Brexit: New opportunities with China and Europe?

Brexit is a harbinger of new uncertainty in Britain, Europe and beyond. A chain of events has been set in motion and it is anybody’s guess where the chips will fall. Much less do we know when the dust will settle, nor what the positives of Brexit could be when all is done.

Brexit seems part of an unsettling larger global pattern where institutions are failing to deliver and people respond by defying those institutions. Populism is as varied as the Arab Spring, the European Far Right and the Far Left movements or some of the American election narratives, yet a common denominator is deep discontent. There is increasing inequality, economic stagnation, overpopulation, lack of social mobility, fear of migrants and terrorism. Moreover, it is not unlikely that in the coming years matters will worsen. With such an outlook are there any bright spots to Brexit?

European reform

The British electorate has spoken, sending signals that Brussels better not ignore. The message begs for deep reflection, even when the temptation is to pick up the spoils. French Prime Minister Manuel Valls promises incentives for banks moving from London, even if Paris is no match to the City’s sophistication in matters of finance. Naiveté is not the issue here. This type of jostling dents the European ethos with its sterile loose-loose scenarios. What London and Britain might lose by Brexit, other Europeans will not gain.

The temptation for the EU to erase the smirk on Boris Johnson’s face will be understandable, but it’s no time to make life more difficult for the UK than it ought to be, if only because of self-interest. Legitimacy of its narrative is the EU’s main force. After all, at its inception the ECC was a peace project. Punishing Britain as a deterrent to the exit campaigns of Marine LePen in France or Geert Wilders in Holland might easily backfire. A vengeful EU will breed resentment; instead it is time for a charm offensive via a deep reform push to make the Union both more effective and more legitimate. The modern nation-state peace project of the 1950’s is now a given and needs to be transformed into a working prosperity project. To that end European elites must mobilize their creative energies to design a leapfrogging strategy for a new mode of political organization. The added pressure for institutional innovation is at the core of the Brexit opportunity.

How should the EU re-organize? It starts with the practical question of Brexit about what the relationship with Britain will be: EFTA, EFTA-light, bilateral, bilateral-light? It is high time to design a new European architecture, one that is flexible and one that benefits from competition. One size does not fit all in Europe; the EU has to leverage its diversity by providing choice. For instance, there could be two or three integration levels where nations can opt in and out - without the recent drama - and pick the corresponding institutional arrangements that suit them best. The core level, the Union, would see tighter integration with a democratically elected European President accountable to the people, not to a club of states perceived as specializing in backdoor deals. The nations by choice out of the core, such Britain, Norway or Switzerland, would still relate to the EU via economic and other arrangements. The end point of a Polexit or a Frexit scenario would be clear. Uncertainty would be reduced, the popular will respected and this measure of flexibility and institutional innovation would make the EU adaptable, able to absorb stress and all in all more likely to survive.