A game changer that should encourage the EU and the UK to reconsider their entire Brexit strategies!
Despite the fact that the unsolicited bid by the HKEX for the LSE has been roundly rejected by the LSE board of Directors, both its timing and scope raise some fundamental geopolitical questions that should not be overlooked lightly.
First of all, it seems inconceivable that the bid was formulated without the express approval of the Chinese Government. The merger would indeed play into Chinese hands aiming at establishing a global duopoly with the United States over world financial markets. Acquisition of the LSE group (minus Refinitiv), would give immediate credibility to such ambitions and to the longer term aspirations of imposing the renminbi as an alternative to the US Dollar.
Despite – or perhaps because of – the current deepening of geopolitical: tensions between oil producers (Saudi Arabia, Iran and the USA), between India and Pakistan, unrest or conflicts in Hong Kong, Syria, Venezuela, Ukraine and other flash points, the timing of the bid is most probably deliberate as it has the capacity of playing havoc in the final stages of the Brexit negotiations. By leading to a chaotic “no deal” exit, the bid, even if rejected, achieves a secondary objective
Indeed, though at this point the bid has be flatly rejected, HKEX has announced its intention to pursue its objective by soliciting directly the shareholders keeping the matter alive. This situation deals suddenly the Government of Boris Johnson new options in its bargaining with the EU: either embracing a deal with the Chinese to create an unbeatable hold over European and Asian markets or, alternatively, seeking a deal with the Americans (Trump has already – as expected – vented his anger at the Chinese bid) to punish the EU. Either deal would secure London’s dominance of the financial market in the European time zone, confirming its leadership in global FX markets and derivatives trading (see latest BIS report). At the same time it would completely – and probably definitively – marginalize the € creating additional impediments to the completion of EMU and greatly enhancing the risks of the ultimate dismemberment of the single currency and of the EU.
The ultimate result would be catastrophic for Europe including the UK, both becoming beholden to a greater or lesser extent to their Chinese or American masters who might find it in their interests to divide the world between themselves, as demonstrated by their ongoing (separate) attempts to divide the EU Member States.
At this critical juncture it is of paramount importance that the parties involved in the Brexit negotiations keep their nerve and have the courage to revisit their respective positions without any preconceived ideas.
– The EU should realize the folly of encouraging the UK to look again overseas rather than to the continent. The EU should encourage a further extension of Art. 50 in order to reassess the new geopolitical situation and in the event, negotiate appropriate and comprehensive Treaty changes. The complementarity of the EU and UK should be fully recognized; it should lead to establishing a shared European sovereignty (on par with the USA and China), capable of holding its own if not assuming the leadership within an emerging tri-polar world. It should also be an opportunity to explore the relationship with Russia whose (natural) association with the European entity would contribute to its military and natural resources independence. With this in mind the EU should take the initiative of resetting the basis of the talks rather than wait for constructive English proposals.
– Putting firmly as a priority the interests of the UK, which is geographically, economically and culturally part of the Europe, Boris Johnson should avoid any temptation of “teaching his ‘European friends’ a lesson for attempting to ‘punish’ Britain over Brexit” by striking or threatening a deal with either New York or Hong Kong, which would, in the long run, be bound to reduce the country to a vassal State. Arguments based on the “mandate” supposedly given by the first referendum should be dropped in light of dramatically new circumstances and any new arrangement resubmitted to the consent of the elector.
– Full consideration should also be given to the UK joining the € with the Bank of England playing a similar role to the New York Fed. Other EU non-members would be encouraged to join, giving the EU/Eurozone the necessary coherence so that the € could play rapidly its full role as a credible world payment currency alongside the USD. Simultaneously the aspiration of the renminbi to a similar status would be further delayed and the USD would lose its exclusive outrageous prerogatives deriving from its current status.
The current mounting geopolitical risks and their attendant threats to the world economy fully justifies wiping the slate clean and reassessing the interests of the 28 EU members. This objective seems perfectly aligned with the political declaration of the new Commission President, Ursula van der Leyen.
After the appalling experiences of the XXth century is it really too much to ask our political masters to ensure the preservation of our civilization rather than to play with the livelihood of millions of human beings?