Brexit’s EU shake-up and the global fall-out

Brexit has certainly shaken the European Union. But apart from the mess over the timing, pace and substance of Britain’s EU divorce, no one should expect any other major changes in way the now-27 member bloc conducts itself. And, oh yes, don’t expect any rapid EU unravelling either.

True, there has been a spate of statements on the need for “political reflection to give an impulse to further reform”. The foreign ministers of France and Germany have talked in a heady fashion of their vision for further steps in the direction of a political union. And there’s even a brand new EU “global strategy” articulating the bloc’s vision for dealing with the world outside.

The far right, meanwhile, is predictably gloating over the “Leave EU” message delivered by British voters and demanding similar national referenda on EU membership in their countries. Europe’s populists will certainly continue to make gains in elections in the coming years. But the likelihood of other EU referenda is slim.

Similarly, those vowing to show that the Union is strong and unchanged by Britain’s withdrawal and that the EU will push on without the presence of Britain as the perennial naysayer, the sceptic and the doubter are on the wrong track. The truth is different.

Britain’s objections focused on the EU’s overly ambitious plans a further pooling of sovereignty and the bloc’s failure to hammer out a rational and fair immigration policy. These are also opposed by many other EU states, not just Britain.

On questions related to the further development of the EU single market, Britain was usually in the vanguard of states wanting the removal of internal barriers. On trade, it took a strong anti-protectionist line. And for all the anti-immigration talk, Britain’s multi-cultural landscape stands out in an EU where minorities are not as visible as they should and could be.

Europe’s internal divisions are not about to disappear. The squabbling and wrangling over the EU’s future will continue — perhaps even become shriller. There is no guarantee that the advice to act responsibly given to the EU by US Secretary of State John Kerry will be heard.

What Brexit has done, however, is create uncertainty on global financial markets triggered by the fall in the value of the pound. Some of Asia’s biggest economies have warned that Brexit could cast a shadow over the world economy for years to come.

Global business leaders are already rethinking their export and investment strategies to take account of Britain’s imminent departure from the EU.

More is at stake, however. The EU has long inspired nations across the globe with its message of reconciliation among former adversaries and as a project for peace and stability. In varying ways and to varying degrees, many have also looked to Europe in their own quest for regional integration and cooperation.

That reputation has now taken a body blow. Both Britain and the EU appear diminished to a closely watching world. Those opposed to regional cooperation are likely to take heart from the EU’s difficulties. But it would be unfortunate if the EU crisis puts the brakes on other regions’ plans for integration.

Significantly, none of the EU’s foreign partners — except Donald Trump, the presumptive Republican nominee for US president and possibly Russian President Vladimir Putin — is applauding.

Much will depend on how British and EU leaders conduct themselves over the coming weeks and months. Britain’s pro-Leave campaigners have already sullied the country’s reputation by misinforming and misleading their citizens and by fanning the fires of hatred and racism. It will be tough to correct their mistakes — if that is indeed what the next British Brexit government intends to do.

EU leaders, meanwhile, face a stark choice: they can either listen to and respond to the real concerns of their citizens, including on immigration, and seek a dignified response to the latest crisis. Or — as many fear — they can engage in yet more squabbling over Europe’s future direction.

The route they take will determine whether or not other eurosceptic movements will become even stronger in the days ahead and present their own blueprints for an EU exit.

Europe’s response will be watched carefully not just by the US where fears are growing of a Trump victory in the November presidential elections but also by China, India, Japan and Europe’s other important partners which have invested heavily in Britain as a “gateway” to Europe.

No responsible global power wanted Britain to leave the EU and today no major country wants the EU to unravel. True, some countries may want to negotiate new trade pacts with Britain — but as the US and India have warned, such discussions will not be their top priority. The EU is a much larger trading bloc than Britain — and will continue to count for more on world stage.

For Europe’s trading partners Britain’s absence will be especially felt in EU discussions on trade agreements, whether bilateral free trade accords such as the Transatlantic Trade and Investment Partnership (TTIP) or the wider multilateral trading system. London has taken a strong stance in favour of granting market economy status to China. It has also been among the lead players in the EU’s trade relations with many South Asian countries, including India, Pakistan and Afghanistan.

The departure of Britain as the EU’s prime military power, is going to hit hard at a time when Europe is trying to push its security credentials, especially in Asia. A new EU “global strategy”, which cannot rely on and use Britain’s wide network of global partners, will appear less impressive.

In the end, however, once the market turmoil is over and the reality of Brexit sinks in, it is the blow to the EU’s reputation as an agent for change and transformation which will resonate most strongly across the world.

View from abroad: Xi’s visit to Britain: it’s also about the EU (Originally published 24/10/2015 at Dawn.com)

President Xi Jinping’s recent trip to the United States grabbed global headlines. By going to Britain, the Chinese leader has sent an equally important signal of his interests and determination in deepening and expanding China’s ties with Britain — but also with Europe.Beijing and Washington certainly need to talk to each other on a range of bilateral and international issues. And the Sino-American agreements reached on cybersecurity and climate change will help ease relations between the world’s two leading political and economic actors.But President Xi and Prime Minister Li Keqiang’s many visits to Brussels, Paris and Berlin this year — and now Xi’s high-profile trip to Britain — underline that China and Europe have also made a strategic choice to further develop and expand relations.China’s focus on Europe and on Britain is important for several reasons. Tackling challenges in a multipolar and multi-complex world requires more than cooperation between China and the US. It also demands working in tandem with the European Union and its 28 member states.Britain, given its global role and influence is, of course, especially important. President Xi’s visit, including his high-level meetings, underline to a watching world — and to the rest of Europe — that China still views Britain as a key international player.Significantly, Xi’s visit follows a trip to China by UK Chancellor George Osborne last month, during which he said Britain should be China’s “best partner in the West”.It’s not just Britain that wants closer ties with China, however. Germany remains a strong contender for the title of Beijing’s ‘best friend’ in Europe. And more generally while relations between China and individual EU states are important, ties with the EU are also improving, with the launch of the connectivity platform and the agreement to cooperate on developing 5G networks.Europe certainly has the markets China needs for its exports — and trade is still booming. European expertise and know-how is critically important to help meet China’s urbanisation, climate, innovation and other developmental challenges. Most recently, there is a focus on synergies between the ‘One Belt, One Road’ project and Europe’s own investment blueprint for transport, digital and technology networks. Britain and British companies have a key role to play in such cooperation, both on a bilateral level but also through the EU.True, the EU’s many recent crises have eroded much of its lustre. Last year has been especially difficult as EU leaders have grappled with continuing troubles in the Eurozone, struggled to tackle the influx of refugees fleeing war and conflict in Syria and Africa while also dealing with longer-term problems of low growth and high unemployment.For the next few months, the focus in London, Brussels and in other EU capitals will be on Britain and the country’s upcoming referendum on its membership of the EU.The EU is hoping that Britain will opt to stay in. And while no EU leader would say so in public, many are clearly hoping that President Xi gives a clear but subtle message to British citizens to vote in favour of EU membership. As such, it is especially significant that the Chinese president has met leaders of the opposition parties and parliamentary leaders.But that’s not the only reason that the EU kept a close watch on President Xi’s speeches and meetings in Britain. China-watchers in Brussels and elsewhere in the EU wanted to learn more about the state of the Chinese economy after the market volatility over the summer and what to expect as China’s development priorities in the upcoming 13th Five-Year Plan.Meanwhile, Xi’s speech in London provided further insight into China’s hopes for the internationalisation of the renminbi and also information on China’s priorities as it prepares to take over as chair of the G20.Certainly as in other EU capitals, the focus was on business, with Britain looking for Chinese investments in key projects such as a high speed rail line in the north of the country and a deal on Chinese investments in the Hinkley Point C nuclear plant. The UK is now China’s largest investment destination country in Europe.More investment opportunities for Chinese companies opened up in the railway, energy, aviation and telecommunications industries. Significantly, leading the way for other European countries, Britain joined the Chinese-led Asian Infrastructure Investment Bank (AIIB), despite opposition from Washington, earlier this year. Within the EU, Britain’s opinion is important as the EU and China negotiate their Bilateral Investment Treaty and will be even more important if and when the two sides start discussions on a Free Trade Agreement.There used to be a time not so long ago when China’s friendships with individual EU member states were viewed with suspicion by Brussels. This was especially the case as regards China’s ‘special relationship’ with Germany and the burgeoning ties between Beijing and the Central and Eastern European states. Fortunately, such unease is now mostly over, with many policymakers agreeing that stronger bilateral ties between China and the individual EU member states — including Britain — help to consolidate and deepen the wider EU-China relationship.

Shada Islam quoted in 'World positive about development of China-Britain ties following Xi's interview with Reuters' (Xinhua 19/10/2015)

This year marks the second 10-year comprehensive partnership for the two countries as well as the 40th anniversary of the establishment of the China-Britain ties. Xi stressed that the good China-Britain relationship bodes well for the good China-Europe ties."Recognition of China as a global and regional strategic player is growing very much in Europe," said Shada Islam, director of policy at Brussels-based think-tank Friends of Europe, in a recent interview.Islam upheld that the China-EU ties are based on a fundamental and indispensable necessity.China and the EU have scored fruitful progress in cooperation since the two sides forged ties 40 years ago, and their leaders have worked out a good road-map for the future, which is based on practical and pragmatic cooperation in areas that the two sides have mutual benefit, such as China's initiative of One Belt and One Road, the EU's Juncker investment plan, innovation, 5G telecommunication technology, education, energy links, urbanization, and smart cities, she said.The potential for China-EU cooperation is immense, not just in business and economic cooperation, but also on global stage, Islam said.There has been good cooperation so far over Iran, and both sides are hoping to get similar dialogue going on the Korean Peninsula and need to settle the havoc in Syria, she said.China is not only an indispensable player economically, but also strategically and politically, Islam added.For the full article, visit:http://news.xinhuanet.com/english/2015-10/20/c_134729483.htm

View from abroad: Not everyone wants Fortress Europe (Originally published 29/08/2015 at Dawn.com)

Throughout the summer, the headlines have reflected the heart-wrenching reality of Europe’s worsening refugee crisis.The messy, incompetent and often cruel response to the influx of embattled men, women and children arriving on its territory is a huge blot on Europe’s reputation. It is also a source of disappointment for many who believed in the creation of an open, more tolerant society and thought Europeans had learned the lessons of a shameful, tragic past.Alas, many have not. The hostile reaction of governments in Britain, Hungary, Slovakia and others to the refugees arriving in Europe from war-devastated countries illustrates a callousness, intolerance and indifference that many hoped would never be seen again in Europe.News from the different “fronts” in the crisis — the Mediterranean sea, the scene of many shipwrecks and deaths, the Balkans where desperate refugees are using land routes to reach Europe and Calais where thousands are stuck in a no-man’s land between France and Britain — continues to dominate the media, elbowing out news of Eurozone troubles, including early elections announced by Greece.The focus is on the harsh statements and even harsher actions by European nations. British Prime Minister David Cameron infamously referred to “swarms” of immigrants while his foreign secretary Philip Hammond warned of “marauding migrants” on Europe’s doorsteps. Meanwhile, the huge camp of refugees seeking entry into Britain set up in Calais in France is kept in check by a swelling police presence and more fences.Many governments, especially in the former Communist central and eastern European states are gearing up for military action to keep out the desperate people on their doorsteps. More and higher fences are being erected. Some countries such as Slovakia and others in Eastern Europe have said openly that they will only take in a limited number of refugees — and only those they can identify as Christian. Not surprisingly, the refugee crisis dominated a summit on the western Balkans attended by EU leaders last week.United Nations Secretary General Ban Ki-moon has urged countries “in Europe and elsewhere to prove their compassion and do much more to bring an end to the crisis”. The thousands of migrants and refugees who brave perilous journeys “should not, when they arrive, encounter new challenges”, Ban said during a visit to Paris.Yes, the crisis has brought out the worst in Europe. But — at least in some cases — it has also brought out the best.Take the governments in Italy and Greece which have been struggling to cope for months with the arrival of an ever-rising number of refugees, their appeals for a more equitable sharing-out of the “burden” rejected by other members of the European Union. Italians coastguards continue to save hundreds of endangered refugees on the high seas. While far-right groups in both countries are up in arms against the refugees, ordinary Italians and Greeks — suffering from their own Euro-imposed troubles — are providing food and shelter to the new arrivals.Even as Britain’s Cameron panders to the xenophobic sentiments of the anti-foreigner UK Independence Party, many British citizens are helping out in the Calais camp. And a letter from the Jewish Council for Racial Equality to Cameron says British Jews are appalled by Britain’s response to the situation in Calais. “Our experience as refugees is not so distant that we’ve forgotten what it’s like to be demonised for seeking safety,” the letter said, adding: “People fleeing conflict and persecution are not to blame for the crisis in Calais; neither is our welfare system, nor the French government. Above all, we in the UK are not the victims here; we are not being invaded by a ‘swarm’.”Most importantly, perhaps, Germany has emerged as the country most willing to welcome the new arrivals. As the country gears up to receive an unprecedented 800,000 refugees, many of them from Syria, German Chancellor Angela Merkel has lashed out against “vile” anti-migrant violence and warned: “There will be no tolerance of those who question the dignity of other people.”Public opinion appears to be largely behind her, with 60 per cent of Germans polled by public broadcaster ZDF saying that Europe’s biggest economy is capable of hosting the asylum-seekers.Desperately seeking a joint EU response to the crisis, Merkel and French President Francois Hollande have said the refugees need to be distributed more equally among the 28 European Union countries, a demand backed by the European Commission. But there is strong opposition to such collective action from Britain and the eastern European states.Germany has in fact taken more than 40% of the Syrian refugees who have reached Europe; Sweden has taken another 20% and Greece, Italy and Spain account for another 25%.As the weeks drag on — and far right parties become ever more vocal in their anti-foreign rhetoric — the need for a joint EU response to the crisis will become more urgent. Merkel and a few others may worry about the erosion of European values — but others are busy building the walls and fences required to secure Fortress Europe.

View from Abroad: Can’t live with EU — can’t live without EU (Originally published 30/05/2015 at dawn.com)

The European Union is gearing up for another bout of prolonged, agonising and internal soul-searching.Reflection on Europe’s future, its identity and role in a rapidly changing world is certainly necessary. But the European landscape has become increasingly complicated, making it imperative that even as it ponders over its future, the EU deals with the many crises on its borders — and beyond.Also, at a time when unity is a compelling necessity, many of the 28 EU countries often appear to be headed in different and often contradictory directions.Take a look: Cameron calls for ‘flexible and imaginative’ EU reformsThere is no denying that triggered by demands by Britain’s newly re-elected Prime Minister David Cameron for an across the board overhaul of key EU priorities, the bloc looks set to enter another period of deep introspection on its future direction, main concerns and general raison d’etre.Britain will hold a referendum — probably next year — on whether it should remain in the EU. But London is not alone in envisaging a withdrawal from the Union.There is also dangerous talk of a Greek exit from the Eurozone as Athens struggles to meet its massive financial obligations vis-à-vis its international lenders.Meanwhile, Poland has elected a conservative new president, Andrzej Duda, while Spain seems to have voted in the opposite — leftist — direction in recent regional elections.In addition, the European economy remains mired in stagnation. Jobs remain scarce across the bloc while the debate on immigration and reception of refugees becomes ever more toxic and complex.Ironically, even as Europeans wring their hands in despair over their many interrelated problems, countries outside the bloc can’t wait to get in.Ukraine, Moldova and Georgia have joined the long list of countries which want a so-called “road map” leading up to membership of the EU.They are not going to get any such thing. At a meeting in Riga last week, the EU made clear that while it wanted closer relations with the three countries — and despite the growing influence of Russia in the region — EU membership was not on the cards.Also in Europe, the leaders of six Western Balkan countries have told the EU that they are becoming impatient with their long wait to join the bloc and needed EU funds to keep up reforms.The prime ministers of Serbia, Montenegro, Macedonia, Bosnia, Kosovo and Albania, all hoping to join the bloc, have said their cooperation should be rewarded with projects like new road and rail links.Slovenia and Croatia are the only countries in the region to have joined the EU. The others have lagged behind because of conflicts with neighbours after the break-up of Yugoslavia and a failure to achieve reform.And then there is Turkey which is still waiting on the sidelines, anxious to become an EU member but unlikely to become one any time in the future.For the moment, all eyes are on Britain and Prime Minister Cameron’s calls for a renegotiation of the EU’s Treaty of Lisbon, the latest version of its constitution.Many EU countries are sympathetic to Britain’s demands for an overhaul of the EU — but do not want another long, difficult and complicated treaty negotiation.Details of what Britain really wants are still deliberately sketchy. But, some salient demands stand out.First, Cameron wants Britain to opt out from the EU ambition to forge an “ever closer union” of the peoples of Europe.He wants to restrict access to the British labour market of EU migrants.And he would like to free business from red tape and “excessive interference” from Brussels and providing access to new markets through “turbo charging” free trade deals with America and AsiaFinally, he says Britain would resist any move towards a European army and has ruled out Britain joining the euro.Controversially, Cameron has said that while British, Irish and Commonwealth citizens over 18 who are resident in the UK will be eligible to vote, nationals from other EU countries residing in the UK will not.Very few EU leaders would like Britain to leave the bloc. Britain’s membership of the EU is good for both Britain and other European states.But many in Brussels and other EU capitals are becoming increasingly frustrated with the tone and content of the toxic British debate on Europe.As a result, many are warning that Britain may have to leave in order to ensure the survival of the EU.The prospect of a Greek exit from the Eurozone is equally problematic, with many worried of the repercussions of such a move on the credibility of the single currency.Still, while things may look very complicated for those inside the EU, membership of the club remains a goal for many of the EU’s neighbours. As Turkey has learned, however, getting a seat at the EU table is not easy. It requires hard work, time and effort — and a great deal of patience.

View from abroad : Transatlantic alliance: fact and fiction (Originally published 21/03/2015 at dawn.com)

So here’s the fiction: America and Europe stand united against the “rest of the world”. The transatlantic alliance is strong, solid and a bulwark against the machinations of China and the world’s other emerging nations.Washington and Brussels are like-minded, like-thinking entities which see eye to eye on almost everything. Together, they can still rule the world.Perhaps in the 20th century — but no longer. Here are the facts: the world has changed from unipolar to multi-polar or even “no-polar”. For all its military might, the US no longer rules the world. For proof, look no further than the way Israeli Prime Minister Benyamin Netanyahu is obstructing progress on US-Iran nuclear talks.And here are some more facts: America and the EU are divided over the death penalty, Guantanamo Bay, illegal renditions, the use of torture and the revelations of spying by the National Security Agency as revealed by Edward Snowden.They disagree over how to deal with Russia and Ukraine. And while America sees China mainly as a strategic competitor, Europe is happy to work with Beijing on tackling many 21st century challenges.Certainly, there are some points of convergence. Significantly, negotiations are underway on a Transatlantic Trade and Investment Partnership (TTIP), seen by many as the last attempt by a declining West to impose its economic rule-making model on a watching world.But even as they seek agreement on TTIP, many European states are posing the BIGGEST challenge to the US by deciding to join the Chinese-led, Chinese-inspired $50 billion Asia Infrastructure Investment Bank (AIIB) which Washington continues to firmly oppose.So far, EU members Britain, France, Germany and Italy have said they want to be founding members of the AIIB. But other Europeans will undoubtedly join their ranks.The story is not just about Washington vs Beijing; it’s about a changing world order, the shift of power from west to east, the rise of China and its challenge to years of US domination.It’s about the need to change and reform post-World War II multilateral institutions, including the World Bank and the International Monetary Fund.And it’s about a world desperately in need of cash, especially for badly-needed infrastructure projects — and a rising China which has more money than it can handle.To be fair, US Secretary of Treasury Jack Lew has said that the US was not opposed to the creation of the AIIB. “There are obviously vast needs in Asia and many parts of the world for infrastructure investment,” he told a Congressional hearing on the status of the international financial system.The US concern, he said, has always been whether such an international investment bank will adhere to the high standards such as in protecting workers’ rights, the environment and dealing properly with corruption issues.The bank, proposed by President Xi Jinping in 2013 during a visit to Indonesia, is expected to be launched formally by the end of this year.All Asian countries can apply to become founding members until March 31.Chinese experts say they are looking less for European financial support and more for Europe’s management experience to share with the AIIB.France, Germany and Italy announced they would join the Bank after Britain said it was doing so last week. Australia, a key US ally in the Asia-Pacific region which had come under pressure from Washington to stay out of the new bank, has also said that it will now rethink that position. South Korea is also expected to join.Other European countries are expected to follow the bigger EU nations’ lead. And why not? Like most Asian countries, Europeans are looking to invest in new infrastructure to raise levels of connectivity across the continent.Policymakers are hoping that China will be an important contributor to the 300 billion dollar infrastructure fund announced earlier this year by European Commission President Jean-Claude Juncker.Britain hopes to establish itself as the number one destination for Chinese investment. China is also a strong investor in Germany and in France.Analysts point out that the US has misplayed its hands and that the best way to ensure that China doesn’t dominate the AIIB is to fill it with other powers. This, they argue would result in much stricter governance rules and safeguards.The AIIB is not the only regional project China has proposed that Washington will have to grapple with. Beijing’s “one belt, one road” Silk Road projects are moving rapidly from theoretical to actual, much to the dismay of America and some European states.The Asian Development Bank has estimated Asia’s infrastructure needs at $750 billion a year, far beyond the ADB’s capacity. With connectivity the buzzword across the region, the new Bank is expected to be very busy pumping money into major infrastructure projects.China has also been quick to respond to huge and acute infrastructure needs in the developing world, in contrast with the lengthy project processes required by other lenders.In response to the Chinese initiatives, the Japanese government has also said it wants to focus on infrastructure projects in developing countries.World leaders at the G20 Summit in Brisbane in 2014 recognised infrastructure demand in the developing world as a new source of global growth in the aftermath of the global financial crisis.The transatlantic trade deal may see the light of the day by end-2015 — even though negotiations are tough and public resistance to the pact is high. But even if they do clinch an agreement on trade, America and Europe will not always share a similar vision of life in a rapidly-changing 21st century.