to employ the City of London as the de facto banking capital of western Europe, which is overwhelmingly in the interest of all concerned. Very little of substance changes. The press selectively reports on economic problems so that the sore loser “remain” faction can maintain plausible deniability that it was right all along, while the “leave” faction gets what it wants in changes to immigration policy.
● Plausible Eurocrats in Brussels are vindictive and seek retaliation for their humiliation; the EU attempts to economically isolate and marginalize the UK, and both sides erect trade barriers that result in UK and EU growth turning negative. A long recession and a slow recovery ensues. This scenario could well be exacerbated by actions taken by the US, as both major political party candidates for the US presidential election are opposed to free trade.
● Possible The “Leave” vote is set aside (the EU has a long history of setting aside votes that fail to conform to its narrative); endless negotiations drag on for years while the EU and the UK are at best economically stagnant; or additional votes are taken until the desired result is obtained.
● Preposterous There is no end to the number of preposterous scenarios that can be constructed upon the “Leave” vote. For example, the unraveling EU might lead to widespread chaos and disorder, ultimately meaning the end of civilization in Europe. Or a royal coup might set aside the popular vote and reverse the decision by royal decree, suspending democratic process. Or the unraveling of the EU might be followed by the constitution of alternative trade zones, as I once suggested in several posts on a northern trade zone (which I called the “Hansazone”) around the Baltic.
In my previous posts on futurism and the futures cone I emphasized that it is a relatively easy matter to predict what tomorrow will be like, because there are definite limits on how different tomorrow can be from today. However, it is extraordinarily difficult to predict the long-term future, so that between the predictable short term and the unpredictable long term, it is in the mid-term that our predictions go wrong. With this in mind, to get a better sense of the foreign country that is the future (and in this sense like the past), we should attempt to construct plausible paths by which probable and plausible short-term actions issue in implausible mid-term and long-term consequences.
For example, in the short-term there will be conflicting motives, with the EU being torn between cutting a deal that is good for all, or seeking a vindictive settlement that will punish Britain. Why should Eurocrats want to punish the UK for going its own way? Because despite the constant drumbeat in the press of the economic risks to Britain to leave the EU, the EU is much more vulnerable than the UK, partly because it is much less resilient and robust in its institutional structure. The “Leave” vote shows this up, and has the symbolic meaning that is the EU, and not the UK, that is weak, and that states can choose to leave the EU and it is not the end of the world. The illusion of the inevitable triumphal expansion of the EU has been rudely shattered, and some will want the UK to suffer for this, regardless of the cost. Thus the negotiations on the EU departure of the EU will be fraught, and may be in equal parts conciliatory and vindictive.
The kind of sausage-making that will result from mixed motives in the EU departure negotiations could result in radically different outcomes in the mid-term. While I regard it as unlikely, it is nevertheless possible that the EU might drag out its negotiations with the UK while fast-tracking the accession of candidates for entry into the EU, meaning that the UK is stuck and stagnant while the EU is expanding. Under this scenario, the EU grows and thrives while the UK becomes a marginalized economic backwater.
Another example of a mid-term future veering away from the most probable future constrained by concerns for stability and vested interests, is that the departure of the UK does begin the process of the unraveling of the EU (meaning the end of “Eurozone civilization” as was the concern of Donald Tusk). Other nation-states may hold referendums and depart from the EU, which shrinks as more and more parts are lopped off. The EU might continue in name only, as a ghost of its former self, and be remembered as a grand but failed visionary political project, the last gasp of the spirit of Yalta and Bretton Woods.
Under this scenario, the EU becomes economically marginal (sort of like Mercosur in South America), but the unraveling need not stop there. One might see the UK break up also, with Scotland and Ireland holding their own referendums to leave, and possibly even trying to rejoin the EU as independent nation-states. Paradoxically, this degree of Balkanization in western Europe, while it would be met with horror by the chattering classes, would probably result in far more pluralism and democracy than the EU model for pluralism and democracy in Europe. Also, in this pluralistic context it would be relatively straight-forward to constitute new economic zones, and so my “preposterous” scenario above could become plausible in the fullness of time.
The “Leave” vote was just the beginning of a process, and the immediate fallout will simply be theatrics. Only time will tell what the process itself will actually be (the situation is unprecedented, as no nation-state has previously negotiated its departure from the EU), and what outcomes are likely to follow.
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