Brexit: Who's Really to Blame for Europe's Mess

Brexit: Who's Really to Blame for Europe's Mess

REUTERS/Kai Pfaffenbach

A year ago, one of the poorest countries in the 28-member European Union, Greece, elected the left-wing Syriza faction in defiance of EU leadership, signaling a threat to break away from the partnership. Next week, one of the richest countries, the United Kingdom, will hold a formal vote on exiting the EU entirely. And if the recent polls are correct, Brexit will succeed where the Grexit failed. 

The scope of this rebellion suggests that there is no unified ideology driving it. Whenever Europeans have held anything approaching a referendum on the EU’s leadership, they’ve generally opted to defy the status quo. We’ve witnessed the return of Euroskeptic ethno-centrism in countries like Hungary and Poland, and an ascendant anti-euro Five Star Movement, led by comedian Beppe Grillo, in Italy.  And we could see more upheavals in Spain from the left and France from the right in the coming months. 

What is happening to the European Union, once seen as a salutary project promoting global peace and economic security? How has something built on solidarity and equality descended into recrimination? 

Related: Brexit Explained — What It Is and How It Could Change the World 

Many would point to the old nationalist embers starting to catch fire again. But the blame must also be laid at the feet of elites, whose stubbornness and even cruelty have perverted the original EU vision, and given national populations no faith that they have anything to gain from it. 

The Leave the EU campaign in Britain, which leads Remain in the past four polls, has unquestionably played out through a virulent stream of anti-immigrant and even racist rhetoric. Euroskeptic British voters have targeted foreign workers as the source of the country’s problems, and have highlighted the (false) possibility of Turkey joining the EU as a chief reason to leave, effectively lying to voters. Leftist Jeremy Corbyn is backing the Remain campaign because of the worker protections the EU provides, in an unlikely alliance with Conservative Prime Minister David Cameron. So like elsewhere in Europe, Brexit reflects outsiders railing against the two major political parties. 

Financial markets consider the fallout of Brexit unpredictable. The U.K. would have two years to negotiate its departure from the EU, its largest trading partner. While Leave supporters assure that this will result in a better deal, along the lines of Canada’s trade agreement with Europe, the EU is probably disinclined to negotiate with the country that spurned them, and a deadlock would lead to World Trade Organization oversight, which would likely mean higher tariffs and economic contraction. The financial industry in London, one of the world’s top centers, could flee for cover (though this might not be such a bad thing if it leads to reduced financialization of the British economy). 

Related: How a Brexit Could Sink Clinton and Hand the Election to Trump 

In other words, the Leave campaign would rather take a leap of faith than persist in the current system. And you can paint this as a purely jingoistic scenario, with Leave’s main complaint being an influx of foreigners. The murder of a pro-EU Labor Party MP by someone reportedly shouting “Britain first” highlights this, and may completely upend the state of the race. 

At the same time, there is a political and economic context underlying the anger. Europe has muddled through the Great Recession terribly. The economic union mostly served the desires of Germany to increase its export base at the expense of southern European countries, which have no ability to use accommodative monetary policy to address their problems. While Britain does not utilize the euro, it has been infected by this sclerotic growth, which includes massive bouts of unemployment in places like Spain, Greece and Portugal. 

Center-right and center-left parties in Europe have associated themselves with deregulation, austerity and the euphemistically described “labor market reforms,” which typically means a hollowing out of local businesses and rollback of worker power. This ideology has marched through EU nations, with no adjustment after the financial crisis. Dominant countries in the north forced their southern neighbors to cut their budgets in a self-defeating policy, as a kind of moral punishment for their perceived laziness. They used the European Central Bank as an economic hit man, threatening opponents with ruin unless they submitted. The EU was once seen as a beacon of democracy, but elite interference in the sovereignty of its members has created a couple of arrogant powers and a multitude of vassal states. 

Related: How a Ban on Tea Kettles Could Drive Britain to a Brexit 

If this resulted in anything approaching economic stability, that would be one thing. But it’s created a lost decade of slow growth and severe unemployment and dislocation. Spain agreed to virtually all the EU’s demands on labor markets and austerity and wound up with employment levels that are still 10 percent below the pre-crisis peak. And that raises the opportunity for xenophobes to blame foreigners for problems created by elites. 

Instead of attacking open borders, opponents of the EU could attack the disaster of a common currency. They could call for greater, not less, fiscal coordination, with Eurobonds and budgetary transfers to stabilize weaker states. They could demand that countries in need of growth be allowed to run higher deficits. They could devise a common regulatory union for finance. They could insist that the EU cannot be run solely for the benefit of Germany. But though the opponents of the status quo simply advocate to break away, ultimately these failures of EU design is what they are resisting. And the leaders who pushed them to that limit must be held responsible. 

EU leaders are calling the prospect of Brexit the end of “western political civilization itself.” Indeed, a Leave vote would probably spawn a renewed independence movement in Scotland, anti-EU sentiment from Sweden to Italy and increased border controls practically everywhere, as political integration breaks down. And this instability could absolutely hit our shores; Janet Yellen cited Brexit as a key reason to not raise interest rates this week. 

Related: Markets May Be Too Complacent Over Brexit Risk, BlackRock Says 

But we have to address the root causes currently squandering a political project that created order after the chaos of two world wars waged mostly in Europe. If democracy founders on the continent and nativism predominates, we must ask why. And you have to conclude that what EU elites set up is the critical factor. 

They built an unaccountable technocracy that ignores citizens’ basic needs in favor of adherence to an ideology of market fundamentalism and deficit hawkery. They bulldoze those who differ with this one true path. As Dani Rodrik writes, the structure of the EU is “so antithetical to democracy that reasonable observers… view departure from it as the only option for repairing democracy.” A crackup of the noble vision of the EU would indeed be lamented. But I would not weep for an end to the hash that was made of it.