'Brexit' about to change not only world economy but world politics

Britain will hold a referendum on Brexit, or Britain's exit from the European Union. After the U.S. Federal Reserve left key interest rates unchanged at 0.25 percent to 0.50 percent Wednesday, Federal Reserve Chair Janet Yellen said Brexit concerns were a factor in the U.S. central bank's latest monetary policy decision. Choi Sang-mok, Korea's vice finance minister, told a macroeconomic policy meeting Thursday that Brexit would have a relatively small impact on the Korean economy, which is not closely connected with Britain in trade and finances. It is narrow sighted to view Brexit only in terms of trade with Britain, as its impact could rattle global financial markets and the current of the international politics.

If Korea fails to sign a new free-trade agreement with the EU after Brexit, the country could suffer from up to a 2.2 percent reduction in its gross domestic product annually until 2030. If some major EU members follow suit, the size of the EU economy will become smaller, dealing a blow to the global trade. Brexit could potentially become a turning point that would reverse the trend of liberalistic politics and economy that has dominated the world since the end of World War II.

Following the terrorist attack in Orlando, Florida by an Islamic State follower, polls showed that supporters of Brexit outnumbered opponents. Brexit supports mostly cite concerns over terrorists' entry into their country because of the EU's immigration policy. In addition, many of them complain that foreign immigrants take their jobs amid a prolonged economic slump. In contrast, mainstream British politicians and elites have been opposed to Brexit, saying it would have a negative impact on the British economy.

If the result of the referendum is in favor of Brexit, it can be called a "popular rebellion" against the political establishment and the social and economic classes with vested interest. It is in the same vein as Donald Trump won the U.S. Republican Party's presidential nomination despite the mainstream forces' opposition. The world's biggest concern is that such open countries such as the U.S. and Britain take the path of isolationism and nationalism.

British Prime Minister David Cameron vowed to hold a Brexit referendum as his campaign pledge for last year's parliamentary elections in order to appease anti-EU forces within the Conservative Party and prevent the populist UK Independence Party. Cameron won the elections thanks to the pledge, only to have it shackling himself. It can be recorded in history as a case showing how a politically-motivated populist election pledge related with foreign affairs could pose a threat not only to the country itself but also to the international community. Korea also had an experience, in which its relationship with the U.S. was twisted during the days of former President Roh Moo-hyun, who took advantage of anti-U.S. sentiment. Populist policies that are aimed at winning popular support but turn a blind eye to national interest could lead to a situation, in which a country will have to pay an unaffordable price.

Brexit is more than economy. Since its independence, Korea has grown in a global economic environment of integration and cooperation. The results of the Brexit referendum and the U.S. presidential election could change the environment that we have taken for granted. We must look ahead and prepare ourselves.

송평인기자 pisong@donga.com