IRENE FINEL-HONIGMAN: Margaret Thatcher from the very first day said, no. We will only be part of a very general structure of a European Union. We will never, ever give up sterling. We will never give up the Bank of England. We will basically never give up our full sovereignty.
Brexit was a cataclysmic mess that never needed to happen.
The one advantage of Brexit and Trump is it's finally forcing us to get our act together.
The UK has to be very careful that politicians in the process of fighting their own little fights about Brexit do not, in turn, ignite a genuine sense of outrage and anger.
DEE SMITH: Hello, I'm Dee Smith. Today, I'm going to be speaking with Irene Finel-Honigman, who is a specialist in international finance, banking, and financial policy, with a focus on the EU and on Brexit. And we're going to be talking about Brexit, the state of play, what we can expect in the coming weeks and months, and how we got here. Irene, welcome, and thank you for being here today.
IRENE FINEL-HONIGMAN: Thank you.
DEE SMITH: So we're going to talk about this little issue called Brexit and its implications. And I'd like to start by asking you what do you think the state of play is today in Brexit. What's led into it, brought us to where we are today, and where are things?
IRENE FINEL-HONIGMAN: Well, I think what is fascinating about Brexit, it's both, I would say, an irony and a farce. It's an irony because when we look at the history that brought it about and the complex relationship between the UK and Europe going all the way back to the start of the European Union, it's never been a comfortable state of affairs. The UK originally wanted to come in. It was Charles de Gaulle in France who absolutely hated the Brits at the time and said, no. They did not come into the European Economic community until 1973.
And it was always a relationship of being in it but not totally being of it. Once Margaret Thatcher comes into power in the late 1970s-- 1979-- the situation becomes even clearer. She wants the European Union, as we move toward economic community to the European Union, to actually serve best the trade interests-- the agricultural interests, the open market interests-- of Britain, but not in any way to impose itself upon Britain.
The real decision takes place in 1991 when it's about to start the European Monetary Union, and it's about to start a far greater integration. And it's fascinating, because no one had a better relationship-- we have to remember in geopolitics-- than Margaret Thatcher, Mitterrand, Chancellor Kohl, and Reagan and then Bush. This was an extraordinary group of leaders who basically ran the whole show for nearly 15 years. And yet, Margaret Thatcher, from the very first day, said, no. We will only be part of a very general structure of a European Union.
We will never, ever give up sterling. We will never give up the Bank of England. We will basically never give up our full sovereignty. The reason I mention this is this is where there's the irony. Brexit was a cataclysmic mess that never needed to happen. It came about because David Cameron made a foolish decision in 2013 because there was already all this anti-EU, anti-euro, anti-globalization movement across Europe brought on by the sovereign debt crisis and then the migration crisis. In order to humor, in part, this constituency and to bring them to his side, he said, you know what, if I'm re-elected in 2015, we'll do a referendum on this issue.
I personally feel referendums are one giant mistake. And along comes, of course, he is re-elected. And along comes June 23rd, 2016. And there is a referendum. And, as you know, the referendum, interestingly enough, was 52 for leave, 48 for remain. From day one, it was clear that the UK was split.
DEE SMITH: So you've said that, really, Margaret Thatcher delivered a soft Brexit.
IRENE FINEL-HONIGMAN: Yes.
DEE SMITH: And so it really is ironic that this whole thing had to be revisited.
IRENE FINEL-HONIGMAN: Exactly. It's ironic, and then at the same time, because there was never-- forget about a plan B or C-- once Brexit occurs, there was never a plan A. Because I think on a very deep level, certainly the British establishment, the political class, the intelligentsia, universities certainly assumed that, yes, this is all very interesting. It will allow everyone to express their view, but this won't really happen. We certainly saw exactly the same situation in November 2016 with the Hillary-Trump election.
These are situations that suddenly occur. And they are cataclysmic moments, and the most awful thing is when nothing's been put in place. Cameron is forced to leave, and Theresa May comes in. And I just want to say, I personally do admire Theresa May. I think she was put in the most atrocious position and took on probably the most thankless job possible in any government.
DEE SMITH: So this has happened, and here we are. And now it seems that there are three probable outcomes. There's the hard Brexit-- leaving with no agreement. There is a second referendum of some kind-- however that might be phrased. And then there's a new election-- a general election. Do you see any other alternatives?
IRENE FINEL-HONIGMAN: I think what is oddly interesting is the Europeans now, with this brand new deadline having basically crashed through the previous absolute deadline of March 31, now on to October 31, 2019-- the Europeans now are setting out a kind of weird scenario of either, basically, no deal. Either going back to something of a sort of more soft deal-- either, oddly enough, just canceling the whole thing. We are, again, in uncharted territory, because the way Brexit had to come about according to the rules and laws of dictating the European Union and the conditions of the EU was that Theresa May had to invoke Article 50.
And she did that in March 2017, which had that two-year transition period onto a final decision. The question is now, how set in stone is Article 50? And are we now looking at a possibility of simply revoking Article 50? We don't even know what that means.
DEE SMITH: Do you think that's a possibility?
IRENE FINEL-HONIGMAN: I think that maybe-- I don't think the Europeans threw that out, particularly with Macron and Merkel simply perchance. That may be a possibility, because, at the end of the day, from the other side, the Europeans-- the European Union, specifically Angela Merkel and once Macron becomes president-- they didn't want this. Nobody wanted, basically, Britain, the UK, to be off the table-- to no longer be at the table.
DEE SMITH: Do you think that, from the standpoint of the EU at this point in time, there is a unified vision about what they would like to see in terms of Brexit? Or do you think that there are a lot of different visions? That the French look at it one way, the Germans another, the Italians another. Obviously there's Poland, Hungary, and Greece and all these other countries-- how does that play in? Is there a center?
IRENE FINEL-HONIGMAN: Maybe there was originally a center. I think when this decision occurred, I would say that the first year-- that year of 2017-- they assumed this would follow certain procedures. If really this had to occur, Theresa May would invoke Article 50, which she did. And then from then on, this would somehow have a not smooth, but certainly fairly cohesive transition. And that the Brits, in turn, would begin to offer some very definitive conditions they were comfortable with, and then room to maneuver.
So I'd say that there was more of a kind of together kind of attitude. And certainly Donald Tusk, as one of the most important voices in the European Commission-- Junger, et cetera-- wanted to work with the UK to find and resolve this issue. The problem was that when it became clear that on the UK side, whatever plan was put forth was immediately shut down. That Parliament was becoming more and more fragmented. That the divisions within the UK were becoming more and more rigid.
There began to be much greater concern, because the question is that this began to be a problem that the Europeans did not want and the Europeans simply did not quite know how to deal with. We also have to remember no one has ever dropped out of the European Union before. There were all these threats. The threats were called Grexit. Occasionally we'd-- horrible word-- tended to be sort of attached to other countries. But there was very little reality behind it. Because, at the end of the day, every country understood if you drop out, there go your subsidies, there go your free market. There goes basically all credibility in global markets. And now what?
The UK is not Greece. UK is not Italy. The UK is a global power unto itself. And the UK is not part of the eurozone. So all of these issues that were somehow crucial, basically, but then looking at some of the other countries, this was a whole new ballgame. Now, the problem was that what now had to be decided was, how do you even go about this? If they don't seem to be able to do it, this fell back on the Europeans. The burden began to be the Europeans' burden to sort of figure out how do we do this.
They don't want them to do it, but it looks like we're going to have to do it for you. The problem is, remember, the European Union when it was originally created-- and this was sort of marvelous in a way. It reminded me of the American pop Eagles song "Hotel California"-- You can check out anytime, but you can never leave. And that's basically what the European Union was. Suddenly, they changed the lyrics. Suddenly, everyone's looking for an exit.
The problem is this is not-- there are no precedents. There's nothing in place. So it always had a sort of ad hoc nature. And everyone was reacting to everyone else. And May, I think, made an enormous effort to try to give in as much as possible to the demands of the European Union-- certainly within the conditions for trade, with sort of the so-called divorce bill, what the amount would be, how to basically structure this. And every time she'd come back, and it got shut down.
DEE SMITH: Do you think that that's essentially a problem that's within the Conservative Party? In other words, is the real problem not the fragmentation of the UK and the fragmentation of parliament per se, but the fragmentation and the infighting within the Conservative Party? Because it seems to me that a lot of people in the Conservative Party care more about the party than they do about the nation.
And whoever ends up being voted the leader after Theresa May is going to face the same set of problems. They will not be able to deliver something, it seems to me. What do you think about that?
IRENE FINEL-HONIGMAN: I think that's exactly right. I think, unfortunately, because Theresa May's plans were shot down, whatever lack of credibility she already had-- because, again, she was excellent home secretary but not seen as truly material to be prime minister. That increased this problem of credibility and of trust. And it made it even easier for any of these other members of parliament with differing views to become more aggressive.
And, in fact, yes, right now the rifts within the Conservative Party plus the total fragmentation and poor leadership on the Labor side, and the inability of any of these groups to have, right now, full support of the country at large as we do see also other parties coming back to the forefront. Certainly the Green, as in every country in Europe-- the liberals. So the situation with Brexit, which has, in a way, moved, really, from irony to almost tragedy, is that the parties themselves have no longer kept real cohesiveness.
DEE SMITH: It's interesting to me that Theresa May was a remain person. She then-- I'm going to spin a train of thoughts here, and tell me what you think about it. Theresa May was a remain person. She then went totally over to leave, because she said to not make Brexit happen was to not respect the wishes of the English voters-- of the UK voter. So fast forward to what we now know-- and I'd like to ask you what you think we do know-- about Russian money and other kinds of influence in the original referendum.
Which, in my mind, calls it into question-- whether it actually did reflect-- I mean, was it a corrupt referendum? And if that's the case, then how would enforcing it be actually-- when we don't know the extent to which it really did represent, if we don't know the extent to which it did represent, the wishes of the UK electorate, then how can enforcing it actually represent the UK? I mean, it's a big argument for a second referendum.
So two questions-- or three. Do you think that that's a valid way of looking at it? Second, what do we know about Russian influence and money in this election? And my third question is, why is that not a bigger issue? Why are senior politicians not making that the main question of the day?
IRENE FINEL-HONIGMAN: I think clearly we now know that, particularly with media incursion and ability to spread so-called fake news, false information-- certainly there was a certain impact that Russia had, just like we can say there was a certain impact in, basically, hacking into the US elections. There's no question. But I really think that we have to be very careful not to give too much weight to that argument because when we think of the overall environment in which Brexit takes place, we are already looking at least five years of profound discontent across Europe.
We are also looking at a Europe that has just gone through the sovereign debt crisis, which, whether countries wanted it or not-- and the UK felt it didn't deserve it-- had actually been pushed into near recession, have had their entire business cycles and trade balances thrown off, and have had to suddenly cope with this really surging movement of anti-EU, anti-globalization, anti-euro.
And what is so interesting is even smaller countries in Europe, that they would decide-- all of a sudden they were scared if we leave, we lose all the advantages. But we don't want to stay and be constantly told by Brussels and told by, basically, nameless, faceless bureaucrats, and, worse, told by Berlin what we can or cannot do. And this is a very fundamental psychological rupture that has occurred in Europe within less than a decade. And I think we can not underestimate this.
Because I found it fascinating right before Brexit when certain polls were taken, and when actually people in smaller parts of the UK and disenfranchised areas in former major industrial cities and fishing villages-- when they were asked, what do you think of the representation that you basically have in the EU? And most of them just stared blankly. They had no idea who represented them, who was making these decisions, why. All they knew was that this was beginning to impact on them and on their Britishness.
They could regain. And the concept of sovereignty-- it's a word that gets thrown out almost as a cliche-- but there's a profound atavistic cultural resonance to how do you define yourself, particularly if you think some foreign person in a foreign country, particularly in Europe, is suddenly coming and announcing to you what is good for you. This cannot be underestimated.
So I think, yes, there was the, basically, influence of Russian money. There also is now the influence, which is actually even more profound, of money laundering issues, which are touching on all major global banks-- particularly European banks. So there is no question of a lot of internal corruption.
What I found interesting was that Boris Johnson's message was so shocking. Because, basically, Boris Johnson came out with a series of downright lies, working exactly into this mythology, this nostalgia. Ah, those evil Europeans will be gone, and all this money will suddenly reform our national health system and do wonderful things. In my view, this was shocking. This was atrocious. This was taking what was already a sense of unease and fear and feeding into it. I have the solution. There was no solution.
And, very sadly in the US, we saw the same thing with the coal miners in West Virginia, with small towns where we've told that no, no, no, forget about it. No globalization, none of this strange technology-- we're returning to a wonderful time where we make America great again. What does that mean? So this is where I would say we had a confluence of events and a confluence of different factors that played into it.
But there were much deeper elements of discontent. And this is, again, coming through. If we just think what happened in the fall of 2017 the German elections-- for the first time since World War II, a party with basic neo-Nazi roots feeding into exactly all of these anti-EU psychological element managed to get into Parliament. Marine Le Pen in France, whose party now has actually done well in the last EU elections just two weeks ago.
This problem, it was almost like the Russian influence was the icing on the cake. But the cake was there.
DEE SMITH: Well, of course, this nostalgia has been-- I've looked at it a lot myself-- it's being studied quite a bit. I recall a friend of mine who was talking to some people in the UK about Brexit. This was more than a year and half ago. One person said, we would be happy to be measurably less wealthy to be measurably more British. And I have since repeated that to other people in the UK. And they said, yes, that's it exactly.
Which is an interesting sentiment that you would not have-- 15 or 20 years ago, you wouldn't have believed it. If somebody had written that in a short story, it would have been-- it was too much fiction. But yet, that's where we are today in the world. And this idea of make it like it was-- and, of course, life is never like it was. And our memory of life is false. And we don't remember what the 70s were really like. We make them into these halcyon days, and they weren't like that at all, particularly in the UK-- the council flats and all these.
So the origins of this feeling of ennui and this feeling of being put upon and the feeling that things are much worse than they have been is an illusion. But it doesn't matter, because it's so emotionally resonant to people, because they find themselves confronted with a world filled with change and change happening more and more extensively and more and more rapidly-- and filled with people who are not like them. And it's a very uncomfortable position for many people-- some people not, but it is for many people.
IRENE FINEL-HONIGMAN: And I think this also does bring up that problem of migration, and the fact that Europe basically was almost torn apart by the pros and cons of the 2015 migration crisis in which Angela Merkel, for all of the right moral reasons, took, however, a decision which, unfortunately, was not always understood where the consequences could be. Interestingly enough, the problem in the UK, which was sort of