Brexit. Now What? (Interview)

Roberto Orsi

Lecturer, Graduate School of Public Policy, the Security Studies Unit of the Policy Alternative Research Institute, University of Tokyo

The United Kingdom has decided to leave the European Union. What are, in your view, the most likely scenarios which can be envisaged today for the future of the EU? How can the balances within the Union of the remaining 27 countries change?

Brexit marks yet another acceleration, which started years ago, in the process of EU disaggregation. It is a very serious crisis, partially caused by, and partially coming on top of, a whole series of other crises now gripping the EU: of the Eurozone (the Hellenic situation only constitutes the most visible aspect), of immigration, of the Ukraine (born out of the association treaty with the EU, we should not forget that) and the relations with Russia. These crises and many others which now operate under the surface, but will emerge in due course, are manifestations of a necrotic process, to be fundamentally attributed to the more or less unconscious work of self-destruction carried out by the European and Europeanist ruling class.
In my view this process is irreversible. While the attention of media is focused on the English and Scottish situation, few commentators realise that Brexit will have shattering effects on the EU itself. Britain is not Cyprus, or Lithuania. It is the second largest European country by population, the second economy, as well as one of the three powers (together with Germany and France) which gave to the Union a political meaning. The EU is therefore losing a substantial piece. And even if the UK has always played a somewhat ambiguous role in Europe, it also had a balancing function vis-à-vis Berlin’s hegemony and Brussels’s blind self-referentiality, thus becoming a point of reference for the nations of the Visegràd group, the Scandinavians, partially the Netherlands, and certainly the Baltic states in an anti-Russian mode. Now all those mechanisms will be disrupted, and keeping united what is left of the EU will therefore become extremely difficult, particularly if one considers that none of the above mentioned crises is on course to find a solution, while numerous other are about to materialise.

Do you think that Brexit will significantly alter the EU’s “politically correct” attitude to migration movements and multiculturalism?

What we have been witnessing since last year concerning immigration can only be defined as a form of collective folly, which perfectly fits the above mentioned work of self-destruction. The Leave camp could have not possibly won without the immigration (actually: invasion) crisis. It has become clear that we are facing an epochal phenomenon and that the current European ruling class, if not obviously complicit as in Italy, is certainly complacent, unprepared, unable to act and foresee. However, we are in this instance in the presence of overwhelming historical forces which are rapidly destroying the credibility of institutions, of the rule of law, and even the desirability of social or international peace. Brexit goes in this direction: a change of direction must come, whatever the price. The current trajectory has to be disrupted, even if this may mean painful damage to the economy. European leaders though (I believe) will never change attitude, and that will lead in a short time to increasingly radical resistance among the population, which may go well beyond the vote to the so-called “populists”, and may cost far more than a lost election. Unfortunately this leadership cannot understand what is really at stake, as they continue to think through “multicultural” schemes, now totally doomed. A change will indeed come, but only with the ruin of the current political class, and after suffering very severe damage, only to be repaired by draconian measures, which may require decades.

In a geopolitical perspective, do you believe that the EU without the UK (which may get closer to the US) should re-think its relation with Russia and the position of Moscow vis-à-vis the West?

The relation with Russia is in any way destined to change in the long run. It will become a further element of division in Europe, considering that some countries are viscerally hostile to Moscow and will never change their attitude, while others are far more sympathetic, in the limits of the US hegemony not allowing at the moment too explicit forms of rapproachement. But if the US will no longer be able to exercise that hegemony, if Trump will prefer some kind of isolationism, or the Americans will simply be too busy with their domestic troubles, then Russia may even become a true strategic partner for some European states, and be wholly integrated again in the European great game, as it was the case in the period between the beginning of the eighteenth century and 1917.

Trump, Brexit, “populist” movements: there are today many forces on both sides of the Atlantic that, in a sincere or opportunistic opposition to the dynamics of globalisation (firstly, to the impoverishment of the middle class) push for new forms of isolationism or secessionism. What may be the features by which nationalisms and localisms can re-propose themselves in today’s “global village”? Would it be some kind of return to the past (a step backward, as many think), or rather a necessary adjustment towards the construction of new balances?

Beyond the impression that one may somehow choose whether to continue on the path of globalisation or rather to embrace new forms of isolationism, localism, or nationalism, the situation is actually more complex and, unfortunately, less reassuring. On the one hand in fact we have reached the limits of globalisation: the extreme complexity born in the past twenty years after the end of the Cold War has revealed itself as impossible to manage, and so the growing discontent at political level in the Western world. This is a classic case of “negative returns to complexity”: past a certain level, a complex system is no longer able to expand, and dynamics of contraction start to emerge. On the other hand, obviously it is not possible to “go back”, no more than it is possible to re-transform a fish soup into an aquarium of living fish.

Here is the big problem of our time: we have exhausted the most plausible options for the future. Let us make a comparison with the recent past: at the end of the 1980s, the leaders of the Soviet bloc were more or less secretly convinced that their system had failed. However, they had in front of them the immediate possibility of alternative systems: the West German/Scandinavian social-democracy (Gorbachev’s favourite), or US-style neoliberalism and its shock therapy (eventually adopted, with all caveats, in Russia and other countries). At that time, those systems were certainly prosperous, and had a strong reputation. Instead, today we are only left with the awareness that the current system is not functioning, but we do not have clear alternatives on which we can bet. This also happens because very few people have endeavoured in the past twenty years to imagine possible alternatives, under the spell of the “end of history” à la Fukuyama and the compulsory optimism which, together with a strong centralisation of intellectual work, has practically censured any form of constructive dissent, while tolerating and even encouraging only pseudo-alternatives such as the various “social” and “anti-capitalistic” movements, which are in reality perfectly integrated in the current system, in order to enhance a façade of pluralism. Broadening the horizon, it is possible that, in the absence of an extraordinary technological revolution in the near future, one may see a structural contraction (not only conjunctural) of the global economy. Already now numerous economists talk about a “secular stagnation”. From a political perspective, that would be a true novelty, considering that the expansion of the world-system has been continuing with ups and downs for the past 250 years (or even 500 years), and, to put to simply, we do not have any way to orderly manage a steady contraction of the system. We may have entered, as I believe, a strongly chaotic period which will last very long, without it being animated by a particular ideological or cultural coherence, in the sense of an overall project.
In such context, new equilibria will only arise in ways and times which are impossible to foresee, but with all probability they well have little to do with a sheer return to localism, even if localism may function as a trigger, in an initial period, of other changes. In other words: Brexit, Trump, are just the beginning.

Greece and Italy are like landmines on the increasingly unstable path of the EU, countries which may also be affected by the consequences of Brexit, perhaps more than the rest of Europe. The former has become the icon of a despotic EU, distant from the people and at the service of lobbies. The latter rests on an crumbling economy, so much that recently The Independent has published an article describing the upcoming “collapse” of the country. What do you make of all this?

Greece and Italy, despite all differences, are nations in which it is very easy to observe the terminal disease of societies which, like sleepwalkers, and while for decades public debates have revolved around dull nonsense, have ended up in a self-destructive spiral. As I wrote elsewhere, this syndrome is not an exclusive illness of the Mediterranean, but also recurs in other milieus, certainly in Europe, with varied intensity. Simply put, a country like Italy has been doing nothing else, at least over the past thirty years, than burning the human and social capital accumulated in non-suspicious times, just in order to carry on. Greece, whose human capital has always been rather thin in modern times, has reached the end of the process first, by exhausting its resources. The point is that we are no longer capable, as societies, to produce human capital, namely to reproduce (even biologically, hence the dramatic demographic crisis of Europe) and create people able to manage complex production processes, assume leadership roles with long-sighted perspectives, or even just do their job well, however humble that may be. In a country like Italy, one is compelled to think that, over the last generation, all the worst individuals have reached top positions, while the best elements of the society have emigrated or are emigrating en masse.
Within this framework, it has been known for years that Italy is a bankrupt country, artificially kept afloat by the ECB. One can see a curious comedy: the crisis of the national budget is hidden by national banks purchasing government bonds for years with the liquidity provided by the ECB, but in the following chapter of this story the banks are sinking (see the banking crisis unfolding now), and it is expected that the government will rescue them, again with the help of the ECB. However, that help was conceived as a provisional instrument until Italy was towed, by means of the famous “reforms”, to an economic and financial stability which will never come. With the EU crisis, it is just a matter of time before the political agreement in the ECB board which keeps Italy afloat will break down. For sure, Italy is too big to be rescued by Germany. With the ongoing banking crisis, international attention is again concentrating on Italy, and deservedly so, considering the systemic risks which can arise from the distress of Italian national debt (currently over €2.2 trillion). Besides, if it is true that Italy’s GDP shows zero growth or almost in normal times, now that a remarkable slowdown is affecting all main economies, I cannot see how the country can avoid a further contraction, with all the consequences of the case.

Another source of great uncertainty for the future of the continent comes from the economic and financial sphere: the signs of a global slowdown are increasingly visible, while the expansive policies of the ECB with their mass of liquidity, are driving interest rates towards zero, or even below. Do you agree with the opinion of economist Gerardo Coco, according to whom in such context growth is no longer possible as the very presuppositions of growth are not present?

Economic growth has been stagnant for quite some time. The extraordinary period of economic expansion induced by the steam engine, electrification, and then the petroleum-based economy did not, for the moment, prolong itself in further leaps generated by equally revolutionary technologies. In fact, despite how much the electronic and information revolution has profoundly changed our societies, has not been able to reverse the declining trajectory of growth rates in the most advanced economies, not considering that the average Western worker/consumer has not seen real income growth for decades. It is not a mystery that the world economic growth has had an extensive, rather than intensive, dynamic: the “consumerist” lifestyle of the West has been expanding, in the limits to which it is possible, to new masses of hundreds of millions people in China, the former Soviet bloc, and several emerging economies in the rest of the planet (urban areas in South-East Asia, Latin America, the Middle East). The “old system” did therefore grow thanks to its geographic expansion, rather than thanks to the growth of what already existed.
However, this economic system cannot expand indefinitely: not only there are well-known environmental limits, but also social limits. It cannot expand in areas where forms of social and political organisation are incompatible with the fundamental structures required by industrial (and market) organisation. That is why in the end China and other Asian countries have been more successful in emerging as industrial realities in comparison to African nations, or the Middle Eastern region. Now we find ourselves in a phase in which more or less all those who could be brought within the system have been let in. But on the other hand, we see the springing of the “middle income trap”: numerous emerging economies will probably never see a diffuse well-being and a truly prosperous society such as West Germany in the 1980s or the US in the 1960s, but they are running aground on intermediate positions characterised by high discrepancies between income classes, as well as between rural and urban areas, with all political consequences of the case (the dynamic of a country like Thailand is a valid example of this trajectory). Western countries have instead embraced “unbridled” financialisation and debt expansion at all levels precisely in order to counter the lack of real economic growth. Now the colossal levels of debt can no longer be further expanded, while on the other hand we have a very negative demographic situation. Zero interest rates are an expression of this generalised stalemate, but they do also represent a further element of instability in the long term, as all financial operators know that they are eventually not sustainable, and this generates caution and restraint in investing, thus feeding the paralysis.
The fact itself that we have been living for about eight years with zero (or negative) interest rates in almost all developed economies of the world is historically unprecedented. And if, despite the ocean of liquidity, real growth remains elusive, this must mean that something fundamental is broken in the mechanisms of world economy. Personally I would not be surprised to witness another financial crisis in the period from now to the end of 2017, numerous criticalities are emerging and it is becoming increasingly difficult, for central banks, to bury them in additional liquidity. My view is also that a perverse mechanism has been reinforced, whereby monetary policies have for years concealed economic and financial problems, without solving them, but instead only by translating them into political and geopolitical questions. In turn, politics (as shown in the Brexit case) generates new economic-financial instability, and the cycle starts over. But it is an increasingly tight and accelerated cycle.

Do you think it may be appropriate to envisage some similarities between 1914 Europe, which at the end of the first wave of globalisation threw itself in a ferociously self-destructive war, and today’s Europe?

I can see similarities only with regard to the inadequacy of our government tools in comparison to the extraordinary complexity of the “global village”. Looking at the various European political leaders, I cannot refrain from thinking that, if we have avoided so far uncontrollable domino effects, it is just become those people are much more lucky than capable. But luck cannot last forever, and Brexit proves this point. In comparison to 1914, there are “traditional” geopolitical risks only with Russia, but they can be contained. The most serious risks come in my view from the great and rapid polarisation of public opinions in Western Europe. As I recently wrote, we find ourselves in a situation where dialogue between opposite political orientations is becoming impossible and/or futile, we have thus a pre-civil war climate in a number of countries. Brexit has led us to discover that there are masses of millions of people who “want their country back”, and that means a U turn which cannot happen but through a redefinition of who belongs and who does not belong to the political community, and must therefore materially pack his suitcase. The situation in France is even worse. If the EU will not manage to survive, then at that point we might, over several years, see the resurgence of conflicts between states in Europe, but not in the immediate. For sure, very hard times are ahead of us in the next years and decades.

The text of this interview has been published in Italian on 11th July 2016 at the following page:
Interviewer: Mr. Andrea Muzzarelli