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How Union was formed?
(Related Article: What next for E.U., by Jayati Ghosh, Page no. 15)
6 founding members Belgium, France, Germany, Italy, Luxembourg & Netherlands built it in the hope of European Coal & Steel Company established in 1950. Expansion of membership: • United Kingdom joined in 1973 along with Ireland & Denmark. • Greece, Spain & Portugal Joined in 1981. • In 1985, the Schengen Agreement paved the way for creation of open borders without passport. • In 1990 after fall of Berlin wall, Eastern Germany became part of community as part of Unified Germany. • Maastricht Treaty was signed in 1992. • In 1995, Austria, Finland & Sweden. • In 2004, the EU saw its biggest enlargement when Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia & Slovenia. • Latest to join was Croatia in 2013.
Britain and E.U.
(Related Article: Brexit Shock, by Parvathi Menon, Page no. 6)
• In 1957, Britain declines invitation to join 6 founders of European Economic Community in signing Treaty of Rome. • In 1961 with its own economy suffering, Britain sees France & West Germany posting strong recovery and applies for EEC. • In 1963 and then in 1967 French President vetoes Britain’s request. • In 1975, Britain votes “Yes” in referendum on EEC membership. • In 1994-95 E.U. agrees to launch single currency in 2009 • In 20008 Global financial crisis • In 2013 Cameron announces plans to negotiate Britain’s E.U. membership and hold referendum in 2017. • June 23, 2016 U.K. votes by 52% to 48% to leave E.U.
Whither E.U.?
(Related Article: What next for E.U., by Jayati Ghosh, Page no. 15 & Immigrant factor, by John Cherian, page no. 25)
• Less flexibility in E.U. with respect to both economic policies & migration. • Ignoring democratic expressions by E.U. leaders as they forced their decisions on people. • In many European countries, right wing parties that are growing mainly due to migrant crisis are demanding referendums on E.U. membership. France, Italy, Hungary, Slovakia, Spain are facing issues.
Brexit and Referendum:
(Related Article: Failed Gamble, by Shiv Mukherjee, page no. 33)
Argument in favor Referendum: • If democracy is our goal, then important issues affecting them should be best voted on by the people as a whole, or atleast all who are eligible to vote. • This is direct democracy, unsullied by vested interests, party politics with its back room deals & horse trading.
Arguments Against: • Undermines the role of elected representatives. The people can vote in a referendum with no real stake in the outcome. • Voters are usully not well informed about the issues, especially complex ones. The assertion that referendum is pures it comes straight from the people & is without contamination by lobbyists & vested interests is incorrect; there is as much politics in a referendum & more if you add all pervasive social media. • Referendum reflects the people’s present frustrations & priorities, the resulting uncertainties & complications are almost never a factor. • Referendum always give the people a stark; binary choice yes or no. In vast majority issues, the choice is hardly that simple. • No matter how bizarre the outcome, it is irreversible. Even if rejection is legally possible, the near mystic virtue of general will such that is impossible to contest.
How Britain voted?
• Majority of those working full time or part time voted to remain in E.U. • Not working or unemployed voted to leave. • Class divide in respect to people’s voting preferences emerged a) AB (prfosseionals & managers)- 57% voted to remain b) C1s(Supervisory/clerical or manual)- evenly divided c) C2DEs (Semiskilled etc)- 2/3rd leave • In total 52% voted to leave and 48% voted to remain.
Questions behind the Verdict: • Deeper meaning & import of Brexit vote is till unclear. Was it driven by exasperation at non transparent & fundamentally undemocratic structures of EU or was it a xenophobic vote against immigrants. • Does it reflect inequalities generated by Rural-Urban divide? • Was it a demonstration of anti-establishment fury by the losers of globalization?
Reasons behind exit:
(Related Articles: Brexit Shock, by Parvathi Menon, Page no. 6; A stone at hornets’ nest, by Prabhat Patnaik, page no. 11; What next for E.U., by Jayati Ghosh, page no. 15 & Immigrant factor, by John Cherian, page no. 25)
• Despair and anger of working class that have been forced to shoulder the multiple burdens that have been forced to shoulder the multiple burdens that successive governments imposed on them. • Thatcherite deindustrialization & privatization first threw out of secure jobs & into uncertain & low paying employment. • 2008 recession. • In post recession period of recovery, they were hit by austerity economics. • The grass root campaign was just fear mongering & hate campaign. • The favour and finance the establishment and the capitalists unleashed against Brexit and their massive campaign in favour of remain contingent. • Not only economic stagnation & inequality but breakdown of communities & a pervading sense of hopelessness among people across region, who feel they are no longer able to control their own destiny. • Low and receding employment prospects. • Precarious work contracts, flat or falling real wages. • Increasing insecurity in material life. • Reduced access or lower quality of essential public services such as health and education. • Increase in problems due to immigrants from war torn regions of West Asia. • Tragedy is that growing alienation of many people have become victims of financial globalization. Nationalism is little more fig or suppressed racism & intolerance to ethnic cultural differences. • The refugee influx, triggered by West on Libya, Syria is one reason with fear of immigrants taking jobs of locals. • The frustration of globalization and ardent impositions of capitalist ideas and reduction in the role of state for welfare of people.
Brexit Impacts:
(Related Articles: A stone at hornets’ nest, by Prabhat Patnaik, page no. 11; Disruption on cards, by C.P. Chandrashekhar, page no. 19; Grim future, by Vijay Prashad, page no. 29)
• One of the main instruments used by finance capital to prevent any delinking from its prevailing arrangements is the instilling of fear over the consequences that would follow any such delinking and no any such concurrent plan after Brexit. • If measures of fiscal & monetary contradiction are adopted to counter this sequence then unemployment rate rises, so that the working people become worse. • British economy has already been facing a serious CAD even before vote. In quarter of 2015, CAD was 52% of GDP. Capital inflows on large scale enough will die down & uncertainties of future will lead to further decline in inflows. • “Bloody-mindedness” of finance capital which would be reluctant to “bail-out” Britain that has opted out of EU both as punishment & also preventing domino effect. • Lack of leadership role for future plans. • Brexit from EU could disrupt world trade & jeopardize the process of pulling the global economy out of recession. • Brexit will worsen crisis in EU, it will also effect world to to different degrees, so called “emerging economies” like India. • Brexit could convert great recession into great depression for EU. • Problem is that UK’s decision will badly damage crisis ridden Europe. a) Within the Remaining-27 (R-27), Germany will possibly find an important market in the UK shrinking as well as less easy to access. Infact from new problem of its “new-nationalism”, UK will try to protectionist. b) Bank & firms from the countries the UK are forced to close some or all the operations in R-27, business could be disrupted in these countries with as yet unforseen consequences. c) Pressure from Germany & a few others to remain open to trade with rest of the world would meet with the opposition from those not benefitting from such trade or even from trade within E.U. d) If all is not well in terms of growth in Europe & UK, which together constitute a quarter of world economy in US & better performing economies in Aisa, Latin America & Africa as well. • London had overtaken New York as world’s most competitive financial centre. • The strength that “passporting” & light touch gave London made it an important hub for financial transactions within EU. • For “emerging markets” that have been drawn into the globalised financial whirl & are the locations for substantial sums of legacy investments in financial assets, uncertainty could participate capital flight. • Danger is aggravated by the likelihood of protectionist response to them in disillusionment within developed economies with globalization & elite nexus of business & politicians that sustains the framework the precipitates periodic crises.
Impacts on India:
(Related Article: Wake up call, by Shiv Mukherjee, page no. 23)
• Overall negative impact of Brexit on India will be short lived. Indian markets must deal professionally with Europe without looking at it through British prism. • Fundamentally of our economy is strong with growth rate of 7.6%. Fiscal Deficit and revenue deficit are under control. • India is third largest investor in UK. Depressing fact is that saving top 15-20 companies or shell companies, whose main aim is squirreling away money from India, through invoicing. • Make in India is an objective that should resonate hundredfold more with our companies rather than foreign ones. • India will face issues of trading agreements with E.U. and U.K. • Indian companies in U.K. have to apply for separate permits in E.U. and U.K.
Impact on China:
(Related Article: Short term pain, by Atul Aneja, page no. 31)
China is likely to benefit from the extra elbow room from strategic manoeuvre that it is likely to acquire on global stage in aftermath of Brexit. Immediate costs that China will have to bear • Hefty Chinese investments could fall under risk, though much would depend on outcome of negotiations that London would undertake with E.U. • China’s symbolically significant & image changing investments such as Hinkley Point nuclear projects could enter grey zone. • With UK out of EU, China’s access to the markets continental Europe could be difficult. There is the fear that EU minus Britain would turn protectionist i.e. Chinese companies in UK may fail to get tariff free access to wider European market. • Following China’s accession to WTO in 2001, many of manufacturing jobs in a variety of sectors moved to China.
Chinese investment oversees: • Chinese have offered glimpse of what can be done to rekindle first rate manufacturing in Eurasian supercontinent under “Belt & Road” connectivity template. • Major benefits to be realized in geostrategic arena: a) France proposed sending EU novel portals to counter China in SCS, but it changed post Brexit. b) NATO’s future. c) Russia & China to gain, West Pivot to Asia to lose. • West posing less danger in future after Brexit, the Eurasian connectivity undertaking under Belt & Road plan is important building block from transitioning China’s economy. • Brexit has potential of breaching Atlantic Alliance, on account of Europe’s increasing reliance on Asia, especially China.
By: Anuj Sharma ProfileResourcesReport error
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