21 June 2016 14:56:17 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Brexit vote is crucial for other reasons too

As the ‘Leave’ and ‘Remain’ camps battle it out, see how the vote will impact Britain and EU

On June 23, the people of the UK will cast a ‘Yes’ or ‘No’ vote to decide a simple question: “Should the United Kingdom remain a member of the European Union or leave the European Union?”

For Indians following the Brexit story, some things are confusing. We are not used to the idea of ordinary people having a decisive say on important policy matters. As a representational democracy, we elect our MPs and entrust them with unique powers to decide policies on our behalf. So why then, are ordinary UK citizens getting involved in this campaign?

About referendums

Some Western democracies introduced the innovative idea of a referendum, in which politicians essentially outsource the act of making decisions on tough questions, to the people.

The biggest benefit is that politicians would not be accountable for their votes — in a referendum, members of the voting public are seen to be just as well informed as the politicians. Only one side can win because the choices are always binary. Also, a simple majority wins.

Referendum votes are binding and the government is expected to change a policy, if required, as long as it is constitutional. (In the United States in 2008, a majority of Californians voted to ban gay marriage. But a federal court held the outcome as unconstitutional because it affects the rights of the gay minority. In 2015, the US Supreme Court let the lower court verdict stand and this was crucial in ushering in gay marriage as a constitutionally protected right across the nation).

The UK story

The UK referendum is a direct result of PM David Cameron’s boast. Confident of a victory in last year’s elections and to silence critics who insisted that Britain had become subservient to the EU, he promised that he would hold a referendum in which ordinary citizens would get to decide whether or not the UK should stay in the union. A strong defender of current UK policy of being in the EU, he had hoped that a public vote would strengthen his hand during his remaining term in office. Except that things have not quite worked out that way.

Several international events have overwhelmed the Conservative Party’s calculations and opinion polls now show that the “Leave” movement may well come out on top. The latest shooting death of a British Labour MP, who was a strong advocate of internationalism, curiously may have helped Cameron. The sympathy vote may persuade fence sitters to vote for Britain to “Remain”.

Cameron misread the pulse of the electorate, for there are many Brits who want to leave the EU. As a proud colonial power on whose vast territory the sun was never deemed to set, a sense of nationalism runs deep, especially among older citizens. As the global economy firmly took root in recent decades, Britain’s international influence has slowly eroded.

Clumsy membership

The UK joined the EU in 1975, but its membership has been clumsy to this day. Landing at Heathrow, there are three lines for passengers entering London — a line for British passport holders, a line for EU passport holders and another for everyone else.

In most nations across continental Europe, there are just two lines. Britain has retained the Pound as a currency while the rest of Europe adopted the Euro.

The EU is a hodge-podge of rules and organisations. There is no single EU President — there are actually four Presidents for Council, Commission, Parliament and Council of the EU. Most people in Europe cannot name these officials, much less define their roles.

The EU has immigration rules that are far more lenient than Britain’s. When the EU agreed to accept large numbers of Syrian and North African refugees, Britain, as a member state, was forced to go along.

National sovereignty

And then, there’s Donald Trump. The presumptive US Republican nominee won largely because of an “America First” campaign that talked about erecting a wall with Mexico, restricting immigration and striking trade deals that bring jobs back to America. Recent terrorist plots in Paris, Brussels, San Bernardino and now Orlando, have added to his narrative that uncontrolled immigration has to stop.

The “Leave” leaders have cleverly cast Brexit as a vote for British sovereignty. They argue that the EU imposes too many restrictions on British businesses for not much in return. A victory for the Leave movement could mean that Britain invests parts of its EU membership fees elsewhere, including as FDI in India.

It will embolden other EU nations to hold similar votes or force bureaucratic Brussels (de facto capital of the EU) to change its ways. It could even propel Trump to victory as a wave of nationalism sweeps west across the Atlantic.

What it means for India

A Remain vote could help Cameron keep his job, which will keep India’s relations with Britain intact and maintain market stability, especially the value of the Pound and the Euro. But the closeness of the vote will determine if the Leave camp can resurrect itself in the coming years.

For India, Brexit is more than a spectacle. Perhaps BJP reformers can consider adding the referendum approach to the Indian constitution — we could then decide important policy areas like GST and Land Reforms through our own referendums, rather than have these ideas languish in the political abyss like they do now.