Brexit Reasons - Lessons For Russia

The dilemma of integration and disintegration

Global processes i.e. processes of world interaction, mutual influence and interdependence do not automatically mean the need to create any form of integration Union. Economically successful Australia, Korea and Japan are not part of the broader trade bloc. The absolute benefits of integration have not been proven (Shiff & Winters, 2005). In the world economic community there is no common theory of international integration. Existing theories of international integration view the process from different perspectives (Hooghe & Marks, 2019). At the same time, the theories of European integration provide little to solve the problems facing the European Union today (Jones, 2018). European integration was primarily a process of creating a market that removes barriers to free trade and international economic competition (Kriesi, 2009) However, as early as 2014. Weber (2014) stressed that the existence of the European Union is very conditional. The EU is very vulnerable to the effects of inner political change (Weber, 2014).

Modern realities of the European Union urgently require clarifying the relationship between the categories of "integration" and "disintegration" and to identify the causes of possible disintegration. European studies of the integration –disintegration relationship are presented by two main points of view: either these are paired categories where the transition of integration into disintegration depends on a decrease or increase in the level of centralization or membership in the EU (Schimmelfennig, 2018; Börzel, 2018); or disintegration is not the reverse side of integration (Vollaard 2014). In some works, disintegration is seen as an unpredictable and open process rather than as a predetermined outcome (Rosamond, 2016).

There are endogenous causes of Brexit - the ever-growing expansion of the European Union (Weber, 2014), the weakening of border control, the decrease in the congruence of borders and the increase in their permeability (Vollaard 2014), the creation of a powerful supranational organization. Exogenous causes include the economic crises of the last decade, the impact of previous integration on transnational interdependence and supranational institutional capacity (Schimmelfennig, 2018). We can agree with the research of Johnson, emphasizing the cumulative theory of causes (Jones, 2018).

The reasons for Brexit and the prospects for an integrated Union should be considered taking into account the space-time factor. From the point of view of spatial economy it is reasonable to consider the processes of integration and disintegration as a genetically unified process.

The causes of disintegration trends lie in the very process of international integration. The process of international economic integration is contradictory internally and therefore cannot develop in a straightforward and progressive manner. In the process of integration it is possible to change the the integrating system goals. Developed international economic integration can be considered as a special form of international socialization of production within the new integrated space. In turn, the integrated space will be characterized by processes of endogenous asymmetry, catastrophic agglomeration and spatial hysteresis (Ottaviano & Thisse, 2004). The practice of functioning of the existing integrated spaces is full of examples of manifestation of the named regularities. Differences within the EU are growing exponentially (Vobruba, 2004). It is important to emphasize, that the more heterogeneous the integrated space in the economic sense, the more likely the manifestation of these laws. Initially, the EU consisted of 6 States, now - 28, in addition, five are candidates and two are potential candidates. The space of any degree of integration will inevitably be characterized by the division into the countries of the center and the countries of the periphery. There is already a manifestation of endogenous asymmetry in the EU space – the countries of the so-called "new periphery" are singled out. Differences in wealth create difficulties for the countries of the centre, as the problems of the periphery tend to affect the countries of the centre as well. From the point of view of the spatial structure, the rich core States of the EU are objectively interested in expanding the space through the development of the poor periphery. But the EU experience shows that as the Union expands, the costs of integration increase. The situation will become more evident if the number of members of the Union increases. Britain's exit from the European Union and the potential desire of other countries to perform a similar action illustrates the manifestation of the effect of spatial hysteresis as a prerequisite for a spatial catastrophe.

Integration as a manifestation of coordination and isolation

The high degree of interstate economic integration is based on the process of production’s international socialization, that is, the process of coordination of separate elements of the economy. As a result, economic ties between countries are being optimized, norms and rules are being harmonized and appropriate institutions are being established. There is a need to create an integration Union (Zobova & Mukhamedieva, 2008). Thus, interstate economic integration is effective when it is based on an objective process of production’s socialization, and not only the political interests of the state. In the foreign scientific community do not use the term "international socialization", but actively use the term "interdependence". If we consider the interdependence of sovereign economies as a result of coordination (i.e. socialization of production), we can equate these categories with a certain degree of tolerance.

The history of European integration testifies to the formation of transnational interdependence. In 2016, 43.4% of UK exports came from the EU and 53.3% of imports came from the EU. The interdependence of the financial market, transnational interdependence and supranational potential have increased significantly. (Schimmelfennig, 2018) In other words, a certain level of financial and industrial socialization (harmonization) has been achieved in the EU.

The threat of economic collapse is a powerful deterrent to hard disintegration (Hooghe & Marks, 2019). The problem of the UK is in the desire to remain part of the single market, but at the same time formally preserve its sovereignty. The UK as a member of the European Union is influenced by two opposing trends: transnational interdependence and political supranational potential (Saurugger, 2016). For many EU countries, the problem has been the mismatch between national issues and the need for subordination to supranational governing bodies of the organization. The internal contradiction of international integration is clearly manifested as a contradiction of the need to harmonize economic and political actions and the preservation of a certain level of national isolation.

Integration in the Eurasian Economic Union

Since 2000 a new stage of integration in the former USSR began. The Eurasian Economic Community (EurAsEC) was created to form the Customs Union and the Common economic space. In practice, there was a contradiction between the economic and political need for integration within the Eurasian space and the possibility of its implementation. Therefore, in 2015 The Eurasian Economic Community was transformed into the Eurasian Economic Union (EAEU) in order to modernize, cooperate and improve the competitiveness of national economies. For the successful functioning of this Union, it is necessary to take into account not only the experience of the EurAsEC, but also the integration experience of the European Union.

The main problems of integration in the EAEU space include significant differences in the economic potential and structure of the economies of the Community States, different rates of market reforms. Objectively, Russia is interested in expanding the borders of the integration Union. But also, objectively, it should be ready to bear the cost of maintaining the economy of the less developed member countries. World experience shows that economic growth and the reduction of uneven development are incompatible.

Currently, the Eurasian economic Union is implementing a model of concentric circles, while the core of material well-being is allocated, beyond which the welfare decreases (Table 01 ).

It is necessary to divide the countries according to the degree of readiness to participate in integration and not to force the process of expanding the economic space. The presence of observer countries requires an answer to the question of the quantitative limits of the integration agreement. A smaller number of participants in the project provide an opportunity to facilitate the establishment of institutions.

Within the EAEU, we cannot talk about the mutual dependence of the participating countries. Even among the countries that initiated the Union, there is an uneven dependence. Even more asymmetrical dependence is in the trade of Armenia and Kyrgyzstan from the Russian Federation (Table  02 ). Overall, the share of mutual trade in the EAEU was only 14.6% in 2018.

The implementation of the model of concentric circles in the EurAsEC should be replaced by a model of step-by-step integration in the EAEU. It involves spatial expansion with the accession of new entities with a status below the level of full membership. In this case, bilateral economic ties of different degrees of integration are implemented within the created integration space. In addition to the five participants of the EAEU and five observer countries, six more countries (Singapore, Pakistan, Israel, India, China, Tunisia) expressed interest in participating in the EAEU. But the share of trade in the total volume of foreign trade of the Russian Federation is insignificant – from 12% in Mongolia to 0.4% in Singapore and Pakistan. Thus, the interest in integration is not mutual for Russia and potential periphery countries. The core countries will bear higher integration costs.

Along with mutual trade within the integrated space there are processes that affect the qualitative and quantitative certainty of the space. In the context of global competition there are rapid changes in the current structure of the international division of labor, deepening intra-specialization and cooperation of subjects. As a result, complementary structures of integrated economies should emerge. The desire to extract spatial rent forces integration entities to look for new business partners outside the existing integrated spaces. Tthe modern world economy is characterized by the formation of cross-border partnership in which there are interregional and cross-country clusters. In the EAEU, it is possible to create such clusters with the participation of both the Union countries and with the involvement of third countries. Complementary structures will enhance the competitive advantages of participants. At the same time, we must be ready to change partnership relations in the integrated space.

One of the prerequisites for the possible disintegration of the European Union – uncontrolled flow of migrants. For Russia, in the context of demographic problems, the increase in the number of legal migrants is a positive process (Table 03 ).

Thus, step-by-step, multi-time integration within the EAEU and the accumulated own intra-regional experience will make it possible to avoid mistakes and problems of the European Union