Brexit and the Future of Regionalism
By Yongnian Zheng

Brexit and the Future of Regionalism

Jul. 25, 2016  |     |  0 comments

The United Kingdom (UK) has voted in a referendum to leave the European Union (EU). This is a major event in the history of international relations since the disintegration of ancient empires and the rise of modern nation states. While Brexit has triggered shock across the world, its profound impact on various aspects will only be fully realized in the long term, as it could be a precursor to changes in the regional and world order. One must face reality and think about the future of the regional and world order. It is predictable that the divorce between the UK and the EU will create an impact that is far-reaching and significant, affecting not only Europe but also North America, the Asia Pacific, Asia, and other regions. If political leaders fail to recognize the radical change in regional and global politics, history will repeat itself and the world will experience turmoil of the kind previously witnessed during the collapse of imperialism.

The modern sovereign state, which first started in Europe, is a product of the disintegration of imperialism. The concept of sovereign state has introduced radical changes to the internal development of states and their international relations. It is the sovereign state that shapes the modern civilization and culture that we are experiencing today. Yet, the development of the sovereign state has also led to war. Wars between sovereign states has spread from Europe across the world. The First and Second World Wars were fights between sovereign states for sovereignty. The most important rationale behind the formation of the EU was to promote internal integration and avoid the occurrence of war.

Yet, what was the reason that led to Brexit? In fact, strong dissatisfaction is festering not only within the UK, but also within the EU. Internally, what has really happened in the EU? We should analyze this from the following three aspects.

Within the region, relations between the EU members have changed. The level of change is multifaceted. First, the EU’s bureaucratic institutions — which are supposed to coordinate EU affairs, promote cooperation, and pursue the common interests of all countries — tend to pursue and prioritize their own interests above the interests of the sovereign member-states, leaving the latter aside. Second, over time, the EU system has grown stronger and has expanded its power through system integration and increases in economic welfare, human rights, etc. As a result, EU member-states are constrained as sovereign states. Third, the EU’s internal integration which is led by the elite and capital has been flattened, creating contradictions between the member-states. Within the EU, different countries (especially between the old and the new EU countries) have different levels of development. The less developed countries engage in rent-seeking behaviors and are also free riders, enjoying the benefits of EU membership without reciprocating in kind. This has greatly increased the burden of the developed countries within the EU.

Next, there have been changes in the relations between the EU members and the countries outside the region. After the Cold War, political figures and scholars in the EU proudly declared that the development of the EU represented the era of the post-sovereign state. However, the post-sovereign state was justified not through internal integration, but though the pursuit of an external enemy. The EU has evolved into a geopolitical group which some regard as a new empire, and since the end of the Cold War it has rapidly expanded into Eastern Europe, imposing great strategic pressure on Russia, which the EU perceives as the common enemy of Europe. Furthermore, the EU has a penchant for moralizing and imposing its excessive ideology on various issues to benefit its own self while harming others. After the June 4 incident in 1989, the EU quickly reached a consensus to impose sanctions on China. Yet, when the situation changed and some EU members expressed their desire to lift sanctions on China, the EU was not able to reach a consensus. The EU continues to impose an arms embargo on China to this day even though this practice is detrimental to the interests of some EU member-states. Another example is the recognition of China’s market economy status. Although some EU member-states like Germany recognize China as a market economy, there is no consensus on this matter for the EU as a whole. This will inevitably affect trade relations between China and the EU member-states. That is to say, the EU as a multilateral organization effectively restricts the bilateral relations of its members with other countries. Such restrictions are detrimental to the interests of the EU member-states and it also hurts the interests of countries outside the EU.

Most importantly, domestically, the EU member-states are undergoing changes. The EU as a regional organization has brought great benefits to its members. It not only prevents the occurrence of conflict or war, but it also promotes economic benefits, the free flow of populations, the free allocation of labor within the region, etc. However, the distribution of benefits within a country is highly uneven, showing polarization. For example, London has reaped the greatest benefit among all the cities. Also, the elite class which has gained the most benefits tends to behave selfishly. Despite being the national policy makers and practitioners, their decisions are often divorced from the specific interests of the common people. This was clearly reflected in the Brexit referendum, in which London recorded the highest number of votes to stay in the EU, while those who had gained few benefits chose to opt out. However, the elite’s self-benefitting behavior can partially be attributed to the constraints that they faced from being part of the EU community. As they had lost part of their sovereignty to the EU, the British political figures lost control of their domestic and international affairs. According to Adam Smith’s theory of the invisible hand, public interests can be fully optimized when individuals work for their own interests. From this perspective, opting out from the EU to regain autonomy seems to be a rational choice for the British people.

The mayhem in the EU serves as a great lesson to ASEAN. The present situation in the EU should urge ASEAN countries to think of a reasonable level of integration.

Brexit could be a precursor to the disintegration of the EU. Empires in Europe have undergone frequent rises and falls since the early days. The Roman Empire, the Austro-Hungarian Empire, and the Ottoman Empire have brought tremendous changes to Europe. It is thus inevitable that Europe would experience disintegration once it evolved into a new type of empire. In its self-interest, the EU has designed numerous institutional barriers for countries to be “in” or “out” of the EU. Nevertheless, if the aforementioned problems cannot be effectively resolved, this will ultimately lead to more crises as problems accumulate. In fact, dissatisfaction with the EU has long been experienced in the new EU countries from Eastern Europe. After democratization, these countries soon found that the old countries were more concerned with their geopolitical interests, rather than the normal functioning of democratic politics or the healthy development of their domestic economies. Poland and Ukraine are two good examples. As a geopolitical organization, the EU has become very fragile as it can only maintain its internal solidarity through identifying a strong external threat. As claimed by some European political figures, the biggest winner of Brexit is Russian President Vladimir Putin. This statement is self-explanatory. However, historically, it is difficult for any geopolitical group to strengthen its internal solidarity by simply creating external threats.

The Brexit divorce has set a good precedent for other states to withdraw from the EU peacefully. It was normally an uprising or revolution in countries within a system that caused the fall of an empire. Now, mass democracy has become a new political condition. The standing of mass democracy will incapacitate the institutional design of the complicated conditions to “join” and “leave” the EU. If the political leaders of the other EU member-states chose to mobilize instead of managing the growing populism, then France, Hungary, Sweden, Holland, Denmark, Greece and other countries will also withdraw from the EU. The political leaders of these countries have been candid in expressing themselves on this matter.

The UK’s exit from the EU is bound to be a cautionary tale to other forms of regionalism in the long run. First of all, the various kinds of “empire” that the US is committed to building can be affected. The US has dominated NATO, the North American Free Trade Area, and various forms of alliance. It is also committed to constructing new types of regionalism such as the TPP and TTIP. Yet, it is still questionable if the non-inclusive form of regionalism established by the US will be sustainable. The late American economist Mancur Olson has proved with plenty of economic evidence that a big country needs to bear more costs in multilateral organizations. A big country should either have the capacity and strength to provide other member-states with public interests, or to "tax" the other states to provide public interests to the member-states. It is easy to understand why the US has formed a geopolitical group of alliances to maintain its hegemony. Yet, why do other member-states have to accept the dominance of the US?

Some of the US’ allies had intended to publicly express their dissatisfaction with the US after the end of the Cold War. During the rule of Yukio Hatoyama from the Liberal Democratic Party, Japan tried to establish the East Asian community to gain status that is on par with the US. The attempt failed as it did not conform to the interests of the US. Yet, it is not true that all Japanese are willing to accept US dominance. The fact that Abe’s administration is pursuing for normalization shows a similar trend, just with a tweak of strategy and words. While Yukio Hatoyamo, the pro-China politician, failed, Abe, in the name of his anti-China policy, is in fact chasing after Japan’s autonomy. The US pivot to Asia is an attempt to shape China as an “enemy.” It is not difficult to understand that, without the existence of an enormous external threat like China, it will be difficult for the US to intervene in Asian affairs, not to mention sharing the costs with Asian countries.

The mayhem in the EU serves as a great lesson to ASEAN. The present situation in the EU should urge ASEAN countries to think of a reasonable level of integration. The extent of integration is related to the nature of ASEAN as a community. If internal integration is achieved through resolving internal complications, then ASEAN’s goal is to provide common interests to its member-states. But even so, it is unlikely for ASEAN to follow the footsteps of the EU. While ASEAN is less idealistic than the EU, it could be a foundation for ASEAN’s sustainable development. It is likely that ASEAN’s unity will be affected or even fall apart if any of the member-states realizes certain values or the abstract utopian dream.

More importantly, it will be a far more acute problem if ASEAN, without the foundation of internal integration, chooses to strengthen its internal solidarity through external factors. There are two aspects to the external factors. First, to what extent will ASEAN be willing to see the US rebalance to Asia balance China? The second aspect is China-ASEAN relations: If ASEAN is to follow the footsteps of European policy on China, which is not only detrimental to others but also not self-benefitting, then the disintegration of ASEAN could become a reality.

In today's world, some form of regionalism has become inevitable because of economic globalization and regional integration.  But it is unclear what kind of regionalism is needed. On top of regionalism, how do we ensure a sound distribution of benefits between and within member-states? How far should regionalism go such that it will not compromise the independence of sovereign states? How can regionalism be practiced such that non-members will not cluster together to form different geopolitical groups? All these need to be addressed, or else it will be inevitable that the fate of the ancient empires will come chasing after modern regionalism.

(Translated by Wen Xin Lim)

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