Brexit or Bremain?
There is still hope for a Bremain. All is not doom as United Kingdom (UK) would require the consent of 3 other parliaments (Scotland, Wales and Northern Ireland) plus London to agree on Brexit before UK can request to be out of the European Union (EU).
The ‘out of EU’ legislation that will be drafted by the London parliament needs to be approved by the other 3 parliaments before the UK can leave the EU. This is in addition to requiring UK politicians to negotiate with the EU on the terms of the departure. The UK could also reject any separation deal given to them by the EU and remain as a member of the EU during the separation discussions.
The departure negotiations can only start after the UK have elected new Prime Minister; which is scheduled to be elected as early as October this year.
There is also hope for the UK to remain in the EU as there are Britons now calling for a second referendum, particularly after the surge in Google searches related to Brexit after it became a reality. 1.5 million Britons have signed a petition to have a second referendum conducted – that proposal has garnered enough signatures for the second referendum proposal to be discussed in the parliament.
However, PM David Cameron and Boris Johnson had played down the possibility of a second referendum. It is still unclear now if a second referendum might occur to undo the Brexit.
While the UK people have voted out of EU, the UK parliament has the rights to seek to remain in the EU. In a sense, the referendum becomes an opinion result. Of course, the parliament will follow the public wish to protect their political career.Recommended Post: Is MBS REIT Possible?
The referendum to Leave on the Rise in Europe
France, Netherlands, Hungary, Italy, Denmark, Slovakia and Austria are all facing calls for a referendum by their citizens to leave the EU.
While many view this as a step backwards towards the war-torn Europe period, I see this as a step forward towards solving the root problem of the Euro-Crisis.
The UK leaving EU is definitely a bad choice for the UK in the short-term (and maybe even the long-run depending on how you see it), but it sets up the stage required to push for the EU countries to leave the EU and subsequently the Eurodollar - the currency that triggered the Euro-Crisis.
The Tragedy of the European Union
In George Soros’ latest book ‘The tragedy of the European Union: Disintegration or Revival?’, he described several ways in which the Euro-Crisis may be resolved. Either the stronger EU countries (namely Germany) forgave the loans made and provide fresh financial aid to the weaker EU countries (much like the Marshall Plan after WWII), or for the stronger EU countries to leave the Euro-dollar, thus allowing the Euro-dollar to depreciate to a level that can help make the weaker EU countries a more attractive a place for tourism or other purposes. Mr Soros also reiterated that a disorderly the disintegration of the EU may trigger an even worse economic the outcome for the whole of Europe.
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In my view, Brexit fits two of Mr Soros’ view of aiding the recovery of Europe. UK is considered as a stronger member of the EU. Although Her leaving does not have a direct impact on the value of Euro-dollar, it sets up the stage for the rest of the stronger EU countries (like France) to want to leave the EU and the Euro-dollar. Furthermore, because it is a departure of a strong EU member, there is time on the UK and EU side to discuss the terms of the separation, which can be set as the reference for future departures. This compared to if it was a weaker country (eg; Greece) who is in dire need for economic reforms; any delay could push them further into the economic brink of no return.
Ironically, this can be seen as using the UK as an example of what would happen to an EU country when it leaves the EU – especially if the UK were to suffer long-term recession. This can be a driving factor for the rest of the EU members to realise that they need deeper integration and wider safety nets for one another instead of pushing for separation and economic disaster. However, this can be a little long (at least 2 years) to watch how it would turn out and by then, maybe the populists and nationalists would have already taken over Europe and disintegrated the EU.
In another article detailing the conversation with Singapore's late MM Lee, the idea of a Euro-disintegration was also vaguely mentioned with "small players... the role of supporting player", signifying individual European countries each surviving on their own.
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