Catastrophes of Great Britain or how to circumvent adversity

                                                               All the past is prologue.

                                                               W. Shakespeare

Rarely in the history of international relations a country takes an unexpected decision by collective mandate and with unknown consequences, and that decision -in the short term- tends to subvert its power level and its level of participation in world politics. A variation of such  "level of participation" usually arises as a result of confrontation between States or as a result of  internal strife. This structural redefinition of its level in the international "system" can come, for example, by a treaty, by war,  by revolution, or actions of a similar nature, leading to a new status quo. But it is not frequent that -without a force majeure  precipitating it-  an ill-conceived popular voting could lead a country  towards a new uncertain future path .

In the case of Great Britain -with an ancient history and an important role in international relations particularly prominent since the 17th century until the middle of the 20th century- few times  has faced situations of catastrophic turbulence like this. Most of those moments in their past arose from internal transformation processes, in the pursuit of their particular democratic identity but always without affecting severely its standing in the world.

Largely, the enormous internal and external challenges of Britain were the product of immense political and economic power accumulated by planned, bold policies, and even deliberately adventurous. La perfide Albion of  Bishop Bossuet . But most of these major shocks were caused by others.

An example occurred with the unexpected independence or separation from the United States. It generated a political and social morass, inside and outside the country. Four Prime Ministers in succession after the cessation of hostilities, the King in question, the army blasted its prestige, the economy  in ruins plus tax and poverty, trade routes were truncated, real estate prices collapsed. Public debt increased disproportionately. Inflation rose from 2.1% in 1782 to 12% the following year. The imminent possibility of a social outbreak or civil war, shook the foundations of the imperial capital.

But Britain has always had a surplus of talent and in the crucial moments in its history the right decisions of their statesmen have helped to give a twist to the impending adversity. Not all nations are so fortunate.

The brilliant William Pitt  convinced Parliament to agree in 1783 to a peace treaty with Gral.Washington. He started inmediatelly a trade alliance with the enemy of the previous day. Great turnaround. The disaster of the decision of the war of separation  was  conjured with smart policies. Trade routes to the Americas were restored to the fullest. Pitt ordered multiplied the trade currents to India. Lost some territories in Canada but gained in commercial activity with North America. Textile companies which had been in bankruptcy, were reshuffled. England returned as world leader of industrial production and the trade with its former American colonies doubled in ten years. Economic prosperity was restored.

The French Revolution and the war against Napoleón Bonaparte also impacted in their results to GB. It became an existential menace to the kingdom of the first order. The war against the threatening French Revolution and Emperor emanating from it, was unavoidable. At the end of the process victory militaraly  confirmed GB as a great world power but turned to trigger an internal political, economic and social crisis of large proportions: unbearable taxes, shortage of food, prices of goods. Almost ending in a civil war. The European conflict had cost the impoverished country, 850 million-pound (30 billion pounds today). But the Kingdom, as result of the famous 1815 negotiations in Vienna, was reaffirmed as a power, in the delicate balance of world power, gaining control of the sea routes in the Indian, Atlantic and Mediterranean.

The Second World War led the United Kingdom to its limits again in another great historical challenge. The country concentrated the largest effort of resistance to national-socialism and fascism under the eminent leadership of W. Churchill. London came out victorious again  and, though their finances were depleted, it overcame the difficulties relatively soon thanks to the power of recovery seamlessly generated by the United States.

But  in this case, unlike previous major crises, Great Britain ceased to be the military and industrial superpower it had been for more than two hundred years. The Empire as such came to an end. Instead, it got permanent seat in the Security Council of the United Nations, (a power of  limited range of action) while the  scaffold of dominance in its territories was slowly being dismantled in the following years,  giving way to dozens of new free States, nowdays gathered in a  maternal fashion, in the so-called Commonwealth.

That way it secure its participation in world affairs . But, apparently it was not enough for GB  and they gradually  promoted the establishment the center of the financial world in London, (the Bretton Woods institutions (IMF and World Bank) settled in the victorious superpower and it was natural to establish that center on its territory: in NYC for example). Therefore, London in the new 1945´s balance of power cemented further its economic independence from Europe and the USA.

Since then, Britain has been a relative power that has rested in his past in the "exceptionalism" of the British people, in an economic link with continental Europe and, above all, a political-military alliance with United States (the special relationship). .

Few days ago, the United Kingdom seems to have surprisingly entered into another  major crises of historic magnitude. (This time -at least for the time being- there isn't a Pitt or a Churchill in sight to lead that kind of traditional reversal of impending adversity). Leaving the European Union is a fact that can be classified in the same dimension of those above-mentioned events, whose consequences are unpredictable and spectacular. The news around the world at this hour indicates a global perplexity and provoque all kinds of opinions. On the other side of the Atlantic, away from the mess, we sense the transcendental nature of the decision taken.

There may be two sheds in a brief primary analysis. The most obvious is that of economic nature, given that the intra-European relationship is of financial and commercial kind. The other one is about the political alliances of GB and in its rearrangement  as a middle-ranking power in world affairs.

About half of British exports  are intended for the European Union. Continental Europe exports less than 10% towards Great Britain. That is a primary problem for the British. It will lose the tariff preferences in the European market. They  will need to negotiate bilateral agreements which will obviously be less gratious than those they enjoyed ex ante. In any case,in the future there will be a long and painful process to redistribute such exports everywhere. European investments, not having  the community treatment in the UK will head to the continent in search of better conditions, and, even if GB remain attractive to investors by its great legal system it will be less attractive to foreign direct investment than those integrated countries in the Continent.

The other problem with the naked eye is the great impact on the condition of London as the financial center of the globe. Even New York, has not been able to compete with "the City" in terms of a powerful and attractive financial center with the greatest comparative advantages.

The conditions that  London has, in order to be intermediary for financial transactions between North and South America, Asian, African and European,  are obvious. The City  headquarters  251 foreign banks and financial and trade services  currently exceeds the astronomical sum of 100 billion euros.

Paradoxically, this may be one cause of the british exit or Brexit. London is the main source of economic wealth into the Kingdom. It is the location of  most centers of study, whithin  close perimeter and therein lies most of the cultural activity. This has provided an enormous wealth for London and sorroundings. But not so, for the rest of the country, where regions with structural poverty have not benefited from that fabulous prosperity generated by the European interaction. A joke circulating in financial circles is, that because of that monopolistic concentration of the ultra-wellbeing, London "should declare their independence" from the United Kingdom. Scotland, who voted to remain as part of the kingdom recently - and a reason was to remain part of the European Union - can reconsider his position and seek its independence. There are hints in this regard. This would create one even greater for the great cataclysm. That would create an disproportionate disaster for Britain.

The other dimension of unpredictable consequences is that at the political level. The United Kingdom has benefited since the Second War with a special status in its relationship with the United States. In seventy years they have worked together during the "Cold War", in the Security Council and in multiple conflicts. (in the Falklands war, the USA had to take the decision to breach the Inter-American Treaty of Reciprocal Assistance to protect its special alliance with GB).

Since the end of the East-West confrontation, GB has been a sort of pivotal axis for the United States in its geopolitical relationship with the Europeans. Currently, it  is even more necessary in order to coordinate, from the inside, the European stance and actions, in the framework of NATO, vis à vis the threats that increasingly perceives Europe. GB will leave in two years, leaving the United States, without that essential intermediary.

In our opinion, Germany appears at first sight as the country that would benefit from this setback and seems  to be prepared, seconded by its economic power its other strengths and by its recent global political status thanks to the brisk activism of his Government.

Frankfurt could happen to be the financial center of Europe, as well as its  economic engine. Germany has taken steps towards a growing willingness to participate in military operations and Berlin could be a more perceptive interlocutor towards the interests of USA than the secularly contentious  France.

The consequences are of all order and at all levels . From that English worker who retired in Palma de Mallorca to the transnational German transnational that established its production line in Leeds, all will face multiple consequences. It will take years to know the implications, but something that seems inexorable is that the gradual and smooth dismantling of its  great power status from another era, will give way to a new role in the 21st century, that of an intermediate player, no doubt modern and creative, although nostalgic of those days when their fleet was sailing the Seven Seas protecting the empire on which "the sun never sets" .

© Vicente E. Vallenilla 2016