Abstract
While there is an abundance of studies that focus on Brexit, most of the focus on the United Kingdom (UK) rather than discussing the European Union (EU), the EU is an international organization, which is considered a unified trade and monetary body of 28 countries, including the UK, which aims at making the members of the union more competitive in the global arena.
While the EU is one of the primary actors of Brexit since it participates in the negotiations as one of the parties, it can be considered as the primary reason for the start of the process. Due to an increase in powers of the EU government, the UK experienced considerable economic, social, and political complications. Additionally, the EU’s technocratic and neoliberal approach to policy-making produced disinterested, elite-led EU institutions. The EU reacted to the matter by acknowledging its priorities by assessing the needs of its member-states. The paper argues that the EU needs to design and implement reformed policies to maintain stability in the region.
Introduction
In 2016, the world was shocked by the result of the public vote held in the United Kingdom (UK), which favored leaving the European Union (EU). After the referendum, the UK initiated a process of exiting the EU that is commonly known as “Brexit.” Even though there are those who support the matter and those who hate it, not a single person in Europe remained untouched by the matter. Is this for real? Is it even possible to leave the EU? Will other countries follow? These are only a few of the questions that have been around since the referendum day. However, the complexity of the procedure and negotiations making these questions linger.
Even though the process started three years ago, it is still underway due to the complexity of the matter and failure to find an agreement on the crucial points of the deal. The event had considerable implications for the UK, the EU, and the rest of the world. While there is an abundance of studies concerning Brexit, most of them focus on the UK, and there is hardly any discussion about what are the implications of the matter for the EU. The present paper offers an analysis of the EU’s role and reaction to the event. First, it offers background information defining Brexit and the EU. Second, the report discusses the EU’s role in Brexit, viewing the EU as a cause and as an actor. Third, the paper describes the economic, political, and social reactions to the event. The report concludes that the EU needs to change its policies in order to maintain stability in the region.
Background Information
Brexit
Brexit is a word used to identify the process initiated by the UK to withdraw from the EU. The word “Brexit” is a blend of two words, “British” and “exit,” which is widely used by the press. The process officially started in 2016, when the referendum made it clear that a small minority of 51.9 percent voted for leaving the EU (Hobolt, 2016). The referendum split the nation almost in half, where the majority felt that the EU threatened the autonomy of the UK and obstructed its long-term economic development (Ramiro Troitiño, Kerikmäe, & Chochia, 2018). Even though the long-term results of the process remain unclear, the short-term outcomes were almost immediate. According to Hobolt (2016), the market reacted to the event quickly, with the British pound falling against the US dollar to a 31-year minimum, while “over 2 trillion dollars were wiped off shares globally” (p. 1259). Moreover, British Prime Minister David Cameron resigned almost immediately, and Scotland signaled that in the case of Brexit, Scotland was ready to leave the UK (Hobolt, 2016). The initial reaction to the event was immediate; however, everything slowed down.
Even though the process started in 2016, it is still in progress since it was extended several times. According to Ramiro Troitiño et al. (2018), the original deadline was on March 29, 2019; however, the UK and the EU failed to reach an agreement on vital points. In particular, there is no certainty about the border with the Republic of Ireland, which led to several revisions of the initial Brexit Deal proposed by Theresa May (Ramiro Troitiño et al., 2018). After May’s resignation, Boris Johnson, the new Prime Minister of the UK, offered a new deal that was to be approved on October 17, 2019 (Ramiro Troitiño et al., 2018). The final agreement proposed that the UK should leave the customs union, while Northern Ireland will remain an entry point into the EU’s customs zone. The agreement also described the rights of the UK and the EU citizens and the fee the UK was to pay to the EU (Ramiro Troitiño et al., 2018). Before moving to the discussion of the event, it is also beneficial to learn about the European Union.
European Union
The EU is an international organization, which is considered a unified trade and monetary body of 28 countries, including the UK. The purpose of the organization is to make its members more competitive in the global economic arena (Dinan, 2017). The EU allows the free flow of people and goods between the countries with random checks. While members of the EU retain a certain degree of autonomy, they are to oblige to the regulations promoted by the centralized government. Three bodies govern the EU, including the EU Council, the European Parliament, and the European Commission. The EU council proposes new legislation; the European Parliament discusses the suggested laws and decides if they should be approved, and the European Commission is responsible for executing the policies (Dinan, 2017). The EU also uses a unified currency, the Euro, which all the members pledged to adopt. However, nine of the countries, including the UK, have failed to do so. In order to appreciate the long-term relationships between the UK and the EU, it is beneficial to consider the history of the organization.
The EU has a long history of successful economic and political cooperation with its member-states. The concept of the EU was initially introduced in 1950 when the concept of a European trade area was formulated (Dinan, 2017). The prototype of the EU, the European Coal and Steel Community, had six founding members, including Belgium, France, Germany, Italy, Luxembourg, and the Netherlands (Dinan, 2017). Since then, many treaties have increased the number of members and the sphere of influence of the organization. One of the most recent agreements, the Treaty of Lisbon, has considerably increased the power of the European government by expanding its jurisdiction on border control, immigration, and judicial cooperation in civil and criminal matters (Dinan, 2017). The growing centralization of power and economic stagnation made many UK citizens concerned since it threatened the sovereignty and prosperity of the nation (Dinan, 2017). Therefore, the country started considering leaving the union to remain financially and politically empowered.
EU’s Role in Brexit
EU as a Cause
As stated above, the EU’s excessive interventions into political and economic matters of its members were the primary reason for mistrust and fear of the UK citizens. The cornerstone of the matter became the EU’s migration laws, which required the members to admit immigrants from various non-European countries for ethical reasons (Ramiro Troitiño, 2018). Such policies became harmful for most of the countries in many aspects. For instance, before the vote, UK citizens suffered from financial problems caused by permissive immigration laws (Tilford, 2015). In fact, the real wages of UK citizens, especially those on low wages, fell sharply since immigrants take the majority of low-paid jobs (Tilford, 2015). Moreover, the UK’s lagging in housing has increased the prices of real estate since more people were arriving from other countries to compete for new homes (Tilford, 2015). Finally, increased immigration pressured the National Healthcare System and the education services (Tilford, 2015). Even though all the reasons listed above may be the result of the UK’s government being slow to react to a rapidly changing environment, the public blamed the immigrants, and consequently the EU, for these problems.
So, why is immigration is such a crucial matter for citizens of the UK? Empirical research by Matti and Zhou (2016) aimed at analyzing different sets of characteristics elaborated on an alternative view on the reasons for Brexit. According to their study, the primary reason for the vote being slightly favoring exiting the union was the aging population of the country (Matti & Zhou, 2016). The scholars argue that “an aging UK population seeking isolation from the national, racial and religious diversity associated with globalization” (Matti & Zhou, 2016, p. 1134). Even the findings are not consistent with the ideas of other experts; it gives further insight into the EU’s role in the matter. Since centralized governments are unable to meet all the diverse needs of the population, they are prone to being bias and favor one group of stakeholders. According to Ramiro Troitiño et al. (2018), Germany enjoyed most of the economic and social benefits of the EU’s policies, while citizens of other countries felt underserved. However, the EU’s role in Brexit is not limited by being a cause of the matter.
EU as an Actor
Apart from being the reason for the matter, the EU is also one of the primary actors of Brexit. The organization represented one of the competing sides during the negotiations about the terms of the treaty. The aim of the EU in the negotiations is to serve the citizens of its member-states by creating job openings and securing economic stability and development (Ott & Ghauri, 2018). Therefore, the organization had to consider the public opinion of all its members to identify its strategy during the negotiations. According to Stockemer (2018), 80% of European society wanted to maintain close economic cooperation with the UK. At the same time, the majority of the European countries believed it was necessary to maintain control of the country’s borders. However, the UK’s objective was different from that of the EU’s, and a deal had to be found. The EU is an actor in the situation since it is actively searching for a consensus through repetitive negotiations.
Even though the final agreement about Brexit was achieved in October 2019, after the referendum, it was unclear whether the UK would leave the union. Since the long-term effects of the matter were unclear and the short-term implications were disastrous, the EU did its best to stagnate the dialogue between the parties. Stockemer (2018) argues that due to the complexity of the situation and lags in the negotiations, Brexit may not happen. Even though the EU’s attitude about Brexit is uncertain, the press suggests that the organization does not want the country to leave the union (Ott & Ghauri, 2018). Therefore, the stagnation in Brexit’s progression may be due to the EU’s silent opposition to the matter. In other words, the organization acts to support its interest by inaction and obstructing the development of the deal. Will that be effective? Unfortunately, no one knows, but the EU was quick to react to the event.
EU’s Reaction to Brexit
Political Reaction
The reaction to Brexit around the globe hardly differed since it came as a shock to the international society. The EU was not an exception, and the majority of officials were confused in their first assessments of the event (Hobolt, 2016). Soon, the confusion was changed by alarm about the future of the organization. The reason the UK is leaving the union was a rise of neo-nationalistic moods and populism of the politicians (Corbett & Walker, 2018). Has Europe not learned the lessons of fascism and World War II? Such tendencies in society were considered to be evidence of the poor social policies of the organization. Research conducted by Corbett and Walker (2018) suggests that the reason for social disturbance is the EU’s technocratic and neoliberal approach to policy-making. Therefore, the de-politicization of European integration and limitation of liberal democracy have produced disinterested, elite-led EU institutions (Corbett & Walker, 2018). The organization acknowledged its need to change the imperatives to social justice and democracy. In short, Brexit has made the EU realize that reformation of the approach is needed to avoid further complications and loss of other member-states.
As a result, many programs have emerged aimed at stabilizing the situation in the EU. According to Galbraith (2016), the hope for the organization lies in the Democracy in Europe Movement 2025. The purpose of the movement is to create a pan-European democratic and social-democratic alliance, which will establish a popular democracy on the European level (Galbraith, 2016). If no adequate reform follows, the implication for the political influence of the organization may fade away. That will create geopolitical space for new parties to increase their impact on the region, including the US, China, and Russia (Galbraith, 2016). The refugees will continue to create immigration problems since there are conflicts in Ukraine, Syria, Iraq, Iran, Libya, Yemen, and Afghanistan. Since the EU understands that, it began to change its priorities to address the political problems demonstrated by Brexit.
Economic Reaction
The EU’s economic sector was also quick to react to Brexit. The UK is one of the world’s largest economies, and the loss of such a member is sure to destabilize both parties. Therefore, the EU’s reaction was to quickly establish the priorities in economic relationships between the two parties. At the same time, the EU estimated the possible implications of the event and made the UK pay the so-called “diverse bill” of £39bn (Ramiro Troitiño, 2018). Even though this money will not compensate for all the possible losses associated with Brexit, it may be used to elaborate and execute new policies to stabilize the economy inside the EU.
Will Euro survive? The experts say that under current circumstances, it will not (Galbraith, 2016). One of the possible ways of rebuilding the Eurozone is to make Euro prevalent in the North while letting weaker economies have their own currencies (Galbraith, 2016). Even though there are opinions that Euro will collapse altogether, it is favored by a minority of experts and is hardly believable. At the same time, there surely will be small changes that will have extensive consequences.
The EU had to make minor arrangements to ensure the efficient operation of the economy. Moreover, the EU has prepared to move the European banks from the UK since Brexit will end the free movement of persons to other European nations (Galbraith, 2016). The absence of free movement of people will limit the access to banks of EU citizens since they will not be able to go to the UK without a visa. Moreover, neither the goods nor the money will be able to travel without additional fees. The decision about where the banks will move will rebalance the economy inside the EU. According to Galbraith (2016), the primary beneficent of the matter is expected to be Italy, since it “has done the most, if quietly and so far without great effect, to bend the fiscal rules to try to staunch the ongoing decline of its economy” (p. 165). At the same time, France and Greece are likely to suffer from considerable economic implications of the rebalance (Galbraith, 2016). The EU will make changes in the balance of powers to ensure long-term financial stability. However, economic implications are minor compared to social reactions.
Social Reaction
After the start of Brexit, the EU has faced many challenges and issues in various spheres apart from the economy. The article by Mazzilli and King (2019) reveals the problems of migrants from the EU living in the UK. According to the article, the majority of the Europeans living in Britain became angry and felt betrayed by the Brexit vote because it was clear that UK citizens voted not against the EU but against the immigrants (Mazzilli & King, 2019). The EU had to recognize and address the problem in order to maintain stability in the region.
The EU members were concerned about the future of scientific collaborations among British and European scientists. Vousden (2019) argues that the majority of success in research is due to close relationships between the nations of the EU. Therefore, the EU has emphasized the importance and expressed a desire to keep working together with the UK when it comes to science (Vousden, 2019). In other words, the EU reacted to Brexit by quickly setting new priorities for preventing social issues and the problem with collaboration in science.
Conclusion
Brexit has enormous implications for the UK, the EU, and the rest of the world. The EU can be viewed both as a cause and an actor in regard to the matter. Brexit demonstrates how neo-nationalistic slogans, populism, and anti-globalization moods can lead to disastrous social, economic, and political consequences. The event revealed the inadequacy of the EU’s neoliberal and technocratic policies. The EU needs to develop a plan for sustaining the growing tension in the region to prevent other member states from leaving the union since many Europeans feel betrayed and angry about the event. The primary strategy for addressing the matter is by creating an alliance that will establish a popular democracy on the European level. Additionally, the EU needs to restructure its relationships with the UK in order to preserve close relationships in the scientific and economic spheres.
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