United we stand, divided we fall – one of the proverbs that had been taught to us to understand what makes us – the homo economicus – a social animal, may soon change. This may not only change the seal of Kentucky, the seal of American commonwealth states that include 4 of the 50 American states but also questions the existence of the largest economic and political union that the history of mankind has ever seen – the European Union (EU) and the motivation behind it – The globalisation.
If we scroll through the history of EU formation, the roots lie in the Second World War when there was a new movement to create unity between Germany and France, which were in shambles by the end of the war. Originally formed as European Economic Community the infant step the globalisation, the union aimed to prevent wars and strengthen economic bonds. Britain joined the union in 1973. The pillars of formation were free movement of human and goods and protection of rights across countries. European union was a move from a single market to a single currency, a single banking system, a single budget and eventually a single political entity. With the Lisbon treat of 2007, the formation of EU as we see today was complete. As on today, covering around 7.3% of the human population, the union generated 16.5 Trillion dollars of nominal GDP – around 22.2% of the global nominal GDP. To give an economic perspective, of the top 500 largest corporations in the world measured by revenue in 2010, 161 have their headquarters in the EU, which enabled the union to hold control over the global trade till date.
For Britain, the cost of EU membership was around 12 Bn Euros and it used to get subsidies and grants worth 4.5 Bn Euros. Obviously, a country still struggling to get employment for the youth will not like this bargain. In June 2016, the British public decides to vote against continuing in the union. In an emotional drama, David Cameron resigned as prime minister the next day. This is the story as we know it and is the dream of a single political entity is almost over.
How does this affect the global power politics? Brexit will inevitably increase the friction between the Britain and its international trading partners. Many large businesses, unsure of future on their access to the Eurozone, will most likely freeze their major investments in the U.K. Since global business is so interconnected, there is a good prospect of a global economic slowdown.
There has been pushing back against globalisation over the years. The violent protests seen in Seattle during the World Trade Organisation meeting in December 1999 were the first sign that not everyone saw the move towards unparalleled freedom in a positive attitude. With the Brexit populism has become an increasingly important force in global politics, followed by the promise of Marine Le Pen to move the France from EU and reinstate the French mark may trigger an avalanche that could result in similar movements in already brewing markets such as Italy, Netherlands and Austria. With the decreasing role of trade alliances such as NAFTA, OPEC and Mercosur and the TPP that Trump nailed to the wall, it is high time for us to bet on the Anti-Globalization.
