Britain's elections: Issue of EU membership could affect stability in the Asia-Pacific

Britain's Prime Minister David Cameron delivers an election speech at the Hayesfield Girls' School in Bath, western England, Britain on May 4, 2015. -- PHOTO: REUTERS 
Britain's Prime Minister David Cameron delivers an election speech at the Hayesfield Girls' School in Bath, western England, Britain on May 4, 2015. -- PHOTO: REUTERS 

A KEY issue in Britain's most unpredictable general election in decades, to be held on May 7, is the country's membership of the 28-member European Union - a point of contention that could have consequences felt as far as the Asia-Pacific region.

While Prime Minister David Cameron, leader of the Conservatives, has said that if they win outright, there will be a referendum on whether to leave the EU by 2017 - supported by the Liberal Democrats, who would want to remain in the grouping.

The Labour Party and Scottish National Party, however, oppose the referendum, and the Eurosceptic United Kingdom Independence Party (UKIP) has based its entire campaign on wanting to leave the EU immediately - a term coined as "Brexit".

POLITICAL FACTORS

If the Brexit happens, Europe's international standing would be affected, writes BBC correspondent Humphrey Hawksley in a column for the Nikkei Asian Review last Friday, and would likely prompt other countries to reconsider their own membership in the grouping.

After World War II, the EU was created so Europe could avoid more wars. To effect, certain compromises had to made with regard to national sovereignty. Britain, as the EU's third-most populous nation, is one of the three most-important in the grouping, next to France and Germany. Its departure would leave it severely weakened.

This weakened EU, being destabilised itself, would be less capable of bridging tensions in the Asia-Pacific, particularly between the United States and China.

Though Asia's wealth has increased significantly in recent years, there remains damaging territorial disputes going back centuries.

Mr Hawksley writes: "A confident EU would have much to offer the region. Europe has found its way around a similarly dangerous historical backdrop and forged an economic and political system that has kept peace and created wealth."

But if Europe is weakened, the Asia-Pacific "could become a theatre of polarised tensions between China, the US and their allies", he added.

However, voters have not yet been made aware of such complex political issues that have hitherto only been whispered in Brussels and conveyed to Asia-Pacific governments and business interests.

ECONOMIC FACTORS

There already is uncertainty over the euro zone's future, and a Brexit would add to it, he Mr Hawksley says. Even a potential Brexit is causing instability. Mr Hawksley cites the example of HSBC Holdings, which recently announced a review of its business, mooting also the moving of its headquarters outside Britain. It cited the uncertainty of Britain's EU membership as one of the factors prompting the review.

The EU, taken as a whole, is the world's largest economy, and beats the United States and China in terms of the being the biggest trading entity.

But Britain gets the lion's share of direct foreign investment into Europe.

China has invested some US$75 billion (S$100 billion) in the EU since 2005, of which Britain has taken 20 per cent, according to the Heritage Foundation.

India's Tata Group has invested heavily in Britain's Jaguar and Land Rover, turning these companies around.

More than 1,300 Japanese companies operate in Britain, creating at least 130,000 jobs, says London. Hitachi recently began a US$125 million project to build railway carriages in the north of England.

Mr Hawksley also flags the fact that Britain would be exposed to trade tensions without the embrace of the EU, due to its "history of Asian colonialism and unequal treaties with China", harming its ability to trade with the emerging economic superpower.