Round The
World
New Delhi, 24 January 2019
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
(Copyright, India
News & Feature Alliance)
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