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8/5/2016

Brexit:9questionsyouweretooembarrassedtoaskVox

Brexit: 9 questions you were too


embarrassed to ask
Updated by Timothy B. Lee and Zack Beauchamp on June 25, 2016, 9:34 a.m.
ET

On Thursday, British voters voted in favor of "Brexit (


http://www.vox.com/world/2016/6/20/11977012/brexit-pollvote-referendum-uk-news)" British exit from the European
Union. That means that the EU is on the verge of losing one of its
largest and wealthiest members.
The consequences will be huge for the British people. Britain's
economy and legal system have become deeply integrated with
the European continent. Unraveling those relationships is likely to
be economically and socially disruptive.

On the other side, Brexit advocates have argued that Britain will
be better off in the long run outside the EU, with full sovereignty
and unfettered control over immigration and economic
regulations. "The risks of Britain staying in the EU far outweigh the
risks of us leaving," argued British journalist Douglas Murray in an
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interview last week. "The eurozone has been a disaster, and it's
very important for Britain to get control of our own borders."

Related
The 7 most important arguments for Britain to leave the EU (
http://www.vox.com/2016/6/22/11992106/brexit-arguments)

On its own, British exit from the EU would be disruptive but not
calamitous for other EU countries. The larger threat for other EU
members is that Britain could become the first step toward
unraveling the EU more generally. The 2008 financial crisis and
the ongoing Syrian refugee crisis have put the EUs rickety
political institutions under strain. A British exit could further
shake peoples confidence that the EU project can endure over
the long run, causing other countries to eye the exits.
The campaign pitted Britains conservative prime minister, David
Cameron, against members of his own party who were more
skeptical of Britains EU membership. The "Leave" result will have
profound consequence for the Conservative party, Great Britain,
and the European Union.

1) What is the European Union?

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Photo by Christopher Furlong/Getty Images

The European Parliament is less powerful than the parliaments of sovereign democracies.

This, as Voxs Matt Yglesias (


http://www.vox.com/2016/3/22/11283970/brussels-europeanunion) has written, "is a bit of a complicated metaphysical
question."
The European Union began its life with the 1952 European Coal
and Steel Community. European leaders wanted to prevent a
repeat of the two world wars by giving European powers
especially France and (West) Germany shared economic and
political institutions. This gave way to the European Economic
Community in 1967, and ultimately the European Union after
1993's Maastricht Treaty.
Today, the EU includes a political and economic bureaucracy,
based in Brussels, that shapes and controls many aspects of
European political life. The EU has its own currency, the euro. It
has a travel agreement, called Schengen, which makes most of
the EU function as one giant country when it comes to travel and
migration.
However, the dream of a "United States of Europe" is still quite far
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from reality. The EU cannot declare war and does not have an
independent power to levy taxes. Most people in Europe feel
greater loyalty toward their home countries than they do to the
European Union as a whole.
This lack of continent-wide political solidarity has led many EU
citizens to be resentful of the degree of control Brussels wields
over their lives. This makes the current European equilibrium
inherently unstable. If Europe doesnt become more integrated
with a stronger central government and a shared political culture
then theres a danger that nationalistic tensions could cause
the whole system to unravel.

2) Why would Britain want to leave the EU?


British politics has always included a faction thats skeptical of
deeper integration with the rest of Europe. This faction has grown
stronger in recent years as the EU has struggled with the
aftermath of the 2008 financial crisis.
Britain joined the European Economic Community in 1973 and
hence the EU in the 1990s. But Britain never fully accepted the
legitimacy of European control over British institutions in a way
that other EU members did. It refused, for example, to join either
the Schengen Area, which eliminates internal border controls, or
the common currency.
Since 2008, Britains background euroskepticism has been
amplified by the poor performance of European economies.
The post-2008 recession was bad in the United States, but it was
really bad in the euro area. The eurozone took a greater hit than
the US did initially, and then quickly collapsed back into recession
rather than experiencing a continued recovery:

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(World Economic Forum ( https://www.weforum.org/agenda/2015/10/is-europe-outperforming-theus/))

There are a number of reasons why this is true, including several


EU nations' embrace of austerity. But one of the biggest, if not
the biggest, cause was the euro itself.
Central banks are supposed to react to recessions by expanding
the money supply in order to promote economic activity. The
2008 financial crisis caught central banks flat-footed both in the
United States and Europe. But Americas central bank, the
Federal Reserve, ultimately responded forcefully to the economic
downturn, helping to get the economy growing again starting in
2010.
In contrast, the ECB decided to raise interest rates a
contractionary policy in 2011. The result: While the US
economy started to heal, the eurozone tipped into a double-dip
recession. Things got so bad, particularly in Greece, that it looked
like the entire eurozone system could collapse.
This didn't affect the UK directly, as it uses the pound rather than
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the euro. But some Britons looked at the situation and decided
that EU membership was dangerous. The EU had historically only
expanded its powers, they worried. How long until Britain got
roped into a euro-like disaster or faced pressure to bail out
countries whose economies were wrecked by bad eurozone
economic policies?
This argument gave new potency to Britains long-simmering
euroskepticism. By mid-2012, after three years of the eurozone
crisis with no real end in sight, Prime Minister David Cameron was
under significant pressure from members of his own
Conservative Party to hold a referendum on whether the UK
should stay in. In January 2013, Cameron gave a speech (
http://www.theguardian.com/politics/2013/jan/23/davidcameron-eu-speech-referendum) promising to hold just such a
referendum if the Tories won Britain's 2015 election.
They did ( http://www.vox.com/2015/5/8/8572201/uk-electionresults), and then Conservative legislators passed a bill to hold a
vote before December 2017. In February, Cameron scheduled the
vote for June 23, 2016 and here we are.

3) What was the case for the UK to leave the EU?

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Photo by Jack Taylor/Getty Images

UKIP leader Nigel Farage.

The arguments for leaving the EU varied depending on which


advocates you talked to. But the two most common arguments
focused on the EU's liberal rules for internal migration and the
EU's burdensome economic regulations.
Boris Johnson, a Conservative who was then mayor of London,
wrote a typical case for Brexit (
http://www.telegraph.co.uk/opinion/2016/03/16/boris-johnsonexclusive-there-is-only-one-way-to-get-the-change/) back in
February, focusing on the increasing concentration of power in
the hands of unelected EU bureaucrats in Brussels:
The more the EU does, the less room there is for national
decision-making. Sometimes these EU rules sound simply
ludicrous, like the rule that you cant recycle a teabag, or
that children under eight cannot blow up balloons, or the
limits on the power of vacuum cleaners. Sometimes they
can be truly infuriating like the time I discovered, in 2013,
that there was nothing we could do to bring in betterdesigned cab windows for trucks, to stop cyclists being
crushed. It had to be done at a European level, and the
French were opposed.
On this view, the EU isn't just too meddlesome, its also
undemocratic and unaccountable to the public.
"The issue of sovereignty of who governs you, is the most
important question for any country," British journalist Douglas
Murray told me in an interview last week. After two decades in
which significant power resided in Brussels, Murray wants to
return full authority to the peoples' elected representatives in the
British Parliament.

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While arguments about economic regulation and political


sovereignty dominate the intellectual case for Brexit, the political
appeal of Brexit relies heavily on the emotionally charged issue of
immigration.
Britain refused to participate in the Schengen agreement and
fully dismantle border controls with other EU countries. But EU
law still requires members to admit an unlimited number of
migrants from other EU countries. With the eurozone suffering
from dismal economic performance, a lot of workers from less
affluent EU states like Poland and Portugal have moved to the UK
in search of work. Theres little Britains elected officials can do to
stem these flows, and that rubs a lot of British voters the wrong
way.
One of the most prominent critics of the EU's immigration rules
wasNigel Farage ( https://en.wikipedia.org/wiki/Nigel_Farage),
leader of the far-right UK Independence Party. He argued that
large-scale migration of low-wage workers from elsewhere in
Europe has depressed wages for native-born Britons. Farage also
suggested ( http://www.telegraph.co.uk/news/2016/06/04/nigelfarage-migrants-could-pose-sex-attack-threat-to-britain/) that
unrestricted immigration from Europe could lead to greater
competition for government services and even put British women
at greater risk of sexual violence.
Farage is an extreme example something like the Pat Buchanan
of the United Kingdom. But like the US, Britain is currently
experiencing an upsurge of nativist sentiments, and these
attitudes are providing a boost for the campaign to leave the EU.

4) What was the case for the UK to remain in the EU?

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Photo by Matt Cardy/Getty Images

Prime Minister David Cameron.

British Prime Minister David Cameron was on the other side of


the debate, leading the campaign for Britain to stay in the EU. And
his argument (
https://www.thesun.co.uk/archives/politics/214923/it-shouldbe-eu-pm-writes-exclusively-for-the-sun-on-sunday-to-makecase-for-staying-in/), like the argument of most supporters of
continued EU membership, was largely focused on economics.
Not only does the UK experience long-term economic benefits
from being part of one of the worlds largest free-trade zones,
advocates argued, but the process of leaving the EU could be
highly disruptive, leading to short-term economic pain.
Jacob Funk Kirkegaard, an economist at the Peterson Institute for
International Economics, told me last week that the UK gains a lot
of benefit from being inside the European club. For example, the
harmonization of laws and regulations across the EU means that
companies can maintain a single corporate headquarters for all of
Europe. And because English is the worlds most widely spoken
language, many foreign companies have located their European
operations in London.
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In addition, Cameron argued that EU membership makes Brits


more secure by allowing closer coordination among European law
enforcement organizations. He also argued that Britains EU
membership amplifies the UKs influence on the world stage, and
that leaving the EU could cause Britain to become marginalized.

5) Can't the UK just negotiate favorable access to


European markets after leaving the EU?

Photo by Ragnar Singsaas/Getty Images

Some supporters have pointed to Norway as a model for post-Brexit cooperation with the EU.

In theory, an independent Britain could negotiate a deal with the


EU that grants British businesses the same kind of preferential
access to the EU that they enjoy now. Indeed, Norway has just
this kind of deal: Its not a EU member, but the country has
agreed to voluntarily abide by most EU rules, and in exchange it
enjoys most of the economic privileges (
http://www.bbc.co.uk/newsbeat/article/36480932/norway-whyits-ok-if-the-uk-leaves-the-european-union) of EU membership.
One problem is that EU leaders may not be in a forgiving mood
after a British vote to leave. Many European countries have
domestic euroskeptical movements of their own, and European
leaders are worried that a successful British exit could embolden
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them. So the EU may refuse to give the UK a favorable deal as a


warning to other countries thinking about exiting the EU.
Another problem is that Britain may not want a Norway-style
deal. To gain preferred access, Norway is required to adopt many
EU regulations. A recent British government report found (
http://file///Users/tblee/Downloads/SN06522.pdf) that "Norway
has adopted three quarters of the EUs rules and legislation."
So if the point of leaving the EU is to escape its burdensome
regulations, it's not obvious that the Norwegian model will
accomplish that. And while euroskeptics have complained that
the EU is not sufficiently accountable to British voters, voters in
Norway have no influence at all over EU laws that in many cases
Norways legislature must approve without modification in
order to gain access to the European common market.
To a large extent, then, unfettered access to European markets
and diminished British sovereignty are a package deal. It's never
going to be possible for the United Kingdom to retain full control
over domestic regulation while enjoying access to EU markets on
par with the access available to other EU member states.

6) Can we take a music break?


Sure! As you might know, the UK has a pretty solid musical
tradition. A good musical interlude for this particular explainer is
"Should I Stay or Should I Go?" It was recorded by the British
band the Clash and released in 1982:

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7) What has happened since Thursday's results were


announced?
British voters voted for Leave by a margin of 52 percent to 48
percent. As the results were reported on Thursday evening,
markets started to panic. The British pound fell from $1.50 earlier
in the day to $1.35 in the early hours of Friday morning. That 10
percent drop brought the pound to its lowest value against the
dollar since the 1980s.
British Prime Minister David Cameron had vowed to continue in
office even if British voters opted to Leave. but by Friday morning
his position had become politically untenable. He has announced
plans to leave his post by October. We don't know who will
succeed him. Boris Johnson, a Conservative former mayor of
London and Leave supporter, is considered a leading candidate to
replace Cameron. But it's also possible that the Conservative
Party will become so fractured that Parliament will deadlock and
be forced to call new elections.

8) What will happen next?

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Photo by Jeff J Mitchell - WPA Pool/Getty Images

Former British Prime Ministers John Major and Tony Blair both support continued EU
membership.

Leaving the EU isn't simply a matter of declaring "I quit!" Article


50, the EU constitution provision that sets exit rules, allows for
the EU and the UK to negotiate over the terms of Britain's exit. At
issue is whether any EU treaties and laws would continue to apply
to the UK after it's gone.
After the British invoke Article 50, the parties will have a two-year
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window in which to cut a deal. If time runs out without a deal (or
without the parties unanimously agreeing to continue
negotiations), then the UKs membership in the EU would
automatically expire.
This could have dramatic consequences. At a minimum, a lot of
people will have to do extra paperwork. EU citizens in Britain and
Brits living in other EU nations will have to update their
immigration statuses. Companies operating in both the UK and
the EU will have to verify that theyre compliant with two sets of
laws.
And things could get uglier if the two sides arent able to
compromise.
"If you are Nissan or some other car producer with major
production in the UK, today, the same safety standards and
environmental standards allow you to sell everywhere in the
European market," Kirkegaard told me. But if the UK leaves the
EU, "you would no longer be able to sell into other European
markets, not because you face a small tariff, but because you'd
have to go through another set of safety certifications. This kind
of thing would be repeated in every industry you can think of."
Critics say the economic effects could be large. The UK
government estimated ( http://www.economist.com/news/latinamerica/21697097-leaving-eu-would-come-heavy-cost-treasuryanalysis-suggests-costs-brexit-would) that exiting the EU could
cause the British economy to be between 3.8 and 7.5 percent
smaller by 2030 depending on how well negotiations for access
to the European market ultimately go. Other reports have found
smaller, but still significant impacts.
And Kirkegaard said that Brexit could also change the United
Kingdom in another fundamental way. It's called the "United"
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Kingdom because it's made up of four "countries" England,


Wales, Scotland, and Northern Ireland. But if the United Kingdom
votes to leave the EU, it may not stay united for very long.
Polls have shown that people in Scotland and Northern Ireland
broadly support remaining in the EU. And the Scots in particular
have never been entirely satisfied with English domination, as
shown by the 44 percent of Scottish people (
http://www.bbc.com/news/events/scotland-decides/results)
who voted to make Scotland an independent country in 2014.
They like having the UK be part of the EU in part because it
provides a counterweight to English power within the UK.
Scotland First Minister Nicola Sturgeon has already said that
shewants to see a second referendum (
http://www.vox.com/2016/6/24/12024088/brexit-scotlandnorthern-ireland) on Scottish independence. That could lead to
an independent Scotland (which would most likely petition for
admission to the EU in its own right). A similar process could lead
to the reunification of Northern Ireland with the nation of Ireland
(itself already an EU member).

9) I skipped to the end of the article. Why should


Americans care about this?

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Photo by Dan Kitwood/Getty Images

British exit from the European Union could be disruptive for


Britain and for the EU more generally. Even skeptics like
Kirkegaard dont expect a British exit to trigger a global recession,
but turmoil in one of our most important trading partners cant be
good for the US economy.
But the more important issue from an American perspective is
about geopolitics more than economics. Ever since World War II,
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the United States has been deeply invested in safeguarding longterm peace and prosperity in Europe. We still have thousands of
troops stationed in Germany to help maintain the status quo
there, and weve worked to build a system of alliances that helps
to minimize the possibility of conflict.
A British decision to leave the EU isn't going to pose an
immediate threat to this political order. But it could signal growing
dissatisfaction with the status quo among European voters. That
could have unpredictable results.
We've already seen the fall of David Cameron, a man whose
policies have generally been friendly to the United States and the
established global order. He could be replaced by a more
euroskeptical leader on the right. Or if the results of British exit
are as bad as critics predict, it could discredit the British right and
bring the Labour Partys far-left leader Jeremy Corbyn to power in
the next election.
A win for British euroskeptics could also provide a boost to
skeptics of the EU elsewhere in Europe. With many countries
continuing to suffer through a euro-induced recession, that could
cause other countries to seriously consider leaving the EU,
ultimately causing the EU to unravel.
None of this will necessarily be bad for the United States
Europe might muddle through and ultimately emerge stronger
and more prosperous. But the peace and stability of the EU era
has been broadly good for Americans and the world, so turmoil in
Europe is cause for worry.

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