When Hegemons Fade

When Hegemons Fade

In our Daily Comment report, a section on Brexit has become something of a regular feature. As part of keeping up with developments, we have commented on nearly every twist and turn (or lack thereof) in the Brexit process. In a recent WGR series, we discussed the Irish problem[1] and how it relates to Brexit.

As we watch Brexit unfold, one persistent theme has emerged—much of Brexit is about unresolved issues surrounding the end of the British Empire. Britain was the global hegemon from 1815 to around 1920 (although the nation still thought it was in charge until the end of WWII). Historians tend to view the shift from one hegemon to another as a clear, abrupt break. But, in reality, faded hegemons tend to cling to elements of former glory. Although global influence may have waned, the vestiges of power still affect policy and national self-image. For example, Spain’s era as global hegemon ended around 1640 after wars with the Dutch exhausted Spain’s power. Still, Spain held possessions in the Western Hemisphere until the Spanish-American War in 1896-98. That war finally ended the Spanish Empire.

There is an element of Brexit that is trying to recapture former glory. Sadly, Brexit may make it clear that Britain is no longer a major global power.

In this report, we will discuss the geopolitics of Europe and Britain. Using this geopolitical analysis, we will examine the British Empire and how it devolved. These two analyses will be used to examine the path of Brexit. As always, we will conclude with market ramifications.

The Geopolitics of Europe and Britain

Geopolitics is the study of the exercise of political power within the context of geography. How a nation exercises its power is shaped by the physical constraints under which the political power operates.

(Source: Wikipedia)

This is a physical map of Europe. One of the great disappointments of history is that technological development has been fastest on a continent that has been impossible to unify under one government. Geography is a key reason why unification has never occurred. Southern Europe is separated by a series of mountain ranges, including the Pyrenees, the Alps and the Carpathians. Northern Europe is separated from the main continent by the Baltic Sea. The British Isles and Ireland hang off the northwestern coast, close enough to allow the British to interfere with continental geopolitics but far enough away to avoid invasion.[2] These physical divisions have prevented any singular power from controlling all of Europe. Of course, that didn’t prevent powers from trying. European history is marked with rising states that have tried to conquer Europe, but none were able to complete the task.

Many of the wars were fought along the Great Northern European plain that runs from the Pyrenees to the Urals in Russia. A seminal event in European history was the formation of Germany after the Franco-Prussian War. The country sits in the middle of the aforementioned plain. Because there are few natural barriers to moving goods and people, Germany was destined to become a major economic power. At the same time, the lack of natural barriers meant Germany was vulnerable to invasion from the east and west. For this reason, Germany was the center of two world wars as the country tried to pre-emptively avoid a two-front war.