Brexit: The European Union and Misunderstood Sovereignty
Sovereignty was defined by prominent political geographer, John Agnew as based on the legitimate exercise of power which has been traditionally conceived as territorially rigid. This would explain the Brexit idea of sovereignty. The belief that leaving the EU would represent a return to full British sovereignty.
To view the collection of nation-states in the world as sharing a homogenous degree and being the only possessors of authority would be incorrect. Thus, common depictions of loss of sovereignty expressed for example by pro-Brexit campaigners tells us very little as there is no complete notion of sovereignty.
European Union Members
In becoming a member of the European Union, it could well be argued that the states exercise in this process a high degree of territorially defined sovereignty. This has led to higher volatility levels in fx trading pairs like the EUR/USD and the EUR/JPY.
There is no clause that obliges members to remain in the Union and Eurozone members are still supposed to enjoy full fiscal sovereignty. However, whilst being a member of the European Union and particularly the Eurozone, there is certainly a trade-off between territorially defined authority and being subject to that of EU legislation, as long as that state remains a member.
This is even more obvious with the common currency whereby ceding control represents a distinctive loss of authority over monetary policy. The de facto nature of authority in the Eurozone was highlighted by the European Debt Crises – interestingly often described as the European Sovereign Debt Crisis – for a number of reasons. It highlighted the fact that countries like Spain and Greece were authoritatively unresponsive both pre and post-crisis.
Eurozone Economic Crisis
Pre-crisis, they had overvalued currencies and without the ability to raise interest rates or control the circulation of bank notes, they were unable to enact monetary policies responsive to global demand. Post-crisis, the loss of effective authority was arguably even more acute. Let’s take the example of Greece, which was unable to devalue its currency to increase its competitiveness and also faced imposed fiscal controls from the ECB, IMF, and a very influential German government.
Therefore, not only was its monetary policy affected by regulations outlined by the ECB, it was now forced to implement budget cuts in areas from pensions to public sector wages. The situation was so extreme that even an electoral rejection of austerity didn’t stop the Greek government from losing much of its fiscal authority.
The EU represents an extreme sovereignty regime opposing the traditional nation-state one, but this conflicting dynamic of state power, as opposed to external influence, can be seen with other international institutions like the WTO and NAFTA, as well as private firms which in many sectors are extremely mobile. The fluidity of capital makes complete authority expressed as sovereignty unattainable. Thus, when the people complain about sovereignty it is worth bearing in mind what authority actually means in relation to the nation-state.