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Brexit is being handled in a way that will give hedge funds greater control over the U.K. economy, put Europe increasingly at the mercy of America’s TTIP, move the U.K. into the sphere of Asian capital, and increase its exploitation of cheap labor and resources in poor countries.
IN DEPTH:
Brexit: The Debate
Two separate sets of researchers working in different fields have come to the conclusion that there is a powerful group of investors who wanted the U.K. to leave the European Union. The rationale is that without EU constraints, the U.K. will be more free to pursue market liberalization thus weakening the Eurozone and making Europe susceptible to greater U.S. influence. Before looking at the evidence, let’s consider the international class order.
Earlier this year, Oxfam reported that 62 individuals own half the world’s wealth. The number is down from 2014, when Oxfam reported that fewer than 90 individuals owned half the world’s wealth. This tells us that the widening divide between haves and have-nots is also affecting multi-billionaires. When multibillionaire hedge fund CEO, Warren Buffett, told the New York Times, “there’s class war alright … but it’s my class, the rich class, that’s making war, and we’re winning,” he was also talking about class war between the super-rich and the super-super-rich.
WATCH: Britain Votes to Leave EU in Brexit Vote
This growing division among elites was reflected recently when BP oil’s CEO, Bob Dudley, was awarded a 20 percent pay rise despite overseeing the company’s worst-ever losses. The Financial Times described “the largest ever shareholder revolt” in the company’s history. This was democracy among elites, where super-rich people got together to vote against the super-super-rich. When ordinary people get together to fight for their rights, such as the Colombian farmers suing BP for violations, it is hardly news in the Western media.
The super-rich, like those represented by the Confederation of British Industry and the British Banking Association, wanted to remain in Europe. However, the super-super-rich wanted further deregulation of capital controls and have pushed for a Brexit behind the scenes, according to researchers.
Jensen and Snaith, writing in the Journal of European Public policy, found broad support for "remain" among large businesses and policymakers, who have made their views known in public and in print. But in addition, there is a “a powerful minority, mainly comprising hedge funds … [which] is in favor of leaving.” The authors conclude that “[a] much-touted potential benefit of leaving the EU would be regulatory easing, as it would allow the government to roll back costly legislation.”
Recent news in the markets indicates that hedge fund companies are raking it in. David Harding of Winton Capital Management reportedly donated millions to the "remain" campaign, but his Winton Diversified fund gained 3.1 percent when the Brexit results came in, “helped by bets against the British pound and euro, according to a client note reviewed by The Wall Street Journal.” Crispin Odey of Odey Asset Management has a US$10 billion subsidiary, Odey Europe Inc., which gained 15 percent after Brexit.
Certainly the U.K.’s Conservative government wanted to further distance the U.K. from Europe, even if its rhetoric was the opposite. According to the ruling Conservative Party’s manifesto, a referendum on Europe would take place by the end of 2017. So, why did they decide to hold it now, when Euroscepticism is rampant?
The Tory manifesto states: The EU “is too big, too bossy and too bureaucratic.” This translates as: EU fiscal and monetary policy is impeding Anglo-American capital. On the Transatlantic Trade and Investment Partnership, the deal being worked out in secret by the U.S. and EU, the manifesto commits the Tories to “completing ambitious trade deals and reducing red tape.”
Red tape translates as regulations designed to avoid another financial crisis: a crisis which helped garner hatred of Brussels, despite the fact that the U.K.'s austerity was, in reality, largely a Tory policy choice. “We say: yes to the Single Market. Yes to turbo-charging free trade,” the manifesto concludes.
The other field where researchers have learned of closeted "Brexiteering" is in medicine. According to the medical journal, The Lancet, “Most U.K. health organizations are against a Brexit vote,” but they were unable to voice their concerns because of the Charity Commission’s draconian guidelines prohibiting “political activity.” The journal notes that the Commission revised its position on the referendum specifically in anticipation of the vote.
“The new wording” of the guidelines “sparked an allegation by Margaret Hodge MP that chairman William Shawcross’ euroscepticism was behind an attempt to gag the roughly 160, 000 registered charities in England and Wales.” Medical professionals and researchers are concerned that Brexit will lead to a decline in funding, pose a threat to health unions, hinder international collaboration, and increase the privatization of the health sector.
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Now, with the U.K.’s free marketeers likely to be further liberated from the already feathery shackles of EU regulation, the U.K. can “turbo-charge” its exploitation of resources, labor, and capital in the “developing” world.
An article in the journal International Affairs notes that one of the U.K.'s main objectives has been maintaining and strengthening the EU’s single market ideology “as a liberalization and deregulation project, open as widely as possible to the free trade agenda, through the EU’s foreign economic policy.”
By setting an international financial standard on (de)regulation, together with the U.S. of course, the U.K. will externally attempt to shape European investment standards. As the article explains, the U.K. was never fully in Europe, refusing to adopt the Schengen system and euro currency, maintaining “a strong preference for intergovernmentalism and the preservation of British opt-outs and national vetoes.”
The U.K. will look increasingly to China, India, and South Korea for its markets. The International Affairs article notes that the U.K. was the first Western member of the Asian Infrastructure Investment Bank. Prime Minister David Cameron has embarked on tours of India and Turkey, “during which he rhetorically made the case for a continuing significant role for the U.K. in international relations.” the U.K’s so-called “defense” policy is “in line with the ‘decentring’ approach to the EU.”
European policy has angered and impoverished millions of people across the continent (remember Greece?), so nationalistic tendencies are understandable. However, the way in which Brexit is being handled will likely make the U.K. far more susceptible to financial volatility, privatization, and growing class divisions; and in doing so will have increasingly negative effects on “developing” states.
T.J. Coles is director of the Plymouth Institute for Peace Research and author of Britain’s Secret Wars.
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