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Friday, November 18, 2016

Brexit, President Elect Trump, What’s Next?

~ Romano Prodi Weighs In

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November 18, 2016. Shanghai – Former President of the European Commission Romano Prodi is in favour of a quick Brexit divorce, believes Donald Trump will have a hard time aligning campaign rhetoric with the reality of ruling, and suggests that China and Europe should make a deal to set systemic rules to get past issues hampering a healthy trade relationship. Prodi, the former Prime Minister of Italy and a Member of the CEIBS Board, was speaking tonight at an intimate gathering of CEIBS international students and alumni ahead of an invitation-only dinner at the school’s Shanghai Campus.

As CEIBS President Li Mingjun noted, Prodi’s insights are invaluable for members of the CEIBS community who are doing, or plan to do, business at the global level. In a wide-ranging speech, followed by frank replies to questions raised, Prodi explored the reasons behind Brexit and drew parallels between the shift in sentiments in Europe and the results of the US vote. “There is a general change,” he said. “Europe has a new political shape. [Meanwhile] in the US, an individual has taken power of a party and changed it completely.”

Brexit

In the wake of the surprise vote to have the UK opt out of the EU, there have been differences of opinion about the pace at which the separation should occur. Some have called for a quick, clean beak while others have supported the UK’s less hasty approach to leaving the EU. Prodi believes failure to act quickly would incur an “incredible price” because it would lead to institutional paralysis.  “No one knows how the divorce will occur. There is uncertainty on the British side, with the Supreme Court ruling that there is need for Parliamentary approval and calls for a referendum on the referendum,” he said. “There is the same uncertainty on the European side. Italy is in favour of a delay in the separation, France and Germany say do it quickly; I am in favour of the second approach. You can’t leave Europe in three years of uncertainty.”

Trump: Rhetoric vs. Reality

Asked whether he believes Donald Trump will rule as he campaigned, the seasoned politician says he anticipates that there will be a “lot of difference” but it will not be easy for Trump to completely change his tone as he “went very far” during the campaign for the White House. “I think reality will prevail over rhetoric, otherwise the crisis will be deep,” he cautioned.

What’s next?

The Brexit vote has raised questions about the future of London as an international financial hub. Pre-Brexit London had made strategic moves to deepen financial ties with China, embracing trading in the RMB and defying the US by signing onto the Asian Infrastructure Investment Bank (AIIB). Prodi believes there will be tough negotiations ahead as the City of London tries to hold onto its skilled employees and its position in the global world of finance. “It will not be a peaceful negotiation, and one of the weapons will be to protect the City with low taxation,” he said. “They will try the same [pre-Brexit] strategy now, but harder, because China will be more prudent. There will be a lot of storms in the world’s financial markets.”

Asked whether Brexit and the election of Trump had shaken his belief in democracy, Prodi spoke of his fear that there is a movement towards a more authoritarian form of government.  He hopes Brexit will be a wake-up call for Europe but fears it will take a “more visible crisis” to get a united EU. “We have to go to the limit of the brink to find solidarity,” he said.  “In theory, Europe is still a great power but it is still divided. No reign can be strong and divided.”

He ended his speech by stressing that despite all the current challenges he is not pessimistic. However he stressed the need for the emergence of a statesman who “understands this historical challenge” and for the politicians in office to have discussions with the “anti-system” factions in order to avoid mistakes of the past.  

The evening’s event was moderated by David Gosset, Director of Academia Sinica Europaea at CEIBS, and organised by the school’s Alumni Department.