Britain’s vote on June 23, 2016 to leave the European Union (EU) has been salutary, exposing the political, economic, and cultural divide between the Davos elites (to use shorthand) and the majority population. This gap has widened not just in the United Kingdom, of course, and this was not the first such vote. (When the EU-Brussels has been put to national votes, it has tended to be repudiated, only to be subjected to re-votes or just ignored.) A squeaker remain vote in the UK would have enabled the Davos elites to continue papering over the divide. So whatever the mendacity and irresponsibility of the “leavers”, or the ultimate outcome of any Brexit process, balloting was a victory for democracy.
The vote did not appreciably increase the risk of an unravelling of the EU, which was already high. Europe today is a remarkably prosperous and peaceful place, with degrees of cross-border cooperation that are stunning by any historical standard. And this followed the most horrible wars in recorded history and required decades of painstaking effort and painful compromise. All this has been undermined, though, not by the 52-48 vote in the UK but by the integration process itself.
Europe’s deep, and perhaps insurmountable challenges, are rooted in a shift from the European Economic Community, a zone of free trade in goods, to the European Union. Aspirations for such a leap can be appreciated, but it has proved fateful in practice. Monetary union came first not because it was most desired, but because it was the least difficult. Political union lagged not because it was less desired, but because it was too difficult (cultural union, still more so). But as some critics warned at the time, and has become evident to many more people since, is that monetary union without fiscal, and ultimately political union, does not advance prosperity and peace.
Either fiscal-political union happens or monetary union ends
Amid the manifest devastation of the economies of southern member countries by the single currency, the so-called five presidents of the EU – of the Commission, Council, Central Bank, group of finance ministers, and Parliament – issued a report back in 2015 on advancing financial, fiscal and political union. Their summons died on arrival. But either fiscal-political union happens (good luck) or the monetary union ends – or the EU continues to serve as a mechanism for creating mass unemployment, because of the vast differences in the economic makeup of euro member countries.
This self-inflicted predicament is a much bigger threat to Europe than any posed by Russia, even if one holds a jaundiced view of Kremlin intentions and behavior. (The possible impact of Brexit on NATO is beyond the scope of this essay.)
Europe’s fundamental structural dilemma is often obscured by passionate ideological tilting. In left-wing critiques, the EU is increasingly identified with “neoliberalism,” an epithet taken to mean wrongheaded liberalisation of every aspect of the economy, from capital (finance) to labor (immigration), which is viewed as advantaging the few and disadvantaging the middle and working classes. At the same time, much of the actual work of the various European bodies involves extensive regulation to “harmonise” laws, practices, and institutions across borders – which produces absurd rules governing minutia, and fodder for right-wing critiques. In both guises – hyper-liberalisation/hyper-regulation – Europe is more easily bashed than loved.
NAFTA a bit like the old EEC
But this is not a matter of better public relations. The North American Free Trade Agreement, or NAFTA, resembles the old European Economic Community. But if NAFTA had been “deepened” to include a supranational court, housed, say, in Mexico City, whose rulings were mandatory for every United States jurisdiction. And then if every single citizen of Mexico possessed the right, not by flouting the law but precisely according to the law, to settle in the US and draw upon US government benefits, then Americans would better understand much of the popular mood in Europe. The refugee crisis resulting from the catastrophes in Libya and especially Syria added combustible Islamic terrorist fears to the mix, but the underlying principle of unlimited migration was already politically problematic.
Transnationalism has built-in limits. Nationalism often gets a bad name, but it is, by definition, majoritarian and therefore compatible with democracy. Transnational sentiments remain decidedly minoritarian and therefore, in important ways, incompatible with democracy. To put the matter another way, transnationalism can succeed if it is made compatible with strong national sentiment. (Most hardnosed analyses of the creation of the EU, by the way, have proven that countries joined only because the union was seen to further national self-interest.)
The EU has every incentive to punish Britain for its nationalist leave vote as a deterrent, but even beyond business people, large numbers of European passport holders, not least EU elites, want continued, unfettered access to London. Large numbers of influential UK passport holders do not want to lose openness to Europe either. Still, no state has ever been granted full access to the EU while refusing to be governed by all its rules, including open EU borders, a key factor in the leave vote. Negotiations should, perhaps, be held in a Kabuki theater.
Still, if Brexit takes place in some form – which remains to be seen – it would have little or no appreciable effect on Europe’s fundamental structural dilemma. Europe’s status quo is detrimental and ultimately untenable, but its replacement could take different forms. Upheaval remains an option.
Euro not ‘one for all and all for one’
To point out that right-wing populists have no viable economic program to solve the deep problems from which they gain votes is not a persuasive argument for holding onto the euro. If the euro is so dear, for economic as well as symbolic reasons, a stable way out could be via introduction of a northern euro, which only select countries would join. The current euro would then become a de facto southern euro, and its uncertain prospects would be independent of the survival of the euro (in a sustainable, northern guise). Just such a northern-southern double currency was the original plan of some European dreamers in the second half of the 19th century. Instead, Germany unified in a series of wars and introduced the mark.
The Brexit vote’s most immediate consequence, for better or worse, has been to scuttle the “small government” austerity of the Tory government. More long-term, it seems to have placed in question the survival of the United Kingdom. In fact, Scotland, Wales, and Northern Ireland have been developing different political cultures from that of England. If the UK is worth saving, and if it can be saved, it will be. If not, the Brexit vote would have at most accelerated something that would have happened anyway.
Powerful underlying interests have a way of asserting themselves through the cut and thrust of events and the predictable political opportunists. It is possible to imagine a face-saving salvation of Britain’s EU association and of Britain itself. It is harder to imagine survival of the EU over the long term.
He is the Birkelund Professor in History and International Affairs at Princeton University, where he has taught since 1989. He is also a fellow at the Hoover Institution at Stanford University. He is the author of Stalin, vol. I: Paradoxes of Power, among other books. For several years he was the book reviewer for the New York Times Sunday Business section (2006-2009), and today writes reviews for the Wall Street Journal and TLS. Kotkin earned a PhD from University of California Berkeley (1988).