Western Hemisphere in the Post-Brexit Era

Post-Brexit for the United Kingdom

Brexit has given the U.K. the possibility to emerge as a new power pole in global politics. Not that the U.K. was not a great power before. But now, following a divorce from the EU, the British will focus on creating a renewed architecture from the (former British) Commonwealth of Nations.

In the near future we will see future more actions that advocate for more U.K. engagement with overseas territories, in terms of sustainable development, ocean governance, immigration, and social issues. These steps will continue previous similar initiatives that emerged in the early 2000s.

After the Brexit vote, an immediate effect was on the stock exchange and the British pound. My earlier prediction came true and the pound took a significant plunge.

The plunge was about 8%, to its weakest level in three decades — from US$1.57 on Friday, June 26, 2015 to US$1.36 on Friday, June 24, 2016, but globalists should not have rushed to jubilate.

In spite of the initial shock of the stock exchange market, that did not have long-lasting effects. Most of the large U.K. stock market components (like banks and commodity stocks) were, in large part, unaffected by the country’s relationship with the EU, while many British export companies benefited from a cheaper pound.

In terms of commerce, the U.K. can cut trade deals with the EU and other partners outside the EU. But ultimately, if no deal would be forthcoming, the country could also cut import duties on its own.

Militarily, the U.K. signaled to its NATO allies that national interests were to be given increased attention over the EU ones.

The EU interests include Eastern Europe, the Middle East, and elsewhere. Consequently, the country showed less inclination to take on global challenges, at least in the short term. It was also a signal for reviewing NATO’s role, construction, principles, and goals. The NATO summit in Warsaw, on July 8 and 9, 2016, reflected exactly that.

Post-Brexit for the United States

On political discourse level, Brexit served as a predictor for the United States presidential election in November 2016. The debate was about anti-establishment bureaucracy and status quo, nationalism, sovereignty, and borders control, and all those factors were present in the American elections narrative, as well.

Financially, in short and medium terms, Brexit affected the U.S. dollar, stocks and bonds. The dollar rise (compared with both the pound and euro) limited the U.S. exports in Europe. Retirement funds invested in stocks were also affected, while treasury bonds decreased their ability to deliver significant income for savers and investors.

The good news for investors was that the Federal Reserve did not raise the short-term interest rate (which, at the time, was between 0.25% and 0.5%) until the end of 2016.

Mortgage rates and house prices dropped, and the U.S. housing market reinvigorated. Tourism in Europe intensified.

On national security grounds, the U.S. will have the opportunity to enhance its cooperation with the U.K. within the Five Eyes (in short, FVEY) intelligence organization. FVEY, an intelligence alliance established in the last years of the World War II, includes other three English-speaking members (Canada, Australia, and New Zealand).

This is important to point out, because the other EU member states (in particular, France and Germany) have, more often than not, other regional interests than the U.S. and the rest of the FVEY members.

Regionally, the Western Hemisphere will have two — more defined — major players, the United States and the United Kingdom. They will divide, to the most part, the vast areas of the North Atlantic region, the Caribbean basin, and the Pacific zone.

Post-Brexit for the Caribbean and Pacific nations

The British overseas territories were not part of the Brexit referendum vote.

In a post-Brexit era, some British commonwealth nations (American/Caribbean, African, Asian, and Australian/Pacific) will take concrete measures, involving new forms of association, depending on their own regional – political, administrative, economic, and trade – interests.

The British Commonwealth has 12 member countries in North America (Canada and 11 Caribbean nations), and 11 member countries in Oceania. Predicting economic and trade trends for all these English-speaking countries is important because with Brexit another world power pole has emerged, namely a redesigned (British) Commonwealth of Nations. And Brexit is the first brick in the new architecture of this nations bloc.

The Caribbean nations (in North, Central, and South America), on their part, possess a wide array of regional economic organizations, among which two are more important: the Association of Caribbean States (ASC) and the Caribbean Community (CARICOM).

ASC has 25 full member states, (initially seven, and currently) 12 associate member states, and 20 observer states. CARICOM has 15 full members, five associates, and eight observers. A large part of them are English-speaking countries, while the rest are Spanish-speaking, French-speaking, and Dutch-speaking countries. The English-speaking countries fall into several categories: parliamentary constitutional monarchies (dominions or independent states, like Antigua and Barbuda, Belize, and Jamaica), with Queen Elizabeth II as their monarch and head of state; republics (like Dominica, Guyana, Trinidad and Tobago) and Dutch territories with English as the official language, in addition to Dutch (like Sint Maarten).

These differences may prove more or less important in terms of trade with a post-Brexit UK, on one hand, and the EU, on the other hand. The Caribbean English monarchies may have a narrower negotiation leverage with the EU and other states or group of states, due to their stronger connection to London. In contrast, the Caribbean republics, including the Dutch English-speaking territory of Sint Maarten, due to their loose connection with London, may actually exercise, to a much larger extent, their leverage of negotiations with the other world state entities.

In a post-Brexit era, the Caribbean nations, on their part, will need to enhance and improve the free trade agreements they currently have with the EU (like CARIFORUM), North America (NAFTA), South Asia, and other regions.

The Pacific nations (in Oceania) have 11 member states in the British Commonwealth. Five of them are monarchies, with Queen Elizabeth II as their monarch and head of state (Australia, New Zealand, Papua New Guinea, the Solomon Islands, and Tuvalu), one is a monarchy with its own monarch (Tonga), and five are republics (Fiji, Kiribati, Nauru, Samoa, and Vanuatu).

Because of the small amount of land and limited resources (except Australia, New Zealand, and Papua New Guinea), the trade relations of the Pacific nations consist of economies in transition to a developed economy and infrastructure. The smallest Pacific nations rely on trade with Australia, New Zealand, and the United States for exports of goods and accession to other products (like cars, electrical equipment, machinery, and clothes).

The main trade blocs of the area are the Asia-Pacific Economic Cooperation (APEC) and the East Asia Summit (EAS). Currently, APEC has 23 members (among them, Australia, New Zealand, and Papua New Guinea), while EAS has 18 members (including Australia and New Zealand). A Pacific Island Countries Trade Agreement (PICTA) is in the process of being implemented by 2020. The aforementioned remarks, related to trade impact on the countries’ different status (monarchy with British monarch, monarchy with own monarch, and republic), remain valid for the Pacific nations, too.

 “The Times They Are A Changin’”

Nowadays we are witnessing world changes again. So far, the U.K. has been considered by some to be the EU’s fifth wheel of the cart, but in a post-Brexit era it has all the chances of becoming the Commonwealth of Nations’ first wheel of the bicycle.

If in the future Brexit were to serve as an example for similar movements (like Byegium, Czechout, Deportugal, Donegary, Finish, Italeave, Latervia, Nexit (or Nethermind), or Oustria), this would be an issue that remains to be confirmed.

 

NOTE – A version of the article was published previously in PUERTO RICO MONITOR.

 

Tiberiu Dianu has published several books and a host of articles in law, politics, and post-communist societies. He currently lives and works in Washington, DC, and can be followed on MEDIUM.

 

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4 comments to Western Hemisphere in the Post-Brexit Era

  • florin valentin

    Brexit is a sign of the End of the European Union!

  • MARCELA DESCULTU

    The article presents in detail and explicitly how Brexit has influenced the whole world. With Brexit, the UK has become another economic power pole. After Brexit, the United Kingdom can reduce the trade with the EU. Militarily, the United Kingdom announced the NATO allies that the national interests, rather than the EU ones, would be increased. It was a signal for NATO to review its role, objectives and principles.

  • MARCELA DESCULTU

    Brexit served as a predictor for the U.S. presidential elections. Emphasis was placed on sovereignty and border control. Financially, Brexit has affected the U.S., with the dollar growing, and shrinking exports to Europe. For national security reasons, the U.S. will intensify its cooperation with the UK. The Western hemisphere will have two major players: the United States and the United Kingdom.

  • MARCELA DESCULTU

    With Brexit, another world power pole will emerge, namely the British Commonwealth of Nations. In a post-Brexit era, the Commonwealth nations of the Caribbean and Pacific will have to consolidate and improve the current free trade agreements with the EU. Brexit marks a great change in the world. Until now, the U.K. has been considered by some to be not so important, but in a post-Brexit era it has all the chances to become an important power pole in the world.



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