First Grexit, then Brexit - What's Next?

2016-06-28 09:28

The first time I heard the “…exit” suffix after a nation state was when Greece got into trouble with the EU because the country was not paying its way. I have to say I hardly found that surprising. From the outset I could not quite grasp how laid back Mediterranean folk who pride themselves on how little tax they can get away with paying, coexist in a union with the diligent, conscientious – and at times arguably anal - Germans, Dutch, Scandinavians and Brits.

The gulf in cultural values between the Greeks, Italians, Spanish and Portuguese on the one hand, and the northern Europeans on the other speaks to why things simply do not work. It is basic common sense - a case study in cultural incompatibility.

Those driving the EU enterprise since its inauguration with the Treaty of Rome in 1957 wanted to grow the club, and incentives for late-comers included the elimination of trade barriers and the financial benefits of the Euro currency. But no one anticipated the ultimate non-quantifiable costs – financial and otherwise. Instead everyone assumed that, somehow, vastly different peoples would establish a sort of accord in a common Europe that is heterogeneous and culturally diverse.

They assumed that a mutually lucrative meeting of cultural minds would evolve. It now seems not.

Add to this cocktail of diverse cultures a bloated bureaucracy in Brussels that minds everyone’s business, costs money and imposes rules. Resentment was always on the cards - but would the benefits of membership outweigh it?

Greece, along with others has enjoyed a free lunch for some while and seems to be taking its time to leave because, after all, time spent in the union carries benefits. Otherwise why hang around with an unemployment rate of 24,1% (second only to South Africa at 26,7% - see The Economist, 25th June) and an avowed anti-austerity communist at the helm? The Greek economy does not look like going anywhere soon and Tsipras is plainly buying time.

I am in little doubt that Grexit is more likely to happen than not.

Against that background it took many by surprise that the United Kingdom voted to opt out of the union last Thursday. It joined the “Inner Six” by becoming its seventh member in 1973 (along with some others). Its presence in the EU generated ongoing domestic debate and disagreement, but many looked upon the UK as a permanent fixture in a club that by now has 28 members.

However, after 43 years of participation, intra-national dissonance has taken its toll.

But there are clearly other less obvious causes.

The prospect of Middle East fugitives gaining easier access to member countries of the EU is an obvious one that is not helped any by bombings and the incidence of Islamic jihadist cells in member countries. But intuitively one feels that there is an even more deep seated sociological tectonic plate moving under it all.

In an interview with Alec Hogg (Moneyweb) after the Brexit poll, one of his observations for the shock result resonated for me. He pointed out that the EU is in essence a corporation of nation states and is by its very nature corporate and prescriptive in outlook. It is driven by rules and offers little space to the small man. It is a huge bureaucracy.

If one accepts this assessment of the EU, it becomes an important argument for leaving it.

For notwithstanding our globalizing world there is much evidence of a trend to diminishing size - or “going smaller”. In that context, the Brexit phenomenon is not dissimilar (although not quite identical either) to a number of socio political trends in recent times. Consider these.

In the past 30 years the Soviet Union has fragmented; the erstwhile nation state of Yugoslavia evolved into seven republics; Timor Leste seceded from Indonesia and South Sudan from Sudan. An independent Scotland with intentions of belonging to the EU seems likely after Brexit – as might even be the case with Northern Ireland.

Although still very early days , even the landlocked Canadian province of Alberta is bleating about possible secession as a result of being bullied by Canada’s federal government; its oil revenues seem to have given it the confidence to consider such demands.

Likewise Nigeria teeters perpetually on the edge of civil conflict on account of its size and diversity. The Muslim dominated north, inhabited by the Hausa Fulani has little in common with the south, inhabited mainly by the Yoruba and Igbo peoples. Today some even say it was a pity that the Biafran secession of 1967 - 1970 (put down brutally at cost of millions of lives and world headline starvation of its people) was not allowed to go ahead. Instead, the authorities forced conformity and “geographic integrity”, notwithstanding the absurdities of many African borders. Secession was not allowed to happen.

From these examples we would be foolish to not look at the African sub continent and ask if there isn’t something we could learn, something we could do differently.

For starters, the frontiers of many African countries were set arbitrarily - sometimes even ridiculously. When Kaiser Wilhelm told Queen Victoria that it was unfair for her to have two mountains, she “gave” him one; look carefully at the border between Tanzania and Kenya on a map, and you will see how the line was redrawn to give Kilimanjaro to the German King.

Most boundaries – with their ruler-straight lines and odd squiggles – were simply the outcomes of colonial manipulation and drawing lines on maps in the colonial offices of Whitehall, Paris or Berlin. Occasionally the odd river was thrown in as a border – if it happened not to impede imperial ambitions.

Focus now on southern Africa, and consider the logic behind the borders of the erstwhile Union of South Africa – now the Republic. Its formation was by no means a logical process of sociological evolution, nor a foregone conclusion. Its citizens sorely lacked the cultural cohesion normally associated with successful state formation.

In essence the union was formed as a result of British financial interests coalescing in the sub continent. Weakened by the Anglo-Boer Wars, the Boer republics (Orange Free State and the Transvaal Republic) were effectively press ganged – or lumped into union with - the Cape Colony, which was already administered by Britain. Natal held a (whites only) referendum in 1909, clearing the way for its inclusion in the coming union. And voilá – a nation state was born!

The inescapable conclusion is that the South African state was a cocktail of outcomes from its recent and violent history, political compromise, regional wars and the heavy hand of the colonial office. The characteristic straight “ruler lines” do not apply much in our case (there is only one from Augrabies to Unions End) with rivers, the shoreline and physical features employed for the most part.

Nonetheless a common South African cultural identity never existed and has never truly taken root across all our peoples. Only the economy has brought people together over the years and continues to do so up to a point. Governments for the past nearly 70 years have driven people apart through racism and an inability and unwillingness to direct an economy through facilitating and incentivising economic activity rather than getting involved in it.

Neither the erstwhile National Party not the ANC has understood government’s role in a successful economy.

To make things worse, once involved in the economy, the ANC has made a monumental hash of everything it touches on account of its cognitive limitations, webs of patronage and pervasive corruption. Our parastatal graveyard and dysfunctional government departments at every level bear testimony to that.

To my mind that suggests an opportunity. Surely it is now time to re examine the socio-political and economic logic of the state formed on 31st May 1910.

It seems to me that our socio-economic software no longer functions on the obsolete mainframe we have inherited. Maybe we need to replace it with a more nimble, much smarter network of units that can capitalize on the technology, talents and human capital available today.

Here are some geographic options we could look at in order to cultivate such an environment.

That way, who knows? It is possible that through greater cultural cohesion and sense of common purpose, plus less time spent by the state trying to control people who deny its authority, everyone might come out ahead!

It might well be worth a try.

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