Trump’s Brexit Blunder

Member Group : Keith Naughton

Is Donald Trump smart or just lucky? Trump was in the United Kingdom when British voters opted to leave the European Union, prompting the ever-opportunistic Trump to do a victory lap. Trump’s populist campaign certainly gained a measure of momentum with a Brexit vote that surprised even it supporters. However, that victory could prove short-lived. The next four months are rather likely to turn Brexit into a millstone for Trump.

For Trump it does not really matter whether the Brexit vote is a long-term benefit. What matters is positive or negative news between now and Election Day. And that’s a problem for Trump, because even the Leave campaign leaders acknowledged that the UK would experience significant short-term costs.

The lead-up to the vote and the immediate aftermath were tailor-made for the Leave campaign. Brexit was sold on both fear and hope: Fear of being further subject to a faceless Brussels bureaucracy, a mass influx of poor immigrants unwilling to become part of British society and the imposition of the deeply flawed Euro currency. Hope for a fully independent future with all the benefits of the single European market without any of the regulatory, currency or immigration cost. The Remain campaign was stuck essentially saying that the EU is not so great, but leaving would be worse than staying. Not exactly inspiring stuff.

In the aftermath, the dynamic has changed. Until Britain actually leaves the EU, it is all costs and no benefits. Britain has to negotiate a new arrangement while still subject to all the rules and regulations of the EU. And those negotiations are not going to be easy.

Like any organization, the EU has an overriding interest in its own survival. If the EU lets Britain leave with a free-trade agreement (as the Leavers promised), not only would that give Britain a privileged economic position in Europe, but it would signal to other countries they can walk out with no economic penalty. An easy out for Britain would be the death knell for the EU. More likely, the EU will offer access only on the terms it offers other European countries outside the EU.

Both Norway and Switzerland have declined to join the EU, but, out of economic necessity need access to the common market. In exchange for access, both nations must adhere to EU regulations and must be part of the Schengen Zone – yet neither has any say in those policies. For Britain (which negotiated itself out of the Schengen Zone) that would be a loss of sovereignty and influence.

But, Britain still has to get to that negotiated settlement, which is some distance away (not to mention that given that the EU market would outnumber Britain, over 440 million to just under 65 million, the British are at a distinct negotiation disadvantage). In the interim, three major problems loom: Job poaching by the EU, unrest in Northern Ireland and independence by Scotland.

For over a decade, Europe has had a significant unemployment problem. The easiest solution to that problem would be poaching as many jobs from Britain as possible. Consider that Britain produced in excess of 1.5 million cars in 2015. Nearly 60 percent of cars produced were exported to the EU – a very tempting target for EU governments with empty assembly lines.

Within the U.K., England and Wales voted Leave, while Northern Ireland and Scotland voted Remain. But, that’s not the whole story. In Ulster, the Catholic districts voted most strongly to Remain, while the Protestant districts were more likely to vote Leave. Given that peace in the region is less than 20 years on and partly predicated on ease of movement between Ulster and the Republic of Ireland, Brexit is already re-opening wounds Britain had thought were healed.

Scotland even more strongly voted for Remain, with all electoral districts in agreement. The leader of the devolved parliament has already come out in favor of a new referendum on independence and admission into the EU. Such a move would not only diminish Britain, but lead to difficult negotiations over national assets, defense and economic policy between two entities tightly intertwined.

But the worst outcome for Trump would be none of the above, and a U.K. U-turn.

After all, the referendum does not automatically trigger Brexit. Given that Britain does not have an actual constitution, there are no real rules in place as to what any future government must do. Not to mention that the EU has a history of "do-overs." As the costs mount and the promises of the Leave campaign begin to unravel, British voters could move solidly for a re-vote. If the sovereignty of the people is important, why deny one?

But there is some hope for Trump – and it is that the European Union remains a mess. There is no question that the EU could find itself in any number of crises before November. Greece remains an economic basket case and the EU’s band-aid policy has only pushed back the day of reckoning. Controversy over immigration could return at any time. But, most ominously, is a looming banking crisis in Italy combined with a scheduled October constitutional referendum. Reversals on either would be highly destabilizing.

In the end, I doubt Trump weighed any of these issues before he decided to jump into the Brexit debate. Trump did what he always does, try to catch the breeze from whichever way the political winds are blowing. In this case, he would have been better sticking to American domestic issues. Then again, Trump’s political success has been built on his opponent out-blundering him – and the leaders of the European Union definitely are capable of doing that.