Russia's Brexit gains will be political, not economic

Subject Russia, the EU and United Kingdom after Brexit. Significance Russian leaders largely refrained from commenting on the UK referendum of June 23, in which voters chose to leave the EU ('Brexit'). Before and after the vote, President Vladimir Putin and other officials voiced anger at UK politicians who cited threats from Russia as reason not to abandon the EU. The outcome is causing market uncertainty, but longer-lasting economic impacts for Russia are not yet apparent. However, a divided and weaker EU fits well with Moscow's foreign policy aims in the region, allowing it to exert bilateral pressure. Impacts EU cohesion on foreign policy is likely to decline, constraining efforts to deal with challenges south and east of the bloc. Many senior Russian officials will watch the United Kingdom closely out of anxiety for their personal assets in the country. As EU members become reluctant to expand the union, Ukraine, Georgia and Moldova will find integration slower than hoped.

Subject Brexit and the UK constitution. Significance After Brexit, the United Kingdom will move from a protected constitutional system, established by EU treaties, to one dominated by the sovereignty of Parliament. Such an unprotected system is difficult to reconcile with the protection of rights and with devolution. Impacts There will likely be entrenched division over the prospect of a codified constitution and what it includes. The United Kingdom should remain in a close and strategic foreign-policy relationship with the EU. There will be pressure from free-market Conservative MPs to lower tariffs and deregulate personal and corporate tax to encourage business.


Subject The package of reforms on a new EU-UK relationship. Significance The agreement between the United Kingdom and its EU partners sets the stage for the UK referendum on EU membership, which Prime Minister David Cameron has set for June 23. Cameron said he had negotiated new terms that would allow the United Kingdom to remain in the EU. Impacts The deal bolsters the campaign to remain in the EU, but the referendum outcome is still highly uncertain. The deal will only come into effect if the outcome is for remaining, forestalling a second referendum for better terms. If the outcome is for leaving, a new relationship with the EU would have to be negotiated during a two-year transition period. It would also probably lead to a second Scottish independence referendum and UK break-up.


Significance This comes after the Telegraph reported last week that Soros had donated 400,000 pounds to the group. There is an ongoing debate as to whether the United Kingdom will in fact leave the EU. Central to it is the question of whether the UK government can unilaterally revoke its decision to trigger Article 50 in March 2017. Impacts Voters would be less likely to support the revocation of Article 50 if the Council imposed conditions that made membership less attractive. Revoking Article 50 and remaining in the EU would reduce damage to the UK economy. If Article 50 is revocable, Eurosceptic governments could be tempted to use the prospect of triggering it as leverage in EU negotiations.


Significance However, member states have the dominant foreign policy role in the EU. After Brexit, that will be France and Germany despite the United Kingdom insisting that it wants to maintain as close a relationship with the EU as possible. Impacts EU reformers will light on foreign policy as an area to drive forwarded integration. However, the EEAS lacks the competencies and institutional horsepower to be a force for integration. The strategic needs of the 27 post-Brexit EU members will be various, thus acting as a drag on integration. Smaller EU member states will see more advantage than larger ones in collectively pursuing foreign policy goals through Brussels. Larger member states will be unwilling to submit their national defence policies to greater EU authority.


Significance The process has been plunged into further uncertainty by the outcome of the June 8 UK general election, which has sparked renewed debate about what kind of Brexit the United Kingdom wants and what kind of future economic relationship with the EU it should seek to negotiate. Impacts The UK government’s weakness is a cause for concern elsewhere in the EU, raising fears that it may not be able to compromise on key issues. Many businesses will begin implementing strategies for dealing with Brexit early next year, before knowing the outcome of the negotiations. Pressure for a lengthy transition period will continue to build. The political turmoil and slowing economic growth in the United Kingdom may increase support for EU membership elsewhere in the bloc.


Subject EU direction post-Brexit. Significance Some Europhiles believe that the United Kingdom’s departure from the EU removes a veto-wielding disruptor, thereby enabling the EU to achieve deeper political and economic integration. However, opposition to integration will remain strong, with former UK policy allies in the EU now looking to occupy the ground left by the United Kingdom. Impacts German-French hopes to create European champion firms to bolster EU competition will strengthen following Brexit. The relative weight in the EU of countries opposed to using sanctions as a foreign policy tool, such as Italy and Hungary, will now grow. Future defence and security initiatives could be established outside EU structures in order to accommodate the United Kingdom.


Subject UK-EU trade talks. Significance The United Kingdom will leave the EU on January 31, 2020, but will abide by EU rules as part of the transition period, which runs to December 31, 2020. During this limited period of time, London and Brussels will seek to negotiate a permanent trading relationship. While the transition deadline can be extended, the UK government has committed not to seek an extension. Impacts The impact of no trade deal or a 'thin' one may force the UK government to increase taxes in order to meet spending pledges. UK financial services will rely on an equivalence deal with the EU; London hopes to agree this by mid-2020. The EU’s future trade policy will focus on having stronger sanction powers as well as legal ones for those that unfairly undercut EU firms.


Significance The minority Socialist Party (PSOE) - Unidas Podemos (UP) government needed the support of several left-wing and pro-independence parties to get the budget through. Its approval makes early elections unlikely and gives the government a better chance to shape the COVID-19 economic recovery and implement some of its 2019 electoral pledges. Impacts Spain’s poor record in absorbing EU funds suggests it will struggle to make the most of the EU recovery fund. The weakening of the UK currency will hurt Spanish exports to the United Kingdom, especially with fewer UK tourists coming to Spain. Greater political stability will enable Spain to pursue a more assertive foreign policy.


Subject UK foreign policy. Significance Last week the EU and United Kingdom published their negotiating objectives for the future relationship. The European Commission’s negotiating mandate largely reflects the Political Declaration, including a desire for close formal cooperation in defence, security and foreign policy. The United Kingdom’s objectives indicate that it wants less formal cooperation as it seeks to de-institutionalise its relationship with the bloc. Impacts The economic impact of Brexit could cut the size of the UK defence budget, which has already fallen more than 10% in real terms since 2010. The absence of formal channels of EU-UK cooperation and coordination could result in a weakening of the EU’s sanctions regime on Russia.  The re-election of US President Donald Trump would herald a further four years of transatlantic tensions.


Author(s):  
Ananieva Elena

Prime Minister T. May has put forward the concept of "Global Britain". After the United Kingdom had left the EU, the concept was formalized under the government of Boris Johnson in the document “Integrated Review of Security, Defense, Development and Foreign Policy "Global Britain in a Competitive Age"”. The article presents an analysis of its goals, methods and practical implementation. Britain, realizing itself as a "middle power", intends to build a system of alliances to counter China and Russia, the latter designated as an ”acute direct threat” to the UK.


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