Brexit: A brief history of economic disintegration

History is full of episodes of political and economic disintegration, which were often the natural culmination of experiences of forced integration. With a few exceptions, most empires ended through a process of violent and anarchic disintegration. Whether we think about the ancient empires of Alexander, Rome, the Qin Dynasty or Persia, or if we consider medieval empires like the Charlemagne Empire, the Islamic Caliphate or the Mongol Empire, or if we look at the modern empires of Britain, Ottoman, the German Reich and the Japanese Empire or the breakup of the Soviet Union and Yugoslavia, the lessons are the same. The separating regions often end up in civil war and always erect barriers to trade and investment through tariffs and instable currencies which bring economic decline.

The inevitable initial sacrifice in terms of economic and human misery is often followed by prolonged periods of underdevelopment (all too visible in Africa) in the separating regions, but there are some notable exceptions like the separation of the United States of America from Britain.

Do these lessons of history have any relevance in the case of an eventual separation of Britain from the European Union (the so-called Brexit)? If so, would the UK follow the general pattern of decadence and misery or could it replicate the US successful experience?

The first question is relevant because the European Union is a voluntary association of countries, not a forced empire. So, an eventual exit of a member state should be seen as the natural counterpart to a voluntary membership and should not be cause for war or vicious conflict. Nevertheless, we cannot ignore that Great Britain is itself an association of three nations – the English, the Welsh and the Scots – which may have quite distinct views in relation to the European Union, wish may lead some to question in which union they wish to participate - the European or the British.

Although military violence cannot be expected, social unrest may still arise in a strongly divided nation in relation to an eventual separation. Moreover, it will also depend on the attitude of the remaining member states in the European Union. Namely, whether they will be understanding and friendly or will be hostile and competitive, for example, by promoting an international financial centre to rival the City of London.

So, political attitudes in London, Brussels, Berlin and Paris would have an important bearing in the outcome of an eventual separation. Nevertheless, the answer to the question whether a separate Britain would be a failure or a success story requires an understanding of the economics of disintegration.

As a preamble to that understanding, let me just give the reader a chart depicting the experience of economic growth in Britain relative to that of France and the USA, before and after joining the European Union.

The chart is impressive. Before joining the European Union, the UK lagged France by over 30%. Since joining, it still lagged the USA by 20% until 1998, but managed to match the GDP growth in France. Since the creation of the Euro, Britain managed to overtake France by 10% and to match the growth in the US economy.

Given the success of Britain in the European Union, for outsiders it is hard to understand the decision to hold a referendum on its continuation in the Union. Is it simply local politics, or there are any fundamental reasons?

Palestinians – With Friends Like These Who Needs Enemies?

The old say that a nation gets the leaders they deserve should not be applied lightly to the Palestinians or any other nation. Truly, in recent history, they have been ruled by a series of terrorist and corrupt leaders. But in a non-democratic society people cannot truly choose their leaders, just like in a gang controlled slam its poor residents cannot be blamed for their criminal rulers.

However the saddest fact about the Palestinians, a poor migrant people, is the way they have literally been used as cannon fodder in the many Middle East conflicts.

The most well known was the Israeli-Arab conflict, because one third of the estimated 10 million Palestinians live in the West Bank and the Gaza Strip areas of Israel. The other third live in Jordan (where they account for half of the population) and in Israel proper. The final third are dispersed throughout the world with large numbers in conflict-prone Syria and Lebanon.

For many years the oil-producing Arab countries used the Palestinians' plight for a nation state to stir up the fear of disruptions in oil supplies and raise the price of oil. There is even a bad taste joke saying that the Arabs will fight for the Palestinians to the last Palestinian.

Then the theocratic rulers of Iran, in their drive the rebuild an ancient Caliphate or Persian Empire, decided to take over their cause. They did so by sponsoring the Hezbollah and Hamas terrorist camps in Syria, Lebanon and Gaza.

Fortunately for the Palestinians, the oil suppliers are now more spread all over the world and the alternative energy industries in the oil-importing countries are the main lobbyists to keep the prices higher. Likewise the Al Qaeda and Iran-sponsored terrorists are now largely discredited even among Arabs.

However, while the embryonic Arab Spring Revolution brought a new hope for a democratic era in the region, a dangerous new “savior” for the Palestinians appeared in the scene.

We refer to the Turkish Prime Minister Recep Erdogan, the maverick leader of the Islamist AK party that now rules Turkey. Seizing the current political vacuum in Egypt, Erdogan is moving swiftly to assert himself in the Arab world by taking a hostile stance against Israel. This can only be bad news for the poor Palestinians. They cannot become once more cannon fodder in another bid to restore an ancient empire, this time the Ottoman.

In a globalised and free world, people will no longer accept new empires, especially religion-driven, whether by Christians or Muslims. So all attempts by any of the largest Islamic nations (Indonesians, Turks, Persians, Saudis or Egyptians) or sects (e.g. Al-Qaeda) to enlarge their area of influence by reclaiming ancient caliphates or empires is doomed to fail and can only harm the Palestinians.