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News & Analysis > All
News & analysis from Proletarian Internationalist Notes—news, reviews and analysis from a global perspective
Brexit may have consequences in the Israeli-Palestinian issue and currency-related international wealth transfers
June 28, 2016
As many outside the European Union and outside NATO – with some distance from the referendum campaigns – have said, there are both pros and cons to Brexit. There have already been consequences from a British majority – more particularly, England and Wales – voting to leave the EU last week. That means there are results to observe and respond to (or not) in demonstrated practice, not just guess about while spouting idealistic political rhetoric. It is one thing to talk about the nature of the rhetoric or supporters on each side of Brexit, another matter to strongly oppose or support Brexit or try to adjust after the vote (or fail to do so). There are reasons to be suspicious of those strongly opposing or supporting Brexit – the English and Welsh decision about which should be accepted as final so one can move on politically – or not taking the appropriate diplomatic and financial steps in the new situation. So-called leftists, whether they supported Brexit from a “Left” angle or not, are worried about the British workers who voted to leave being perceived as racist. What would be racist is supporting social-democratic gains for white oppressor nation workers but continuing to rule out an anti-colonial stage of struggle for Palestine – under the new condition of the EU continuing to exist, but with Britain having less say. What would be racist is preserving all of the British pound’s status as a reserve currency when it is obvious even to some Westerners concerned about trade or stability that the Chinese yuan should be ascendant.
From the perspective of the world’s oppressed majority, of course nobody should care about economic growth of imperialist countries (which concerned both the Remain and Leave camps) unless poor growth is seen as caused by the united $tates, maintaining the bourgeois incomes of British or other First World so-called workers, equality among thieves stealing wealth from the Third World, imperialist European countries’ so-called anti-terror security involving new operations against Muslim countries and migrant proletarians, oppressed nation migrants taking jobs, migrants bringing Islam into countries where atheists haven’t overthrown capitalism, or migrants falling through the cracks when it comes to deportations and EU borders mostly closed to economic migrants who want to enter the EU. The labor aristocracy First World so-called working class – which exerts itself in weakening even inter-European internationalism – has its reactionary reasons for opposing free trade and certain trade agreements, and there was never anything proletarian about opposing labor mobility contrary to much pandering to social-democrats, chauvinists, and fascists. (Concerns both of those supporting free trade in principle and those supporting protectionism, and nationalist mixtures of both, animated both sides of the Brexit debate.) There is much not to like about what the British labor aristocracy is saying in the context of various options for trade.
There are lingering fantasies about international socialism led by First World European workers, connected to opposing or supporting the EU as an institution. Despite the usefulness of ideas of European unity from the point of view of opposing fascism, EU member states including Britain, France and Germany repeatedly participated in wars against oppressed nations after the EU was created in 1993, and the EU was never going to become socialist even with the inclusion of poorer European countries over the objections of rich European countries’ working classes. Those in Britain who voted to leave the EU were disproportionately people with less education and less income called workers,(1) but they weren’t proletarian despite rhetoric against capitalists and elites. There is no longer a proletariat among British citizens, who are all exploiters. There is no rich western European country proletariat to bring about socialism with or without the EU or EU membership. In fact, the First World countries’ working classes stand in the way of revolution whether their countries are inside or outside the EU.
Colonial oppression of Palestine
Some seem to suggest Brexit means nothing from a military standpoint, that its impact can only be economic because Britain still belongs to NATO and has nuclear weapons. It is both an Atlanticism-oriented and an overconfident or fragmentary way of looking at things. The UK and the united $tates will still go to war together over the world’s objections, and EU countries will still cooperate with the united $tates, true. But they may have to come up with new justifications, or negotiate a new diplomatic environment with EU unity with Britain in various areas no longer being a given. An EU without #1 US ally Britain may be more likely to support an end to colonial oppression of Palestine, which would change dynamics in the Middle East relevant to Amerikan and British involvement there. That is one thing few are talking about now, apart from Arab, Muslim and Middle East countries.(2) At the moment, an EU with relatively more French influence (or influence of Poland, Romania, the Czech Republic, Sweden, Hungary and other EU countries that have recognized the Palestinian state) sounds great from the point of view of Palestinian diplomacy/discussions with the EU and member states – independently of reactionary pro- or anti- Brexit rhetoric. On the other hand, in recent years British, French and German opinion of I$rael have been similar in terms of percentages for certain questions,(3) and it’s not clear to this writer that a German-led EU would be more likely to help reach a breakthrough on Palestine.
However, many European colonies were able to advance from colonialism to neo-colonialism or internal semi-colonialism without overthrowing imperialism fully or overthrowing imperialism in the colonizing countries. There is no reason Palestine should be an exception. In the long term, as long as Palestinians don’t have the citizenship rights and international status that even people in the poorest Third World neo-colonies and imperialist country semi-colonies have (and that even Chican@s and New Afrikans have despite the united $tates’ being a settler parasite state), nobody can complain about armed struggle related to colonial oppression of the Palestinian nation. An EU without Britain may be less likely to use the armed struggle of Palestinians as an excuse to get in the way of incentives supporting peace in the Middle East. The discussions of Irish reunification and Scottish independence following the Brexit vote are interesting in the context of Palestine, because of developing Irish and Scottish support for Palestine, and may seem more promising than more German influence in the place of British influence.
If the EU is going to totally fall apart before 2020 as some are suggesting – made easier by lack of enthusiasm for German leadership – whether the EU can increase its support for Palestine is still important but may be perceived by some as moot. This makes Irish reunification and Scottish independence even more interesting. EU institutions may become irrelevant to Palestine one day, but reunification and independence can still be useful if they can be achieved before the current prominent reason for them – remaining in an EU that still largely exists as it has existed – goes away. Ireland and Scotland are exploiter-majority nations today, but the oppressed can make use of their self-determination while opposing fascism and the reactionary demands of labor aristocracies. Lacking full self-determination themselves, Ireland and Scotland have obvious reasons to identify with even much-poorer Palestinians, and their natural support for Palestine in this respect has been proved to a degree in practice, though any Irish or Scottish nationalist demand connected to high living standards would be risky. If support for Palestine were more advanced in other nations, or Ireland and Scotland belonged to a union on the verge of socialist revolution internal or imposed, there would be less reason to highlight the Irish and Scottish struggles.
On the minus side with Brexit, Brexit favors appreciation of the U.S. dollar and benefits the united $tates as the country controlling the dominant investment, trade and reserve currency. Some Amerikan ambivalence and uncertainty about Brexit is related to export competitiveness versus strong dollar policy, but Brexit looks like a bad thing right now to many around the world who are concerned about dollar dominance as well as the welfare and independence of countries that owe imperialist countries debt repayments in dollars.
Contrariwise, the renminbi may now be more appealing as a reserve currency than it used to be relative to the pound sterling and even compared with the euro. The yuan depreciated less than the pound did. The weight of the yuan in the IMF Special Drawing Right currency basket (XDR) should increase; that would be one concrete step warranted by the Brexit vote and its aftermath. The pound’s weight should decrease.
In any case, the dollar and the yen both got a boost from the Brexit vote. Revealing a difference between poorer imperialist country Russia and First World imperialist countries, the ruble took a hit albeit a limited one.(4) China allowed the yuan to fall relative to the dollar.(5) Amerikan nationalists will whine about exports because of dollar appreciation and alleged yuan devaluation as usual, but demand for the dollar together with inflation and very low yields(6) – and exchanging low-price quality goods from the Third World for high-price gadgets/licenses (or nothing) from the united $tates – could contribute to wealth transfer to the united $tates even as the united $tates’ creditors seem to benefit from dollar appreciation. International investors would be giving dollars – which they have too few of in the first place because of prices of Third World exports underrepresenting their value relative to U.$. exports – in exchange for a few more dollars in the future. With these dollars, the investors (many of them Third World governments and capitalists) may or may not purchase more u.$. or equivalent goods(7) – compared with what they could have bought with returns from long-term investments of other kinds – when they decide to spend the money on something other than more Treasuries.
With dollar appreciation, the united $tates exploits other countries as it buys goods from other countries with fewer dollars, and other countries continue buying goods from the united $tates with more of their own currency per dollar. Other countries can try to mitigate this by owning dollars themselves and dollar-denominated assets, but then Amerikans spend dollars they borrowed at low rates on “cheap” goods from the Third World while non-Amerikans buy dollar-denominated debt. The “cheap” goods – which command less demand because of bias against labels like “Made in China” versus “Made in Great Britain” – are competitively priced goods of the quality the purchasers want, sold partly to accumulate dollars in the first place.
U.$. exports won’t decrease in the short term, but u.$. workers like other First World labor aristocrats are shortsighted and have difficulty understanding all the ways they benefit as exploiters from combinations of u.$. economic and foreign policy and how the united $tates uses both dollar dominance and trade to obtain super-profits. They complain about low wages in the Third World involved in export competitiveness, but benefit from those wage differences. Instead of taking up proletarian internationalism, First World workers deny the majority of the average imperialist country persyn’s privilege – even the majority of the average white persyn’s privilege in the united $tates when they denounce “white privilege” but reject Lenin’s ideas about nations and parasitism. They seek imperialist power to benefit their own group and alternate between uniting with their own countries’ imperialists, and exerting protectionist and fascist anti-elite pressure even when the benefit to them of doing so is unclear. The brunt of the resulting crises – caused by Amerikans or Britons – is suffered by non-Amerikans when the united $tates remains dominant in various ways.
There are those who would say the EU or similar European unity was obsolete anyway because World War II was fought and is now several generations in the past – even though war with Russia is a possibility. People shouldn’t try to have it both ways. If the EU is obsolete, so is dollar dominance. Dollar dominance reflected the particular interests of u.$. capitalists even shortly after it was formalized, but now there is capitalist China’s currency today and people can see the need for the yuan to have a greater role in terms of stability. There are non-Amerikan arguments both for and against stability, but when the world sees the crises that will still happen regardless of financial system tinkering, it will be easier to proceed with necessary steps requiring risk and sacrifice.
The united $tates faces dilemmas as the country with the dominant currency also needing to worry about its own economy independently of capitalists globally. Some aspects of this are well-known, but the dilemmas are worse than most think. The united $tates remains the #1 exploiter in the world, with an extremely high GDP per hour worked and a workforce larger than the entire populations of most OECD countries. How to maintain this position while maintaining dominance of various types and achieving global financial stability in the long term is difficult. The high “productivity” and wages of the u.$. unproductive sector, and of even the manufacturing portion of the u.$. export sector, are possible because of international exploitation. It is international exploitation to a degree that is unsustainable if other countries that have been integrated into the global financial system are to have the conditions necessary for more global stability. ◊
1. “The areas and demographics where the Brexit vote was won,” 2016 June 24. http://www.theguardian.com/news/datablog/2016/jun/24/the-areas-and-demographics-where-the-brexit-vote-was-won
2. “Arab perspectives on Brexit,” 2016 June 24. http://www.aljazeera.com/news/2016/06/arab-perspectives-brexit-160624111955180.html
“After Brexit vote, Israeli prof warns: ‘When the EU is sick, Israel will suffer’,” 2016 June 24. http://www.timesofisrael.com/after-brexit-vote-israeli-prof-warns-when-the-eu-is-sick-israel-will-suffer/
3. “European public perceptions of the Israel-Palestine conflict,” 2011 January. http://studies.aljazeera.net/ResourceGallery/media/Documents/2012/3/13/201231311324326734European%20Public%20Perceptions%20of%20the%20Israel%20Palestine%20Conflict.pdf
“Poll: Israel viewed negatively around the world,” 2012 May 17. http://www.jpost.com/National-News/Poll-Israel-viewed-negatively-around-the-world
4. “Ruble jumps on crude as Morgan Stanley sees limited Brexit pain,” 2016 June 28. http://www.bloomberg.com/news/articles/2016-06-28/ruble-jumps-on-crude-as-morgan-stanley-sees-limited-brexit-pain
5. “China weakens yuan fixing by most since August as dollar surges,” 2016 June 27. http://www.bloomberg.com/news/articles/2016-06-27/traders-await-yuan-fixing-as-dollar-strength-challenges-china
“After Brexit vote, yuan falls to weakest point against dollar since 2010,” 2016 June 27. http://www.wsj.com/articles/yuan-falls-to-weakest-point-against-dollar-since-2010-1466997308
6. “Daily Treasury Yield Curve Rates.” https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=yield
7. Some indicators to watch and consider at this time are CPI, GDPDEF, PCE, PPI, and MXP (Import/Export Price Indexes, recent changes in which are significantly related to oil prices in addition to exchange rate movements), and comparable indicators for other countries.