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Brexit Northern Ireland Protocol – Violence erupts in Northern Ireland – Geopolitics Current Affairs

Brexit Northern Ireland Protocol – Violence erupts in Northern Ireland – Geopolitics Current Affairs

Relevance:

  • GS 2 || International Relations || India & Rest of the World || Europe

Why in the news?

Tensions have erupted in Northern Ireland once again, as U.K. and Irish leaders attempt to preserve a long-standing peace deal in the region post-Brexit.

What is ‘Brexit’?

  • ‘Brexit’ is the name given to the United Kingdom’s departure from the European Union. It is a combination of ‘Britain’ and ‘exit’.
  • In 2016, the UK held a referendum on its membership of the EU. The question facing voters was: ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’
  • 51.89% of voters voted to leave the EU. The UK left the EU on 31 January 2020. This is called ‘Brexit’ in common discourse.

Reasons behind Brexit:

The reasons can be classified under:

  1. Economical reasons: Opponents of the EU argued that it is a dysfunctional economic entity. The EU failed to address the economic problems that had been developing since 2008.
    1. For eg: 20% and raising unemployment in the UK. Also, the difference between the lives of southern Europeans and Germans, who enjoy 4.2% unemployment.
  2. Sovereignty: The second reason for Brexit is the rise of nationalism across the world. There’s a growing distrust of multinational financial, trade, and defence organisations created after World War II.
    1. The EU, the IMF, and NATO are good examples of this. Many who oppose the EU believe these institutions no longer serve a purpose. Also, the EU doesn’t understand the power of nationalism.
    2. It attempts to retain nationality as a cultural right. On the other hand, it deprives individual nations of the power to make many decisions.
  3. Political Elitism: Two established parties- Conservative and Labour parties wanted to remain in the EU, and a third faction, drawn from both parties, opposed it.
    1. People in this third group saw both of the establishment parties as hostile to their interests.
    2. Brexit was a vote against the British elite. Voters thought politicians, business leaders, and intellectuals had lost their right to control the system. Voters thought the elite had contempt for their values—for their nationalism and interests

Impacts of Brexit:

  • The U.K. formally left the EU on Jan. 31, 2020, but entered a transition process that ended on Dec. 31, 2020.
  • The EU-UK Trade and Cooperation Agreement was agreed to on Dec. 24, 2020.
  • The Trade and Cooperation Agreement has three main pillars: trade, cooperation, and governance. Notably, the agreement does not cover foreign policy and defence

Impacts on the United Kingdom

  • Economic Growth : Brexit’s biggest disadvantage is its damage to the U.K.’s economic growth.
    • Most of this has been due to the uncertainty surrounding the final outcome. Uncertainty over Brexit slowed the U.K.’s growth from 2.4% in 2015 to 1.0% in 2019.The U.K. government estimated that Brexit would lower the U.K.’s growth by up to 6.7% over 15 years.
  • Lesser Jobs: Brexit hurts Britain’s younger workers. Germany is projected to have a labor shortage of 3 million skilled workers by 2030.Those jobs won’t be as readily available to the U.K.’s workers after Brexit.
  • UK’s relationship with Northern Ireland: Brexit put a big strain on the relations of U.K. member Northern Ireland with its neighbour, the Republic of Ireland, an EU member.
    • The new agreement allows Northern Ireland to adopt EU customs rules so there isn’t a hard border between the two adjacent countries.
  • Impacts on London’s financial sector: Brexit has already depressed growth in the U.K.’s financial centre of London, which saw only 1.4% in 2018 and was close to zero in 2019.
    • Brexit also diminished business investment by 11% between 2016 and 2019. International companies are less likely to use London as an English-speaking entry into the EU economy.
    • Barclay’s moved 5,000 clients to its Irish subsidiary, while Goldman Sachs, JP Morgan, and Morgan Stanley switched 10% of their clients.

Impacts on the EU:

  • Damage to the idea of a ‘single-Europe’: Brexit is a vote against globalisation. As a result, it has weakened forces in the EU that favour integration.
  • Possibility of further disintegration of the bloc: Members of right-wing, anti-immigration parties are particularly anti-EU in France and Germany. If they gained enough ground, they could force an anti-EU vote. If either of those countries left, the EU would lose its most robust economies and would dissolve.
  • Jeopardised pan-European institutions: Due to Brexit, the Pan European institutions such as NATO, OECD, etc. would get weakened.
  • Restricted Trade: The U.K. is no longer part of the customs union and single market with the EU. Instead, it has a trade agreement that allows zero tariffs and zero quotas on goods traded that comply with the appropriate rules of origin. Free movement between the U.K. and EU has ended. Many services, such as telecommunications, broadcasting, and electronic services, may be taxed.
  • Devaluation of Pound vis-a-vis US dollar: A weak pound also makes U.S. exports to the U.K. more expensive, although that hasn’t slowed exports. In 2019, U.S. exports to the U.K. were $147.4 billion, up from $141 billion in 2018

Impacts of  Brexit on Indian interests:

  • More restricted Immigration from India: More restrictions on Indian immigration can be expected in the United Kingdom post Brexit.
    • However, it is anticipated that the restrictions on the other EU citizens will be limited due to political reasons; Indian immigrants may have to feel the actual heat.
  • On exports: India’s exports to the UK have been around 3% of our total exports and exports to the European Union are around 17% of total exports.
    • Our exports to both UK and Europe have been on a downtrend in the past two years on account of subdued demand led by a frail and scattered recovery in the region.
    • Post Brexit there is a heightened chance of this trend being amplified over the near term given the possibility of disturbances in currencies and the UK facing a further slowdown in growth.
  • On Indian businesses: UK has been a valued economic partner for India and the decision to leave the European Union has created some amount of ambiguity for the Indian businesses.
  • On the education sector: Britain’s exit from the EU is expected to open up significant business and economic opportunities for the Indian Education Sector.
    • Education in the UK will likely become more affordable and we might see UK wooing candidates with more incentives.
    • For Indian students studying in the UK, Brexit would result in a more level playing field compared with other EU students who hitherto had an informal edge over the rest of the world in the job market.

Conclusion:

Brexit is an important geopolitical incident that has impacts across the globe. However,  since there is still lack of clarity on several provisions on the mutual agreement signed by the UK and the EU, it will come only with the time and experiences.

Model Mains Question:

  1. Critically discuss the impacts of ‘Brexit’ on the Indian interests in Europe. In the long-term, do you think the incident would help India more in advancing its interests in the region?