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The race for the digital future

The race for the digital future

High-tech ‘dreadnoughts’ will change everything

by John Kornblum in Berlin

Thu 17 Mar 2016

‘The most puzzling development in politics during the last decade is the apparent determination of western European leaders to re-create the Soviet Union in western Europe.’ – Mikhail Gorbachev

In the end, the 23 June referendum will probably be decided by emotion. A British version of Trumpism versus the good old Methodist values of Hillary Clinton. Most votes in the UK will go to the side which can build the most appealing emotional picture of Britain’s future. Hard to say who that will be. 

But if logic has anything to do with it, the Gorbachev quote is as good a starting point as any. Which is the most relevant model for the future? A UK mired within an organisation which even the president of the European parliament fears is in danger of blowing apart? Or a global identity as a central node of a growing system of integrated networks built with the help of American and Asian ingenuity?

As the commentator Robert Colvile wrote in the Financial Times: ‘In the old days, countries used to measure their virility by the size of their fleets. If tech giants are the new dreadnoughts, Britain and Europe were long ago blown out of the water.’

In other words, most of the arguments being deployed in the Brexit debate are rapidly becoming obsolete. Europe’s future cannot be understood without focusing on the importance of these new high-tech dreadnoughts. They will change everything. The Soviet Union was ultimately brought down by its inability to keep up with technological change.

Without questioning the democratic credentials of EU leaders, the similarities between the Soviet Union and the European Union are striking, down even to their names. Both were built in the tradition of the European empires – an amalgam of nations and people ruled from the top down by an unelected elite. Efficiency is not part of their credo.

Try as it may, the European Union has not been able to overcome this fixation with the past. Be it the euro crisis, defence strategy, the refugee crisis or the race for high-tech leadership, EU Europe always seems to be less than the sum of its parts.

Much of this lag flows from the psychology of the Brussels establishment. It is based on the deeply held belief that peace and prosperity can be assured only through equilibrium enforced by an elite group of leaders. The goal is not good policy or even results, but rather to ensure that no one rocks the boat.

But two things are certain. Whatever its advantages, the EU is not going to help its members move to the forefront of the new digital world. In fact, Europe is likely to fall even further behind. And whatever the outcome of the 23 June referendum, Britain’s future is likely to be decided not by whether it stays in the EU, but by its ability to attract talent and capital for the next critical phase of the industrial revolution.

Embedded in the EU, Britain would gain stability and access to an economic system based on social welfare and traditional manufacturing. Both are rapidly becoming obsolete. Germany trades more with the US than with France.

As David Owen, former UK foreign secretary, has pointed out, a Britain outside the EU would retain a privileged status in many important fields of trade. Europeans are not about to exclude their second largest economy. At the same time, the UK would be able to build both on the strength of London as a global financial capital and on its many links beyond Europe. It might even attract some British engineers back from Silicon Valley.

John Kornblum is a former US Ambassador to Germany and Senior Counsellor at Noerr LLP, and a member of the OMFIF Advisory Board. This is No.14 in the series.

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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