Conference Presentation, Panel
The Future of the United Kingdom and the European Union
Milken InstituteMichael Klowden, Stephanie Flanders, Alan Houmann, Jo Johnson, Mikhail Khodorkovsky, Lord Mandelson, Peter Mandelson
- The Milken Institute London Summit's theme is "navigating the changing Europe," addressing political, cultural, and financial uncertainties including AI, aging populations, superbugs, and Brexit.
- A panel on the "Future of the United Kingdom and the European Union" was moderated by Stephanie Flanders, featuring Joe Johnson, Peter Mandelson, Alan Hobman, and Mikhail Khodorkovsky.
- Joe Johnson described the government's Brexit options as a choice between "vassalage and chaos," characterizing the lack of a viable alternative as a "failure of statecraft" on the level of the Suez crisis.
- Johnson highlighted that government analysis projects the UK financial services sector will shrink by 6% under the proposed deal, contradicting claims of regulatory freedom.
- Peter Mandelson argued that the EU would likely move to "emergency flexibility" and mitigate catastrophic damage rather than allowing a "no-deal" crash-out, despite the UK's exhausted reservoir of goodwill.
- Mandelson noted that less than 20% of the British population currently believes the Prime Minister's deal is right, suggesting the deal lacks democratic legitimacy.
- Mikhail Khodorkovsky cited polling indicating a potential "Remain" victory of 57% to 43% in a second referendum comparing the current deal against staying in the EU.
- The panel discussed the high probability of a second referendum, with bookmakers implying a 40% chance of a new vote occurring.
- Alan Hobman of Citi stated that the financial industry is divided but primarily driven by a fear of a "crash-out," which would be more severe for clients than the current uncertainty.
- Business plans are accelerating due to political uncertainty, with subsidiaries being created and operational changes made to ensure EU market access regardless of the final deal.
- The panel expressed concern that upcoming European Parliament elections could empower populist parties to reach 30% of seats, shifting policy focus from economic integration to social and migration issues.
- Mandelson identified a lack of coordination between national governments and EU institutions as a driver of populism, where structural economic changes are blamed on Brussels while national governments fail to address inequality.
- Khodorkovsky characterized the "enemy" not as Russia generally, but as the Kremlin leadership, arguing that broad sanctions fail to target the specific actors driving instability.
- Khodorkovsky warned that President Putin's approval ratings have dropped to pre-Crimea levels and suggested he might resort to military adventurism to distract from domestic issues, though he deemed it unlikely given current public sentiment.
- Joe Johnson noted a significant shift in US policy under the Trump administration, which is now actively fostering European disintegration rather than supporting integration, a stance unique since the Bretton Woods era.
- Trump's trade strategy involves pick-off tactics against individual EU nations, with the UK's Brexit serving as a tool to weaken the EU bloc before negotiating bilateral deals.
- Mandelson outlined a two-track EU response to US trade threats: countering "Article 232" national security measures on car imports while shelving any comprehensive free trade deal (like TTIP) until those threats are resolved.
- Khodorkovsky and Mandelson observed that US unilateralism under Trump has paradoxically strengthened European commitment to the multilateral system, NATO, and the preservation of the WTO.
- The panel concluded with the observation that despite the chaos of Brexit, the situation has united the nation against the government's plan, while external pressures from Trump and Putin have potentially galvanized European unity.