On June 23rd, 2016, an entire country headed
into the unknown.
That’s the day 17.4 million people in the
United Kingdom voted to become the first country
to leave the European Union.
This is the story of Brexit.
We begin 60 years ago.
After World Wars I and II had brought unprecedented
death and destruction to the continent, a
simple theory gained traction: if countries
form stronger economic ties, they’ll be
much less likely to fight each other.
So, in 1957, Belgium, France, Italy, Luxembourg,
Netherlands, and West Germany signed the Treaty
of Rome and formed the European Economic Community.
The UK wasn’t included.
It tried to join in 1963 and ‘67, but was
blocked by French President Charles de Gaulle.
De Gaulle didn’t trust the British and their
close allies, the United States, although
de Gaulle’s official reason was that the
UK’s economy wasn’t compatible with Europe’s.
A few years later, once de Gaulle was out
of power, the UK became a member of the EEC
in 1973.
But not everyone was sold on the idea.
So, just two years after joining, the UK held
its first ever national referendum to decide
whether it should turn around and leave.
The vote wasn’t close, 67% of the electorate
chose to stay.
In the years since, the EEC has become known
as the European Union, expanded to 28 member
states, and enacted countless laws and reforms
that have created a thriving political and
economic zone with 500 million citizens.
In many ways it was designed to mirror the
world’s most successful federal republic:
the United States.
Just like the American colonies had done two
centuries earlier, the individual countries
of Europe decided they’d be better off - economically,
geopolitically - if they formed a unified
group.
It was a good decision.
For proof, look no further than the year-by-year,
per-person GDP rate, which has skyrocketed
across the entire euro-zone.
Germany, the UK, and France, the EU’s biggest
economies and the 4th, 5th, and 6th largest
individual economies in the world, have seen
their growth track right along with each other
at roughly the rate of the United States.
A look at the emerging economies of Brazil,
China, and South Africa gives you a better
sense of just how closely the Europeans have
tracked together.
Look at Turkey — who wants desperately to
join the union — compared to Portugal, Italy,
Greece, and Spain the four EU countries most
affected by the global downturn at the end
of the previous decade, and you see more evidence
of the power of the EU in driving growth.
As it has became more and more integrated
— as its members chose to give up more and
more of their sovereignty — the UK kept
negotiating ways to stay independent from
key aspects of the union.
It didn’t join the open border that the
rest of the EU created in 1995 to create completely
free movement within the union, and it chose
to keep the British pound as its currency
instead of adopting the Euro.
But the development that made the UK’s eventual
exit most likely was the adoption of the Lisbon
Treaty in 2009.
Not only did it make the EU’s central institutions
more efficient and more powerful, but — for
the first time — it gave its members an
official mechanism to leave, called Article
50.
At around the same time, the world was hit
by a severe recession.
Greece, whose public debt was far higher than
most other EU members, was worse off.
Its fellow union members forced it to implement
severe spending cutbacks in exchange for money
it needed to stabilize its economy.
This was followed by a migrant crisis, as
millions of refugees fled war-torn countries
across the Middle East and North Africa.
As immigration rates rose across Europe, the
preferred destination was one of the big three
economies: Germany, the UK, or France.
With all of these new arrivals — many of
whom were in need of tremendous public assistance
— anti-immigrant, nationalist feelings rose.
As Europe’s leaders came under heavy pressure
to stop the flow, fences and walls were built
in the east, patrols were intensified along
the Mediterranean coast, camps were set up
along borders, and deportations rose.
Some leaders, like Germany’s Angela Merkel
pledged to welcome large numbers of migrants,
while the UK — as an island — was able
to stop the flow more easily.
Facing a tough reelection, UK Prime Minister
David Cameron promised that — if he won
— he’d schedule a public referendum on
whether the UK should leave the EU.
When he did win, he used his victory as leverage
to successfully renegotiate a few minor terms
of the UK’s membership.
Although it changed little, Cameron hailed
it as a victory—it was the first time an
existing EU member country had been permitted
to have its own special deal.
[David Cameron] “Britain will be permanently
out of ever closer union, never part of a
European super state.
There will be tough new restrictions on access
to our welfare system for EU migrants, no
more something for nothing.”
That deal was dependent on Britain choosing
to remain in the union during a vote scheduled
for June 2016.
By campaigning hard for the remain side, Cameron
also made it a referendum of sorts on his
time in office, while giving his rivals and
critics who wanted him out an extra incentive
to push for Brexit.
Chief among those urging Brexit were far right
politicians who relied on inflamed rhetoric
and misinformation.
One of the primary l arguments was that the
UK — as one of the wealthier countries in
the Union — was contributing too much money
to the EU budget.
Another factor that pushed Britain toward
the exit was terrorism.
A string of attacks, some carried out by immigrants,
had hit Europe, including the devastating
November 2015 violence in Paris that killed
or injured nearly 500 people.
A look at the data also helps us understand
why immigration was a key issue.
Compared to the four other European countries
with more than 40 million residents, the UK
has the highest population density.
The US, if you’re wondering, is six times
less crowded than the UK.
And as you can see in this graph, for the
better part of 15 years, the UK had been absorbing
far more immigrants than before—capped off
by its two highest years of net migration
right before the Brexit vote.
Which finally brings us to the decision that
shocked the world.
By a narrow vote of 51.9% to 48.1% the United
Kingdom decided to leave the European Union.
The consequences were immediate.
Cameron resigned and the value of the British
pound plummeted.
Today, it remains around 15% lower against
the dollar.
Theresa May — a member of Cameron’s cabinet
— had been against Brexit, but in a cunning
move, chose not to publicly campaign, positioning
her perfectly to succeed Cameron as Prime
Minister when Brexit passed.
True to her “Brexit means Brexit” saying,
May sent a letter to EU President Donald Tusk
invoking Article 50, which starts a two year
countdown for the UK to negotiate its future
relationship with Europe before it has to
leave.
[Theresa May} “A few minutes ago in Brussels,
the United Kingdom’s permanent representative
to the EU handed a letter to the President
of the European Council on my behalf confirming
the government’s decision to invoke Article
50 of the Treaty on European Union.”
Two years isn’t a very long time to get
through the long list of key points which
include:
whether the European Court of Justice will
continue to have jurisdiction over the UK;
whether the UK will reject the Human Rights
Act in favor of writing their own British
Bill of Rights; how the security and crime-fighting
relationship will work; how much the UK will
pay for EU projects and programs that it committed
to before Brexit; what the rights will be
for EU citizens living in the UK and vice
versa, for Britons living in the EU; what
will happen to Scotland, who voted to remain
in the EU by a large margin of 62%-38%, there
is some talk it will leave the UK and become
an EU member; what will happen along the land
border between Northern Ireland (of the UK)
and the Republic of Ireland (an EU member
state).
There is currently a common travel area between
the UK and the Republic.
The man who wrote Article 50, the distinguished
diplomat Lord John Kerr, detailed the bill
Britain must agree to pay before any negotiations
will move forward.
[Lord Kerr] “The trade negotiation won’t
get very far until the money negotiation is
clearly settled.
Now the money negotiation is going to be a
very nasty negotiation.”
Perhaps the biggest issue is whether Brexit
will be hard or soft.
This mainly has to do with trade and immigration.
A soft Brexit would largely keep things the
same as they are now, with the continued free
movement of goods and people from the continent.
But a hard Brexit would result in import taxes
on goods and services in both directions.
Hard would also restrict the migration of
EU citizens into the UK.
Norway is an example of how a soft Brexit
would work.
It is a member of the single market, but not
a full EU member.
So for access to the market, it accepts the
free movement of people.
The most influential leader in the EU, German
Chancellor Angela Merkel, has made it clear
that Europe is going to drive a hard bargain
and will look after the interests of its 27
members.
[Chancellor Merkel speaking in German]
The UK is in a terrible bargaining position
and has put the EU leadership in a tough spot.
Why would the EU allow the UK to leave, but
still keep the best parts of union membership?
In order to maintain the legitimacy of the
EU, it has to make an example out of the UK.
It must show its members that leaving has
very real consequences.
This has many British business leaders — like
entrepreneur David Cleevely — nervous.
[Entrepreneur David Cleevely] “My concern
about Brexit is that we have a big market
just a few miles away, and we're not going
to be able to access it as freely as we could
before.”
Once a deal is hammered out, at least 20 of
the 27 countries in the Union must approve
it.
But if no deal is reached, negotiations can
only continue if all 27 EU countries agree
to extend the talks.
Regardless of whether there’s a deal in
place when the UK leaves, the moment it does,
all the EU laws Britain has been living under
cease to apply.
To deal with this potential catastrophe, the
UK plans to pass a Great Repeal Bill.
It will copy all the existing EU laws into
UK law to give parliament time to decide which
laws to keep, change, or get rid of.
This uncertainty has many who voted for Brexit
regretting their decision.
As it becomes clear that independence won’t
be so great, opinion polls consistently show
that the result would be reversed if the referendum
were held again.
So, is there any chance the UK could reverse
course?
Again, we’ll again turn to the author of
Article 50.
After running through various scenarios for
how Brexit could play out, Lord Kerr said
this.
[Lord Kerr] “There is, and I’m almost
ashamed to mention it, the possibility of
the United Kingdom changing its mind.
An Article 50 notification - the triggering
- is revocable.”
So, that’s Brexit in a nutshell.
But I want to know what you think.
Is this a classic case of people not appreciating
what they have, and thinking the grass is
greener on the other side?
And what do you think will be most significant
effect of the UK’s withdrawal?
Thanks for watching.
For The Daily Conversation, I’m Bryce Plank.
