Lessons from Brexit

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Looking at the ripple effects of the Brexit crisis

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Though an ocean separates us from Europe and the serial crises that have engulfed the continent and the European Union (EU) in recent years, it is hard to avoid wondering for how long Canada can continue to be largely immune to the major problems facing some of our oldest and most loyal allies.

After mostly muddling through its debt crises in Greece and elsewhere, the EU now faces an existential threat in the form of Brexit — one of its largest members opting out of the Union entirely.

Brexit was a victory for the same forces of fear and division now manifesting themselves in the U.S. in the form of Trumpism.

Here at home we cannot remain smug and complacent as the postwar liberal democratic order succumbs to isolation and xenophobia in countries all around us.

Already there is an economic impact, and not just in the U.K. where the currency has taken a massive hit and investment has fled or failed to materialize in the context of Brexit fears leading up to the vote in June.

The Bank of Canada downgraded growth forecasts for Canada directly as a result of the U.K. vote, citing Brexit in its latest report on the economy as certain to have a negative impact on growth at home.

The degree to which this downgraded growth forecast comes to pass remains to be seen — the Bank has been wrong before on forecasts and it will be again.

But it’s hard to conclude anything other than a negative economic hit resulting from the deliberate decision by a major trading partner to leave an economic union that, while imperfect as all unions, has delivered tangible benefits for decades.

In addition to the economic and quality-of-life benefits that the EU has brought its citizens, it is important not to forget its most important achievement: the preservation of peace on the European continent that until 1945 had been a near-constant theatre for increasingly devastating combat and death for centuries.

In this regard, the EU is a victim of its own success: interstate war, having been effectively removed from within its borders over the past seven decades, has ceased to be a top-of-mind concern for most EU citizens. The Union has shifted in the minds of those citizens from a guarantor of peace on a historicallywar-torn piece of land to a bureaucratic and undemocratic institution run by and for the elites of society.

Criticisms of the EU and its institutions is fair game. Many of its leaders have treated members’ voters as obstacles to be overcome — or ignored — and not stakeholders to be consulted on the Grand European Project.

There is a real democratic deficit in the EU, and Brussels is widely derided as a distant regime, said to be more focused on enhancing the lifestyles of its own bureaucrats than Europe as a whole. In short, EU institutions are open to the same criticism that is eventually levelled at all governments: distant, self-serving, and disconnected from the needs of regular people.

But do these criticisms justify the wholesale divorce from the Union for the U.K., or any of its members for that matter? It is a question increasing numbers of Brexit voters are asking themselves.

These questions are made more pressing by the immediate disappearance of the leaders of the campaign for the U.K. to leave, and by the hasty installation of a new Prime Minister who had campaigned to stay in the EU.

Most analysis and “expert opinion” is firmly on the side of the preservation of the Union, as when Canada faced its own most recent existential question more than 20 years ago.

The criticisms are fair but exaggerated. Labelled as a “bureaucratic monster,” the EU’s budget is a mere one per cent of GDP, or less than three hundred Euros per citizen per year. Charging the average citizen a dollar a day hardly gives the EU the dictatorial clout for which it is widely panned by pro-Brexiteers and their like-minded campaigners in other member states.

So institutional criticism is fair and vital in a democratic society. However, by the same token, the exaggerations and fabrications of those making the criticisms have to be called out.

For Canada, the lessons are important.

Increasingly in what appears to be a world turning to isolationism, we like to see ourselves as an open bastion of liberalism, free movement and immigration, immune to what we see as the racist leanings of wall-building and isolationist constituencies in other countries. But we are not immune to these forces.

What takes decades to build can sometimes be torn down in months or days, as our friends in the U.K. are now learning.

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