Brexit: responsible leaders back Cameron, not Boris Johnson

Illustration: Eric Lobbecke

A vote by the British people to leave the EU after 43 years will weaken Britain’s economy, diminish its influence in Europe and the world, and deliver a hammer blow to the EU with unpredictable and serious strategic risks of a greater unravelling.

Rarely in a democracy has such a decision, going to identity and destiny, been required from people by referendum. This emotional and bitter campaign that has seen the murder of pro-Remain Labour MP Jo Cox will shape Britain’s future for decades and constitute a searching assessment of the judgment of the British people.

Brexit, a decision to quit the EU and reverse the path of nearly a half-century, is not without cogent and powerful arguments. Yet it fails two central tests. First, while the pros and cons relate to different domains — mainly the economy and sovereignty — a reasoned assessment is that Britain will lose far more than it will gain from folding its tent on the continent.

Second, the inconsistency is too great between Britain’s immense success over recent decades as a non-eurozone EU mem­ber and the solution being proposed: the extreme step of EU abandonment in a world where interdependence and engagement are more, not less, important. The recent British experience neither justifies nor leads to the radical Brexit solution advocated by the ambitious Tory Boris Johnston and his peculiar band of outers.

The opinion of most respected world leaders, financial markets and the bulk of British business overwhelmingly favours the Remain cause. It is advanced with a strange mix of clarity and desperation by Prime Minister David Cameron. The sense from these quarters is unmistakeable: that Brexit is a dangerous step for Britain and the world.

The strength of global opinion is revealing. The only conclusion is that leaving is seen as an act of strategic recklessness. US President Barack Obama has deliber­ately intervened to appeal to Britain to stay. So have Japan’s PM, Shinzo Abe, Germany’s Angela Merkel and France’s Francois Hollande. Eastern European opinion is extreme for Britain to remain. German public opinion is strongly against Brexit. Malcolm Turnbull and John Key support the Remain cause, with Turnbull saying it is the wise option. By the way, so does that Anglophile Tony Abbott, along with former foreign minister and our high commissioner in London Alexander Downer. John Howard is relatively isolated in Liberal circles in his support for Brexit.

Why is opinion so strong? It is because of respect for Britain, the world’s fifth largest economy, and regard for its voice and influence. The EU without Britain will have a huge hole. Britain is usually a source for good, constructive and sometimes courageous policy. These leaders, like Cameron, fear Brexit will leave Britain weaker, not stronger. Are they all wrong?

And who backs Brexit? Start with the vicious Donald Trump with his contempt for NATO. Trump sees Brexit as vindication of his campaign for tougher border controls and crackdowns on trade deals. Move to Russia’s Vladimir Putin, officially neutral but salivating at the prospect of more chaos in Europe. Take in France’s extremist Marine Le Pen. Populists of the Left and Right flock to the Brexit cause.

In a joint statement, former rival PMs John Major and Tony Blair have warned that quitting the EU could “tear apart the UK”. Blair says the stability of Northern Ireland would be at risk. If Brexit wins and Scotland votes to remain — a likely option — that means another Scottish attempt at independence, signifying that “the most successful union in world history would be broken apart for good”.

The irony is that the Brexit cause is based on a great hoax. It purports to offer liberation from the detested Brussels EU bureaucracy and stifling controls in favour of the sunlight of open markets and free trade. Indeed, the band of happy economic liberals who champion these ideas post-Brexit include Johnson, Justice Secretary Michael Gove and the formidable former chancellor Nigel Lawson, among others.

Johnson damns the EU as a zone of “low growth, low innovation and very high unemployment”, saying no “liberal internationalist” could back the union. Would you like to know the truth? Try historian Niall Ferguson, a potent EU critic who sees the reality, namely that “the tone of the Leave campaign remains doggedly parochial”. Brexit voters tend to be older or working class or from rural areas. They are not hoisting the flag for liberal internationalism.

The further reality, as Janan Ganesh argues in the Financial Times, is that the Brexit camp is a coalition of economic liberals and nostalgic statists who dislike the EU for opposite reasons. Far from a departure from Brussels unveiling a new age of free markets, put your money on exactly the opposing option.

The Brexit cause is full of backers longing for the 1970s pre-Thatcher economic model, with Ganesh suggesting the consequence of Brexit is likely to be “a stable culture, a paternalistic eco­nomy, a place that forgoes some growth for cohesion”.

It will be a move towards isolationism and there will be nothing splendid about it.

It is folly to believe the push to retreat from Europe’s single market — the market that Margaret Thatcher backed — is going to lead to a new burst of British globalisation. The drums beating the call for EU retreat are not mobilising popular British backing for markets and economic liberalism. That is a fantasy. People who believe this fundamentally misread the nature of the political movement they back.

Cameron points out that being in the EU has not stopped Britain from running an enterprise culture, a low corporate tax rate (far lower than Australia’s), a modest regulatory environment as testified by the OECD, a flexible labour market, making inroads into its budget deficit and ensuring the success of London as a financial centre. Indeed, it is the openness of Britain’s labour market that is probably the most powerful argument among the public for quitting the EU.

Ferguson adds another reality check, saying much of the activity in Brussels is designed to ensure the EU operates as a single market. Paraphrasing Winston Churchill, he warns the EU is “the worst of all ways of bringing prosperity and peace to Europe — except for all the others that have been tried from time to time”.

The governor of the Bank of England, Mark Carney, strongly supports the Remain case and has warned Brexit could provoke a “technical recession”. Replying to critics, he said the bank had an obligation to the people to ensure the risks were not kept from them.

The ideological fanaticism of sections of the Brexit gang is captured in recent comments by Nigel Farage, leader of the UK Independence Party, saying he hopes Brexit will destroy the EU, thereby bringing “an end to this entire project”. He says the EU is not just “bad for Britain” but “bad for the whole of Europe”. While the EU is flawed, the idea that its collapse would help Europe and Britain and the 20 per cent of global gross domestic product they represent is reckless nonsense.

“We don’t want to see the beginning of the break-up of the EU,” Downer says. He speaks for Australia but the sentiment is near universal. Arguments for EU disintegration are ignorant and crazy. It would almost certainly result in violence in addition to dangerous instability. Russia’s military adventurism would be encouraged. So would the prospect of more authoritarian regimes in Europe.

Ferguson reminds us that Britain for centuries has been tied to the cycles of Europe’s political and military balance of power. The lesson is manifest: British retreat is no answer because “British isolationism has often been associated with continental disintegration”.

Cameron says the onus falls on the Leave camp to make the case for reversal. It is fair to say its efforts have been less than persuasive, despite the polls pointing to its possible victory. The British Treasury calculates the cost to each British household from Brexit would be as high as £4300 by 2030. Opinion from the International Monetary Fund and the OECD says Brexit means a sudden economic shock and a poorer economy in the long run.

“I believe that despite its faults and its frustrations, the United Kingdom is stronger, safer and better off by remaining a member of the European Union,” Cameron says. “We are part of a single market of 500 million people which Britain helped to create. Our membership of the single market is one of the reasons why our economy is doing so well, why we have created almost 2.4 million jobs over the last six years and why so many companies from overseas … invest so much in the UK.

“The Leave campaign are asking us to take a massive risk with the future of our economy and the future of our country. And yet they can’t even answer the most basic questions. What would Britain’s relationship be with the EU if we were to leave? Will we have a free-trade agreement or will we fall back on World Trade Organisation rules?”

There is no clear idea of how Britain would replace its existing trade arrangements with the EU. Gove says Britain would not remain part of the single EU market. New trade deals might take years to negotiate. They could take various forms — as part of the European Economic Area, or the negotiation of a new EU relationship such as Canada’s, or trade relations based on WTO rules.

At this point another huge irony emerges. What would be the best outcome for Britain after a Brexit vote? Answer: it would be the outcome that best resembles the current arrangement with the EU. This is the finding of several independent economic studies.

It highlights a sad joke — the more Britain departs the current trade model, the more risk it creates for itself. The Financial Times’ Martin Wolf argues that “it is far more likely that a supposedly autonomous UK would be more protectionist and interventionist than it is within the EU”.

Johnson says Britain can be like Canada. Gove, unfortunately, says like Albania. But Canada’s EU deal took five years to negotiate. And under the Treaty of Lisbon, once Britain notifies it is leaving, it has just two years to finalise a new trade deal with the EU. Cameron says leaving means “years of painful negotiation and a poorer deal”. Johnson admits leaving will create “some business uncertainty”. Gove says there will be “bumps in the road” if Britain leaves.

Foreign policy realists know what happens next. It has been spelled out. After any Brexit vote, the EU’s priority will be to punish Britain to halt any domino effect. The purpose will be self-preservation. Germany’s Finance Minister Wolfgang Schauble has put the reality on the table: “In is in. Out is out. If the majority in Britain opts for Brexit, that would be a decision against the single market.”

There will be little goodwill towards Britain reversing more than four decades of EU commitment. France’s President Hollande also has been explicit: if Britain leaves, that dictates a tough exit. The EU will show Brexit comes with a high cost. The message to other doubters is: don’t try.

The point is the union is at risk. Its problem today is not its strength but its weakness. EU leaders are alert to an unravelling by popular national referendums.

A supporter of Brexit for sovereignty reasons, Ambrose Evans-Pritchard of Britain’s The Daily Telegraph confronts with honesty the extent of the challenge: “The Leave campaign has offered no convincing plan for our future trading ties or the viability of the City. It has ruled out a fallback to the European Economic Area, the ‘Norwegian’ model that would preserve … access to the EU Customs union and preserve the ‘passporting’ rights of the City.

“However unfair it may seem, the whole Western world deems Brexit to be an act of strategic vandalism at a time when Pax Americana is cracking and the liberal democracies are under civilisational threat … You do not unpick the web of interlocking global ties lightly. One hopes Brexiteers now understand what they face …”

They don’t. Johnson is strong on rhetoric but hopeless in explaining the consequences of his policy. “We will win for exactly the same reason that the Greeks beat the Persians at Marathon — because they are fighting for an outdated absolutist ideology and we are fighting for freedom,” he says. Fine words conceal impoverished argument. The delusion perpetrated by the Leave campaign is that Britain can have the best of leaving but minimise the dangers of leaving. This relates to immigration and trade. Brexit leaders pretend they could somehow keep a viable free-trade system with Europe but also seize back full control of immigration policy.

Chancellor George Osborne says: “These people are going around saying we could have all the benefits without any of the obligations. That is economically illiterate. Where is a single ally or trading partner or credible international organisation that thinks it’s a good idea for Britain to leave the EU?”

As the vote nears, hostility to liberal immigration becomes the single most powerful popular argument for Brexit. The problem, however, is that EU rules for the free movement of trade and labour are integral to the system. Britain cannot take back immigration policy yet save its trade policy.

The two strongest arguments for the Leave case are immigration and sovereignty. They need to be confronted because they show this is not a black-white choice. The EU is a flawed project and this decision overall is about balancing different risks.

The price of EU membership is that Britain lacks sovereignty on its borders. It is a clear difference between Britain and Australia. The Leave campaign says “the automatic right of all EU citizens to come and live and work in the UK will end”. Johnson and Gove pledge a national immigration policy based on Australia’s.

Cameron is exposed on this front. Sovereignty becomes a practical reality in daily life when it translates into immigration. Unlike any Australian PM, Cameron does not “own” his immigration policy. There is no gainsaying this issue: it is a loss of sovereignty on a core question of economy and identity. Cameron has tried to reform EU policy, with little impact.

It is true that high immigration provides many economic dividends for Britain. It also contributes to rising house prices, immense strain on public services and worries about the multicultural compact. If they choose, people are logically justified in voting for Brexit on the immigration question. Because the EU has lost control of its borders — witness the mass movement of people from the Middle East — the immigration control argument gains even more traction. It is highly doubtful this issue alone justifies a Brexit vote — but that is for the British people to decide, not for outsiders.

Johnson’s strongest case for Brexit lies in the sovereignty principle. He sees the EU’s accumulation of power from its member nations as unstoppable and irreversible. The EU legal system is starting to erode Britain’s parliamentary and national sovereignty, devoid of the democratic accountability integral to British democracy. How far might this penetrate? Given the present plight of the EU, will it seek to accumulate more power as part of a drive towards deeper political union or will its recent failures and popular resistance limit or stall such aspirations? These are contested issues.

In the 21st century, sovereignty will become less of an absolutist concept. There is no denying, however, the relative strength of the sovereignty argument as a case for Brexit. Does sovereignty alone justify a vote to leave? It will be a brave British public that decides it does, given the collective risks.

The vote, however, may be very tight. It seems a majority of Conservative voters support Brexit, thereby creating a potential crisis for Cameron and his government. But even a narrow victory for Remain may not heal the internal rifts and, even worse, force a subsequent showdown down the track.