In the first days after the shocking Brexit vote in the UK, many were imbued with fear and calling this a landscape-altering moment that would shift how we have to view the world. While shock continues to prevail, and nobody knows what will happen next, some are beginning to acknowledge that the end of the world may not be imminent. German Chancellor Merkel’s statesmanlike calm has impressed many.
I had the privilege over the past two days to spend time in Germany with many of Europe’s top business leaders, along with Americans and other non-European executives, most of them from tech, along with academics and policy experts. At the excellent and thoughtful 24 Hours Conference hosted by Deutsche Telecom, an impromptu but intense session on Brexit was a highlight. The event is held under Chatham House Rules, so nobody’s name can be used in reporting, but there was much here worth listening to.
“We have, since the 1970s, had the luxury of being both British and European,” said one deeply pro-EU Londoner. “Now I feel that someone has ripped away one of those parts of me.”
“Who won and who lost?” asked a Continental policy guru. “Well, Putin will not be displeased. Marine Le Pen expressed satisfaction. Small-time parochialism is winning out.”
So what will it mean and how bad will things get, many here, as everywhere, were wondering. One large investor explained that he’s most worried about “second-order effects.” He mentioned, for example, the consequences for China. With the U.S. dollar so strengthened as the Euro and Pound have plummeted, China is hurt because its Renminbi is essentially pegged to the dollar. In order to prevent it from rising too much, credit will likely tighten, he said. That, in turn, will probably cause Chinese growth to slow even more than it has already. So a more turgid China could be an unexpected victim of the fearful British voters who voted for Brexit.
Britons in the group, of which they were many, were worried that no matter what happens next, “the country is broken,” as one said. On the one hand, it was widely felt that the decision might somehow be reversed before it was actually implemented. But on the other, there was no argument when one businessperson opined that the chances loom large that Britain will now face the emergence of a large, more-organized ultra-right party with support from something like 30% of the voters, no matter what happens from here.
But a thoughtful British voice added that Churchill famously said “never waste a crisis.” So how, this time, can we use the shock to the system in order to somehow strengthen that system long-term? Perhaps there will be a chance to step back and consider how to more effectively constitute the entire European idea, this person continued.
There was widespread dissatisfaction, even disgust, at Europe’s collective failures to address gigantic problems in recent years that were felt by many to have contributed to the vote’s outcome. Most notably, Europe did “exactly nothing” in the words of one European, even when it was very clear a year ago that large numbers from Syria and Libya and elsewhere were headed towards Europe.
Another business leader said that it wasn’t too late for Europe to show it can better address the refugee crisis, perhaps with firm action in some of the countries where conflict is forcing people to leave. And this top exec, like many here, adamantly wants to see a more constructive approach taken to the the North/South divide within Europe, which has forced painful austerity on countries like Greece. Many here worry that Italy could be a coming problem. There was a strong feeling in the room that there is room for Northern Europe, and Germany in particular, to relent on their hard line on fiscal discipline when it comes to states mostly in Southern Europe whose economies are far weaker. “When we say the EU has failed, it’s the European member states that have failed,” said a businessperson.
There was a powerful consensus here that the push for immigration will only increase, and broaden globally. “Africa will become to Europe what Mexico is to the U.S.,” said one investor. “And now with smartphones they all know that life in Europe is better than the life they have. They’re all coming and the solution has to come fast.” If there is a solution, it must be in building the economies where people already live so they can feel more promise in their homelands, several agreed.
“The next crisis is probably Algeria,” said a former government official. “It’s because President Bouteflika is old and sick and probably will pass away soon. But there’s no succession plan. The likelihood that all hell will break loose is significant, and it’s a much bigger country than Libya or Syria. It’s 50 million people and they all speak French and know how easy it is to leave.” My neighbor in the audience, of Algerian heritage, muttered his pained agreement.
“These people will come anyhow,” said another person. “That’s what the Brits worry about on an island. They want to watch how the Europeans handle this. And 50 miles of cold sea is the best thing they have.”
One Indian participant added “It’s a global failure. It’s not about the UK or US. People are asking for more. They want to have a stake in society because, via information, they are now connected to society.”
One German audience member ruefully said “For me the EU is about 70 years of peace in Europe. We haven’t had that for a thousand years.” Many here worry that, long term, that peace is in jeopardy if current trends continue.
By the next morning, the discussion a little distant, some were a tad more sanguine. “Keep calm and have a tea,” said a top German businessperson to the group. And a security expert reminded me in a side conversation that “nothing changes for now. The fears may be overdone. Nobody has died. We can work on this.”
The many British and European leaders here have to wrestle with a dark moment in their own history. We Americans can mostly just watch and tend to our own troubling political landscape, which reflects similar forces of sentiment. For all the concerns, I left feeling less alarmed than I had last Friday upon hearing the Brexit vote result. Yet the hard and fast reality is that unless the welfare of the world’s poor rises, the rest of us will come down, or our countries will. How we handle that reality is the great challenge facing the modern developed world.