Nel's New Day

October 22, 2016

The Effects of Brexit

Volcanoes go quiet before the eruptions: the greater the calm, the more powerful the explosion. That’s the conclusion of volcanologist Diana Roman who reported that the length of the quiet time can be correlated to the volcanoes’ risks. Although not always, bad storms are also identified by preceding periods of calm. Tropical cyclones have an “eye,” a time of calm weather in the circular area before the other side hits.

This weekend feels like one of those periods of eerie calm as the nation comes off two tumultuous days last week—the presidential debate and the humorless “roast” at the Al Smith’s charity dinner when Donald Trump’s only “self-deprecating” statement was directed at his wife’s copying Michele Obama’s speech earlier this year. Hillary Clinton was funnier—she wasn’t frequently booed as Trump was—but several of her jokes had serious barbs.

Since those events, a subdued Trump lacks energy in his rallies. For the first time, he said that he might lose the election, and GOP politicians appear to be in a political malaise with no way out. The tension of an upcoming storm gives a feeling of danger, but even a short calm leaves us a chance to contemplate the issues that have been overlooked by the bombastic control of the GOP presidential candidate showman.

Brexit, for example, is making its presence known. For those who have forgotten, the Trumpian hatred toward minorities, government, and regulation across the pond led a frenzy of voting in the United Kingdom to separate the country from the European Union. The voters then elected conservative Theresa May as its prime minister. Her announcement to invoke Article 50 within a few months forces the UK to finalize its separation two years from then.

The divorce settlement between the UK and the EU is a bit fuzzy with no scheduled deadline. No one knows what UK’s constitution requires although May promised a bill to put EU laws into UK domestic law. A serious problem is negotiating new trade agreements until the divorce may be finalized in 2019.

Meanwhile, May is behaving like a woman forced to leave her husband with the intent to divorce but trying to keep all the rights of her marriage. This week she ordered the EU to not hold any more summits without the UK. May said, “I want the U.K. to play an active part…. I expect to be fully involved in all discussions related to the EU 28.”

EU leaders weren’t impressed. The remaining 27 had two informal meetings since last June when UK citizens voted in favoring of dumping the EU and plan another information meeting—without the UK—in January. May was allowed to give a speech about Brexit at the summit but given only five minutes at 1:00 am. EU leaders are also considering changing the official negotiation language from English to French, another bone of contention for May.

Gibraltar, where 96 percent of its residents voted to stay with EU, is just one problem that May faces. Their flourishing economy is dependent on easy commutes across its border, and Madrid would be delighted for Spain to regain sovereignty after three centuries. If Spain plays hardball with Gibraltar, residents would be dependent on boats or planes to leave the country, and intensified border checks would complicate their life as it did three years ago until the EU settled the problems. After Brexit, Spain can veto any trade deals with the UK—which also means Gibraltar.

Scotland’s First Minister Nicola Sturgeon said that it is “democratically unacceptable” to force Scotland out of the EU because its citizens voted to remain. A second independence referendum for Scotland is now “highly likely,” according to Sturgeon. The impact in Northern Ireland would be “very profound,” according to Deputy First Minister Martin McGuinness, and the island of Ireland should be able to vote on reunification. Northern Ireland Secretary, Theresa Villiers ruled out the call from Sinn Féin for a border poll. UK’s prime minister, Theresa May, will meet this coming week with leaders of Scotland, Wales, and Northern Ireland this week to essentially tell them  that she’s in charge and they will work for the entire UK—not just their part of it.

Another problem comes from reports banks are leaving the UK, the smaller ones by the end of the year followed by the biggest ones early next year. The flight comes from the threat that Britain will “pay the price” of leaving, as French president François Hollande and other EU leaders have promised in a “hard Brexit.” EU leaders could reintroduce tariff and non-tariff restrictions on British imports and exports, and banking is Britain’s largest export industry, according to Anthony Browne, head of the British Bankers’ Association. Up to 70,000 financial jobs could be lost if the banks flee the sinking island.

Despite these dangers, the UK Conservative party is more concerned about immigration than the country’s economy and has no plan regarding the UK and the EU. Businesses are at a loss because the government has provided no direction. The pound’s value has dropped to an almost 30-year low, meaning that it buys fewer euros or dollars, and experts predict the pound value to remain at least ten percent below what it was on the day before the June Brexit vote. All imported products—clothing, food, etc.—will stay more expensive than before the vote.

The Bank of England’s drop in interest rates from 0.5 percent to 0.25 percent—a record low and the first cut since 2009—is the same strategy that the U.S. used to fight its way out of George W. Bush’s recession, and lowering the interest rate may reduce the value of pensions.  Cost of government borrowing has gone up because Britain lost its top AAA credit rating.

Divorce from the EU covering thousands of subjects during 43 years of agreements and treaties must have the unanimous approval of over 30 national and regional parliaments across Europe, some of whom may want to hold referendums. At this time, the EU will permit the UK to be part of the single-market—including tariff-free trade—if EU nationals have the unchecked right to live and work in the UK. The UK doesn’t want to give up that control and declines to give a guarantee about EU nationals now living in the UK, but it wants the single market.

Travelers from EU and other non-EU countries in a group called the European Economic Area (EEA) may no longer receive state-provided medical help for conditions or injuries requiring urgent treatment if the UK severs ties with EEA.

Overwhelming popularity of Brexit is vanishing in the UK. In the Witney vote this week to replace former Prime Minister David Cameron, the Conservative Party percentage went from 60.2  last year for Cameron percent to 45 percent, Liberal Democrat vote increased from 6.8 percent to 30.2 percent, and the UKIP (Brexit supporters) went down almost two-thirds, 9.2 percent to 3.5 percent, now fourth place behind the Green Party candidate, Bernie Sanders’ brother Larry Sanders.

Brexit campaign manager and Vladimir Putin-supporter Nigel Farage has been a strong supporter of Donald Trump, coaching him for the town hall session with Hillary Clinton on October 9 and speaking at his rallies. Farage was heard praising Trump about his town hall performance on Fox. Although Farage took a small step backwards after hearing about Trump’s groping women, he still wants the racist, nationalist presidential candidate to win because of their similarities. Farage tells his U.S. audiences that Trump, despite his shrinking poll numbers, can still win because many people didn’t expect Brexit to win.

If people don’t vote for Clinton, Farage could be right, and the United States could be in worse shape than the UK if that happens. Even if Trump loses, the negative effects of Brexit will penetrate the United States, requiring a competent president.

Today I dropped off my ballot in Oregon. I wanted to make sure that no matter what happens to me in the next 17 days, I have voted to keep Donald Trump from become the Russian-supporting dictator of the country where I live.

Nels New Day is taking a hiatus and will return after Halloween. In the meantime, please vote early and vote sane!

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