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Mains Articles

‘Brexit’ Issue: Explained [Part-1]

Finally, Britain opted for a momentous change of course by voting to leave the European Union.
By IT' Mains Articles Team
June 29, 2016

 

After weeks of political campaigns and debates, finally Britain voted to leave the European Union, a decision that surprised many and one whose consequences still aren’t totally clear.

Here’s a detailed analysis on all that you need to know about the Brexit issue.

The article is divided into two parts:

  1. What is the issue of Brexit; all about EU, why does Britain want to leave the EU, results of the referendum and finally way ahead.
  2. In second part, we will further discuss on Brexit, but most primarily its impact, if any, to India and the world.

For the second part, click here

Let’s start our first part at the very beginning.

 

What does Brexit mean?

  • It’s a short form for Britain exiting the European Union (EU). It is a word that has become used as a shorthand way of saying the UK leaving the EU – merging the words Britain and exit to get Brexit, in a same way as a Greek exit from the EU was dubbed Grexit in the past.

What is a referendum?

  • A referendum is basically a vote in which everyone (or nearly everyone) of voting age can take part, normally giving a “Yes” or “No” answer to a question. The side which gets majority votes is considered to have won.
Illustration picture of postal ballot papers ussed for BREXIT referendum
Illustration picture of postal ballot papers ussed for BREXIT referendum

What is the EU?

The European Union – often known as the EU – is an economic and political partnership involving 28 European countries.

Flag_of_EU

  • The ravages of World War II led to an intense desire for peace in Europe. France and Germany, which had suffered terribly, decided to cooperate with each other so that they would not have to go to war again. This led to other nations joining them.
  • In 1950, six countries decided to share their coal and steel resources. In 1957, the European Economic Community was formed. Slowly, this grew into the European Union.
  • Today, the EU has 28 member states. The first six countries were Belgium, France, Germany, Italy, Luxembourg and Netherlands. Croatia was the last to join in 2013. Britain joined the EU in 1973.

EU members

  • As far as people in these countries are concerned, the EU is like a single country where transport of goods, services and people are allowed.
  • The EU has its own currency — the Euro (€), which is used by 19 of the member countries.
  • The EU’s capital is Brussels, Belgium.
  • In 2009, the Lisbon Treaty made it possible for a country to leave the EU.
  • The EU is managed by seven institutions:
  1. The European Commission,
  2. The European Parliament,
  3. The European Council
  4. The Council of the European Union
  5. The Court of Justice.
  6. The European Central Bank, and
  7. The European Court of Auditors
  • The EU has developed an internal single market through a standardised system of laws that apply in all member states.
  • EU policies aim to ensure the free movement of people, goods, services, and capital within the internal market, enact legislation in justice and home affairs, and maintain common policies on trade, agriculture, fisheries, and regional development.
  • The EU is based on the rule of law: everything it does is founded on treaties, voluntarily and democratically agreed by its member countries.
  • Citizens of the member countries can travel to and in other member countries without a passport or checks at the border.
  • Thanks to the single currency, if goods are cheaper in another country, they can buy there as long as it is for their personal use.
  • Citizens can decide live, work, study in any of the EU member states.

In 2012, the EU was awarded the Nobel Peace Prize for advancing the causes of peace, reconciliation, democracy and human rights in Europe.

U.K.’s history with the EU:

A United Kingdom flag flying next to a European Union flag

  • U.K. joined the EU in 1973. Though part of EU, Britain has traditionally had a ‘eurosceptic’ stand. It continues to use the Pound as its currency, while most EU nations have moved to Euro. Neither does it participate in the Schengen border-free zone, which allows passport-free travel in EU.
  • Interestingly, this is the second time U.K. has sought a referendum on this issue. In 1975 Prime Minister Harold Wilson called a referendum after considerable opposition rose from within the country on U.K. staying with the European Economic Community, the precursor of the EU. With 67% of those who voted preferring to ‘Remain’, U.K. stayed on.

Why is a referendum being held?

  • Prime Minister David Cameron promised to hold referendum if he won the 2015 general election, in response to growing calls from his own Conservative MPs and the UK Independence Party (UKIP), who argued that Britain had not had a say since 1975, when it voted to stay in the EU in a referendum.
Prime Minister David Cameron
Prime Minister David Cameron
 

Why does Britain want to leave the EU?

Following reasons may be cited to answer the question: Why does Britain want to leave the EU?

Sovereignty:

  • Many people in Britain believe that EU is making inroads into British sovereignty.
  • Many in the ruling Conservative Party and the UK Independence Party (UKIP) believe that the EU has changed since the time it was formed and that it was impacting daily life.
  • Those wanting Britain to leave the EU see it as an opportunity to reassert British national sovereignty and in a sense liberate Britain from the bottlenecks of EU both politically and financially.

A supporter wears a tee-shirt as he waits for Farage, the leader of Britain's UKIP to speak at the launch of the party's EU referendum campaign in London

Money matters:

  • One factor is, of course, money. Much of the EU’s money comes from its member states. And the UK is one of the larger contributors.
  • The money is spent on administration of the EU in each member country, aid activities outside the EU, grants for asylum education and culture, on preserving and managing natural resources (this includes, agriculture, fishing, mining and so on), helping poorer countries in Europe and in grants to research in science and technology and in helping small businesses.
  • Those supporting Brexit argue that EU charges from Britain billions of pounds a year in membership fees for little in return.

Interfering laws:

  • According to a 2010 House of Commons Library study, around 17% of the UK’s laws are the result of its membership in the EU. Much of this has to do with agriculture, fishing, environmental policies, trade etc.
  • For example, British farmers have to meet the EU standards of quality control to export to member countries. EU’s agriculture policy lays down the law on GM crops, animal husbandry and even how much of his field a farmer must leave fallow to get subsidies.
  • Another example is the fishing policy. There is a 200-mile fishing zone around the UK coastline. Under EU law, UK fishermen can fish only up to a specific quota and fishing fleets from other EU countries are given equal access to the zone.
  • The other areas where the EU laws reign are in the fields of criminal justice, data protection, immigration and broadcasting, human rights among others.

Immigration:

  • As EU’s membership expanded, more Europeans, especially from poorer EU nations, started migrating to U.K. using the “freedom of movement” clause.
  • The anti-immigration parties argue this puts a severe strain on national resources and add up to welfare expenditure.
  • The pro-EU members argue that EU migrants contribute more to the national economy than they take out.

uk-immigration_2

Security:

  • The Remain side argues that in the era of international terrorism and criminality, cooperating with the EU will make the U.K. safer.
  • While the other side says that the security risk will in fact increase if the U.K. does not have control over its borders.

Employment:

  • The Remain side argues that as three million jobs are tied to the EU there could be a jobs crisis if the U.K. leaves the EU.
  • While the other side claim that there will be a jobs boom without the fetters that EU regulations impose.

Trade:

  • The Remain side says that access to the single European market, free of tariffs and border controls, is critical for the U.K. as 45% of its trade is with the EU.
  • The Leave side says that the EU needs British markets and individual trade deals with European countries can be easily negotiated.

Economy:

  • Remain argues that leaving the EU will put the dominance of London, the Europe’s financial centre, at risk as banks will move out.
  • The Brexiteers argue that London’s status is unassailable as it is already a global power base.

Result of the referendum held on 23rd June:

  • On 23 June, the UK finally settled the question: should the country remain within the European Union or go it alone.
  • The United Kingdom opted for a momentous change of course by voting to leave the European Union in a closely-fought referendum. ‘Leave’ side won decisively with 52% of the vote.

results-by-country1

When will Britain exit from EU:

  • Both the leaders of the ‘Leave’ campaign and the European leadership want to expedite the U.K.’s exit from the EU. But still, the vote doesn’t mean that Britain will be immediately out of the club because of Lisbon treaty.

U

What is the Lisbon treaty?

The Treaty of Lisbon is an international agreement which amends the two treaties which form the constitutional basis of the European Union (EU). The Treaty of Lisbon entered into force in 2009.

  • Under the Lisbon treaty, a member state wishing to leave the EU should first notify the European Council its decision, triggering Article 50.
  • This would set in motion a process by which the member and the EU leadership will negotiate the terms of the departure and reach an agreement in two years.

This means even if the British government invokes the Article 50 now, the earliest exit of Britain will take place after two years.

The Norway model: Only thing which can keep Britain together, after Brexit

Some economists have already suggested that one of the options Britain could follow in the wake of a Brexit vote is the Norway model.

  • Norway, along with Liechtenstein and Iceland are members of the European Economic Area (EEA).
  • The major difference between Norway and UK is while the former was never a part of EU and voted to stay the same way, the latter is an integral part of the union which has voted to opt out.

Merits of the Norway model:

  • The European Economic Area (EEA) allows Norway to access the EU market by paying an annual sum of around 400 million pounds.
  • Under this agreement, they are not only assured free movement of their citizens across Europe, but also keep their core industries of fishing and oil away from EU interference.
  • They have access to the single market while staying out of the EU. They also make contributions to the EU budget. There is separate secretariat in Brussels to manage the relationship between the EU and EEA countries.

Demerits of the Norway model:

  • Even though Norway enjoys virtual integration, it does not have any say in the running of the EU. They have no right to vote and have limited potential to have any sway over the agenda, and the fact that EU remains a tough negotiator.

If Britain chooses to leave the EU but join the EEA, it will be a half-in-and-half-out arrangement, and the long-term impact on either side will be minimal.

 

[This is the end of the part-1. In second part, we will further discuss on Brexit, but most primarily its impact, if any, to India and the world.]

 

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