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What the Brexit means to the U.S.

Neil Fligstein, professor of sociology | June 17, 2016

By Neil Fligstein and Alina Polyakova

On June 23 Great Britain is likely to vote to leave the European Union. This event is just the latest crisis of the European Union.

In the past eight years, the EU has faced down the financial crisis and the ongoing slow economic recovery of the Eurozone. In the past year, it has been in constant crisis mode — with the possibility of a Greek exit from both the Euro and the European Union, the onslaught of immigrants escaping from war-torn Syria, and the terrorist attacks on Paris and Brussels.

"Brits don't Quit" poster

“Sir Winston Churchill, founder of the European Union,” reads this anti-Brexit poster.” (ninjahilde via Instagram)

Somehow, the European Union has managed to muddle through each of these crises. But the Brexit (shorthand for the exit of Great Britain from the European Union) may finally be the straw that breaks the back of the 59-year experiment in supranational governance.

Why leave the EU?

So, why are the British leaving the European Union? One can observe in Great Britain a microcosm of the populist politics that are sweeping across the advanced industrial democracies.

At its core, the British public is experiencing a rebirth of nationalism on a level that probably has not been seen in the country since before World War I. Polls show that British national identity has been rising since the turn of the 21st century, and has intensified in the wake of the financial crisis.

Just as in the United States (and in other parts of Europe), a large number of citizens have become convinced that their governments have done too much to help immigrants and not enough to help the “nation.” In response, they want to take back their nation and have their government produce higher levels of border controls.

European politics have played some role in this process. In the face of slow economic growth, citizens across Europe saw that the European Union was not going to be a vehicle to support a strong economic recovery. Indeed, citizens in Portugal, Italy, Ireland, Greece, and Spain (called the “PIIGS”) were forced to accept economic policies dictated by the German government and their northern European supporters. In the eastern part of the European Union, the financial crisis hit hard as well and citizens across that region began to rethink their commitments to the European project.

In all of these countries, the idea of European solidarity was found to be wanting and citizens have responded by turning back to their national governments for protection. Nationalism is on the rise everywhere in Europe.

The British — who were already skeptical about the idea of European solidarity in the first place — accepted extreme austerity as economic medicine for the crisis. But the dose they got was delivered by their own government, which promised to deliver them from the bad economic times.

As the British economy has slowly recovered, the sense that Britain could go it alone has only intensified. In the last two elections, the UK Independent Party pushed a political agenda with one item: leave the European Union. David Cameron promised that if voters re-elected his Conservative Party, he would hold a referendum on the issue.

Brexit scenarios

What will happen if British voters decide to leave? No one really knows. But let us sketch out two scenarios.

The most positive one is that the British exit will be done with the least amount of drama. The British will decide to opt in to being a member of the European Free Trade Area, which now includes Switzerland, Norway, Liechtenstein, and Iceland. That means they retain access to the European single market, but must still obey European rules in trade. Ironically, the main effect of this will be to reduce the British voice in those rules. If the end game goes like this, the crisis will be weathered by the rest of the member states of the European Union, many of whom will be glad to have the British leave.

But a more negative scenario can easily be constructed as well. First, the Scots are likely to want to stay in the European Union and will revisit their vote to leave Great Britain. Second, firms that are now using Great Britain as a platform to trade with the rest of Europe will choose to relocate in Ireland (and Scotland, if they leave) where people speak English; that will create a job drain. Third, the City of London will experience a similar decline as financial centers in Frankfurt and Paris vie for the financial trading that involves European banks and firms.

But the most negative consequences could be to set the European Union adrift and push each of the countries who are involved to rethink their commitments to free trade, open borders, and maintaining a peaceful Europe.

It is here that Americans should care about what happens next. The European Union is our best defense against most of the current threats to our country. It mirrors our commitment to democracy and western values. If it starts to break apart, then the underlying fabric of the postwar alliance that withstood the challenge of the Soviet Union, as well as the current crises prompted by the ongoing struggles in the Middle East, starts to unravel.

The nationalism of the British will produce more such responses across Europe. With the U.S. barreling toward an election where the Republicans will try to ride the same sentiment to the presidency, the idea that history will rear its ugly head again should make is all nervous.

While the odds of this happening may not seem large now, the Brexit is one more ominous sign that the liberal democratic capitalist project is under siege.

(Alina Polyakova is deputy director of the Dinu Patriciu Eurasia Center at the Atlantic Council, where her work focuses on Russia and Ukraine. She earned her MA and PhD at UC Berkeley.)