Sovereignty by VOX Journal: The Student Journal of Philosophy, Economics and Politics

Vol. XI, No. III

SOVEREIGNTY

Autumn Term, Vol. XI, No. III

Sebastian Law Editor in Chief Miguel Vidal Editor in Chief Bea Watts Secretary Uvin Dissanayake Content Editor Leo Ehrnrooth Content Editor Orla Lavery Content Editor Christopher LĂźbker Content Editor

Front Cover Art Merete Stene

CONTACT Email: contact@voxjournal.org Facebook: www.facebook.com/VOXJournal Website: http://voxjournal.org/

VOX is a student-run academic journal published tri-annually by The Club of Politics, Economics, and Philosophy at the University of York, with the aim of providing a platform for the exchange of ideas relating to Politics, Economics, and Philosophy.

Contents LEADER

By Sebastian Law and Miguel Vidal

ARE EU REFERENDUMS UNDERMINING PARLIAMENTARY

SOVEREIGNTY? By Ben Wellings and Emma Vines BREXIT

– EXIT FROM WHAT?

By Prof. Werner Bonefeld THE DISCURSIVE CONSTRUCTION OF THE HONG KONG

LOCALIST IDENTITY By Brian Wong HOW TRANSNATIONAL COMPANIES USURP THE

DEMOCRATIC SOVEREIGNTY OF NATION STATES, AND WHY SUPRANATIONAL ENTITIES ARE THE SOLUTION By William Hardy SOVEREIGNTY, FINANCE AND ‘BREXIT’

By Prof. Lucia Quaglia BREXIT NEGOTIATIONS ARE LIKELY TO DRIVE A WEDGE

BETWEEN ALREADY FRACTIONED GROUPS OF BRITISH SOCIETY By Dr Sofia Vasilopoulou BRICS AND WORLD HEGEMONY CONTRASTED THEORETICAL APPROACHES TO EMERGING ECONOMIES By Alice Gerow

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Editorial The concept of sovereignty as employed over the centuries holds many meanings. Yet, arguably there is a general definition that captures its meaning – supreme authority within a territory. Since WWII, with the emerging international acknowledgement of individual rights, the picture of a world consisting of sovereign states has been questioned. Competing claims to legitimacy between international and domestic levels of governance on the one hand and complex interaction between state and non-state actors on the other, have distorted conventional lines of authority, supremacy, and territory. These challenges have surfaced, and perhaps become more pressing than ever with the British decision to leave the EU. Furthermore, the concept of sovereignty underlies much of contemporary debate on globalisation, integration, and ethics of humanitarian aid and intervention. With this issue, we hope to contribute to these ongoing debates by providing a variety of perspectives on a broad set of related questions. Ben Wellings and Emma Vines ask whether EU referenda undermine parliamentary sovereignty. Professor Werner Bonefeld provides a perspective on what leaving the EU means for Britain. Brian Wong argues that a synthesis could never emerge from the interactions between Chinese mainlanders and “Hong Kongers”. William Hardy argues that supranational organisations are necessary to protect sovereignty from international corporations. Professor Lucia Quaglia discusses sovereignty and finance in relation to the BREXIT. Dr Sofia Vasilopoulou argues that the BREXIT negotiations drive a wedge between the “winners” and “losers” of globalisation. Lastly, Alice Gerow questions the BRICS identity and their potential for challenging Western sovereignty in the realm of development economics. If you are interested in responding to any of the pieces, or write an essay for our next issue, please contact us at contact@voxjournal.org. Finally, we would like to thank all of those who contributed to this issue of VOX. Sebastian & Miguel Editors in Chief 1

Are EU Referendums Undermining Parliamentary Sovereignty? By Ben Wellings1 and Emma Vines2 The Eurozone crisis framed European politics from 2010 onwards, but beyond Brussels, older challenges to European integration gathered strength. One such challenge was the intensification of populist politics, opposed to further European integration. This was especially so in the UK, where ‘The People’ were directly pitted against further European integration. Unexpectedly, the Conservative Party has, in recent years, done the most to formally embed populism within the British political system. Even before David Cameron’s 2013 referendum pledge, the future direction of UKEU relations under the coalition government was clear from the outset, with the Coalition Programme (2010) ruling out any further transfers of power. This promise led to the passing of the EU Act (2011), which saw populism inadvertently written into English law by introducing the novel device of a ‘referendum lock’. The result was that, thanks to the Act, the people, not Parliament, were now the final guarantor of British sovereignty. The passing of the Act was surprising, given that the Conservative Party has been perhaps the foremost defender of representative democracy over the past two centuries. However, the move seems less radical if we consider referendums as devices used to preserve the status quo. In this light, the limitations of the populism enshrined by the Act were clear. Its true intention was not the empowerment of the people, but instead, halting European integration given the Eurosceptic tenor of the electorate. Despite

Ben Wellings is the deputy-director of the Monash European and EU Centre and Lecturer in Politics and International Relations at Monash University in Melbourne, Australia. 2 Emma Vines is a doctoral candidate at the Institute for Governance and Policy Analysis, University of Canberra, Australia

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this underlying, conservative purpose, however, the Act did represent a significant shift within a political system firmly based upon the principle of Burkean representation. On paper, at least, the electorate had the final say on Britain’s future involvement in European integration. While the EU Act was a circumscribed extension of popular sovereignty, the decision to hold an ‘in-out referendum’ was far more radical. Despite the rhetoric of the Coalition Government, referendums are not always about reconnecting the electorate with the political process. The 1975 referendum, for example, was initiated, not because Harold Wilson felt any true obligation to secure popular approval, but because he faced dissension within his Party. Similarly, the introduction of a bill by Conservative backbencher David Nuttall in October 2011, which called for a referendum on EU membership, came as Cameron’s veto of the Eurozone bailout had failed to quieten backbench dissent. Even before the debate, many believed the bill had little chance of success and the imposition of a three-line whip made its passing even more unlikely. However, 81 Conservative MPs defied the whip and the debate showed there were many who felt the denial of a free and popular vote was 3

Ben Wellings and Emma Vines a clear failure of democracy. Such sentiment, although driven in large part by a belief that a referendum was the best means of achieving British withdrawal, also revealed that many considered the European issue to be inexorably linked with questions related to popular sovereignty: the people had to have the final say. At this stage, populist Euroscepticism was given an enormous boost by the success of the UK Independence Party. Although UKIP then held no seats in Westminster, it was attracting some of Britain’s most disenchanted and alienated voters. Their anti-establishment rhetoric, an essen“The result was that, thanks to tial part of their Euroscepticism, the Act, the people, not Parliafound a very receptive audience. The ment, were now the final guarmajor parties were suddenly confronted by the possibility of voters deantor of British sovereignty.” fecting to a minor party. A Eurosceptic party was thus in a position to exert pressure on the coalition and with the EU Act failing to satisfy Conservative Eurosceptics, Cameron was forced towards a referendum. Cameron’s promise to hold a referendum symbolised a far more radical shift in British politics than the EU Act. Not only was his announcement a response to persistent and growing dissension within his party, it was, more importantly, a reaction to external pressure. With UKIP’s success built upon populism, the government needed to appear to be in touch with the opinions and concerns of the people. That populist politics had such an effect on the direction of government policy exposed just how significant this shift within British politics was. A party whose support was built upon anti-politics and populism threatened Britain’s two-and-a-halfparty system and major parties could no longer be seen to be clinging to notions of Burkean representation alone. This fusion of popular and parliamentary sovereignty within Britain has, alongside the intensification of populist politics, become increasingly clear since 2010. With the Conservative leadership shifting its response to

Autumn Term, Vol. XI, No. III Eurosceptic threats away from strategies solely concerned with party management, the unintended consequence of this shift was a structural change in British politics. In seeking to strengthen Westminsterâ&#x20AC;&#x2122;s powers through both the EU Act and a referendum promise, the Conservatives have in fact undermined the very principle of parliamentary sovereignty they had hoped to protect. The breakthrough of populist politics says a great deal about the health of British democracy. Rather than being a sign of the reinvigoration of the relationship between state and citizen, the reactive referendum measures now enshrined in English law and British politics are symptoms of its malaise. This article was originally published at the LSE BREXIT blog http://blogs.lse.ac.uk/brexit/2015/11/05/are-eu-referendums-undermining-parliamentary-sovereignty/.

Brexit – Exit from What? By Prof. Werner Bonefeld1 The UK decided to exit an international organisation in which she had been a reluctant partner ever since she joined in the early 1970s. She was also one of its most important drivers. The Single European Act that created the single market found a most enthusiastic supporter in then British Prime Minister Margaret Thatcher. The eastern enlargement of the European Union expressed British policy – it brought allies into the Union and was seen to strengthen her influence vis-à-vis France and Germany. Britain did not vote to leave. England and Wales did. Whether English sentiment will prevail and lead to Brexit still needs to be seen. Scotland remains opposed, and so is Northern Ireland. England and Wales will leave. There is no doubt. Yet, whether leaving will include exiting the single market that Thatcher had worked for with all her might, remains to be seen, too. The crux of the matter is the right to the free movement of labour. The British government is keen to regain control over its borders – not for trade and commerce, only for labour. Apparently control was lost as a consequence of eastern European immigration, which came about as a consequence of British policy on eastward expansion. The politics of eastern enlargement has now turned into a political demand for eastern exclusion, and everybody else too. No more freedom of movement for European citizens has become a rallying cry. Its sentiment was articulated first by Gordon Brown who demanded British jobs for British workers. Instead of employing, say, nurses educated in Poland, the May government intends to educate its own nurses, for a fee. The May government is hopeful that its former European partners will accommodate her request for a bespoke deal giving access to European markets. What this might be is unclear. One of her colleagues at cabinet

Professor Werner Bonefeld is professor at the University of York.

Autumn Term, Vol. XI, No. III table says ‘out’. Another says half in. In the meantime, her Foreign Secretary has visited Turkey to prepare the ground for future trade. May is looking towards Germany to ascertain the kind of deal that can be struck. Nobody, it seems, has asked what, say, the Polish government makes of it all. Presumably, not much. The UK government projects Brexit as a great opportunity for national independence and global reach. Its export industry is doing fantastically well since Brexit. There has not been a breakthrough in labour productivity. Industry is doing well because of the devaluation of the British pound since the end of June. Whether the rate of devaluation will be greater than the import tariffs that British exporters might well have to pay soon at European borders is an open question. In the meantime the CEO of Nissan Sunderland has requested that government should compensate for any losses companies make on their investments as consequence of tariffs that need to be paid at European borders. Should there be a second Scottish referendum, and should it succeed, the European border will be just north of Newcastle. The projection of Britain as a sovereign country engaged in global free trade does not make sense. In an interdependent world sovereignty is interdependent, too. The projection harks back at time when Britain ruled the seas. She ‘unified’ the world as the world’s primary power. She was the Empire of the world. The price exacted upon Britain over the last century has been high. She was on the winning site of two world wars. The

Prof. Werner Bonefeld success cost Britain her Empire. For the Western European countries, European integration was a means of peace through trade, common laws and common markets, and a common currency, too. What pitted them against each other in war was now to be discussed and decided by a European Council of the Heads of Governments. Their affairs were to be administered by independent Union institutions on the basis of European law and legal judgement by an independent European Court. Lots of things have â&#x20AC;&#x153;The projection of Britain as a been wrong in Europe. European sovereign country engaged in peace is its major achievement, and global free trade does not make regulation of European affairs by a sense. In an interdependent supranational rule of law has been an achievement, too. No shots have world sovereignty is interdebeen fired where, once, thousands pendent, too.â&#x20AC;? upon thousands died in blooddrenched trenches. The Balkan conflict is the one terrible exception. Whether Brexit will provoke the Continent to the point of break-up, and beyond, is pure conjecture; and yet a more likely outcome than Britain ruling the seas again. Independence from Europe looks good on paper; the regressive idea of a truly noble and gracious past satisfies the flight from the present. Its reality is more complicated than that. Suez put it to bed at long time ago. That the dream of past glory should be made use of in denial of the present shows a degree of disconnection that borders on morbid charm. Nobody knows what tomorrow holds. What is certain things will change - for better or worse. The gloom merchants might be proved wrong and Dr Fox and his colleagues in arms might be proven right when they say that after Brexit Britain will go from strength to strength; without balance of payment deficit, unwanted foreign labour and World Cup success. Brexit represents a time of great uncertainty, not just for the UK. Standing alone in uncertain times requires character and courage. Magical thinking about the future of a vanquished past will not do. 8

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The Discursive Construction of the Hong Kong Localist Identity By Brian Wong1 Introduction Since the early 2010s, Hong Kong citizens have increasingly adopted a new “Localist Identity” (abbrev. LI), an identity defined by an active rejection of an imagined “Chinese Identity” (abbrev. CI) and the prioritisation of Hong Kong’s interests and core values over further integration with China. This article proposes a tripartite interpretive framework for the discursive construction of the NI, which comprises three components: i) the Anti-Chinese Antithesis, ii) the Activist Performativity (Butler, 2015; Tarrow and Tilly, 2015), and iii) the Post-Chinese Thesis; borrowing from Wodak’s typology of discursive strategies, i) maps roughly onto the Destructive Strategy2; ii) onto the Justification Strategy3, and iii) onto the Constructive Strategy4 (Wodak et al., 2009). These three components symbiotically reinforce each other in shaping the dialectical polarity between Hong Kong and China. The Anti-Chinese Antithesis The most prominent component of the LI consists of its destructive rejection (Wodak et al., 1999) of the archetypal CI, and its denial of possibility for compromise-based synthesis between Hong Kong and the Mainland. 1

Brian Wong is an undergraduate at the University of Oxford. “Finally, dismantling or destructive strategies serve to de-mythologize or demolish existing national identities or elements of them.” (Page 160; Wodak et al., 1999) 3 “Perpetuation and justification strategies attempt to maintain, support and reproduce national identities.” (Page 161; Wodak et al., 1999) 4 “What we describe as constructive strategies encompass those linguistic acts which serve to ‘build’ and establish a particular national identity.” (Page 160; Wodak et al., 1999) 2

Brian Wong The rise of the LI is reflected in the shifting self-identification amongst the younger generations – the largest demographic poll in Hong Kong recorded an increase in the number of under-29 individuals identifying as “Pure Hong Kongers” from 35.8% to 63.9% between June, 2010 and June, 2016 (HKU POP, 2016). Anecdotal evidence includes the actively anti-Mainland Chinese discourses adopted at large-scale social movements: the 2014 anti-Mainland tourist protests in Tsim Sha Tsui and the 2015-6 anti-parallel trading protests in Sheung Shui (at the Hong Kong-China borders) actively adopted narratives that framed Mainlanders as “Outsiders” and “locusts” that sought to deprive Hong Kong of its precious resources (Tarrow and Tilly, 2015). The 2016 Mong Kok Civil Unrest saw localist political figures5 gain active media salience and political traction in their complete rejection of Chinese governance, channeled into the construction of a localist identity as “NOT-Chinese” (Hansen Edwards, 2016). Various escalating conflicts have led to a radical pivot towards de-Sinicisation in youth identity politics, transforming the Hong Kong identity from an Other situated within the Chinese Self (e.g. the Pan-democratic, conventional opposition view that Hong Kong is a “modern” and “reformist” territory under China), into an entirely independent Self that acts as the effective antithesis to Mainland China (Hansen Edwards, 2016). The first destructive sub-strategy is value associationism. Through associating the LI and CI with visibly contrasted pairs of interpersonal and individual values, localists frame LI as the morally superior and hence desirable antithesis to the “amoral” and “barbaric” CI (Li, 2016). These descriptive pairs include the following: the Mainlander Chinese regularly violates the law; the Hong Konger respects and abides by just laws. The Mainlander takes no heed of norms of civility and decency; the Hong Konger adheres strictly to such norms. The Mainlander prioritises the Sinic values of material stability and affluence (under a false consciousness, as alleged by localists); the Hong Konger embraces “Western” values of postmaterial individuality and liberty. The Mainlander tends to be a member of

e.g. Edward Leung and Ray Wong, of Hong Kong Indigenous

Autumn Term, Vol. XI, No. III the nouveau riche – vulgar and uneducated; the Hong Konger is well educated and well acquainted with high culture (Li, 2016). These narratives highlight the undesirability of the Mainlander, and – through doing so – generate the overwhelming urge for individuals to internalise the normative idealness of the Hong Konger (Hansen Edwards, 2016). Essentialising the juxtaposed identities enables localists to conveniently police “anomalies” that deviate from their controlling images. For example, the likability of the Chinese athlete, Fu Yuanhui6, was quickly dismissed by Passion Times, an online localist media outlet, as a tokenistic “advertising automaton”7 (Lau, 2016); that the localist Edward Leung was born in Hubei to a Mainland Chinese mother was heavily underplayed by localist media – for amplifying this fact would be politically unsound from their point of view (Merelli, 2015). The second destructive sub-strategy is the establishment of ingroups and out-groups. Through tactfully embedding the differences between the LI and CI in relatively permanent, contrasting dispositions between the Hong Konger and the Mainlander, the localist discourse legitimises and emboldens pre-existing divisions between the Hong Kong ingroup and the Chinese out-group. A case in point would be the natural

傅園慧 “中國便抬出傅園慧來販賣「真性情」，[…] 舉國體制之下，所有運動員的本質都是宣傳機器”; translation: “China propped up Fu Yuanhui in an attempt to revamp its image of “inauthenticity”; […] within its national institutions, all of its athletes are merely advertising automatons.” (Lau, 2016) 6 7

Brian Wong Shibboleth of languages.8 Cantonese is portrayed as “more aesthetically pleasing”, the language of “classical poets”, and hence far more “culturally refined”; Traditional Chinese is anthropomorphically idealised as “complete”, whilst Simplified Chinese is denigratingly labeled as “physically handicapped” (Guo, 2004). Through textual discourse (e.g. posters, web pages, books, articles etc.) and non-textual discourse (e.g. behavioural interactions with other Hong Kongers and Mainland Chinese), these constructed identities reinforce themselves through influencing the cognitive frames through which projecting claims about the future are generated. Localists have posited that the unsustainable Chinese economy’s foreseeable, imminent collapse9 is attributable to the “innate badness of the Chinese character”, whilst the “diligence and integrity of the Hong Konger” would suffice in rescuing Hong Kong from the inevitable collapse of China (Li, 2016). The third destructive sub-strategy is the active dehumanisation of the Mainland Chinese Other through animalistic imagery. Localists brand Mainlanders as “locusts”; the predatory connotations of “locusts” satirises the tendency of Mainlanders to compete for economically scarce resources (e.g. hospital bed spaces10 and some commodities11) (Li, 2016) whilst construing Mainlanders as “pests” that are far inferior – in intelligence and desirability – to Hong Kongers. Through transforming the CI into an animalistic and primitive image, localist discourses establish favourable conditions for Hong Kongers to psychologically distance themselves from an 8

Mainland China adopts Mandarin as its official language, and Simplified Chinese as the official writing system; Hong Kong citizens predominantly speak Cantonese, and adopt Traditional Chinese as their writing system. 9 “支爆”, an abbreviation for “支那爆炸”, which translates literally into “An Exploding Shina”. Shina is an allusion to the Japanese occupation of China during World War 2; the term connotes a weak and fragile state subjugated under foreign control. 10 Public hospitals in the New Territories (near the Hong Kong-Mainland border) had previously been overburdened by an excess number of pregnant mothers travelling from the Mainland to give birth in Hong Kong. 11 Parallel trading and purchases made by Mainland Chinese consumers have created inflationary pressures upon basic commodities such as milk powder

Autumn Term, Vol. XI, No. III Other with which they have no moral imperative to empathise. The discourses of biological determinism (e.g. that Mainlanders have “inferior genes”12) reinforce the view that the observed behavioural contrasts between Hong Kongers and Mainlanders are rooted in non-reversible, preprogrammed conditions that are immune to social inversion and subversion (Shadbolt, 2014). The Activist Performativity The dismantling of the Mainland Chinese thesis is sustained by the persistent performativity of precarity13 grounded in Hong Kong’s grassroots localist activism. The activist element serves as the primary justification strategy for the continuation of the NI. Butler argues that a prevalent sense of precarity inspires a struggle for “recognisability, a public insistence on existing and mattering” (Butler, 2015); in Hong Kong, the political and socioeconomic expansionism of the PRC14 (which threatens to undermine the “One Country, Two Systems” enshrined by the Basic Law) acts as the primary source of the Hong Konger’s precarity. This sense of vulnerability (and resultant paranoia of being subjugated to an all-encompassing Panopticon of the PRC) defines the contemporary NI. The first justification sub-strategy involves the transposition of an epic15 metanarrative onto the Hong Kong context. Through vocalisation (both verbal and non-verbal) at protests (e.g. slogans, chants, and rallying cries) and within mass communications (e.g. the print media and the social media), localists have constructed an inseverable linkage between their political struggle and the archetypal Hong Konger living under the repressive, authoritarian PRC regime (Tarrow and Tilly, 2015). The former resolves 小農DNA, which translates literally as “Petty Farmer DNA” “[…] that politically induced condition of maximised vulnerability and exposure for populations exposed to arbitrary state violence, to street or domestic violence, or other forms not enacted by states but for which the judicial instruments of states fail to provide sufficient protection or redress.” 14 People’s Republic of China 15 The genre, used to describe literature that contains themes of grandeur and heroism 12 13

Brian Wong the existential angst of the latter; the latter expresses the power asymmetry embodied by the former. The former is couched in the interests of the latter; the latter grounds the former in recognisable lived experiences with which the everyday Hong Konger could resonate. The co-dependence between the active subject (the localist) and the passive object (the protected Hong Kong civilian) emphasises the nature of the LI as the David juxtaposed against the authoritarian Goliath of the PRC. The second justification sub-strategy involves the construction of an imagined community of localists (Anderson, 1983). Localist web media such as Passion Times and VJMedia regularly adopt language that analogises localist resistance to historical and romanticised revolutions; localists to contemporary revolutionaries. A Cantonese arrangement of “Do You Hear the People Sing?”16 borrows the ethos of fortitude and perseverance from the canonical musical in re-imagining the rallying cry of localist activists against the PRC (analogised to the tyrannical French monarchy). The 2014 Umbrella Movement has been canonised in activist literature as the “Umbrella Revolution”; the 2016 Mongkok Unrest, the “Fishball Revolution”. Notable localist figures (e.g. Eddie Leung) have frequently advocated the motto, “When dictatorship is a fact, revolution becomes «Through vocalisation [...] at proa duty.”, which is – in turn – a quotation sourced from Pascal tests [...] and within mass commuMercier’s novel “Night Train to nications [...], localists have conLisbon” and the Sunflower structed an inseverable linkage beMovement in Taiwan (Tarrow tween their political struggle and and Tilly, 2015). The revolutionthe archetypal Hong Konger living ary discourse prescribes the acunder the repressive, authoritarian tions of the localist, who is exPRC regime.” pected to defend their culture and shared values against the Chi-

“問誰未發聲”, which translates literally as “Whose voice has not been heard?” 16

Autumn Term, Vol. XI, No. III nese “invasion”; through ascribing to them virtues of bravery and endurance, the revolution-based imagery prescribes the telic purpose that governs and polices the interests and preferences of the localist. Resisting China is not a supererogatory choice, but a necessary obligation. The third justification sub-strategy is the deliberate hyperbolisation of the pace at which Hong Kong-China integration is taking place, so as to create an impression of urgency for disassociation: localists justify their antagonistic LI by appealing to the urgent imperative of anti-Chinese resistance. Verbs such as “colonise”17, “conquer”18, and “invade”19 are frequently employed by major localist media outlets (Li, 2016) in reference to the imposed erasure of the Hong Kong culture resulting from socioeconomic integration between the Mainland and the city (Li, 2016). A repeated motif across major localist outlets involves the allegation that the refusal to act in the present would entail an inevitably catastrophic outcome in the imminent future – e.g. a “Communist Takeover”, or the “Complete Annihilation of the Hong Konger Identity” (Tarrow and Tilly, 2015). Through particularising the significance of acting in the present, localists construct the LI as a perennial directive that requires localists to be ready to participate in political activism (direct or indirect) whenever required. The Post-Chinese Thesis It must be recognised that a binding, comprehensive identity seldom is constructed from destructive forces alone (Wodak et al., 1999). The development of a new thesis for the Hong Konger identity requires constructive strategies that ideally extend beyond an antagonistic critique of the previous thesis. Localists are “united” only by their common anti-PRC antagonism. Yet they are fundamentally “disunited” with respect to their alternative visions for Hong Kong. Self-determination localists (e.g. Eddie Chu20)

殖民統戰 19 進佔 20 A Hong Kong Legislative Councillor-elect (2016), known for his campaigns against landed interests and gentry in the New Territories 17 18

Brian Wong emphasise the significance of value-based, liberal nationalism; ethnic localists21 particularise the importance of an ethnically and biologically “pure” Hong Kong constituting purely individuals of Southern Chinese descent22; federational localists (e.g. Wan Chin) underscore the significance of conservative Confucian values and customs (Chin, 2011). There currently exists no single dominant narrative concerning what the new thesis precisely is (Hansen Edwards, 2016). There exist various reasons for this phenomenon: First, controlling the narrative for a new LI for Hong Kong is an opportunity too invaluable for any localist faction to neglect, for it enables them to claim absolutist, overriding normative legitimacy to their other ideological claims (“normative spillover”); localist groups in Hong Kong compete for media publicity, crowd mobilisation, and politico-economic capital in accordance with a spatial model (Downs, 1957). Ideological distinctness is critical in ensuring the sustainability of the political faction – to seek a consensus would risk undermining their pre-existing political spaces of allies, supporters, and donors. Second, identity construction in Hong Kong had always taken place against the backdrop of an imposed Chinese identity. The priority hitherto (and for many years to come given the existing tensions between the Hong Kong public and the PRC government) had always been the generation of a identity that provided a “safe haven” from Sinicisation – the precise form and essence of the identity has been largely irrelevant: so long as the identity is antithetical to the Chinese Other, it is deemed acceptable (Hansen Edwards, 2016). Third, localism in domestic politics is a relatively new ideology that approximately emerged only little more than six years ago, from a spontaneous and organic combination of the perceived encroachment of the PRC

e.g. 香港民族論 (translation: “On Hong Kong Ethnic Nationalism”) To support its normative narratives, Wan Chin’s localist faction has investigated and publicised historical information suggesting that the indigenous Hong Kong and Cantonese population are “ethnically different” from the majority of mainland China today by lineage and descent. 21 22

Autumn Term, Vol. XI, No. III upon Hong Kong’s domestic affairs, and the rise of a politically active generation Z – a collective of youths who are the first to grow up in a highly socially saturated setting. Many of its most ardent advocates have prioritised the generation of salience – as opposed to reconciling internal dilemmas and contradictions (Hansen Edwards, 2016). Conclusion The three components of the Localist Identity are mutually reinforcing and co-dependent. The destructive critique of China generates the time-sensitive urgency for activism, and clears the field of discourse for experimental positive attempts at identity construction. The activist performativity allows the visualisation and enactment of both positive and negative identity components. The attempts in building a unifying LI deepen the critique of the Chinese identity, and encourage more Hong Kongers to take to the streets in challenging the interference of the PRC in Hong Kong’s affairs. Whether localists will eventually succeed in developing a coherent and distinct Localist Identity remains – for all – to be seen (Hansen Edwards, 2016). Reference List Anderson, B.O.R. (1983) Imagined communities: Reflections on the origin and spread of nationalism. Butler, J. (2015) Notes toward a Performative theory of assembly. Cambridge, MA, United States: Harvard University Press. Chin, W. (2011) 香港城邦論. Enrich Publishing. Downs, A. (1957) An economic theory of democracy. New York: AddisonWesley. Guo, Yingjie. (2004). Cultural Nationalism in Contemporary China: The Search for National Identity under reform. Routledge. Hansen Edwards, J.G. (2016) ‘The politics of language and identity: Attitudes towards Hong Kong English pre and post the umbrella movement’, Asian Englishes, pp. 1–8.

Brian Wong HKU

POP. (2016) Statistical table. Available at: https://www.hkupop.hku.hk/chinese/popexpress/ethnic/eidentity/poll/datatables.html (Accessed: 26 September 2016). Lau (2016) Available at: http://www.passiontimes.hk/article/08-132016/32159 (Accessed: 26 September 2016). Li, Lianjiang. (2016) ‘Reassessing Trust in the Central Government: Evidence from Five National Surveys’, The China Quarterly 225, pg. 100-121 Merelli, A. (2015) These illustrations show how different Hong Kong thinks it is from mainland china. Available at: http://qz.com/442887/how-hong-kong-is-different-from-china-ina-series-of-offensive-stereotype-based-posters/ (Accessed: 26 September 2016). Shadbolt, P. (2014) Hong Kong protests take aim at ‘locust’ shoppers from mainland china. Available at: http://edition.cnn.com/2014/03/07/world/asia/hong-kong-china-visitors-controversy/ (Accessed: 26 September 2016). Tarrow, S. and Tilly, C. (2015) Contentious Politics. OUP. Wodak, R., De Cilla, R., Reisigl, M. (1999) ‘The discursive construction of national identities’, Discourse & Society, 10(2), pp. 149–173. Wodak, R., Hirsch, A., Mitten, R. and Unger, J.W. (2009) The discursive construction of national identity. 2nd edn. Edinburgh: Edinburgh University Press.

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How Transnational Companies Usurp the Democratic Sovereignty of Nation States, and Why Supranational Entities are the Solution By William Hardy1 In this essay I hope to establish that the sovereignty of nation states is seriously endangered by the coercive power of transnational companies. Although the enforceable powers of the state can be maintained within territorial boundaries, the existence of trans-national organisations can result in a domination of the national government by non-political entities through the employment of coercive economic tactics. This coercion undermines the democratic legitimacy of such nations because the legitimation of state sovereignty comes from democratic authorisation. When power is understood to be the possession or exercise of influence by one agent (or body) over another, and sovereignty is a monopoly of authorisation or the legitimate use of this power, then an undermining of sovereignty involves the use of power which supersedes that of the supposed sovereign; in this case of a nation state. The purpose of this essay is to show that this happens when global financial powers exploit the economic needs of modern nation states to avoid territorial political mandates. This is particularly evident when considering corporation tax, and corporation tax avoidance by transnational companies (TNCs). The sovereignty of nation states is undermined by tax avoidance, since TNCs are in no way politically accountable to the demos. Finally I hope to demonstrate that the way in which TNCs undermine the sovereign power of nation states is vastly different to the way in which supranational political entities can influence political affairs in nation states, and to establish that supranational political bodies are, in 1

William Hardy is an undergraduate at the University of York.

William Hardy fact, the only way in which nation states can preserve their democratic sovereignty. In modern, liberal democracies 'the state', I would suggest, is the natural incumbent of sovereign political power in any given national territory. The exact definition of the modern state might be difficult to establish, as it is a usually formed of a number of interdependent institutions which collectively exercise power through a series of dominant political relationships of authority between entities and individuals. For the purposes of this essay, and for the purposes of discussing sovereign power, I will refer to the state mainly in the context of Max Weber's definition. Weber identifies the state in 'Politics as a Vocation' as being: "A human community that (successfully) claims the monopoly of the legitimate use of physical force within a given territory." (Weber, 1946, p.79) This definition provides a clear boundary for the extent of the state's power and allows us to neatly draw boundaries to its jurisdiction, which will be important when we later consider the impact of extranational agents. Under this definition, however, there is no direct reference to, or implication of, political sovereignty as an inherent property of the state. This feature can be drawn out through the consideration that power relations do not always involve 'physical force'. In democratic states, I would posit, it is held that the sovereignty, in any legitimate form, comes from the authorisation of the national government by, and accountability to, the democratic process. "The essence of the democratic principle is...the assertion of an identity between law and the people's will." (Schmitt, 2000, p.26) This implies the consent of the nation's citizens, to whom the state is accountable for its political decisions, is the contingency condition for state sovereignty. In short, the property of sovereignty in regard to the political power of the state is related to democratic endorsement, such that should power be exercised over the nation state without such endorsement, this would surely be in contravention of the state's sovereign power, and would 20

Autumn Term, Vol. XI, No. III indicate a usurpation of the nation's political sovereignty. Thus, it can be shown that state sovereignty is threatened by any agents or forces which are capable of influencing the political decisions of the state without being accountable to the democratic process. In the globalised world, economic influence can be more politically powerful than commanding a physical threat over a territorial area. Neo liberal economic success has led to a greater interdependence between nations, and between nations and investors. This is a phenomenon which is acknowledged by Robinson: "The nation state, while it does not disappear or even become 'less important', is undergoing transformation. The institutional apparatus of nation states has become increasingly entangled in transnational institutional webs." (Robinson, 2011, p. 351) In his 'Global Capitalism Theory and the Emergence of Transnational Elites', he discusses the way in which dominant political ideology emerging from the cold war, regarding the deregulation of financial markets and national boundaries to business have allowed for the emergence of socalled 'Transnational Elites' capable â&#x20AC;&#x153;[...] should power be exorcised of exercising undemocratically auover the nation state without thorised influence over the political such endorsement, this would decisions of nation states. (Robinsurely be in contravention of the son, 2011) state's sovereign power, and The kind of influence that would indicate a usurpation of Robinson refers to is different to the the nation's political soverkinds of traditional power in that it escapes the realm of the state's aueignty.â&#x20AC;? thority; no physical or military threat is required, and so the influence occurs in a sphere which is not territorially bound. Instead, the coercive power of an external agent might come from an economic power. It is easier to influence a nation state which is at an economic imposition. Consider, by 21

William Hardy way of example, a scenario involving two nations: nation A and nation B. For A to implement political influence over B would be very simple, if A were to have a monopoly over the distribution of global food resources. This influence would both (1) subvert the sovereign authority of the demos of nation B, and (2) come from a source which escapes the power remit of nation B's state apparatus - it is extra-territorial. Michel Foucault provides a definitive description of the potential problem which is observed here, in his 'Society must be defended' where he alludes to the existential gap between authorisation and actual power, in relation to considerations of sovereignty. The suggestion being that instead of approaching the concept of sovereignty from a perspective of democratic authorisation, a direct examination of the relationships of domination which exist between agents involved in power relationships gives a clearer understanding of which agent is actually sovereign. "Rather than deriving powers from sovereignty, we should be extracting operators of domination from relations of power... revealing relations of domination rather than the source of sovereignty" (Foucault, 2003, p.46) When this principle is applied to the nation state in the context of extraterritorial economic powers it is clear that there are several agents which are able to undermine nation state sovereignty through the usurpation of powers from the state. There exist multiple international organisations which posses the power to apply either economic or political power over nation states in a manner similar to that which is presented in the example that is given earlier. These include, but are not limited to, such bodies as; the North Atlantic Treaty Organisation (NATO), the United Nations (UN) and the European Union (EU). However, these sorts of organisations do not worry me in relation to concerns around national sovereignty for two reasons. Firstly, the participation by nation states in these federal organisations is on a voluntary basis; nations are free, theoretically, to join or leave the consortia at any time (subject to various entry criteria). Secondly, mandates or decisions made by these bodies are made by the process of cooperative and 22

Autumn Term, Vol. XI, No. III collusive negotiations, involving representatives or delegates from all of the participating nations. In this way such organisations are more of an extension of national sovereignty than a separate and undermining entity. The referendum to leave the European Union in the United Kingdom recently proves that these institutions are a function of the state, subject to the will of the demos, as opposed to a force which overrules it. The other form of international organisation which is capable of wielding undue political influence over nation states, and the form which concerns me due to its impact on democratic sovereignty, is the transnational corporation (TNC). TNCs are entities with the primary objective of profit generation. The unique feature of TNCs is the geo-flexibility which they enjoy, meaning that they are capable of shifting operational or manufacturing elements between national borders, in order to take advantage of the most desirable economic conditions (laws and regulations set by each nation state). In this way they are elusive of the enforcement arm of nation state powers, since this power is, in accordance to our earlier definition, restricted to bordered territories. This geo-flexibility gives TNCs a power to supersede nation state power in a way which can be used to coerce states into acting in political ways which directly benefit corporations, above national democratic interests. As Robinson explains: "Transnationally oriented capitalists in each country shift their horizons from national markets to global markets. Different phases of production, as they become broken down into component phases that are detachable and dispersible throughout the world to distinct economic agents through chains of subcontracting, outsourcing and other forms of association... transnational business groups have become a powerful lobby in many countries." (Robinson, 2011, p.356) In simple terms, TNCs use the coercive power of manoeuvrability in order to force down national interests in regard to employment law and corporate taxation and business regulations. This could take the form of influencing decisions about minimum wage by threatening to move jobs overseas (outsourcing), or influencing policy towards corporate taxation and regulation 23

William Hardy by threatening to move the country of registration for the company to one with lower tax rates or fewer regulations. In this way TNCs engender competition between countries in ways which work contrary to each state's national interest. The recent Apple Corporation taxes scandal in Ireland can be seen as an example of this influence. Ireland is accused of having arranged a "sweetheart deal" with Apple, in order to help the company to "avoid paying taxes in other countries." (Harrison, 2016) The allegation being made against the Irish Government is that they provided Apple with an exemption from standard corporation tax payments in order to receive one-off contributions from the company, and establish a reputation for being a state with a lax policy towards transnational corporate taxes, thus attracting investment and jobs to the country. While Ireland's corporate tax rate is 12.5%, an investigation by the European Commission has ruled that Apple only paid between 0.5% and 1% tax in Ireland since 2003. (BBC, 2016) This kind of treatment by the Irish Government seems contrary to the national interest, especially once the figures are considered. According to the Irish Department of Finance, Ireland's national tax receipts from 2015 were â&#x201A;Ź45.6 billion. (Irish Department of Finance, 2016) In comparison, the European Commission has ordered Apple to pay â&#x201A;Ź13 billion of compensation to the Irish Government; more than 25% of the national tax receipts total for the year of 2015. Clearly, it would be in Ireland's national interest to have its budget supplemented to this sum, however, due to the threat of TNC manoeuvrability, should Apple be forced to pay this rate of tax, it is liable to move its business components elsewhere, in an effort to find cheaper rates. This demonstrates the coercive power held by TNCs to influence and contravene the interests of nation states, and the way in which they therefore undermine democratic sovereignty in these states. Held within the example of the Irish Apple scandal is also the solution to the problem of usurpation of democratic sovereignty, in that the European Commission is a part of the apparatus of the supranational organisation, the European Union. As previously discussed these transnational entities can be thought of as an extension of state sovereignty and 24

Autumn Term, Vol. XI, No. III not a disestablishing agent, and thus can be employed to confront the influence of TNCs. By establishing further the network of cooperative transnational political entities with the capacity to enforce national power over and across national territorial boundaries, problems resulting from the impotency of state power in global geopolitics can be averted. In this way, and with the democratic legitimacy of organisations such as the EU, it is possible for nation states to uphold the sovereign power which they otherwise risk, at the hands of unchecked economic influence by TNCs. Bibliography BBC. (2016). 'Apple should repay Ireland 13bn Euros, European Commission rules'. Available from: http://www.bbc.co.uk/news/business37220799. Last accessed: 07/10/2016. Foucault, M. (1997).'Society must be Defended'. Picador: New York. pp. 43-62. Harrison, S. (2016). 'Apple tax ruling 'must not stand' says Enda Kenny'. Available from: http://www.bbc.co.uk/news/world-europe37294260. Last accessed: 07/10/2016. Irish Department of Finance. (2016). 'Exchequer Returns show Tax Revenue â&#x201A;Ź3.3 billion ahead of expectation in 2015'. Available at: http://www.finance.gov.ie/news-centre/press-releases/exchequerreturns-show-tax-revenue-%E2%82%AC33-billion-ahead-expectation-2015. Last accessed: 07/10/2016. Robinson, W. (2011). 'Global Capitalism Theory and the Emergence of Transnational Elites'. Critical Sociology. No. 38(3). pp. 349-363. Schmitt, C. (2000) 'The Crisis of Parliamentary Democracy'. Cambridge, Massachusetts: MIT press. 6th Printing. pp. 20-29. Weber, M. (1946). 'Politics as a Vocation'. Essays in Sociology. New York: Oxford University Press. pp. 77-128.

Sovereignty, Finance and ‘Brexit’ By Prof. Lucia Quaglia1 The result of the British referendum on continuing membership of the European Union (EU) represented a turning point in the relationship between the United Kingdom (UK) and the EU. The economic and political effects of Brexit will be far reaching for the UK and the EU. This short article discusses the potential implications of Brexit for financial services in the UK and the EU. This issue is significant because of the large size of the financial sector in the UK in absolute terms and relative terms (that is to say, compared to the rest of the national economy). This matter is also important for the EU given the fact that London is by far the main financial centre in Europe and the second main international financial centres worldwide. Indeed, British policy-makers have often pointed out that ‘the City is a European asset, not only a British asset’. This article starts with a short excursus on the elusive concept of sovereignty in finance, so as to put the discussions on Brexit into a broader international context. It then examines the current status of the UK in single financial market of the EU. Finally, it discusses several Brexit options with reference to financial services, even though this assessment should be placed into the broader context of the settlement that will be agreed for ‘divorce’ between the UK and the EU. The elusive concept of sovereignty in finance Sovereignty is a slippery concept with reference to finance. Finance is a global activity that easily moves across national borders and so does financial instability, as highlighted by the recent financial crisis. Financial stability is an important objective of the state: the national authorities are accountable to taxpayers if something goes wrong and banks have to be bailed out (or if small savers lose their money). At the same time, the ability to safeguard financial stability is partly beyond the domestic reach of the 1

Professor Lucia Quaglia is a professor at the University of York.

Autumn Term, Vol. XI, No. III

national authorities – international cooperation is necessary, which has implications in terms of ‘lost’ (or ‘pooled’) sovereignty. There is a ‘dilemma’ between safeguarding financial stability domestically and protecting the competitiveness of the domestic financial industry internationally. On the one hand, jurisdictions have an incentive to engage in regulatory cooperation in order to protect financial stability. However, international regulatory cooperation has redistributive implications: it generates costs and benefits that are not uniformly distributed across jurisdictions. On the other hand, jurisdictions also have an incentive to engage in regulatory competition, that is to say, they compete with one another by adopting domestic regulation designed to make their national financial sector more competitive and by providing market-friendly rules in order to attract business. International regulatory cooperation is therefore needed because different financial regulations across jurisdictions encourage regulatory arbitrage and result in regulatory gaps and conflicting mandates. However, international financial rules (they are generally referred to as ‘standards’ or ‘soft law’) are not simply ‘technical’ welfareoptimising rules: they have redistributive implications across jurisdictions 27

Prof. Lucia Quaglia and within jurisdictions. International cooperation is particularly challenging because of the diversity of jurisdictions worldwide. In theory, European (to be precise, EU) regulatory cooperation in finance should be easier than international cooperation, given the relative homogeneity of the EU as a regional block and the governance institutions already in place.

“[...] the ability to safeguard financial stability is partly beyond the domestic reach of the national authorities – international cooperation is necessary, which has implications in terms of ‘lost’ (or ‘pooled’) sovereignty.”

The status quo of the UK and financial services in the EU The UK (like all EU member states) is a full member of the single market, including in financial services. Hence, the UK has unconditional access to the single financial market, within which there are not tariff barriers nor regulatory barriers; it benefits from the so-called passport system; and it has to comply with EU financial regulation. The UK ‘opted-out’ of Economic and Monetary Union, which began in 1999, when the European Central Bank became responsible for conducting the single monetary policy in the euro area. The UK also decided not to ‘opt-in’ Banking Union, which transferred competences for banking supervision and resolution to the euro area level. Trade policy, including financial services, is exclusive competence of the EU. In the EU, the UK has by far the largest financial sector and the British financial industry has strongly benefitted from access to the single financial market. According to data from the CityUK, the EU is the biggest market for UK exports of financial services, generating a trade surplus of £15 bn, 33% of the UK’s total trade surplus in financial services, which totalled £46 bn in 2012. The UK’s financial services trade surplus with the EU more than doubled over the past decade. About 70% of the EU’s foreign-exchange trading and 40% of global trading in euros takes place in the 28

Autumn Term, Vol. XI, No. III UK. The UK hosts 85% of EU’s hedge-fund assets, 42% of EU privateequity funds, half of EU investment bank activity, half of EU pension assets and international insurance premiums. The UK attracts more foreign direct investment (FDI) than any other EU member state, and financial services attract FDI more than any other sector. A large proportion of inward FDI move to the UK to enjoy access to the single market, especially in the financial sector. Thus, the City and the financial industry more generally (with some exceptions) sided with the ‘remain’ camp during the campaign on the Brexit referendum and were deeply concerned about the outcome of the vote. Brexit scenarios in financial services The choice of the Brexit ‘format’ will have to be agreed by the UK and the EU (excluding the UK). The negotiations of the specific relations between the UK and the EU in finance will be part of the broader Brexit negotiations in which a multiplicity of rationales will be at play. In order to discourage other centrifugal tendencies in the EU, the EU will seek a ‘Brexit deal’ that is no better than the one that the UK currently enjoys as a full member. At the same time, the main continental financial centres will be keen to attract business away from the City. The UK will seek to secure the best possible deal, which for finance means to retain full membership of the single (financial) market. However, the UK authorities will be subject to domestic political constraints, first and foremost, the controversial issues of the free movement of people, the contributions to the EU budget and compliance with EU rules - these conditions are seen by the EU as essential for the UK to retain membership of the single financial market. Finally, there are third countries (first and foremost, the US) that have financial entities operating in the UK and that will seek to retain full access to the EU market through the passport system. Failing that, third country financial entities might consider relocating some activities from the UK to the EU. There are different scenarios of Brexit: ‘full Brexit’, whereby the UK – EU relations would be regulated by WTO; the UK joins the European Economic (EEA) area, as in the case of Norway; and the UK-EU relations 29

Prof. Lucia Quaglia are regulated by a set of specific bilateral agreements in a variety of economic sectors, as in the case of Switzerland. Although each option has specific implications for financial services, all options share three features. First, the UK would have the power to negotiate international trade agreements (including financial services), albeit it would have less bargaining power than the EU as a whole, given the different size of the UK economy and the EU economy. Second, the British financial industry would retain access to the EU market if the UK adopted the bulk of EU financial regulation, without having a say in the making of those rules. Alternatively, the UK rules could be considered as equivalent to EU rules, but that would require some sort of approximation between the two sets of rules. There is the possibility that if an ad hoc bilateral relationship were to be agreed by the UK and the EU, the UK would be able to maintain full (barrier-free) access to the EU single market. However, this should not to be taken for granted. Currently, it is not the case for Switzerland, which does not enjoy unrestricted access to the single financial market, despite the importance of the financial services industry in Switzerland. Each scenarios has economic and political costs and benefits. From an economic point of view, the WTO option is the more ‘costly’ for financial services based in the UK: they would face tariff and regulatory barriers to continue accessing the single financial market, but would no longer have to comply with EU financial legislation. This is the least costly scenario in terms of lost (or pooled) sovereignty for the UK. From an economic point of view, the UK’s membership of the EEA is less penalising than the WTO option for financial services based in the UK, which would be able to operate throughout the EU with the passport system. Yet, they would have to comply with EU rules. Politically, it is the least feasible option because of the domestic constraints mentioned above and because Norway, whose assent is needed for the UK to enter the EEA, has expressed strong reservations. A special bilateral deal (or set of bilateral deals) including finance between the EU and the UK would be the first best option for financial services based in the UK. It is also supported (like in the case of the EEA) by third countries, such as the US and by big financial players on both sides of the Channel and both sides of the Atlantic – transnational business are 30

Autumn Term, Vol. XI, No. III keen to retain the free circulation of finical services between the UK and the EU. However, this option is politically costly for the EU, which had already expressed dissatisfaction with the current sets of bilateral arrangements it has with Switzerland (which, anyway, exclude finance). The EU might be unwilling to contemplate what the City call a â&#x20AC;&#x2DC;Swiss plusâ&#x20AC;&#x2122; deal (a bilateral agreement that includes finance). At any rate, it will be a challenging task to square the circle in the negotiations on the terms of the separation between the UK and the EU. Conclusion This article has discussed the conundrum of how to reconcile (national) sovereignty with (effective) financial governance internationally and regionally, in the context of Brexit. The traditional dilemma between stability and competitiveness in finance is coupled with the rather elusive concept of sovereignty in a world characterised by a high level of financial interpenetration. Financial integration is particularly high in the EU and indeed was a deliberate effect of the establishment of the single market. In a sense, it is the very success of the single financial market that makes the quest for a post Brexit settlement on finance so complex. Moreover, these negotiations are nested into a broader set of Brexit negotiations that will require some careful (and creative?) thinking.

Brexit Negotiations Are Likely to Drive a Wedge between Already Fractioned Groups of British Society By Dr Sofia Vasilopoulou1 The hard versus soft Brexit debate provides a smokescreen for the less discussed question of how the divide between Brexiteers and Remainers is widening post-referendum. The UK’s EU referendum divided British society like no other political event has done in the recent past. The referendum revealed that the public is split in two broad camps. On the one hand, those who consider themselves the winners of globalisation, i.e. younger, educated and welloff individuals voted to remain. On the other hand, the so-called ‘losers of globalisation’ voted to leave the EU. These include the less educated, the less affluent, older and professionally vulnerable people who feel threatened by market liberalisation. The two official referendum campaigns ‘Britain Stronger In Europe’ and ‘Vote Leave’ set the agenda by transforming the debate into a battle between two issues: economy versus immigration. This resonated with the voters. Those who voted to remain did so primarily because of the risk of economic uncertainty whereas Brexiteers stated control of immigration and sovereignty as their main concerns. The campaigns were very powerful, as they appear to have also set the post-Referendum agenda. Brexit is now perceived as a trade-off between access to the single market and curbing EU migration. The ‘soft’ approach to Brexit suggests that the UK should remain a member of the single market at the cost of continued free access for European nationals to work and settle in the UK. The ‘hard’ approach favours an arrangement 1

Dr Sofia Vasilopoulou is a Senior Lecturer at the Department of Politics, University of York

Autumn Term, Vol. XI, No. III that prioritises control of migration and sovereignty over access to the single market. Theresa May’s Speech at the Conservative party conference appeared to be in line with the hard approach to Brexit. May and her Cabinet colleagues have interpreted the referendum result as a popular mandate for curbing EU migration and restoring full Parliamentary control over legislation. Amber Rudd, the Home Secretary, has reinforced this view by arguing that ‘It's only by reducing the numbers back down to sustainable levels that we can change the tide of public opinion’. A ‘hard’ approach to Brexit has two advantages. First, the government will appear to deliver on what the people voted for, allowing the PM to reinstate public trust. Besides, one of the arguments quoted by Brexit voters was distrust in the government. Second, in practice a hard Brexit might be easier to negotiate in the short time-span of two years after Article 50 has been evoked. Partial access to the single market with specific arrangements for EU nationals might take very long to negotiate; and may be even harder to sell to the public. A timely negotiation “For Brexit to work [...] it needs to take will enhance the governinto consideration the interests of a ment’s ability to argue that it has governed the country efnumber of social groups in a democratic fectively. This could be an way.” easy win for the Conservative party in the run up to the 2020 general election. However, the key policy challenge that lies ahead for this government is beyond hard versus soft Brexit. It relates to how Brexit can be achieved with a view to safeguarding UK interests while at the same time uniting the British people and avoiding further polarisation. To do so, the government needs to go further into understanding Brexit. While it is true that a number of Britons voted for Brexit in order to express disapproval of EU policies and politics, which suggests that they may opt for ‘hard’ Brexit, others did so in order to express discontent against the political elite and to signal that they feel left behind. Brexit will not necessarily benefit 33

Dr Sofia Vasilopoulou

these groups unless combined with a social policy agenda that improves social cohesion, enables these groups to improve their immediate well-being and increases social mobility for all. For Brexit to work, as this is a major constitutional change, it needs to take into consideration the interests of a number of social groups in a democratic way. While curbing EU migration may appeal to the working classes, it is very likely to disaffect parts of the middle class. A strong antiimmigration rhetoric may also alienate the educated who tend to prioritise values such as tolerance and cosmopolitanism. Cutting ties with the EU may satisfy older voters who perceive Brexit as beneficial to the welfare state, but it might disempower younger and more mobile individuals and possibly result in further anti-establishment views. A break-up with the EU might please a substantive majority of English voters, but is very likely to be resisted in Scotland, Northern Ireland, and parts of London. And while it is not clear who will benefit from a new economic partnership with the EU, businesses are likely to struggle from economic uncertainty. A declining economy will only sharpen these divisions unless domestic public pol34

Autumn Term, Vol. XI, No. III icy measures, including investment in public infrastructure, can be implemented quickly to provide market confidence to businesses and consumers as well as reassurance to workers on employment rights. May’s insistence that she will not give a ‘running commentary’ on Brexit negotiations may also serve to further alienate some social groups and reinforce feelings of exclusivity. The Conservative party has promised a country ‘that works for everyone’. Such a country requires responsible politics that respect a variety of interests, encourage public engagement and welcome interest group involvement in policy-making. This piece has also been published at UK&EU, http://ukandeu.ac.uk/brexit-negotiations-are-likely-to-drive-a-wedge-between-already-fractioned-groups-of-british-society/ .

BRICS and World Hegemony: Contrasted Theoretical Approaches to Emerging Economies By Alice Gerow1 Keywords: BRICS, international relations, critical theory, hegemony In light of recent pressures on the global economic system, including the economic and financial crisis of 2008 and the wave of austerity reforms that ensued from it, the status quo of the global economy is called into question. The United States and many European economies have been constrained by slow growth since the crisis, creating the conditions for the rise of emerging economies. The largest emerging economies are the BRICS – Brazil, Russia, India, China, and since 2011 South Africa – which have propelled global economic growth in the last decade and a half. Since a Goldman Sachs economist coined the term BRICS in 2001, these five states have struggled to be more than an acronym of disparate economically thriving entities that rarely present a united front on political issues. In 2014 however, the BRICS launched a set of financial initiatives to meet this end, including the BRICS or New Development Bank (NDB), the BRICS-led Contingent Reserve Arrangement (CRA), the Asian Infrastructure Investment Bank (AIIB), and the Silk Road projects. As the BRICS concretize their existence as a bloc and sustain economic growth, can the bloc be considered a counter-hegemon to the Western economic order? After defining the BRICS, we will consider this question in the light of traditional theories in international relations, before framing the question within critical theory concept of Neo-Gramscian hegemony. We will then take interest in the purpose and significance of the NDB relative to the Bretton Woods Institutions, and what this initiative means for the BRICS’ potential as counter1

Alice Gerow is an undergraduate at the University of Pennsylvania.

Autumn Term, Vol. XI, No. III hegemony understood in the Neo-Gramscian sense. In this pluralistic approach to hegemony, we will see how it is possible to arrive to a similar conclusion, in our case, that the BRICS are not counter-hegemonic, through paths that differ in ideology. I) The BRICS We must first define the BRICS as a bloc in order to assess its potential for counter-hegemony. The BRICS are a contemporary construct consisting of an economic cooperation between the five countries with the strongest developing economies across the world. The 21st century introduced fundamental changes in the global economy, including a shift towards the economies of Brazil, Russia, India, China, and South Africa, which showed rapid economic growth, especially in Asia, as China and India showed two digit growth rates. The financial and economic crisis of 2008 reinforced this global shift because the United States’ and European economies were weighed down by sovereign debt and austerity measures while the emerging economies recovered quicker from the recession. The BRICS currently account for 21 percent of global economic output and have contributed more than 50 percent of real global GDP growth in the past decade and a half. In 2003, two years after the Goldman Sachs economist Jim O’Neill coined the term BRICS in his publication Building Better Global Economic BRICs, Goldman Sachs the bank projected that “in less than 40 years, the BRICs economies together could be larger than the G6 [Germany, France, United Kingdom, Italy, Spain, Poland] in US dollar terms.” These projections nonetheless did not enunciate the actions to be taken by the BRICS for them to become an economic bloc, or a convergence of policies that could challenge the status quo of economic governance established by the Bretton Woods Institutions, including the World Bank or the International Monetary Fund (IMF), and the country at the origin of these institutions, the United States. The BRICS represent nonetheless a bloc. What unites these countries of different economic structures and geopolitical aspirations is primarily their status as “emerging economies”, their strong economic growth, and their desire for greater representation in international economic and financial governance. Furthermore, 37

Alice Gerow the BRICS bloc is unique because unlike other blocs of economic cooperation such as NAFTA, the EU, or UNASUR, this cooperation is not regional but instead spans across different continents and contains no 20th century “great powers,” which explains why a traditional approach to hegemony is not appropriate for the BRICS. II) Theories of hegemony A) Hegemony in traditional theories of international relations Before suggesting a framework of analysis that could account for the BRICS potential for counter-hegemony, let us first contemplate hegemony from the standpoint of traditional theories in international relations, beginning with realism. Classical realism claims that self-interested states compete for power and security in an anarchic world order through military power and state diplomacy. According to Mearsheimer, the maximization of power only reaches a steady state when hegemony is achieved, because the hegemon, “a state that is so powerful that it dominates all other states in the system,” eliminates challenges to a state’s security. This conception of hegemony fails to consider however the interaction between economics and diplomacy and essentially how economics can drive power on the international stage. South Africa, for example, has relatively little military strength, ranking 46 on one scale, yet is a force to be reckoned with because of its economic leadership on the African continent. The BRICS would not be considered counter-hegemonic from the realist perspective, first because it is a cooperation, not a sovereign state, and second because its power is purely economic. Neo-liberal institutionalism on the other hand accounts for economics and other non-military factors governing international relations, especially in the form of institutions. In an anarchic context, democracy, interdependent economies, and global governance achieved through representative institutions, foster cooperation and lasting peace. The BRICS derives more hegemonic authority from neo-liberal institutionalism than realism in 38

Autumn Term, Vol. XI, No. III its structure but not in its purpose. That is, while the BRICS may be perceived as a unit with specific interests in existing institutions, their joining forces tends towards a realist purpose, which is the global balance of power, rather than peace through Western order. Furthermore, neo-liberal institutionalism does not explain economic cooperation and stability between states that are not democratic, such as Russia and China. Another prominent theory is constructivism, which maintains that international politics is shaped by persuasive ideas, collective values, culture, and social identities, thereby ascribing importance to transnational activist networks and nongovernmental organizations. While this theory also offers the requisite global structure for a bloc that transcends national and conâ&#x20AC;&#x153;[...] the problem is not whether the five tinental boundaries to be BRICS countries share the values of deconsidered counter-hegemocracy, but whether they share values monic, the BRICS once at all.â&#x20AC;? again are above all an economic cooperation and the states that form it share little else than productive capacity and a certain frustration with the West. Here the problem is not whether the five BRICS countries share the values of democracy, but whether they share values at all. They have different histories, societies, and political regimes and interests. Furthermore, constructivism does not explain which power structures and social conditions would allow for values to come into being or to evolve, which we will see is an important condition in Neo-Gramscian hegemony. B) Hegemony in critical theory An alternative to traditional theories that could consider the BRICS counter-hegemonic in a blunt interpretation is critical theory, specifically NeoGramscian theory of hegemony. This is a product of the work by Antonio Gramsci, an early 20th century Marxist theoretician and prominent figure of modern critical theory, â&#x20AC;&#x153;a method of analysis deriving from a non posi39

Alice Gerow tivist epistemology” applicable to several fields including international relations. Neo-Gramscian hegemony is a function of the global labor relations shaped by the production process and hinges on global norm consensus. Hegemony arises from a dominant class’s capacity to project a worldview onto other states so that this worldview becomes the norm and its producer the hegemon. In both traditional theories and Neo-Gramscian theory, today’s hegemon would be considered the United States. Mearsheimer would argue that the United States, with its military spending exceeding that of the seven next states combined, dominates the American continent. NeoGramscian critical theorists, such as Robert Cox or Werner Bonefeld, would argue that the United States is a hegemon not because of its accumulated resources but because it has successfully projected its worldview and culture with the reign of capital as the dominant ideology, a systemic power that engrains consensus around the United States’ hegemony. Since hegemony is more than simply state dominance, a situation of hegemony may arise “based on a coherent conjunction or fit between a configuration of material power, the prevalent collective image of world order (including certain norms) and a set of institutions which administer the order with a certain semblance of universality. Hegemony is therefore a form of dominance, but it refers more to a consensual order so that dominance by a powerful state may be a necessary but not a sufficient condition of hegemony.” This consensual order is the only means by which the BRICS as a bloc could counter the United States hegemony, since both its creation and its continued existence rely on the image the worlds makes of it. III) The New Development Bank How does The New Development Bank (NDB) contribute to the BRICS’ authority? The NDB is an endeavor for the BRICS to cooperate strategically on economic governance issues and give the bloc tangible economic leverage on the international sphere. The IMF, the World Bank, and the European Central Bank, have been criticized for strict structural adjustment programs that states must undergo to qualify for loans, often said to subsi40

Autumn Term, Vol. XI, No. III dize economic dependency, as well as for not offering sufficient representation to developing countries and for implementing change at a frustratingly slow pace. The NDB was instituted at the BRICS 2015 summit as an initiative to provide loans to BRICS members and other developing countries for infrastructure and industrialization. While there have been previous attempts to reform the governance structures of the World Bank and the IMF, the NDB has the advantage of a decade and a half’s worth of foreign exchange reserves. This initiative will have initially US$100 billion in authorized capital at its disposal, with China, whose nominal GDP is larger than that of the other BRICS members combined, contributing the largest share of the funding at US$41 billion. Despite the major variations in economic size between its founding members, the NDB established an equal share basis, meaning that the five signatories have an equal share in the management and governance of the bank. While the BRICS leaders describe the bank’s prospective relationship with the World Bank and the IMF as cooperative rather than competitive, the establishment of the bank itself, its focus on development, and its egalitarian structure, is a symbolic statement against the status quo. IV) The BRICS and critical theory Can the NDB be perceived as a challenge to the leading financial institutions, and if so can the BRICS undermine the United States’ global financial power? To the extent that the NDB becomes a vehicle for the values of the Global South and gives the developing world a voice loud enough to derail the financial status quo, then yes, the BRICS could be a counterhegemonic force. However, a deeper understanding of Neo-Gramscian hegemony will lead us to a conclusion similar to the traditional theories’ pessimistic perspectives. The BRICS do not have the potential for counterhegemony. They are merely the example of a passive revolution, or the passive internalization of nation-based developments that spilled over national boundaries and became internationally expansive phenomena. The hegemon is a state that founded and protected “a world order which was universal in conception i.e. not an order in which one state directly exploits others but an order which most other states […] could find compatible with 41

Alice Gerow

their interests.â&#x20AC;? The hegemon conceived a civil society, that is a mode of production with global reach that connects the social classes of the different countries it spills into. â&#x20AC;&#x153;Hegemony at the international level is thus merely not an order among states. It is an order within a world economy with a dominant mode of production which penetrates into all countries and links into other subordinate modes of production.â&#x20AC;? Here, international organizations serve as the product and the embodiment of the hegemonic order that can take the shock of counter-hegemonic ideas. The BRICS economies developed on the model of capitalism, and its countries now have deeply liberal market economies and financial ties with the West. The BRICS could only be counter-hegemonic if it deconstructed the current labor-capital relation and replaced it with another. Note that Neo-Gramscian theory would not consider China counter-hegemonic either, because while it may have a communist government, it thrives on the open market economy. That is not to say Neo-Gramscian theory is abstract and hegemony unachievable. Gramsci wrote just before the world divided into two blocs, and one of these, the Eastern bloc, detained this counter-hegemonic power, as communism encroached on and threatened the Western order. The BRICS, the economic bloc of cooperation between the fastest growing developing nations, is starting to materialize in the creation of financial partnerships including a bank that will finance development in 42

Autumn Term, Vol. XI, No. III countries often dissatisfied with the current credit institutions. From the perspectives of two opposing ideologies, we come to a single conclusion. Theories that are in favor of the free market, such as neo-liberal institutionalism, and theories that are more critical of capitalism, such as Gramscian critical theory, both contend that the BRICS bloc cannot be considered counter-hegemonic, as it is a byproduct of an anterior system. While it may align with developing countries’ ideology, the larger ideological framework that encompasses its financial institutions is no different from the United States’. The fact that the economist for one of the largest North American banks created the concept of the BRICS is telling. The BRICS’ entire existence, from its economic development and reliance on the dollar to the coordination between elites and its international image, is anchored in the capitalist production process. The BRICS may demand more room to maneuver, but within the framework of buying into capitalist globalization and the secondary role that comes with it. Bibliography Antonio, Robert J., “Immanent critique as the core of critical theory: Its origins and developments in Hegel, Marx, and political thought.” 1981. The British Journal of Sociology. 32.3. 330-345. Countries Ranked by Military Strength (2016). Global Fire. Cox, Robert. “Social Forces, States and World Orders: Beyond International Relations Theory.” 1981. Millennium: Journal of International Studies 10.2. 139-141. de Jong, Sijbren et al. “New Players, New Game?: The Impact of Emerging Economies on Global Governance.” Amsterdam University Press, 2012. Gramsci, Antonio. The Prison Notebooks. 1971 Snyder, Jack. “One World, Rival Theories.” Essential Readings in World Politics. 5th Edition. 7. Norton. Print. Abruzesse, Leo. “Submerging World.” The World in 2016. The Economist. Wilson, Dominic, and Roopa Purushotaman. “Dreaming with BRICs: The Path to 2050.” Global Economics Paper 99 (2003). Goldman Sachs. 43

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