Exit Britain, enter India

By Dr D.K.Giri
(Prof. International Politics, JMI)

Any event involving a major power impacts the world politics and economy. So how can ‘Brexit’- the exit of Britain from the 28-countries European Union not impact a growing power like India, that too when India and Britain have a long historical ties.
When India became independent in 1947, it decided in favour of staying in the Commonwealth of Nations consisting of former British colonies and headed by the United Kingdom as it provided India a window to the world. Prime Minister Modi called “United Kingdom the entry point for us to the European Union”. A Swedish friend, now a Minister in the government said to me in the context of an international affiliation of our non-governmental organisation, “you must get the help of the Brits for your membership”. In the international body in question, a British organisation is already a member.
Admittedly, Britain has been escorting us in Europe. In fact, India, was the first developing country to make diplomatic contact with the European Union (EU) in 1962, any formal agreement could be signed only after Britain joined the EU in 1973. The first agreement signed in 1973, between India and the EU was called the Commercial and Cooperation Agreement.
Britain had a tenuous relation with the EU from the very beginning. Their membership was twice vetoed by French strongman, President Charles de Gaulle. Even after Britain joined the Union, it maintained substantial strategic difference on the concept of the European Union. While the ‘Big Two’ France and Germany wished an ‘ever closer Union’ leading to a ‘United States of Europe’. Britain wanted a loose federal union.
Britain felt that UK was held by EU, which imposed too many rules on business, paid billions of pounds in membership fee, with very little in return. They want to recover full controls of the borders and reduce the number of people coming into the country. The free movement, one of the organising principles of EU was causing UK a big loss. From East European, poorer countries, 942,000 moved to Britain to avail in-work benefits, 34,000 received child benefits, those who do not live in Britain. British withdrawal from EU would save the $12 billion a year they pay to the EU budget.
David Cameron, the former Prime Minister of the Conservative party offered a referendum on British membership of EU in 2015 general elections, if he was voted back to power. He was, and the referendum was held on 23 June 2016, with 58 per cent voting to get out, against 42 per cent to stay on. Accordingly, Britain had to formally withdraw on 29 March. Before that the British Parliament has to endorse the deal negotiated between EU and Britain, by British Prime Minister Theresa May.
At the time of writing, as the deal was defeated heavily on 15 January, she was to come with a ‘plan B’ on the deal which is to be voted again on 29 January. In the meantime, she survived a no-confidence motion by 19 votes. So British Parliament is hyper active and charged in the first month of the New Year.
As per the international political axiom of interdependence mentioned here in the beginning; i.e. any action by a major power impacts the rest, what would be the impact of Brexit (British exit) from EU on the Union of India. As the UK was divided over its membership with the EU, Indian media and the Europe watchers are divided over the impact of Brexit on India. Although it is a bit early to firm up ideas on the possible impact, one can pontificate on the possibilities.
My take is that India will benefit from deepening it relations with Britain and widening its contacts with the European Union. So obviously, there are two interrelated impacts, on India’s relation with Britain and second, India’s dealing with European Union.
Let us start with post-Brexit India-Britain relations. First, the British pound will fall, it will help India get into profitable real estate in Britain, open up economic and business opportunities for more investment, India is the third biggest investor to Britain, Indian students and visitors will find it easier in Britain. There are about 18000 students from India now. Also Britain will withdraw the subsidies and scholarships it gives to the students from EU countries that will free up surplus for more Indian students to go to Britain.
Second, for business, the gateway to EU may be closed. They will have to set up offices in Britain as well as EU countries incurring greater expense. This will be short term distress. As Britain will have more robust trade relationship with India, and in view of India’s growing economy, there will be greater FDI flow to India. Britain, relieved from ‘restrictive’ EU laws will find it easier to sign a trade partnership agreement with India. Such an agreement with the EU has been stalled for years.
Third, interest rates by US banks and other countries will not be raised soon to avoid the economies from tanking with British withdrawal and pound plummeting, that will help India to attract more investment with its higher interest rates. Fourth, with a new immigration policy, UK might woo Indians, favouring high-skilled workers from India. It may be ironic though, as xenophobia, nativism and isolationism presaged and motivated the exit of Britain form the Union. Fifth, UK will revive its interest in Commonwealth countries, certainly in “the jewel of the crown,” India, to expand its market after EU. It will compensate the loss for India in EU.
What will be relations between European Union and Union of India? As similarity names suggests, both EU and India have a lot in common politically, and socially. Both are a kind of federation, multi-cultural and integrationist. In fact, India started as a Union and is trying to preserve it, EU is building the Union. India, having fumbled initially on its attitude to EU, has developed solid contacts with its big member States like Germany and France.
India realises that EU is the biggest bloc in the world with 16 per cent of world trade. It was given the Noble peace prize in 2012 for peace, reconciliation, democracy and human rights. It has no neo-imperialist agenda. So the relations between India and EU will prosper as India upholds similar political values as EU does.
In sum, India, interestingly, is most likely to benefit from the turbulent political situation in regard to Britain and the EU. The divorce between the two may be distressing for both, but good for India as it can have best of both the worlds. At the same time, it is a major jolt to the EU, which is perceived as the best example of regional integration as countries subcontract their sovereignties to a supranational body for collective peace and prosperity. But UK withdrawal, although it has been a reluctant partner may have a Domino Effect, leading to disintegration of the Union. It does not augur well for Indian Union too. However, such alarming signs have not been seen yet. Let us keep our fingers crossed. — INFA