Podcast: You Break It You Brexit

TRANSCRIPT: You Break It You Brexit

George Osborne:

You are sort of chasing the tail of the populace. How did you allow that to happen?

Ian Bremmer:

Hi, I'm Ian Bremmer, and welcome to the GZERO World podcast. I'm host of the weekly show, GZERO World, on Facebook Watch. In this podcast, we share extended versions of the big interviews from that show. This week I sit down with George Osborne. He's editor of the London Evening Standard and former Chancellor of the United Kingdom. I'll ask him about the extraordinary range of issues facing the UK and Europe today, including, of course, Brexit. Let's get to it.

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Ian Bremmer:

I'm here in the West Village with George Osborne. He's editor-in-chief of the London Evening Standard, but also was Chancellor of the Exchequer for the United Kingdom. Delighted to be with him today.

George Osborne:

Great to be here in your home, Ian.

Ian Bremmer:

How inextricably divided does the UK feel to you right now?

George Osborne:

Well, I think there still remains quite a bitter division between many of the people who voted to leave and remain. It's still actually how British politics is characterized, how the factions and the different political parties, particularly the Conservative party, are characterized now. Hopefully, with the passage of time that will abate. That's the case at the moment.

George Osborne:

Do you know, I think it's an interesting question. Obviously, there are lots of parallels with what happened with Donald Trump and other movements around the world, and indeed, of course, people like President Trump self-identify with the Brexit movement, sometimes to the discomfort of the Brexiteers. But if you were a historian, I don't think you would have a huge amount of trouble understanding what's going on at the moment. We've had a big economic shock, the financial crash a decade ago, stagnant real incomes, a big drop in GDP. That kind of thing in our modern history has always had a big spillover into politics and created anger and discontent, understandably.

George Osborne:

And at the same time, coincidentally, you've had this big technology shift, where just like the invention of the printing press or the television, you've got new social media, like the way people are watching this interview. And that has dramatically lowered the barriers to entry and shook up the existing political order, just like it's shaken up the newspaper industry or the music industry or whatever. So, those two things coming together has created populous movements that can emerge very quickly out of nowhere with relatively few resources, and generate large followings because they're playing into a world, certainly in the West, which feels let down or angry.

Ian Bremmer:

What do you think represents the best hope for the UK being a little less divided going forward?

George Osborne:

Well, I think the longer we look at the situation, the more people are coming to the realization that to depart radically from all of our major arrangements with our neighbors is a mistake. And the current conversation is, okay, well we get to the spring of 2019 and we might leave the EU, but we're going to stay in some kind of transition arrangement, which is code for having all the sort of costs and obligations of EU membership and access rights for EU membership. Just walking out of the room where those decisions about those arrangements are made. You might think a very strange thing to do, but better than the alternatives.

George Osborne:

And that suggests to me that people are very nervous about going off a cliff edge looking for this transition. And look, when you're in this transition, in my view, it could take quite a long time, because the simplest decision at any one point, and I've seen it in many European negotiations, will be just to sort of delay the transition, delay the moment the transition comes to an end. No one will admit that now. You'll never get anyone from the British government saying that, and you won't get anyone from the European Union saying that. But when push comes to shove, often the easiest thing to do if you can't get an agreement on something is to-

Ian Bremmer:

Kick it down the road.

George Osborne:

Kick it down the road.

Ian Bremmer:

So who are the friends for the Brits in Europe right now? I mean, the Germans clearly have their own challenging elections to finish up, create this actual coalition. Merkel is weaker, Schröder was gone. France is focusing on far greater integration, something that very few people have appetite for. Brexit is not the top priority for anybody else right now, so is kicking it down the road essentially ad infinitum the best the UK can hope for?

George Osborne:

We'd been having this conversation at your home last year. I think there have been a lot of concern in Europe that Brexit would herald the breakup of the EU. That was one of the claims that some of the Brexiteers made. That has not been the case. If anything, it's solidified our neighbors and allies in the EU. And the big development in the EU has been the election of a French president, Emmanuel Macron, who's got a plan, in your mother's sort of classic French style, a grand project, which is the further integration of the eurozone. And even if he only gets 30 or 40% of it, because of German reluctance and the general problem of getting things agreed in the EU, that would be a major step forward. And what he has done, and I'm quite a fan of what he's done in France-

Ian Bremmer:

And you spent a lot of time with him personally when he was Minister of Economy in Europe.

George Osborne:

And again, I ... He was the Minister of Industry and he was previously the economic advisor to François Hollande, and I had many meetings and meals and the like with him. He's a smart guy, but he's got a plan, and you know, plan beats no plan, to use the phrase. And the EU didn't really have a plan, and now it does.

Ian Bremmer:

So Europe with a French plan, even if only quarter-baked, should be more attractive for the UK to be engaged with, no?

George Osborne:

Britain was not in the eurozone, so it never had to go along with this further integration. There was an intriguing reference in Emmanuel Macron's speech recently in France, where he did touch on Britain. And he said, "Maybe if Europe reforms, there'll be a place for Britain in that reformed arrangement."

George Osborne:

Now, I think it'll be very difficult for Britain to either remain in the EU, or having left the EU, rejoin it. But there are all sorts of countries who aren't in the EU, like Norway and Switzerland, much smaller countries than Britain, but nevertheless, important countries. They have found working arrangements, bespoke arrangements, with the EU where they are able to participate in quite a lot of the EU's economic networks, for example. And I can imagine, although this is heresy and the sort of Brexiteer camp at the moment, that in four or five, 10 years time, we find ourselves in something like the Norwegian or the Swiss arrangement. In my view, not as good as what we got now, because it lacks the influence and means we're not in the room, but better than the alternative, which is to have essentially no closer relationship with France 20 miles away from us than we might have with India or Brazil or some country on the other side of the world.

Ian Bremmer:

So betting man right now, if literally right now, if you had to put odds on the likelihood you think that the UK ends up with no deal whatsoever, it'd be roughly what?

George Osborne:

20%.

Ian Bremmer:

20%. Okay.

George Osborne:

Some very smart people I know who say actually it's better than 50/50. I don't think so because I think in the end, Britain would blink. With no deal, it means really basic things, like your aviation agreements that allow planes to take off, your mobile phone agreements to allow data to be shared, your financial service, they all fall. So it's not a question of just sort of having some tariffs at the border. It's your regulatory arrangements don't work, and Britain would blink, I think, long before we got to that situation. As it happens, I think the EU also would blink. Ireland is an important member state, would be very damaged in a no-deal situation. Places like Antwerp and Rotterdam would be badly affected. But the impact on the overall EU would be considerably less, so I think they would blink after we would-

Ian Bremmer:

More likely to blink if Theresa May is still premier, or someone else?

George Osborne:

Well, she is, frankly, after the election, less relevant to the conversation going forward, because people know she's going to leave. And the real action in the Conservative Party's amongst people who are positioning themselves to take over from her.

Ian Bremmer:

It used to be when the Brits and the Americans got together, we talked about a special relationship. Haven't heard the term come out once with the Trump administration. Certainly feels a lot less relevant, when you think about the global order today. Is there something still of a US-UK relationship that's actually special in your view?

George Osborne:

Yeah. Look, I still think it's a very close and important alliance, and when the US takes action, its most reliable partner is the United Kingdom. Doesn't mean United Kingdom always signs up to some kind of action with the US, but it normally does, and I saw that when I was in the British National Security Council.

George Osborne:

I mean, one of the kind of challenges, I think, is when you're looking at the US-UK relationship is to sort of aim off for the characters at the top. I know that's difficult to do, and everything gets personalized through the prime minister and the president holding hands, and all that kind of thing. But of course, the relationship between our countries is deep, long-lasting, rooted in history, and exists at many levels, not just of the government, but of families and businesses and charities and the media and so on. That's where the strength lies.

Ian Bremmer:

Let me ask you about Russia, because of course, it keeps coming out that the Russians played a significant role, not just in the US election, but actually in the Brexit referendum. How aware were you of that when you were part of the government, and what do you think the response needs to be?

George Osborne:

Well, I wasn't aware at all is the short answer to your question.

Ian Bremmer:

Did you not?

George Osborne:

I don't think ... Well, look, I think as with the US election, and I'm not a participant in US politics, personally, I think the whole Russian role in all of this has been a bit overblown. Yeah, they're definitely out to cause trouble and disrupt things, and sanctions-

Ian Bremmer:

They are not the Chinese force for stability.

George Osborne:

I mean, they're a country that actually likes disorder on their border, which is quite unusual. Most countries look for order on their border. But do I think it was the Russians that got Donald Trump elected? No. Do I think it's the Russians that caused Brexit? No, I don't. We should be robust about some of their actions. We should confront their espionage and political disruption. We should, as we do with the NATO mission in Eastern Europe, be absolutely clear that you can't cross international borders and that's a red line. But that does not mean you put them in the deep freeze. You've got to try and find a way to get them round the table, because I know a problem like Syria is never going to be solved unless there's a Russian participant in that discussion.

Ian Bremmer:

I want to go back to this quaint notion you had of shared values between America and the UK.

George Osborne:

Quaint, that's a good English word.

Ian Bremmer:

It is a good English word. You and I have a lot in common, sure, culturally, but I mean, do our countries really-

George Osborne:

There are shared values around individual freedom, free markets, an international trading system, resolution of disputes between neighbors in a friendly way or in the hostile way, and that kind of thing. And I think there was a great shared effort led by the United States, but supported by the UK, to create, after the second World War, a set of alliances and arrangements, NATO, the European Union, and all of those sorts of arrangements. And you can either sort of give up and say, "Okay, well, let's allow our countries to be atomized and divided and whatever, and let's go along with the populist argument or the fringe argument that we should tear up all these arrangements," or we need to stand and fight for them.

George Osborne:

And if you ask yourself, as the populists do, "What the hell have you got to lose to these populations?" Well, the answer is peace, security, and stability, and that is a hell of a lot. And so it is worth fighting for. If anything, I just think we've ... And of course, I'm as guilty of this as anyone having been in a leadership role in the UK, I think we've sort of let the argument go. Let's take immigration, right? I am someone who believes immigration has brought enormous benefits to my country, to its economy, to its diversity, to its cultural output-

Ian Bremmer:

And that argument is largely lost.

George Osborne:

We haven't really bothered to make that argument.

Ian Bremmer:

George, did you not do that because you thought it was self-evident, or did you not do it because you knew it was unpopular and it isn't what you wanted to play for?

George Osborne:

On immigration, I think myself, and collectively the government I was part of, did not go out of its way to confront the views of those who essentially were saying, "Immigration was a bad thing."

Ian Bremmer:

I was with Bush Jr. the other day, and he was talking about immigration, and he came across as abundantly sensible, bipartisan, wanting solutions. Of course, he's not in politics anymore. So, I guess I'm just asking you personally, because I know you, how aware of how politically constrained you were on some of these big issues?

George Osborne:

I mean, the short answer is, I was always trying to fight for the values that I hold dear, and broadly speaking, I think they advanced on my watch. But obviously, it ended with us losing a European referendum, which I was always uncomfortable with us holding, and then very disappointed that we lost. What I've decided is rather than just sort of pack up and go home and forget about it, I'm editing a newspaper. I'm speaking to you and in public. I'm not saying it's the freedom I chose, but it's the freedom I've got, and I'm enjoying it, because I think it does enable you with a bit of perspective to make arguments that I didn't make when I was in office.

Ian Bremmer:

George Osborn, very good to have you.

George Osborne:

Thank you.

Ian Bremmer:

See you soon, my friend.

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The GZERO World is brought to you by our founding sponsor, First Republic. First Republic, a private bank and wealth wealth management company. Imagine a bank without teller lines, where your banker knows your name, and its most prized currency is extraordinary client service. Hear directly from First Republic's clients by visiting FirstRepublic.com.