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Friday, June 24

"Is 'Brexit' the Beginning of End for European Union?"


by ANMAR FRANGOUL
CNBC via NBC News
(Updated) JUNE 24 2016, 2:24 AM ET
First published JUNE 23 2016, 8:42 AM ET

"... the notion that integration is Europe's destiny — and irreversible — would be shattered."

Britons voted to leave the 28-member European Union and analysts are worried the outcome could have far-reaching consequences for Europe's political landscape.

A recent poll from YouGov showed that, out of seven countries polled, a majority in six of those felt that more countries would choose to leave the EU if a Brexit occurred.

Sixty-nine percent of Swedes believed it was likely there would be further exits from the EU "post-Brexit," with 66 percent of Danes and 57 percent of Norwegians feeling the same way.

"From the European perspective, the question of the outcome of the referendum is one thing, but I think if you take the broader picture then what the referendum shows is that you're dealing with these 'eurosceptic' and populist parties everywhere across the continent these days and so either way, whether the U.K. stays or leaves, I think that the main takeaway here is that the days of ever closer integration are basically over," Carsten Nickel, a political risk analyst at Teneo Intelligence, told CNBC in a phone interview before the results were known.

While the prospect of a Brexit triggering other countries in Europe to follow suit and decide to leave is not an immediate one it would "certainly sow seeds of doubt," according to Paolo Dardanelli, senior lecturer in comparative politics and acting director of the Center for Federal Studies at the University of Kent.

"Denmark and Sweden would be the ones to watch in particular, as their position would be significantly weakened," Dardanelli added via email.

Nickel went on to say that while the risk of countries pushing to leave was not immediate, the Netherlands —in addition to Sweden and Denmark — would be watched closely.

These countries would be in a position of relative strength — compared to other European countries who have been in weaker positions — if a conversation about leaving ever did take place.

"You could argue that the conversation about this could be different in a place like Denmark, or Sweden or the Netherlands, where you're looking at countries with well-functioning political institutions, and economies that are doing fairly well," Nickel said.

The tone of such conversations was already being set. "You have this already, where you have a conversation where people say 'we don't want to be paying for south Europeans who are incapable of reforming their economy,' so I think that's a problem," he went on to add.

Looking at the broader picture, Dardanelli said that there could be four main consequences of a Brexit, including, "the notion that integration is Europe's destiny — and irreversible — would be shattered."

Other ramifications Dardanelli pointed to include the further marginalization of EU members outside the euro zone, such as Denmark and Sweden; Ireland — a member of the euro zone but also closely tied to the U.K. — finding itself "in an uncomfortable situation"; and Germany finding itself "in an even more dominant position" whilst at the same time losing "a precious ally on issues such as economic reform, competitiveness, free trade and so forth."

The upshot, Dardanelli said, "is likely to be a less competitive, more protectionist EU."

[END REPORT]

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