RISK or OPPORTUNITY
BY TAMER IŞITIR
BRITIAN IS EXPERIENCING ONE OF THE MOST IMPORTANT TURNING POINTS IN ITS HISTORY. BREXIT WILL PUT THE EMPIRE IN A NEW PHASE. BUT ALSO BREXIT WILL LAUNCH A NEW ERA FOR BOTH THE UK AND TURKEY FULL OF NEW OPPORTUNITIES.
When the Opening Ceremony Of London Olympics was over in 2012, the whole world witnessed on air a show of national pride, emphasis on glorious history of the empire, message of leadership for humanity and optimism for the future. One of the most important newspapers of the UK, The Guardian commented on the producer of the show Boyle's success and as followed: “Boyle's Isles Of Wonder spectacular had barely finished before it had become a byword for a new approach, not only to British culture but to Britishness itself. Politicians would soon be referring to it, using it as shorthand for a new kind of patriotism that does not lament a vanished Britain but loves the country that has changed. Boyle's ceremony was hailed from (almost) all sides... for providing a nation that had grown used to mocking its myriad flaws with a new, unfamiliarly positive view of itself ... It was, perhaps, this lack of cynicism that people responded to ... So used to British irony and detachment, it felt refreshing to witness an unembarrassed, positive case for this country.” Just 4 years later UK has lost that optimism and ego. Nobody could foresee in four years the whole nation which celebrated her glorious past with a glorious Olympic ceremony, would start a chaos not just for UK but also EU with just one referendum: BREXIT
Are the unconscious leaders dragging the world into a state of chaos? For example, what was Trump's trade war in 2018, a chaos caused by the unconscious populism of an unpredictable leader? Or, is it the annually increasing current account deficit of the US and the possibility of losing the economic and commercial leadership especially after 2008 crisis, which has led the way to such a leader?
When the case is Britain and Brexit, it is again the subject of similar confusion and reprimands. As a result of a referendum the UK left the EU which was considered as the greatest triumph in the history of free trade and liberal democracy. Everyone blamed Prime Minister David Cameron for his incompetence and lack of foresight because of this decision of leaving. Two years after the homeland of liberalism betrayed the biggest liberal project in history, the US the current-biggest fortress of Liberalism, betrayed liberal trade. The first response that comes to mind is to blame and condemn the leaders but does it make sense to oversimplify this important issues?
Cameron did not expect that the referendum would result in Brexit when he promised to do a re-referendum for EU membership in the 2015 general elections to eliminate Brexit supporters which even existed in the Conservative Party's group of House of Common. And it resulted in Theresa May as his replacement. If Cameron's policy is a predisposition or incompetence, are those who vote yes for Brexit 51.9% and are incompetent, too?
Or is Theresa May the leader of the Conservative Party, who rejects the referendum as a blow to British democracy and rejects Britain as a submission to the EU's blackmail, is also incompetent and inconsistent? Moreover, the leader of the Labor Party, Jeremy Corbin agrees with Theresa May on this issue and opposes the repetition of Brexit despite of the MPs at his party who resigned and formed a new party group, Independent Labour. In other words, to see Brexit as a road accident caused by right wing fanaticism in England is an extremely simple and optimistic perspective.
The EU sees the real danger. The anti-EU rightist and leftist movements have gained strength in the last 10 years in Germany, France, Italy, Spain, Greece and the whole EU. So the EU is negotiating very hard with Britain. They regard the matter as not a threat to Britain's membership but as a threat to the existence of the EU. That's what led Theresa May to a stalemate.
Economists declare that Brexit will be a major loss to the British economy in the medium to long term unequivocally. All the negative and positive scenarios predict the decline in trade volume and GDP for Britain.
Studies have shown
that since the referendum, inflation in the UK has already increased by 1.7%, while the national income per capita has decreased by £404. In September 2018, the Brexit vote was already reported to lead to a loss of 2% of the UK economy, and according to the think tank “Centre For European Reform”, this loss will reach 2.5%. According to the Financial Times, the results of the Brexit referendum decreased UK national income by 0.6% to 1.3% as of December 2017. But it did not occur in the great apocalyptic level of disaster as the Brexit opponents claimed. Unemployment in the UK fell to its lowest level last year since 1975, down to 4.2%.
The major danger for the British economy is the long-term loss of London's characteristics of being the financial capital of the EU and even the whole world, with Brexit. Between June 2016 and November 2017, when the Brexit vote was held, European Banks removed €350bn of UK-related assets from their balance sheets and this trend will increase by March 31, 2019 Brexit deadline, a deadline which was later extended to 31 October 2019.
The Brexit-related shrinkage in the British economy was mainly due to the shift of the financial sector to Ireland and the Netherlands. Since Thatcher, Britain is not an industry giant but a financial giant. The main dangerous trend is that it loses its leadership in this sector, too. Those who propose a re referendum for Brexit most often suggest this nightmare scenario. So why does a country take a decision when it is almost 100% certain that it will negatively affect its economy in the short and medium term? And then insist on this decision?
This is not only an economic decision, but also a political decision. The EU can be an economic union but also a political union. However, it has not been able to respond to the political turmoil in recent years and it has almost reached the stage of fragmentation in the face of the first major political crisis in its history.
What is this? A single civil war has fundamentally shaken the EU. Civil War in Syria! The waves of illegal immigration created by economic inequality around the world have been shaking the walls of the EU castle for years, but the Syrian Civil War has almost destroyed these walls. The mythology of economic cooperation and prosperity, which would lead directly to political unity and democracy, and that economic interests would prevent any nationalist, isolationist deviations in Europe, was buried in the wreckage. A single civil war was enough. A great disappointment for the EU! Of course, the Syrian Civil War was just the triggering factor.
REFUGEE CRISIS EXAM: TURKEY AND THE EU
If an extensive refugee crisis can disrupt the dream of a United Europe, it is certainly logical to end the political partnership by maintaining the economic interest partnerships that are assumed to hold the United Europe together. Can it be said that nation states performed more successfully in military, political and humanitarian crises than in international political unions? In the Syrian crisis, the differences between Turkey's and the EU's humanitarian and political performances, did not signal promising at all for the EU's political vision. Britain's Brexit decision is therefore a danger to become a catalyst. Britain has decided to act as a nation state against the refugee crisis. Taking all kinds of economic risks.
In other words, Britain is making a political decision by considering economic losses. It is necessary to think twice before accusing Britain of incompetence. What could be the huge economic losses to be experienced if the EU, which was shaken by the Syrian crisis, could not handle the next international economic, political or humanitarian crisis and become catastrophically fragmented? Perhaps Britain will have paid this great risk cheaper today.
Britexit may have had a negative impact on the economy in the UK in the short term, but it is another case that the emigration to the UK was 200 thousand in 2018, which has been the lowest level in recent years. In short, the EU, which claims to lead the world and the international community on human rights, has been completely incapacitated by the world's biggest and most important humanitarian crisis. In the last 10 years, asylum applications to the EU have steadily increased. We see that these applications reached a record level in 2015 and 2016 after the Syrian Civil War. The only measure taken by the EU against this crisis was to increase border security.
The decrease of asylum in 2017 is indicator of this. From 2008 to 2017, the total asylum applications in the EU had reached 5 million, while Turkey by itself hosted 3.9 million refugees from Syria. Carrying almost all of the economic burdens on its own, despite all the promises of the EU. The failure of the EU in this crisis has resulted for Britain in a complete separation from the EU. It also raised the question marks on the future of the EU.
THE EU – UK BREXIT CONFLICT
2018 was marked by two tremendous events. The first was the trade war between the US and China, the second was the Brexit conflict between the UK and the EU. Brexit has also created a civil war within Britain. Both the Conservative Party and the Labor Party were divided into two. The Greens and the Liberal Democrat Party are in favor of remaining, but their representation in the House of Commons is very low. Neither strategy nor the program of the two major parties is clear.
The division is not only between parties and within parties. Scotland, Wales and Northern Ireland voted to stay in the Brexit elections. The Scottish National Party, the largest party in Scotland, wants the independence referendum again, which was rejected by 55% in September 2014, and thus Scotland would be seperated from Britain and join the EU.
In Northern Ireland, the situation is much more critical. The separatist Catholic majority here voted for a stay in the Brexit referendum, while the pro-British loyalist Protestant minority voted for a leave in the Brexit referendum. The Democratic Unionist Party (DUP), the party of the Protestant minority, vetoes any maneuver of Theresa May as a coalition partner to redo a new Brexit referendum or to soften the leave deal with the EU in case of Northern Ireland.
In 1998, however, the peace agreement signed between Britain and the IRA's political wing, Sinn Fein, was based on an important phenomenon such as the UK and Ireland being a member of the EU at the same time. Thus, the border between Northern Ireland and Ireland was virtually eliminated, the secterian civil war that started in 1968 and led to death of 3600 people was over.
Currently, the biggest fear is the possibility of no-deal Brexit. In other words, by the deadline of Brexit on 31 October 2019, the UK exits the EU without signing an agreement between the EU and the UK. In this case, the only land border between the UK and the EU will be the old border between Northern Ireland and Ireland. Since the free movement and the customs union are over, the border will be reopened to police and military control. It is feared that it will create an environment of secterian violence again.
The EU knows that this is the weak spot of Britain. And they didn't step back. Theresa May tried to find a middle way solution. This was called Northern Ireland Back-Up plan. In other words, the UK would leave the EU, but Northern Ireland would have a special status. However, both the coalition partner DUP and the Conservative Party opposed to this agreement, as it could practically mean that Northern Ireland would be separated from Britain and connected to Ireland via the EU.
And on January 15, 2019, Theresa May's agreement with the EU along with the votes of MPs from its own party was rejected by the House of Commons. This is the biggest defeat of a prime minister in the history of UK. Only 202 yes votes against 432 no votes. She immediately obtained a confidence vote of the government, and she remained to be the prime minister still, with 306 votes against 325. Theresa In March 2019, Theresa May committed to stepping down as Prime Minister if Parliament passed her Brexit deal, to make way for a new leader in the second phase of Brexit. If that's the case May will be the second Conservative Prime Minister after Cameron, that Brexit process took out of position. Let's see how many more prime ministers will be off because of this crisis. There's only one thing on Brexit front right now. On March 29, 2019, the deadline for a deal before Brexit, the UK Parliament could not reach a solution. So the deadline has been extended to extended to 31 October 2019 for the last time. A very little time left to that date when the UK will officially leave the EU, and there is still no separation agreement between the UK and the EU.
A NEW ERA FOR TURKEY AND THE UK
After the Brexit referendum, Turkish President Recep Tayyip Erdoğan was the first leader that Foreign Minister Boris Johnson visited, who ran campaigns in favor of leaving the UK despite the party leader Cameron. Erdoğan and Johnson have agreed on increasing trade relations. Johnson was the biggest advocate of Brexit during the campaigns and his most powerful rethoric was if Britain remained in the EU, 77 million Turks could invade the UK. A claim which was criticised a lot by his critics for not being true, Although campaign time for Brexit vote is over Britain still stays as a country deeply polarized and divided over the subject.
and provocating feelings of fear amongst voters. In his Ankara visit Johnson was very joyful about new oppurties between to parties after Brexit. Now that Britain was about to exit te EU, "a jumbo free trade agreement between the UK and Turkey” he stated could be signed.
Britain has already started to develop an independent and new strategy of partnerships in international trade for the last 2 years, regardless of how the chaos of Brexit ends. No matter what anyone says, UK is Europe's second largest market after Germany. Britain's number one trading partner is Germany with an annual volume of $135 billion. In the worst case scenario, even in the case of No-Deal Brexit on October 31st the EU has to make new trade agreements with the UK. Some economists in the UK -currently few tough- say that Brexit may harm the UK economy in the medium term, but in a new world arena which long-term trade wars have already begun, much more advantageous trade agreements can be made between the UK and the US and the UK and China, seperately from the EU.
Of course, no matter what anyone says, Britain, which is still the world's 5th economy giant, has to shift from the finance sector, which is the engine of its economy for 25 years, back to industry. The first impact of Brexit was that London could no longer be a suitable financial capital for the EU. All these phenomena creates many new partnership opportunities between the UK and Turkey. In fact, Turkey may establish more balanced political and commercial relations with the UK, regardless of its relationship with the EU which was rough, disappointed and lengthened out. Even now, the UK is the second largest country that Turkey has a trade surplus after Iraq. Turkey became the 15th country that the UK imports most from with the figure of $9.5 billion. The UK was the second largest country that Turkey ran a trade surplus, with the figure of $2,9 billion in 2017. Brexit chaos will further increase the commercial and economic relations between Turkey and the UK. Both Turkey and Britain are two countries as being located on the opposite sides of the European geographically, may converge on each other to solve their problems with the EU.
On February 15, speaking at a panel entitled “Brexit: The European Union and Turkey”, UK's Ambassador Dominick Chilcott, stated that Brexit would not affect the strategic importance of Turkey in any way. Expressing that a seperated UK can make mutual investments in domains of economy, defense and security with Turkey in a much more comfortable way. Chilcott said the relationship would continue at an advanced level. Stressing the importance of trade relations with Turkey, Chilcott told “We are Turkey's second largest export market. Our total trade volume grew by 9.9% in 2018.” He also stated that Turkey is an important market for the UK: “Brexit process is fraught with uncertainty. This was the message that the public was not happy with politicians.”
Chilcott contiuned his speech by saying that Brexit vote was a response to the changes brought by globalization. Chilcott stressed that if Brexit happens, the UK will continue to be together with Turkey in many organizations, especially in NATO, the European Council, G20 and the OECD.
In short, the world is changing. This change can be expected to be painful and even conflicting, but no one can assert that the established new world will not lead to more balanced commercial, economic and political relations. Within this scope, it can be said that Brexit launched a new era for both the UK and Turkey full of new opportunities.