OU Political Economist Mitchell Smith Explains What 'Brexit' Vote Could Mean For EU/UK Relations
Six days from now British voters head to the polls for a referendum on whether or not to leave the European Union. The June 23 vote may be the first step toward concluding Britain’s more than 40-year awkward relationship with the rest of continental Europe.
Mitchell Smith, the associate dean of the University of Oklahoma’s College of International Studies and the director of OU’s European Union Center, says since the United Kingdom joined the European Economic Community (an EU precursor) in 1973, there’s never been strong support for EU membership, either from the British government or a constantly critical press.
“The Labour Party, in the early 1980s, turned far to the left, and was somewhat skeptical about the EU itself. And then as it became more centrist during the course of the 1980s, the party itself was divided and didn’t talk much about Europe,” Smith told KGOU’s World Views. “Meanwhile, with [Prime Minister] Margaret Thatcher and following Thatcher, Conservatives tended to be sort-of ‘euroskeptic.’ And so there was no advocacy from that side either.”
The euroskeptic UK Independence Party gained significant electoral ground in the May 2015 general election, and started pressuring Prime Minister David Cameron to solidify the government’s position toward the European Union.
“And the leader of the UK Independence Party, Nigel Farage, more or less cornered Cameron into promising a referendum if the Conservatives won the next election, which they did,” Smith said.
Smith says the cost of membership in the Union are fairly quantifiable, with anti-EU groups constantly saying £350 million of the UK’s budget going toward the European Union every single week. That claim may have dubious origins, but Smith says the benefits are even more opaque.
“When people hear that, it sounds like, ‘Wow this would be tremendous savings from being outside of this entity’,” Smith said. “What they can’t see, and what nobody has really been able to tally up very carefully and accurately, is all the benefits of being in the European Union, which include the trade benefits, the benefits of foreign direct investment that has flocked into Britain because they’re part of the European Single Market, which is really the greatest accomplishment of the whole project.”
If voters do decide to leave the EU, there’s a tremendous amount of uncertainty about Britain’s future – from it bargaining position on the global stage, to the power of its economy.
“When the UK enters into a negotiation over a trade deal with China, are they going to do as well as part of the European Union? I think it’s probably reasonable to assume not,” Smith said. “Those who argue for leaving suggest that Britain will be able to negotiate better deals, and they’ll have more flexibility and independence to do so. Whether or not that could bring a better deal is questionable.”
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SUZETTE GRILLOT, HOST: Mitchell Smith, welcome to World Views.
MITCHELL SMITH: Thank you.
GRILLOT: Well, as an expert on the European Union, I'd like to talk about the upcoming vote in the UK on June 23, I believe, they're going to vote whether to leave the European Union. Of course we're all familiar with the fact the European Union has been struggling the past several years. Economic crisis. Various other things. But the UK has always had kind of an awkward relationship with the rest of the European Union anyway not being on continental Europe. They kind of see themselves as outsiders. They never joined the monetary union. So give us a little bit of the background here and how we got here to begin with. Why are they even considering leaving the European Union?
SMITH: Sure, two things. Let's start with how we got to the referendum itself, and then we'll go back a little bit further to the awkward relationship. The referendum actually, I think, is very much a product of just political dynamics. Prior to the last election, which took place in May 2015 - the last general election. The UK Independence Party, which is the very strongly "euroskeptic" party, was gaining ground very significantly electorally, and kept pressuring the prime minister, Cameron, to say what the position of his government would be toward the European Union. And the leader of the UK Independence Party, Nigel Farage, more or less cornered Cameron into promising a referendum if the Conservatives won the next election, which they did. So in some ways, it was a sort-of a political cornering of Cameron that happened. And one that had the potential from the start to backfire, and we could talk about what the potential outcome will be and the consequences, of course. Prior to that, though, I would say that most accounts of the British relationship with the EU tend to focus on culture. And I don't actually embrace those arguments. Ever since the British became part of the European Union back in 1973, there really has not been any powerful advocacy for the European Union within the UK. And if you look at the press in Britain over the decades, it's just staunchly anti-EU and constantly critical. And there's really no party that's made the case for EU membership and the benefits of EU membership. The Labour Party in the early 1980s turned far to the left, and was somewhat skeptical about the EU itself. And then as it became more centrist during the course of the 1980s, the party itself was divided and didn't talk much about Europe. Meanwhile, with Margaret Thatcher and following Thatcher, Conservatives tended to be sort-of "euroskeptic." And so there was no advocacy from that side either. So I don't think the British people have really heard consistently over the decades a strong case for membership in the European Union.
GRILLOT: Now have they been hearing anything about the cost of leaving the European Union? Because obviously there are significant, it would seem to me at least at a minimum, economic costs to leaving. But are there political and social costs to leaving a rather strong, although struggling, union like the European Union?
SMITH: Yeah, I think one of the problems that the EU struggles with generally is that the costs of membership are readily visible, and the benefits are not visible. So one thing that's played very prominently in the debate over the referendum has been the budget contribution that the British government has to make. And that's just a tangible figure one could look at and reduce it to a weekly amount or an annual amount. And what we hear is that every week 350 million British pounds go to the European Union. It's very easy to compare it to portions of the national budget. Apparently that's about half of the budget that goes to education in Britain. So when people hear that, it sounds like, wow, this would be tremendous savings from being outside of this entity. What they can't see, and what nobody has really been able to tally up very carefully and accurately, of course, is all the benefits of being in the European Union, which include the trade benefits, the benefits of foreign direct investment that has flocked into Britain because they're part of the European Single Market, which is really the greatest accomplishment of the whole project. And most estimates of those benefits suggest there are eight or nine times as large as the budget contribution. But those are not tangible things that the British people see. So I think they see the costs much more heavily. And by the way, I think this is true throughout the European Union. People see the costs more readily than they see the benefits. What I think is different in the British case is what I said earlier, that there doesn't seem to be a party that has consistently made the case for the value of being in the European Union.
GRILLOT: So let's go back. I want to pick up on the cultural argument again. I mean, this isn't the first time that the UK has actually debated as to whether they should stay in Europe, if you will. Back when they were considering leaving, for example, the European Economic Community before it even became the European Union. So there seems to be some underlying, you refer to skepticism, this skepticism about being a part of this union. But I'm wondering if it's growing at all from a cultural perspective because of... One of the benefits, of course, of being in the EU is free movement of people. Not just money and labor but just people. And people of all different kinds of backgrounds. And as the European Union has expanded to the east, you have, of course, east Europeans and central Europeans that have been able to move around Europe easily. And so what role does immigration play? Because the UK is so different today than it was even 20 years ago, let's say, the last time that they were considering whether to leave Europe. And I don't mean that geographically, right. I mean that politically. Politically and economically. So what role, if any, does that play? Is that a visible benefit to them? Or do they see that as largely a cost?
SMITH: Well, again, I think immigration's an issue that plays out in Britain in ways that are not dissimilar from other places. We have issues with immigration in the United States where there are those who tally up the relative costs and benefits. And many claim that there are net benefits of this. But it's relatively easy for politicians to make the case that this is taking jobs away from people, and is costly to us. In Britain, the same dynamic has played out. So again, I think what people see is kind of a drain on their social welfare system, encroachment on their labor markets, large numbers of people coming in. To be fair about this, when one looks across the channel at what's happening in the European Union these days, it does become very hard to make a positive case. Things are not going well in the European Union. What we have is this refugee crisis which is a complete disaster on top of the Eurozone crisis. And so when people in Britain see that, it becomes much harder to make a positive case for this than to make a case that we'd be better off just shorn of this entire entity.
GRILLOT: So you think that there's a fair amount of fear-mongering about some of those issues, but also fear-mongering about leaving Europe? It seems like people are coming at it from both sides, that they're like 'We're afraid to leave because we don't know exactly what the costs are going to be, and what it's going to look like if we go.' But we don't want to stay, and there's a tremendous amount of fear because of all of these things that we've just been talking about. Immigrants and other things. All the costs, all the money going out to mainland Europe or whatever. It just seems like there's no real, I think as you started by saying, there's no optimism about it. It's all fear even, really, from both sides.
SMITH: Yeah, and I think that that's an outgrowth of the fact that the future course is unknown and unknowable. All we can do is project what the consequences would be in either direction. And of course, depending upon which side of the issue you're on, you make one case or the other. I will say that just very recently the Bank of England warned that withdrawal from the EU could lead to a recession. And I think there are many who make economic arguments that suggest this would be costly to Britain to leave. On the other hand, there are those who tally up all of the economic gains and what they argue is that by leaving, Britain would then be able to recapture any potential losses by renegotiating various trade deals and such. And this is all where there's unknown territory. What will the bargaining position look like? It is a sizable economy, but it does not carry the weight in the world that it once did. And outside the European Union it's a much smaller voice. So when the UK enters into a negotiation over a trade deal with China, are they going to do as well as part of the European Union? I think it's probably reasonable to assume not. Those who argue for leaving suggest that Britain will be able to negotiate deals, and they'll have more flexibility and independence to do so. Whether or not that could bring a better deal is questionable. But nonetheless, those who are advocating to leave make the case that this is something they'd be able to do.
GRILLOT: It sounds to me like there's just such a significant amount of uncertainty that's being emphasized. Again, on both sides. That raises the question in my mind about leadership on these issues and where everybody's kind of stacking themselves up. Prime Minister Cameron, of course, taking a certain perspective. We've got a new mayor in London that's now changed the perspective within London. London's a very different city. There's a huge influx of people and cash and the UK is a very expensive place to be and to live. It's hard to make a living there now, especially if you're in a place like London or any big city. So how is it that they can even think that leaving, and let's face it, the UK is a pretty small space, leave Europe and really do well? But at the same time, what kind of leadership qualities they need in these people to really kind of help them work through it without the fear-mongering, without the emphasis on uncertainty, but to really have, I guess develop a vision for the future of the UK.
SMITH: Yeah, and I think another way of asking that same question is whether or not the current government, the Cameron government, is making the most effective case possible. A prior step to this was that once Cameron was backed into that political corner of calling the referendum, he then embarked on an effort to renegotiate the terms of British membership in the European Union so that he could come back to the British people and say, 'I've gotten a better deal for us. Now we can confirm our membership.' And I think it's widely understood that he got relatively little in that process. It's really fascinating to look at what happened in that process. One of the most contested pieces of this was an effort to have Britain exempted from 'the commitment to ever-closer union,' which are the words in the preamble to the Treaty of Rome that's considered the founding document of European integration. And while Britain did get, in essence, an opt-out from this, it's not clear if that's meaningful at all because there is widespread agreement among legal people in the European Union that the phrase itself is, as they put it, politically important but not legally binding. It's not clear what it commits anybody to, if anything. So to have an exemption from something that has no legal foundation other than a general commitment that was meant for political purposes to bring everybody together. It's not clear what concretely Britain got out of that. And so I'm not sure that the British government is able to make a very powerful case that it got a better deal for Britain. And that raises the broader question of whether or not the government is making an effective case for staying in.
GRILLOT: There seem to be a lot of arguments made basically just for symbolic reasons in some ways. Well, in the couple minutes that we have left, tell us what your prediction may be. And we're going to check back in with you, of course, after the referendum and see what happens. But what is your prediction for this UK? And really, if you could connect it to, they aren't the only ones that are having these kinds of discussions, right? I mean, there are others in the European Union that also are grappling with whether we stay or whether we go. And so not only a prediction about the UK, but thoughts about others in Europe, and the future of the European Union. They're struggling, this long-standing institution, but yet is it strong enough to ride through this and come out the other end stronger?
SMITH: I've said this before that I consider the refugee crisis really an existential crisis for the European Union because the European Union, if anything, is an entity that claims to represent a set of values. Tolerance, rule of law, and it's not clear that those values have prevailed in the refugee crisis. So we're at a juncture where a country, a large significant country leaving could really have dramatic consequences. And I think that's kind of the most recent twist on this whole thing, most of the focus has been on what are the consequences for the British if they leave, and the question you're asking now is what about the rest of the European Union? And I think the consequences can be worrisome. So the rest of the European Union now has, in some sense, a larger stake or concern in this than they did previously. I think what we're seeing is that...I looked at the latest polls, and they're extremely close. I have always maintained - I've talked about this in my European Union classes on campus - that once somebody, a government consistently made the case for Europe – that the polls would move in favor of staying in. That's only happened to a very modest degree. And I think the latest polls show, just in the last few days, I think an Economist poll showed a 41-40 advantage for leaving, and a Financial Times poll showed a 43-41 advantage for staying in. So essentially a dead heat. So it can absolutely go either way, which I find surprising. I find that especially surprising given that the government is now making the case for staying in. And it raises additional questions. What if they do decide to leave? What happens to the Cameron government? Does he have to resign after advocating for staying in? So there's a tremendous amount of stake for Britain, for the government, and for Europe.
GRILLOT: Alright, well Mitchell, we will be paying close attention to what happens during this referendum and we'll be back in touch to see what you think after the results. Thanks for being here.
SMITH: Great, thank you.
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