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Analysis
Why India doesn’t care about Brexit

Why India doesn’t care about Brexit

World community and a Conservative quarrel

by Meghnad Desai in Delhi

Wed 9 Mar 2016

India does not care about a possible British exit from the European Union. Indians are like Americans. They see the rest of the world through their mirror. To them, India matters most. The others matter only if they affect India.

The whole EU debate remains, for India, a topic of little interest. ‘Leave’ campaigners should not believe that India (and most other Commonwealth nations) would welcome Brexit. Some people in the UK may regard the world as revolving around the Old Empire. Ask the countries that were in it and you will know that this is not true.

Shocking though it may sound, India does not rate UK as very important for its economy. David Cameron, the British prime minister, and George Osborne, the chancellor of the exchequer, have been to India on several occasions. Indian Prime Minister Narendra Modi took his time and kept the UK low on his list of countries to visit. Despite the importance of the Indian diaspora, India does not feel beholden to the UK.

India will pursue its preferential trade agreement with the EU. It will take due interest in the Commonwealth. Yet India feels the Commonwealth needs India, not the other way around.

The other day I was talking to some large Indian investors who asked whether the EU question was a Conservative versus Labour issue. In fact, the real reason for the present charade is the Conservatives’ apparent death wish. I had to explain that this is a festering Conservative party quarrel, stretching back to the 1990 leadership struggle over Margaret Thatcher’s successor.

Thatcher’s supporters blamed the pro-Europeans for plunging in the knife against her. Since then, pro-Thatcher Tory MPs have regarded europhiles as enemies within. The Thatcherites made her successor John Major's life a misery, despite his 1991 Maastricht triumph in winning the opt-out from the single currency. Anti-EU Conservative MPs always wanted more euroscepticism at the top of the party. The issue has now returned after the Conservative party chewed up and spat out three post-Major leaders, William Hague, Iain Duncan-Smith and Michael Howard.

The divisions in the opposition Labour party run far less deeply. Labour is comfortable with the EU without being madly in love with it. Yet the party is generally pro-Europe, to the surprise of my interlocutors in India. This is despite the generally anti-EU views of Jeremy Corbyn, the Labour leader, who has been isolated from the party mainstream for decades. Labour was once divided on Europe, which is why Harold Wilson as prime minister had to hold a referendum in 1975. Then Jacques Delors, the European Commission president, came to the Trades Union Congress and convinced the brothers that workers’ rights were safer under the EU than with Thatcher. That did the trick.

The EU has many problems. With 12 or even 15 members, it had a coherence and a community of interests, similar income levels, a western European outlook and (largely) a common Christian heritage. It lost shape with enlargement, which was an emotional spasm, driven by guilt about abandoning Czechoslovakia and Poland to Hitler and Stalin. Little thought was given to building a proper governing structure. The result has been, generally, a shambles.

Since Britain joined in 1973, I have moved from being a real hot federalist to a cool europhile. The EU needs structural reform. It needs democratic legitimacy. To get the best deal with Europe, Britain needs critical engagement. The British may want to fool themselves that the rest of the world is watching. But in reality they have better things to do.

Prof. Lord (Meghnad) Desai is Emeritus Professor at the London School of Economics and Political Science and Chairman of the OMFIF Advisory Board. This is No.7 in the series.

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Correction: In Meghnad Desai's 2 March Commentary, ‘Indian budget for the long run’, the figure for the budgetary allocation for restructuring nationalised banks was incorrectly stated at $40bn.The correct figure is $4bn.

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