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How Brexit will Move the World Further Towards Multipolarity

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

On 23rd June 2016, the British voted to change to leave the EU in a referendum. Despite the margin being close, the majority voted to leave.

The result is quite monumental, because the UK is the third largest economy in the Europe region, and plays an influential role in the politics. But the vote differed regionally – Scotland and Northern Ireland voted to remain in the EU, while the Welsh and the English voted to leave, triggering a political crisis, with the Scottish Nationalist Party headed by Nicola Sturgeon bringing up the possibility of having a second referendum to leave the UK. While the effects of the vote and the politics right after it will certainly determine how the UK’s borders will eventually look, the reverberations go far beyond the UK’s borders, and indeed Europe.

The UK owing to its Empire heyday has enjoyed an influential position in the post war world order. It is part of the core group of countries which extend an outsized influence on to the world. It is a member of the G7 group of countries, retains an active role in the recent “interventions” of the Western world (regardless of the morality of those interventions), is a crucial member of NATO, and is a permanent member of the UN Security Council, where it enjoys a powerful veto over UN treaties.

However, is this outsized influence of the UK in keeping with the rapidly changing times we are in? It doesn’t seem so. For quite some time now, developing countries, particular those with ambitions and greatly increasing political clout have been itching for a change in the post Word War 2 order. But the Western world, which holds greater influence and power over international bodies seem to be quite inertial in terms of responding to calls for change.

This April, right after the G20 and IMF meetings held in Washington, India, China and Russia held their annual trilateral meeting, in which they issued a 30-point communique, calling “on the IMF to continue to carry out reforms in order to increase the voice and representation of emerging markets and developing countries as soon as possible.” This is an indicator of the shift that is occurring in the world.

Given the background of the emergence of the newer hegemonies, the British vote comes at a momentous time, and the direction the UK chooses to follow from this point on, will determine its position in the newer world yet to come.

The European Union is highly unlikely to survive, as it finds itself between a rock and a hard place. The deficit countries in the Eurozone will end up exploding if any more austerity is administered (and indeed there are already signs of this, with Greek life expectancy rates starting to fall). But for the Eurozone to survive as a viable currency union, the EU has to become a “United States of Europe” where Germany, which runs a surplus account, redistributes its money to cover the shortfalls in the deficit states. But if this were to happen sovereignty would be lost and Berlin would lose control over its own finances. However this decision cannot take place because if the EU were to combine itself into a country, angry German voters would want to know why their hard earned money was being given away to others, and this question would require Chancellor Merkel and her predecessors, Gerhard Schroeder and Helmut Kohl, to admit that they had lied to them.

Hence the ‘single currency union in a country’ model is out of the question. Thus, while the politicians would very much like to extend the present game indefinitely – forever kicking the can down the road, we don’t live in a static world and markets, which have already been spooked by the dirty laundry in Europe (especially its extremely fragile banking system) will most likely eventually force an end to the euro currency. As the euro breaks apart the EU will soon follow as the damage and chaos forces national governments to take action to protect their own societies and forces them to stop pretending that they care about the European project.

The vote by the British to leave the European Union, even though many don’t realise it, is also one of the first shots signalling the beginning of the end of the unipolar structure.  Whilst the effects on the world economy of the turmoil in Europe are likely to be quite large, the greatest damage will be done to the developed countries as they are heavily indebted with hardly any attractive fundamentals. And since it can be argued that economic weight goes hand in hand with political power, the coming crisis will significantly damage the unipolar Western world, at the expense of the Asian countries.

Hence, while India, Russia and China are for the moment seemingly demanding nothing more than modest reforms in the IMF’s holding structure, in a few years time changes will almost certainly happen to the UN Security Council as well.  They will have to happen, as no longer will the world be in the shackles of Western domination and for the first time in almost three centuries the world polity will be more democratic.

It is quite natural then for discussions to be held about what the makeup of the supranational organisations is going to be.  India, despite having its bid for a UN Security Council permanent member seat denied even by Russia and China, will be in far more powerful shape in a few years time, and before long will be able to insist on its right to a permanent UN Security Council seat.  

As for the UK, being a relatively shrewd political operator, it should realise the benefits of being partners with its former colony – India – but will need to do so in a manner that does not provoke or reignite the old tensions from the colonial period, for there are many of them.


The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of this site. This site does not give financial, investment or medical advice.

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