Interview: Cleo Paskal on Background Briefing with Ian Masters talking the potential upside of Brexit

Cleo was on Background Briefing with Ian Masters talking about how Brexit may actually turn out to be good for the EU and increase global security. You can hear it here. 

Article: 5 ways Brexit could be good for the United States (Yahoo News)

To read it on Yahoo News, click here. 

Cleo Paskal for Yahoo News

June 25, 2016

We’ve all seen the short-term downsides of Brexit: the stock market nosedive, the crash of the pound to 30-year-lows and the political earthquakes in the United Kingdom — including the announced resignation of Prime Minister David Cameron, the flaring up of civil war in the opposition Labour Party and the threats by the leader of the Scottish National Party to hold another referendum on Scottish independence.

This flux will wax and wane as the U.K. and the European Union soon launch into a two-year period of disengagement that is likely to feature window-rattling Sturm und Drang from both sides. But then the deal will be done, and life will go on. And life post-Brexit might be good, not just for the U.K. but for the United States. Five areas in particular could benefit — and open a path for a new geopolitical order that’s even friendlier to U.S. interests.

1. Intelligence sharing

The U.K. is part of the Five Eyes intelligence alliance, along with the U.S., Canada, Australia and New Zealand. This global intelligence-sharing network has the highest penetration in the world. Traditionally, the U.K. and U.S. in particular cooperate very closely. That partnership contributes to the U.K. having the best intelligence capabilities in the EU (though the Germans and French are also very good, they don’t have the global network the U.K. has via Five Eyes).

The EU has been pushing hard for increased intelligence sharing among its 28 members, but at the same time other EU institutions are enacting policies under the rubric of human rights and immigration that undermine security and operations. According to former CIA Director General Michael Hayden: “Because of some of the positions the Euro institutions have taken on surveillance and privacy, the capitals are finding it more difficult to provide for their own citizens’ safety. So to a degree, Brussels, as a Euro institution, keeps pushing these activities at the expense of security.”

Had the U.K. been pulled closer into the EU, it is likely the U.S. would have had increasing concerns about sensitive intelligence cooperation and sharing with the U.K. in case of Brussels interference or leakage to less secure members of the EU. With Brexit, the U.K. and U.S. can continue to deepen their relationship, while the U.K. can continue to work with EU members on well-defined files of mutual interest, without risking compromising Five Eyes partners. Brexit reassures the U.S. that intelligence cooperation with one of its key allies, the U.K.  , can not only continue but also grow, securely.

2. Defense

Similarly, there has been a growing push by Brussels for an EU military. The goals of that military risk being very different from the goals of Washington. The cracks have already appeared. Recently, NATO held exercises in Poland and the Baltic states in order to reassure those countries that NATO took their concerns about Russia seriously. Germany’s foreign minister responded by accusing NATO of “warmongering,” thereby showing Russia a NATO-undermining lack of unity in the Western response and discounting the real concerns of EU partners. What would the situation be like if the EU already had a military? Would the NATO exercise have been allowed?

With Brexit, the U.S. can be assured that the U.K. — a permanent member of the UN Security Council — will remain an unconflicted partner in NATO, not subject to divergent EU policies.

3. Trade and finance

During the campaign, President Obama told the British that if they voted for Brexit, a post-EU U.K. would be “in the back of the queue” for negotiating a trade agreement with the U.S. First, the U.S. business sector is unlikely to want to wait to make a deal with the world’s fifth largest economy, especially at a time when it is most adaptable. Second, with the stalling of the U.S.-EU Transatlantic Trade and Investment Partnership and the precarious state of the Trans-Pacific Partnership, that queue is getting rather short anyway.

Also, one of the main drivers of the U.K. economy is financial services. The current Conservative U.K. government has a strong relationship with the City, as the home financial sector in London is called, and is likely to work closely with it to ensure that a post-Brexit regulatory regime favors the sector.

The City has a long (if dubious) tradition of working with, and leveraging, political sovereignty to create market exploits, which is why so many of the world’s tax havens are in U.K. possessions, like the Cayman Islands. Stripped of EU oversight, and with a likely compliant national government, the City will actively look to use its new position to try to create adaptable, dynamic and attractive products and services. Wall Street is going to want in.

Overall, the chances of the U.S. being able to do a mutually beneficial, relatively fast, bilateral deal with a close defense partner that has a relatively friendly regulatory regime are much better than the chances of quickly completing a U.S.-EU deal.

4. Geopolitics: The Anglosphere opportunity

The possibility of a reinvigorated U.S.-U.K. relationship creates an opening for the development of a potentially beneficial new geopolitical construct: the Anglosphere. Latticed with English-speaking countries (for example the Five Eyes) and anchored by the U.S., U.K. and India (which has its own accomplished intelligence network), the idea is to facilitate trade, strategic partnerships and more between like-minded nations. It would also act, implicitly, as a competing center of gravity for Chinese influence.

Brexit could fast track the operationalization of an Anglosphere structure. The U.S. is already actively working on developing a strategic relationship with India, and Brexit campaigners have repeatedly said the goal is not to be locked into the anemic growth of Europe, but to go global and build ties with dynamic countries like India. There is a natural compatibility that goes beyond the English language. Already, the U.K. is a favorite destination for well-heeled Indian students, accomplished Indian professionals, Mumbai bankers and more. If the U.K. approaches India like the 21st century power it is, an Anglosphere might take shape, offering the U.S. another set of allies in a time of geopolitical flux.

5. A wake-up call for the EU

There is a (small) chance Brexit might actually help save the EU. The EU is becoming increasingly addicted to an out-of-touch bureaucracy. Brexit may be the intervention it needs to break its habit and become more alert to ground realities. Brexit showed very clearly that, in its current form, the EU is deeply unpopular. Ideally, the concern over exit contagion would spur Eurocrats to get back to the original goals of the union — a mutually beneficial trade zone — and to curb some of its political overreach, creating more popular support. A more stable EU would be a good thing not just for Europe, but for the U.S. and the world. But habits are hard to break.

There is a post-Brexit path for the U.K. to become more economically nimble and geopolitically relevant, both things that would benefit the U.S. It will take leadership and vision. And time. Ignore the sound and fury. It will take at least three years to discover the real meaning of Brexit.

Cleo Paskal is associate fellow, Chatham House, London, and author of Global Warring: How Environmental, Economic, and Political Crises Will Redraw the World Map

Article: Post Brexit, UK will build partnerships of its choice (Sunday Guardian)

By Cleo Paskal

Sunday Guardian, 25 June 2016

Now, an obvious focal point for the UK would be India, and its high growth, English speaking population and abundant, young professionals. UK can prioritise the immigration of Indian doctors and engineers instead of favouring the EU.

On 23 June, the United Kingdom voted to leave the European Union by a vote of around 52% to 48%. The front page of one major newspaper announced “Independence Day”.

There was an immediate seismic shift in the British political landscape. Prime Minister David Cameron declared he would be resigning in the next few months, a revolt was launched against the leader of the opposition Labour Party by members of his own party, the leader of the Scottish Nationalist Party raised the spectre of a second Scottish independence referendum, some in Ireland said they would be pushing for a vote on Irish “reunification”, the pound dropped and global markets had palpitations. EU grandees wailed that Armageddon had arrived.

The short-term implications seem negative. Systems don’t like change and they will bray and flail as they try to adjust and position themselves in the new reality. The EU will be worried about exit contagion and spew heated rhetoric to try to neutralise it. Turkey may try to push for advantage in the confusion, potentially adding to the tensions so that it can be brought in as “part of the solution”.

But the medium and longer-term implications are much more promising. To understand why, it helps to think forward ten years, to where the EU might have been without a Brexit.

WHAT IF BREXIT HADN’T HAPPENED?

Looking forward, it is hard to imagine a scenario in which the EU’s anaemic growth substantially revives, or its social challenges improve. With no domestic economic tools to adapt, countries like Greece remain captive to economic policies coming out of Brussels, or maybe Berlin, spurring more popular discontent and resentment. Infrastructure and social service planning becomes increasingly difficult as a mobile population tries to find work.

At the same time, there is a growing push for an EU army and increased intelligence sharing among the EU’s 28 or so members. What sort of a position might be backed by an EU military? Just a few days ago, Germany’s Foreign Minister publicly berated NATO for sending troops to the Baltic countries and Poland to reassure them in the face of concerns about a resurgent Russia (something the EU is now loath to do, especially given their mismanagement of the Ukraine situation). This means that, even without a military, one of the EU’s main voices was already undermining NATO, and sending conflicting messages about Western positioning. What would happen if an EU military and NATO were directing conflicting policies? And how would overlapping partners be expected to fully share intelligence under those circumstances?

Had the UK remained, it would have been one voice of over two dozen in shaping trade negotiations and foreign policy priorities in a zone of low growth and increasing social instability. At the same time partners like the US would have been increasingly concerned about its reliability as a military and intelligence ally.

WHAT DOES  BREXIT MEAN NOW?

Once the UK officially declares its intention to leave the EU, it has two years to finalise the terms of disengagement. However it is not as if there is no safety net. All countries involved are members of the WTO, and so there are baseline trade agreements in place. Similarly all are members of Interpol and raft of other international organisations. In spite of all the sound and fury, the UK is not going to end up with a worse deal than, say, Canada, which benefits from visa free travel to European countries and market access.

The UK has a large trade deficit with the EU, and the EU won’t want to lose access to UK markets for German cars, French wine, Danish cheese, Italian pasta, and whatever it is Portugal sells to the UK. Ignore the noise. And there will be a lot of noise. Traders and speculators love volatility as they can make money when the market moves, whichever way it moves. At the end of the day, though, a deal will be struck.

LOOKING FORWARD, TO INDIA

Once the initial flux of the next two or three years is over, the UK can become more adaptable and nimble in economic development and foreign policy engagement. Rather than being tied to the EU, it can look globally for partners. Instead of being one of 28 at the negotiating table for a trade agreement, for example, it can create targeted bilateral deals.

An obvious focal point would be India, and its high growth, English speaking population and abundant, young professionals. Instead of being forced to take Spanish bartenders and Bulgarian drivers, the UK can prioritise the immigration of Indian doctors and engineers. Geopolitically, it can also start focusing on an “Anglosphere”, in which India, the UK and US, anchor a global partnership of like-minded English-capable countries. This takes the UK from being one of several biggish players (along with Germany and France) in a regional partnership, to being a uniquely valuable node in a real global alliance.

Of course, this is not inevitable. It will take leadership and vision, and a real understanding of the drivers and realities of potential partners, like India. The Empire is long gone. And the tone of the engagement will need to acknowledge that. But at least it is now possible. Had the UK stayed with the EU, the UK would have been subsumed into an increasingly dysfunctional Europe. Now it can decide for itself which partnerships it wants to build.

WHITHER, THE EU?

The EU is not a static structure. A lot will depend on how it responds to Brexit. If it doubles down on its bureaucracy-based political and military integration, the Brexit virus is likely to spread. If it takes the lessons of Brexit to heart and retreats and retrenches along the lines of its core identity—an economic bloc—it might buy itself some time. However it will still have to find ways to handle Turkey, and possibly Russia. The EU is evolving, the question is, will it also be adapting.

Cleo Paskal is Associate Fellow, Chatham House, London and Trudeau Visiting Fellow, CÉRIUM, Montreal. Views are her own.

Article: Hard times ahead for European Union (Sunday Guardian)

By CLEO PASKAL | READING, UK | 18 June, 2016

EU will face its biggest test on Thursday, when UK votes on whether or not to leave the Union.

Imagine 29 states, each with their own languages and cultures, forged together in an economic and political union that transcends a history of war and division to create a single nation that shapes the world. Well, what you are imagining is India, not the European Union.

The European Union, made up of 28 states rather than 29, may wish it could accomplish what India did, but Brussels has yet to find its Sardar Patel. In the meantime, it is struggling to find its way. It will face its biggest test on 23 June, when the people of the United Kingdom will vote on whether to remain in the union, or leave. Regardless of the outcome, the tensions at the core of the EU will remain, and likely increase. So, it is worth looking at some of the issues that lie at the heart of the debate.

What is the goal of the EU?

The core of many of the disagreements between the UK “leave” and “remain” camps is philosophical.

A large section of “remainers” believe the world would be a better place without borders—there would be less discrimination, less war, more trade. Like some of the Marxists from JNU, they believe borders are a byproduct of a retrograde 19th century political philosophy.

A sample policy byproduct of this philosophy is that Spaniards working in the UK can get child benefits from the UK (at UK rates) that they send back to their children in Spain, where the rates are substantially lower. This is considered “right” in the context of a borderless union, since the UK and Spain are considered interchangeable.

“Leavers”, meanwhile, believe the voters and the people they elect should be “local” so that they can better understand and respond to changing conditions, and governments can be held directly accountable to the people they govern. One policy example they give is that, given most of the EU’s agricultural policy is decided and funded via Brussels, land use in the UK cannot adapt quickly to changing social and climate conditions and is out of touch with ground realities.

One specific event encapsulated the combination of lack of flexibility and abundance of bureaucracy leavers think is endemic in the EU. The EU fisheries policy sets strict limits on who can catch which fish. However, with climate change and overfishing, stocks are changing and moving. In this case, herring and mackerel moved north to find colder waters as the seas warmed.

Three years ago, the Faroe Islands suddenly found themselves with more fish in their seas. The Faroes are part of the Kingdom of Denmark, but are self-governing. While mainland Denmark is part of the EU, the Faroes have a looser relationship with Brussels. The EU told the Faroes the herring and mackerel were EU fish, and they couldn’t catch them. The Faroes unilaterally decided to catch more fish. The EU declared a boycott on the Faroes. This meant that, for a while, due to EU policy, one part of Denmark was boycotting another part of Denmark. The boycott rankled the Faroes, and contributed to its subsequent decision to open a trade office in Moscow.

Leavers are concerned that this sort of cascading unintended political consequence of inflexible bureaucratic positioning in a time flux is becoming more common. They say the EU’s handling of the Greek debt crisis, combined with Greece’s limited economic self-governance options, have not only weakened Greece, but the south-eastern border of the EU, making Greece less able to handle the refugee crisis. Far from making the zone more stable, they say, some EU policies make rapid response to changing conditions more difficult, leading to more instability.

Additionally, when one powerful country in the Union unilaterally enacts a policy that affects all, as Germany did when it threw open its borders to Syrian migrants, there is little smaller countries can do, even if their stability is affected. The EU, some leavers say, was designed to distribute bounty in the good times, not share the burden in the bad times.

Many disagreements between the UK ‘leave’ and ‘remain’ camps are philosophical. Some ‘remainers’ believe the world would be a better place without borders—there would be less discrimination, more trade. They believe borders are a byproduct of a retrograde 19th century political philosophy.

EU as a military force?

Remainers believe that the solution to this problem is to give the EU more powers, including an army, so that response can be quicker and more decisive. UK remainers think it is important for the UK to stay in the EU to have a voice in shaping this stated desire for increasing political integration.

UK leavers think that their primary concern should be the welfare of UK citizens, as opposed to EU citizens as a whole. Though they also think that, given what they believe are some of the core problems with the EU, a Brexit might trigger the course correction the EU needs to become more responsive to member concerns, and so ultimately more stable and resilient.

Pointing to the UK’s advantage of geography, leavers see the islands of the UK as being an intrinsic defence against some of the challenges faced by continental EU members. Some also voice concerns about how that EU military would work in the context of NATO, especially given one of the first tests of that sort of EU political engagement, they say, contributed to the situation in the Ukraine.

EU as an economic force?

The discussion about economics is also fundamentally philosophical. Remainers are opposed to change, and are Europe focused. Essentially, they think the global economy will, or should, stay balanced more or less the way it is now. They believe that it is important for the UK to stay part of the EU market, one of the largest in the world, and are concerned about the effects of leaving on the financial services sector.

Leavers say that the EU is a zone of exceptionally low growth, with little long-term hope for high growth. They see a UK that is primarily just a part of the EU economy as restrictive and regressive. They say the EU is not going to stay the way it is anyway, and the UK will have limited say in the new directions, so a vote to stay is not a vote for the status quo, it is a vote to ride along to an unknown destination in the backseat. They are not concerned about “losing” access to the EU market because they say the EU will need access to the UK market, and so there will be room to negotiate.

They are also not concerned about the financial services sector, saying that sector in particular thrives in the margins and, as the EU/UK rules are being rewritten, the sector will boom as it looks for, and helps to create, exploits. Also, as individuals, too many people from around the world are too comfortable in London to abandon it. Highfliers from Mumbai aren’t going to leave London for Lisbon, they say.

Building on that, they see the future with countries like India. They are more Commonwealth and Anglosphere focused, seeing the potential for a global market of English speaking allies, in which the UK will hold a unique position. 

Migration is a key component of the leavers’ strategy. Last year, the UK experienced 300,000 in net migration, with around half coming from the EU. This causes planning difficulties as physical and social infrastructure sees massive shifts. For example, aging water reservoirs can’t keep up with sudden new demand, or a primary school class with 30 children may suddenly get 10 more non-English speaking students, each speaking a different EU language. The next year, they may all leave as economies change, or another batch, with different languages, may come in. How is a city to plan and budget, say the leavers? Leavers prefer skills-based migration, something that would favour, for example, an educated English-speaking Indian over a unilingual Spanish barista.

When one powerful country in the Union unilaterally enacts a policy that affects all, as Germany did when it threw open its borders to Syrian migrants, there is little smaller countries can do, even if their stability is affected. The EU, some leavers say, was designed to distribute bounty in the good times, not share the burden in the bad times.

What now?

Whichever way the vote goes on 23 June, the EU debate is far from over. The EU is evolving politically and economically at a time when the world as a whole is changing geopolitically, geoeconomically and geophysically. The Brexit debate has uncovered some very deep differences in political philosophy at the heart of how to handle those changes. And, so far, there is no leadership at the level of Sardar Patel to guide the path ahead. The EU is in for some very tough times.

Cleo Paskal is Associate Fellow, Chatham House, London and Trudeau Visiting Fellow, CÉRIUM, Montreal. Views are her own.

Report about Cleo's presentation on strategic shifts in Oceania at the Asia Pacific Foundation of Canada

The Asia Pacific Foundation of Canada's Trevor Fairlie wrote about the presentation Cleo made at the AFP on geopolitics in Oceania. You can read it here. It starts:

Making the Case for Canada’s Engagement 

with Oceania

When Canadians think of the Pacific Islands, or 'Oceania,' we think of beaches and family vacations. What we do not think of is the next sphere of great-power influence. In May 2016, Cleo Paskal [1] made the case to the Asia Pacific Foundation of Canada for a change of mindset regarding Oceania. Far from being merely a honeymoon destination, Paskal argued that the region is increasingly critical in geopolitical relations. She argued that some countries, like China, understand the new dynamic in Oceania, while others do not—and Canada is among those countries that are out of the loop on this fast-changing frontier.

Video: Panel discussion on the future of the oil sands with Cleo Paskal, Jeff Rubin, Karel Mayrand, François Delorme (CPAC)

Cleo took part in a panel discussion on the future of Canada's oil sands in the context of today's economic environment with Jeff Rubin (Senior Fellow, Centre for International Governeance Innovation), Karel Mayrand (DG, Quebec and Atlantic Canada, David Suzuki Foundation), Frencois Delorme (Lecturer, Department of Economics, University of Sherbroke), moderated by journalist and Laure Waridel. You can see it here.

http://www.cpac.ca/en/programs/public-record/episodes/47991703/