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June 30, 2016

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June 30, 2016

What’s the likely impact of Brexit on development, aid and Oxfam? Any opportunities amid the gloom?

June 30, 2016
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Following on Tuesday’s retrospective ‘how did this happen?’ piece, some thoughts on the future, starting

So does 'crisis ' really equal 'danger' + 'opportunity'?

So does ‘crisis ‘ really equal ‘danger’ + ‘opportunity’?

wide (development in general) then narrowing down to the aid business, and all the way to Oxfam/INGOs. All highly tentative, subject to correction etc in the coming days. One big assumption: I’m assuming that Brexit actually goes ahead. And one pleasant surprise – there are a few opportunities as well as a lot of risks in the post-Brexit confusion.

Development, output and trade: Unless you are an extreme anti-capitalist, it’s hard to see an upside in $3 trillion dollars being wiped off global markets in the two days after the vote, or the coming years of uncertainty and instability in the UK, with plenty of potential for contagion to the EU (a great unravelling?) and beyond. See briefing from ODI’s Phyllis Papadavid for more.

The implications for the trading system are messy. A Brexit UK will presumably have to negotiate both a spate of bilateral trade deals to replace EU-led ones such as the Economic Partnership Agreements with Europe’s former colonies, and entry to the WTO as an independent player (it’s been represented by the EU up to now). More from Owen Barder on the implications for the UK’s trading partners in Africa and elsewhere.

the view from Germany

the view from Germany

Aid: At first sight, this looks like big trouble for 0.7 – many of the Leavers are just as hostile to internationalism and aid as they are to the EU. A Brexit government is likely to find itself in urgent need of cash, so overturning Britain’s legal commitment to 0.7 would look like like an easy target. That’s certainly Owen’s view. So I was surprised (and reassured) by the more optimistic analysis by Oxfam’s political liaison guy, Tim Livesey. He argues convincingly that any Brexit government will be keen to show that Britain is not turning its back on the world. The legal commitment to 0.7 means that any attempt to cut aid would require a high profile decision in parliament, where a recent debate showed just how much support for aid exists, despite the best efforts of the Daily Mail. Of the two front runners to succeed David Cameron, Boris Johnson is a cosmopolitan internationalist, while Teresa May is famous for telling the Tories to shed their image as ‘the nasty party’. For Party read nasty Country – Britain’s reputation has been deeply damaged by Brexit, and its aid programme could help restore it.

A lot of UK aid currently goes through the EU, and that would become purely bilateral UK aid after a Brexit. That could give opportunities for DFID to do more in the way of innovation and accountability (although on the other hand, if DFID chooses to do bad or dumb stuff, it will have more money to do it with).

But in at least two other areas, Brexit is just plain bad news. At the time of writing, Brexit has devalued I wish we hadn't done that nowthe pound by over 10%, massively cutting the real value of British aid. Second, the entire British political machine will be consumed for years by Brexit negotiations, so you can kiss goodbye to a lot of British leadership on everything from nutrition to women’s rights, although DFID’s global role will hopefully continue, as Brexit talks drag on in Brussels.

The British aid business: Will the anomalously dynamic UK aid cluster survive? It will have a series of blows to its funding (eg European research grants will become harder to access), bandwidth in Whitehall will shrink, and in any case, Britain’s international voice will be diminished in Brussels and beyond.

Oxfam/other UK based INGOs: There are already serious financial consequences from the drop in the value of the pound – Oxfam may need to dig into its reserves to minimise the damage to its partners. The future contains further risks: a post-Brexit recession in the UK would inevitably hit our ability to raise funds from the public. Whether or not we can continue to access EU funding (currently 10% of Oxfam GB’s income) depends on the nature of the Brexit deal – eg whether the UK remains a member of the European Economic Area, and/or strikes a bilateral deal like Switzerland. That will take several years, but obviously includes a worst case scenario (Oxit? Sorry, couldn’t help myself…..), consisting of a double whammy in which DFID is butchered, at the same time as we lose access to at least a part of EU funds. There are lots of reasons to think that won’t happen, but these are sombre times.

There are wider considerations and big strategic choices to be made on how to respond. Here are a
couple that cropped up in a staff discussion this week.

Short term v long term: in the short term, there will be a spate of negotiations, new trade deals, Brexit talks with the EU etc, all of which could have profound impacts on development. There is a clear case for stepping up  efforts to influence the UK Government in order to seize any opportunities and minimize damage.

On the other hand Brexit has revealed just how deep Britain’s divide is, a multifaceted inequality that has Brexit thumbs upgenerated not just income inequality but deep divisions over norms and identity. Would it be better to pull back from the day to day trench warfare of Whitehall and go long term, working with youth, investing more in development education, working on public attitudes to race and ‘Otherness’?

More UK or Less? There is another option. If the decline in Britain’s influence is now terminal and accelerating, maybe UK NGOs should shift their emphasis to the countries that matter more, helping build citizenship and voice in the emerging powers, strengthening the pan-EU network on development?

OK, that’s about as much straw clutchism as I can muster. As ever, I welcome all comments and insights from the multiple conversations that must be going on right now

12 comments

  1. Agriculture: with the demise of the CAP, the UK will have to redesign its agricultural policies. Given that the UK is only 1/4 self-sufficient, agricultural policies could afford to be non-protectionist. And good for the consumer..

  2. How about the potential positive impact of the UK no longer blocking some progressive moves by other EU players? Eg financial regulation?

  3. The headline for this blog should’ve been about the likely <> impact of Brexit on development aid (lets talk sign-off again?). So, another blog needed, please (I’m enjoying this), on what it means for civil society that Brexit has mangled, intensified and released new public attitudes around poverty, inequality, migration, austerity, trust, class, discrimination etc. I think Brexit and 0.7% and trade agreements and currency fluctuations are important, but Brexit and “making change happen” – in this new environment – is a near existential for civil society to come to grips with, now?

    1. and what wd be your historical point of comparison on civil society reaction to major political implosion, delegitimization of ruling elite etc etc? Back to the Berlin Wall comparisons?

  4. It is amazing that so much good is coming out of this display of intentional and premeditated stupidity.

    There is already a post-vote debate starting about British identity, and the corrosive divisions between “classes” and wealth groups. I am much encouraged by seeing, for the first time, some realism in the discussion about the non-incusiveness of British society and the resulting alienation. SNP in Scotland have based a lot of their success in giving people a positive identity, maybe England can follow. There is also the start of facing up to post-Empire realism (albeit in an unwilling and half-hearted way, but it is a start).

    The position of Northern Ireland makes some form of rapprochement that is a step towards a new reality for the geographic island in the medium term (20 years perhaps) more likely.

    The worst elements of the EU have been served a warning (long-simmering and ignored) that the institutions and structures must serve more than just big business and the mythical goal of “competition” everywhere and in every sector. There is indeed very much that needs reformed there and this is a push in the right direction.

    The UK has not yet started withdrawal, only conducted a non-binding referendum. The UK Conservative government is going to be in a lose-lose about how to deal with the realities; constitutionally a vote in Parliament to initiate Article 50 seems necessary and that means MPs being forced to face their constituents who want Brexit and deal with the discomfort of voices of poor, marginalised and angry voters that are demanding to be heard.

    Lots and lots of good _can_ come from this – the status quo was not exactly wonderful and needed a long overdue massive restructuring. I am not at all a Brexiteer (I’m former EC staff, have lived many years outside UK including 10 years in Germany) but it is obvious that a shake-up was needed and we have to start addressing the concerns of people who see immigration, race, “foreign-ness” etc as a threat and not an opportunity. Those are real concerns of real people, even if we disagree with them.

    Hoorah that the apple cart has been upset – let us now have the courage to challenge the xenophobes and greedy bigots and rearrange the apples in a fairer and better way. It is indeed a huge opportunity – but only if we have the courage to seize it.

    I would have voted “in” (been outside UK too long to get a vote) but I am not at all displeased by the opportunities I see opening up. Even if my pension is going to suffer. What an interesting and defining moment, I’m pleased to be living in such dynamic times.

  5. Speaking of further blog explorations needed: I think there is an interesting thinking space on what Brexit means for NGOs policy objectives beyond aid budgets. Much of British and European NGO policy work on key issues like trade, climate, tax, timber certification, etc has been based on the political and economic leverage provided by the EU. Will/can this continue? What new strategies should NGOs adopt? What consequences will the “liberation” from EU regulation – much of it comparatively sensible and progressive in the above mentioned areas – mean for the UK policy in these areas?

  6. Interesting analysis. The only thing I ‘d say is that Theresa May’s ‘nasty party’ comments were made in 2012, nearly 14 years ago, in completely different political and social economic climate.I’d add, that as Home Secretary, it was her UK Border Agency that introduced the so-called ‘racist van’, telling illegal immigrants to go home. Not sure how much of an internationalist Gove is, but one of his supporters is Dominic Raab, who’s very keen to roll back human rights legislation.

  7. Isnt it too early to give definitive conclusions?

    The critical question to ponder over is that the UK has been a power for hundreds of years. Has 40 years of EU membership made it so weak and dependable that it cant sustain its position?

  8. On Oxfam’s UK work, I suggest let’s quickly get back to the UK youth education work on development, race etc. that we had to/ chose to drop after the 2008 financial crisis hit Oxfam, that work was really important to counteract the Daily Mail effect in UK society. As with our programming all over the world, to influence we need to work at all levels…not just focus on Whitehall which as we know lost touch with reality a while back. And if the UK government actually wants to tackle some of the root causes perhaps they might take such youth education approaches into their curriculum- hopeful thinking I know, but let’s at least do what we can ourselves to work on youth and therefore UK future inclusiveness

    1. Hear, hear to comments from both Duncan and Jane Lonsdale about the importance of working with youth and investing more in development education in this context. Yes please!

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