Article 50, Brexit, British Government, Irish border, Negotiating

Breaking up is so very hard to do #brexit

Brexit4Over the past number of years, I have been involved, on the management side, in many European-level labour negotiations. But one particularly comes to mind.

The employees’ representatives on the other side had cancelled an agreement that had been in place for close on 20 years. It wasn’t a perfect agreement, it had drawbacks for both parties, but it worked reasonably well in practice.

Further, it was always possible to negotiate small, but important, changes to the agreement as circumstances evolved, old provisions became outdated and new issues and organisational changes needed to be taken into consideration.

In other words, the other side did not need to cancel the agreement but could, instead, have worked on improving it. But they were advised that negotiating a new agreement would be easy and that it would be a lot better than what they then had. Five years on, a replacement is not yet in place.

During those five years there have been significant changes in the company which further complicated and lengthened the renegotiation process. Because the employees’ representatives were focused on negotiating their new agreement they missed having a voice during the change process. Anticipating the future is difficult and the unexpected happens.

Of course, they complained repeatedly that they were not “informed and consulted” about the changes. However, every time we, the management, pointed out to them that the reason they were not informed and consulted was because they had cancelled the original agreement they reacted in hurt tones. They had been “forced into it”.

Management had been unreasonable. They had no choice. None of it was their fault. And we were the ones to blame for not “making it easy” to negotiate a new agreement.

The employees’ representatives had made a choice, but then refused to accept that the consequences that flowed from a choice that was theirs, and theirs alone. They expected management to pull them out of the hole they had dug themselves into it.

It’s a phenomenon known in other fields too. The German military strategist Helmuth von Moltke summed it up this way: “No battle plan survives contact with the enemy”, in other words: when your plan meets the real world, the real-world wins.

So, this negotiation came to mind as I read reports yesterday (Thurs, Oct 12) of the “breakdown” of negotiations in Brussels between the UK and the EU. Reading the London newspapers, with their English spin on events (English more so than British) it would be all too easy to conclude that the position the UK finds itself in had nothing to do with the UK and was all the fault of the EU. As if the EU had decided to leave the UK, not the other way around.

Negotiations between the two parties are deadlocked because the UK refuses to engage realistically on how the money it owes the EU should be calculated.

Not to mention the other two Article 50 issues, the respective rights of EU citizens living in the UK and UK citizens living in the EU, and the issue of the potential re-imposition of a border between the Republic of Ireland and Northern Ireland, the former an EU member, the latter, as part of the UK, out of the EU when Brexit takes effect.

As we commented in last week’s BEERG Brexit Briefing, the UK is pushing a “double bubble” strategy when it comes to money:

  • It is saying to the EU that it will only put money on the table in the context of discussion on a future trade arrangement.
  • Yes, it knows it owes money as a result of decisions the EU took while it was a member but it will only settle those bills if the EU promises it a commercial arrangement in the future that mimics the single market and the customs union. An arrangement that would mean that the UK was a member of the single market and the customs union in all but name.
  • It has to be that way for the UK because that is the way that UK prime minister framed the referendum decision to leave the EU as also meaning leaving the customs union and the single market as well.
  • Old money that is owed will only be paid in return for new benefits because that is what UK politics demands. Or at least, Conservative party politics demands.

Unsurprisingly, the EU sees it very differently.

The UK alone took the decision to leave the EU. It was not forced out. It was not shown the door. Consequences flow from that decision. One, it has financial obligations arising from its membership that it needs to settle. These obligations are freestanding and cannot be used as bargaining chips in negotiations on future relationships. No “double bubble”, says the EU. If you don’t pay, the EU continues, then there can be no talks on future commercial relationships. How can we negotiate with a party that won’t honour its existing obligations?

Hence the deadlock. No money, no trade talks, says the EU. No trade talks, no money is the UK position. If the negotiations between the EU and the UK crash and burn, and the UK falls out of the EU in March 2019 without an agreement, then the new reality for the EU is the single market and customs union between the 27 remaining member states. The status quo, less one member. Some problems, certainly, but probably manageable

For the UK it is a big, black hole.

For a start, it will have to create dozens of regulatory agencies that are needed in a modern economy, to replicate the work existing EU agencies do for all member states. How long will that take? How many new staff will need to be recruited? It has been estimated that around 5,000 customs agents alone would be required. How long will it take to develop the processes and procedures to facilitate continuing trade with the EU, the UK’s single biggest export market?

Outside of the EU’s open skies agreement, what legal framework will govern aviation? And on, and on, and on across all sectors of the economy. A growing multitude of problems only now beginning to be recognised, and looking increasingly difficult to manage.

On citizens’ rights the UK position appears to be that EU citizens living in the UK can have less rights than they have at the moment if UK citizens living in the EU can have all the free movement rights they currently enjoy. The UK wants its citizens living and working in the EU to be able to move around EU countries as they please, as they can do at the moment. But it wants to limit the rights EU citizens living in the UK currently have, such as the right to have extended family members join them.

As for Ireland, the UK appears unwilling to accept that its decision to leave the customs union and the single market has the consequence of re-imposing a hard border on the island. If there is to be a border again in Ireland, that is the EU’s fault. Nothing to do with the UK.

Breaking old agreements, as our labour relations story demonstrates, is easy. Negotiating replacements is never as easy as promised, takes longer than thought and will never be as good as what was previously in place because bonds of trust have been severed.

Breaking agreements always comes at a cost, costs which generally fall most heavily on the party that initiates the break.

Day by day, the UK is having to learn the truth of these sad realities.

But, to borrow and slightly change, some words from the Irish poet W.B. Yeats, such learning comes “dropping slow”.

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