[ANALYSIS] Brexit: own goal or a new beginning?

Some have described it as Independence Day, others have said it was the worst day of their life. Brexit divided a nation and could now lead to the disintegration of both the EU and the UK. 

Speaking to MaltaToday hours after the referendum result was issued, Maltese academic John Baldacchino said Brexit was long in coming and it is a combination of many factors. 

Baldacchino, who resides in Scotland and voted Remain said that the EU is partly to blame for the result. “The British were always sceptical, but this does not exculpate the EU. The EU has huge problems of governability. It is excessively bureaucratic and it is perceived as a Franco-German affair. And with what happened recently vis-a-vis Greece and the Southern European countries, one cannot blame anyone for seeing the EU in this way.” 

Pointing out that a federal Europe cannot happen without the EU losing its peripheries and keeping its Unionist core, Baldacchino warned “there is a huge problem, and unless the member states begin to push for reform there is a danger that others will follow suit in Britain’s exit.

“I wish the EU would change tack. Like Ianis Varoufakis I tend to look at the EU as a problem but also as a source of solutions, but only if there was the political courage from progressive forces to unite and work together to reform Europe,” he added.

Asked who is the main culprit for Brexit, Baldacchino said there were factors directly linked to the way British politics evolved, especially in the last decade. 

“There is a past that has seen its own evolution of Euroscepticism moving from Labour in the 70s to the Tories, which split them right down the middle. But there is also a disconnect with the EU. We all know how the EU is split horizontally and vertically between several EU member states. We also know that the EU is seen as a bureaucratic entity ‘out there’; and this is a perception which is partly true, but it was seized upon by Eurosceptics who consistently hid the benefits of EU membership, and exaggerated the problems – even when the UK got more concessions than any other member state.”

Outgoing British Prime Minister David Cameron must also shoulder responsibility, Baldacchino said, explaining that his electoral promise to hold a referendum was both a miscalculation and a gamble which “backfired on him and on Britain.” 

Complacency among the electorate also played a part he said, but “there was also a systematic reinforcement of the misconceptions that grew around the EU, partly to hide the problems caused by British governments in the way they run the economy and more so with widespread cuts which came upon the British electorate in the last few years.

“We cannot forget that the notion of immigration as the source of all evils and the EU as the source of immigration was a major narrative that affected a good portion of the working class vote. In Scotland, where immigration is welcomed and is seen as a source of development and wealth generation, the attitude towards the EU was always positive. And this is reflected in how the Scots overwhelmingly voted to stay in,” he added.  

“However in several regions of England, which have suffered the brunt of recessions and cutbacks, this narrative was effective,” with many unemployed blaming their woes on immigration.

With some Labour strongholds overwhelmingly voting Leave, Labour Party leader Jeremy Corbyn is being accused of leading a feeble campaign to remain. 

Noting that the British economy in its mechanisms is robust Baldacchino said it is difficult to tell how Britain will fare outside the EU. 

“My fear is that in the immediate future there will be a snap election and with a weak Labour Party we’ll see a very right wing Tory government which will wreak havoc. This could result in a backlash and maybe a reformed social democratic Labour Party could resurge and rebuild the welfare state.”

Asked whether Brexit would boost Far Right parties in Europe, Baldacchino said “I think the British result is a symptom of a larger surge. Britain may seem to be distanced from Europe, but it forms part of that phenomenon. The discourse we have been hearing for some time now reminds me of what one reads in the history of Europe in the 1930s: weak liberal democracies, managerial governments, and a Left in disarray. With the movement of peoples because of wars and economic imbalances, you have the right conditions for the resurgence of a reactionary Right. We are not going to see black shirts, but the rise of the corporate state is there and we are already feeling the consequences.”

Some Maltese expats feeling ‘unwelcome’

Similarly to Baldacchino, UK-based accountant Edward Fenech and his family voted Remain and in comments to MaltaToday he expressed bitter disappointment at the outcome. 

“The economic reasons for staying are overwhelming. The country that conceived the single market has effectively disowned it. However the major reason we voted IN is because we truly believe in the EU as a force for good, peace, stability and equality. Despite the problems of Europe it is still the brightest light on the planet. As my daughter Victoria recently posted – on Facebook of course – ‘the EU isn’t perfect but no family is’.”

Fenech said the decision seems to be a massive own goal for Britain, and asked how the Maltese expats will be affected, he said “we don’t know, that is the issue. Those who have a passport or are entitled to get one because of five-year residency will have the same rights as the Brits. Those who do not will be living in limbo for some time. The mood of the Maltese people I have chatted to is not good. Some already feel that they are living in a country that no longer welcomes them.”

Fenech, who is head of product at a leading accountancy software company, added that “the really sad part to this story is that the people voting to leave have been voting on reasons that are, in some respects, pathetic. The discourse is that there is too much bureaucracy and control, but when you actually ask people what they mean they have no reply.

“Then there is the bogey man complex of the immigrant of course. First it was black people, then the Jews, then the Caribbean, later the Poles, Romanians, Bulgarians and now of course the Turks. This country is an immigrant country that succeeds because of immigration. Incidentally this very evening, just 24 hours after the vote, a leading Brexit supporter, MEP Daniel Hannan has declared that a Norwegian-style arrangement may be the best option – this, of course includes free movement of labour. Brexit is looking increasingly like a con, with Boris Johnson playing chief clown.”

He added that this week’s British referendum reminded him of Malta’s EU accession referendum in 2003 “when the bogey man was the Sicilian hairdresser and the terror was an inevitable Aids epidemic from EU membership – somewhat depressing and pretty shallow. However as the Brits say, let’s Keep Calm and Carry On.”

Gonzi: Malta needs Britain 

Former Prime Minister Lawrence Gonzi said he is confident that despite Britain’s exit, Malta and the UK will retain a strong relationship. 

Asked whether Malta will benefit from Brexit, Gonzi said “there are always advantages and disadvantages. Both will probably balance each other out. As I have already stated, for us Maltese, we need Britain to remain a strong and successful economic partner with whom we will cooperate as trading partners and as active members of the Commonwealth of Nations.”

Gonzi said that any negative effects on Malta can be mitigated through bilateral agreements between the two countries, noting that “this is something that should not be difficult for us to implement since we already have a number of such bilateral agreements that benefit both sides and which can and should be strengthened now that the UK will no longer be a member of the EU.”

With Britain out of the EU, Malta could lose an important ally in its struggle to resist attempts to harmonise tax across the EU.   

But Gonzi, a convinced European, said that he honestly hopes and believes that the Maltese government will continue to defend Malta’s interests as far as tax harmonisation and regularisation of financial services are concerned. 

“In this, the Prime Minister would do well to take up Simon Busuttil’s offer of cooperation in this and in other matters. National interest demands that both sides come together to defend what keeps us able to compete in a globalised world. Our economy, our jobs, the future of our younger generation depend on this. This was a red line in my time. I trust nothing has happened to change this.”

Gonzi believes that the European project remains a viable proposition.

“The principles it represents and the values it embraces remain unchanged. It stands for respect for human dignity and human rights, freedom, democracy, equality and the rule of law. These principles have brought peace and prosperity for all member states and it is an undisputed fact that as a result EU citizens have gained immensely.”

Brexit however, Gonzi said, has shown that there is a disconnect between what the EU stands for and what citizens expect from EU leaders. 

“So far EU political leadership has failed to respond adequately to the immigration crisis. EU leaders have failed to practise solidarity where and when solidarity was needed. They have allowed austerity to dominate its economic policies even when it was clear to everyone that flexibility was necessary.”

The former PN leader added that some leaders have insisted on a one-size-fits-all model, forgetting that Europe stands for unity in diversity. 

“The stark reality is that the political future of the European project depends very much on its political leaders – not those in Brussels but those leading its member states. If our Presidents and Prime Ministers shoulder the responsibility for their collective political decisions, if they do so in a manner that addresses the major concerns of our citizens: jobs, security, terrorism, education, health – then the EU project will have a solid basis for the future. If not, then the very raison d’etre of the union will be placed in doubt and the consequences will be dire for everyone.”

Asked whether he believes Britain will prosper or flounder outside of the EU, he said “the British people are resilient. Their economy has some very strong fundamentals and their democracy is a beacon for all the nations in the world. There is no reason why Britain should flounder outside of the EU. In my opinion, it would have been much more successful in the EU than out of the EU. But this is now beside the point. For us in Malta, it is crucial that we understand the importance for Britain to be successful even outside of the EU. The fact that Malta will have the Presidency of the EU during a key stage of the negotiations for the exit, places more responsibility on us to be able to deliver a smooth transition which is not inspired by hard feelings, nostalgia or emotional knee jerk reactions.”

Gonzi said that he now expects member states to react in a constructive manner, arguing strongly for a change of direction as well as updates in policies that deliver real and tangible benefits for citizens. “In all fairness one must state that in the past months – even before Friday’s referendum – President Juncker had already launched a host of initiatives that are designed to stimulate economic growth and create jobs. More needs to be done.”

He however does not believe that other countries will want to emulate Britain and pointing out Scotland and Northern Ireland’s willingness to break off from the UK to remain in the EU, Gonzi said the question is not whether other countries want out, but rather whether parts of the UK want in.

Sant: War not lost but battles will get riskier for Malta 

Sounding a note of caution, former Labour Prime Minister Alfred Sant said European leaders will need to tread carefully following the British vote. 

“Adoption of a ‘tough’ stance towards the UK will be detrimental to the EU’s own interests; too ‘soft’ an approach runs the risk of loosening internal ties. There will be the calls for an acceleration of the unity project, proposing further ‘deepening’ of institutions. That would be another mistake; it could create further fissures. The best approach would be consolidation after a period of reflection about how best to carry out the forthcoming exit negotiations with the UK.”

Sant, who himself opposed Malta’s EU membership in 2003, said that initially, Britain might face some serious economic and financial problems. 

“I am however wary of doom and gloom scenarios. By itself, Britain is a medium sized economy with lots of things going for it. In the medium term, it should have the capability to reposition its economic machine in the globalised economy and occupy quite a lucrative niche.”

Sant, who now leads Labour’s delegation within the European Parliament, said that rather than renegotiating their membership conditions, “which is largely a British ploy,” member states will feel more empowered to resist the development of common EU policies proposed to tackle new needs or emergencies, mainly in the immigration sector, but quite possibly in other areas as well. 

“The Visegrad group have been active in this approach and will probably now feel vindicated.”

On whether other countries might now be encouraged to follow suit and exit the EU, Sant said there already are similar demands by the extreme right in Holland and other countries. 

“The big problem for the EU is that it is increasingly being perceived as some kind of Trojan horse for globalisation, leaving the working and middle classes without protection when times are hard.”

Sant said that Malta could benefit from Brexit, but only marginally, “as the case could be made that Malta might benefit from financial services opportunities at a European level, which will be given up by the UK as a result of Brexit. Others however will be prowling to make the same killings. On iGaming, I would not rule out meanwhile developments that have nothing to do with Brexit, but that would follow the patterns of Luxleaks and the Panama papers.” 

Asked whether Malta can survive a possible onslaught to introduce tax harmonisation, Sant said he could not give a definite answer.

“But for different reasons, different member states, not just the UK or Malta, have reservations about tax harmonisation, or the regulation of financial services, or both. Countries like Austria, Holland, Cyprus, Ireland. So the war is not yet lost, but coming battles will get increasingly riskier, without a big player like the UK in the lists.”