Romania’s Exposure to Brexit Is Limited and Manageable
The British vote in favor of leaving the European Union is a defining moment for the United Kingdom, for the EU project as a whole and for each individual European country. It could also be a critical juncture for the current international world order.
The economic consequences will be serious enough for the United Kingdom and for the European economies: increased uncertainty and higher volatility in the financial markets, reduced capital flows, shrinking trade, less liberal markets and increased protectionism, all resulting in slower growth and eventually recession. In normal times, the Brexit shock would fade away as economies tend to adjust to various disruptions and get back to their long term growth path.
However, we are not living “normal times” right now and the political reverberations of the British decision are far reaching and unpredictable. The United Kingdom is profoundly divided and risks seeing Scotland and Northern Ireland secede. For the European Union, Brexit may either be a “wake up call” that would mobilize citizens and leaders in support of a renewed EU project or the starting point for a protracted dissolution process. Considering the current complicated political configuration that prevails in most of Europe, with populist and nationalist currents fast rising everywhere, the odds for a positive outcome of the Brexit crisis are slim.
And new challenges keep coming for Europe: the never solved debt crisis, the immigration crisis triggered by the collapse of old structures in the Arab world, Russia, China, the emerging markets instability, the new trends in the American political spectrum… The EU institutions are hardly prepared to tackle each of these challenges at a time; with several coming simultaneously, missteps are certain and frustration with the EU’s “ineffective, bureaucratic and undemocratic” institutions will be growing to the benefit of Euroscepticism.
Romania’s direct exposure to the disruptions generated by Brexit is limited and manageable. However, Romania is very much dependent on the European Union integration project and has no real better alternative – economically, politically or in terms of geopolitical positioning – to EU membership. We have to fight for the EU’s future, but also prepare for less favorable scenarios.