Yes, the “leave” vote surprised me. I expected
economic rationality and political equanimity to prevail over
distaste for immigrants and flag-waving England firsters. Identity
politics has triumphed once again. Let it be a lesson to me.
The immediate economic implications are already
clear: a sharp fall in the British pound, a sell-off in stock
markets worldwide, an even shakier euro, and more than likely
renewed recession in Europe as well as a sharp slowdown elsewhere.
The US may be the exception for a while, as many people will seek
safe haven in the dollar, but that will drive it up, weaken exports,
and slow already slow growth. Uncertainty will persist: Scotland
will proceed with a second referendum, Wales may follow suit, and
Catalonia will try to do so. Will the Netherlands or France put the
EU to a vote?
What about the Balkans and Middle East, where my
attention is focused?
In the Balkans, both the immediate and longer term
effects are dire. The region is heavily dependent on European trade
and investment, which are going to be hit hard right away. But
perhaps more important will be the political impact. Balkanites
(that’s what I call people who live in the Balkans) have already
been finding it hard to believe in their European prospects, which
seem farther away than they did five years ago. Now they would be
fools not to doubt the willingness of Europe minus UK to accommodate
These doubts will open the door to increased
Russian influence, not only in the Balkans but also in Ukraine. No
one gains more politically than Putin does from the UK referendum:
it weakens his antagonists in the UK and the EU, makes his
annexation of Crimea and occupation of southeastern Ukraine look
more acceptable, and validates his ethnic nationalism. The vodka
should be flowing freely at the Kremlin today. It will also flow
into the Balkans. Putin will no doubt intensify his efforts in
Serbia, in Bosnia’s Republika Srpska and in Macedonia to wean Slavs
from their EU and NATO dreams.
The Middle East is a harder call. There are a lot
of wealthy Gulf sheikhs with money and property in Britain. They
won’t like seeing the pound collapse, and some may already be so
strapped by low oil prices that they panic and get out. But my guess
is that most will hang on. Slowed world economic growth will however
crimp oil prices once again, after their recent rise to $50 and
change. So the future of Gulf money in Britain is likely dimmer than
it was in the past.
Britain’s role in the Middle East may also change.
It has been a major European contributor to intervention not only in
Iraq but also in Libya and Syria. A more inward-looking and reduced
Britain is not going to have the same resources and will to
underwrite such efforts.
Britain will of course raise its barriers to
Middle Eastern immigrants, but it hasn’t been taking many of them in
any event. The main focus of resentment has been against East
Europeans and the threat of immigration from the Balkans. Young
Albanians, Serbs, Bosniaks and Macedonians are going to lose both
education and job opportunities that many have been enjoying in
Ironically, one of the many problems that need to
be resolved during the two-year negotiation to implement Brexit,
will be Brits abroad living in the rest of Europe, who number 1.2
million. Three million people from other EU countries live in the
UK. If no accommodation is reached to allow these people to stay, we
could see a massive population movement with unpredictable
implications. Even if they are allowed to stay, this kind of
migration is finished. The next British government will have to do
everything it can to prevent foreigners from reaching its soon to be
Net net: Brexit is bad news for the UK, the EU,
the US, the Balkans and the Middle East. It is good news for
Vladimir Putin. My friends and I will not be celebrating.