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Brexit: an avoidable trainwreck

Brexit: an avoidable trainwreck

Getting the world back on course

by DeLisle Worrell in Bridgetown, Barbados

Sun 5 Jun 2016

British departure from the European Union would be a chaotic, divisive and inefficient experience – a major setback for the global economy.

‘Brexit’ after the 23 June referendum would dismay Britain’s friends and delight its detractors. It would give heart to those on the right and on the left who want to take the world back to whatever they fantasise as their golden era. It would aggravate the problems of global governance with which the world has struggled since the turn of the century.

I understand the Leavers’ frustrations. The European Commission has a reputation, not entirely undeserved, for insensitivity and inconsistency. One example pertains to my own country. Last year a European Commissioner published a list of international financial centres that, it was claimed, were not co-operating fully with international guidance on tax information exchange.

Barbados was placed on this list, in spite of our solid track record of maintaining international regulatory standards. That is a vital pillar of our competitiveness, a fact that has been certified by the International Monetary Fund, the World Bank, the Financial Action Task Force on anti-money laundering, and other internationally recognised bodies.

There are other areas of overlap with Caribbean problems. Our region is familiar with the social problems and misperceptions stemming from high immigration, which leads to new arrivals not being assimilated into the resident culture, but instead setting up their own alien communities. An unexpected upsurge in immigration, motivated by international income and employment disparities, has turned the Caribbean’s previously welcoming sentiment into one of hostility and resentment.

Problems such as international regulatory reform and the management of international migratory flows pose complex challenges, best addressed by research to deepen understanding of the nature of the problem. This takes time, and may be overtaken by events, so authorities must improvise. This is where they can go wrong.

Instead of a sensitive approach which seeks out common ground, the relevant authority (the European Commission in the case of IFCs, and the Caricom secretariat in the Caribbean case) insist that all parties obey the letter of the law. In fact, you cannot promote good behaviour through legislation alone; you must motivate it by providing appropriate incentives. In the case of EU directives on everything from the definition of a vintage car to competition rules, the impression is of arbitrary decision-making, with little sensitivity to the impact on individuals and companies.

The heart of the challenge, whether in the EU or in the Caribbean, is this: in the interconnected world of the 21st century, we should dispense with 20th century notions of sovereignty. The world is driven by forces of telecommunications and access to technology in ways that will continue to surprise us. The results are seen in behaviours and activities that can be influenced, but not controlled, by sovereigns.

International migration and flows of international finance are prime symptoms of these changed fundamental circumstances, necessitating improved global governance and redefined objectives of global co-operation.

After the end of the cold war and the lifting – almost – of the threat of nuclear extinction of civilisation, today’s international leaders have perhaps the best opportunity in history to build a peaceful, prosperous and co-operative world.

Our leaders should focus on realising this rare opportunity, to the benefit of all. Brexit would be a great setback for this objective, a thoroughly avoidable trainwreck. At this seminal moment, we do not need a disruptive event that would distract skills and energies better directed to understanding and countering the global currents driving our world off course.

DeLisle Worrell is Governor of the Central Bank of Barbados. This is No.81 in the series – the 100th article will appear on 23 June.

OMFIF’s series on the UK EU referendum presents a wide variety of perspectives from Britain and around the world ahead of the 23 June poll. We are assuring a balance between many different points of view, in line with OMFIF’s overall neutral stance on the issue.

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