Geopolitics

UK: Stuck Between Brexit Isolation And Hong Kong Idealism

London generously opened its doors to Hong Kongers fleeing Xi Jinping's regime, which stands in strong contrast with the closed-minded attitudes driving Brexit. Where does it power lie now?

A London march in solidarity with Hong Kong protesters.
Dominique Moisi

-Analysis-

When the British voted "yes' on the Brexit referendum four years ago, it was a resounding way of saying "no." Not just to the European Union, but to all the migrants — including the famous Polish plumber — who were "invading" their enchanted island and allegedly endangering their identity. By June 2016, many British citizens of Asian or African origin, all members of the Old Empire, had joined the Brexit camp, as if it made them feel more British. Their sense of belonging to the Commonwealth had a tangible cultural context, while the idea of Europe remained an abstraction.

Will the summer of 2020 see a dramatic turnaround in the relationship of the British to the Other? Pro-Brexiters certainly don't want to return to the EU, but, encouraged by their government, they're showing an astounding readiness to welcome over three million Hongkongers eligible for British citizenship.

How do we explain this apparent paradox? Why selfishly close the borders to foreigners yesterday yet generously open up today?

Sailing away

The difference in treatment between Eastern and Central Europeans as compared to Asians is clearly not a product of geography. Could it be explained by political history? For Great Britain, the "mother of democracies," is it a question of ensuring the protection of a former colony accustomed to freedom of the press and judicial independence? Or is it about welcoming an educated population with strong economic potential? The inclusivity of Hongkongers, be it a generous or selfish act, is part a carefully chosen immigration policy which seems designed to provoke China. Beijing's reaction was immediate and virulent: "Who do you think you are? We're in the 21st century: You are no longer anything, and we are everything. We are no longer in the same category!"

That's where Britain's problem lies. It's true that, since Brexit, the island may have regained a freedom that allows it to make post-coronavirus internal adjustments as it sees fit. But these freedoms come at the price of losing international credibility and legitimacy. The economic and political trajectory of world does not, to say the least, favor Britain's choice to "sail away."

Rally against Hong Kong emergency law in London in 2019 — Photo: Andres Pantoja/SOPA Images/ZUMA

In a highly competitive world where a Cold War logic of economic "blocs' is being reconstituted before our eyes, is it reasonable for the British to find themselves even more alone against the Chinese? Right when the UK wanted to demonstrate its ability to become a global power in its own right between Asia and the West, free from the constraints of the EU, it finds itself in a worrying state of isolation between an increasingly aggressive China and an America with dwindling stability. What good is Brexit's ideal of freedom if, in reality, it means choosing solitude at the worst possible moment? As Chris Patten, the last governor of Hong Kong, recently remarked, Britain is now "only a middle power." Against China, the UK simply does not have any clout— especially not in terms of trade.

Only from within the EU — an economic player capable of throwing its weight around— could the UK claim to play on an (almost) equal footing with China. In today's balance of power, London's outstretched hand to the citizens of Hong Kong paradoxically demonstrates a quality traditionally associated not with the British, but the French: panache. Unless, of course, the offer is just empty words. How many Hong Kong citizens will be able to choose the freedom and rule of law that the British have successfully instilled in them over time? Beijing believes itself to be in a position of strength and wishes to demonstrate its power far beyond Britain. China's real end goal is to dissuade the outside world from questioning treaties, and plow ahead with the tactic of "strongest man wins."

The Chinese threat

The EU isn't necessarily showing courage or an iron will when it comes to Hong Kong's relations with China. Instead, it's as if Europe is following "collaborationist instincts," refusing to be fully aware of China's new reality. Just as COVID-19 shined a light on the state of the world, Beijing's treatment of Hong Kong is an insight into understanding China.

In a recent Financial Times article, the former head of MI6 (the British secret service), Sir John Sawers called on Britain to ban Huawei from participating in the 5G network; The use of Chinese telecoms equipment could pose a serious security risk. He concluded that facing China with determination has become the only choice.

When it comes to the Chinese threat, Britain has combined the courage of welcoming Hong Kong citizens with the calculated analysis of its best experts. The paradox is that, having left the EU, it finds itself somewhat alone in making the right move. How can we be "right" about China when we are "wrong" about Europe? It is not the few thousand (or tens of thousands) Hongkongers that may eventually arrive in Britain who will restore the balance of this equation.

*Dominique Moisi is a special adviser at the Montaigne Institute.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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