Brexit, British Government, Irish border, Northern Ireland, Theresa May

#Brexit – Charging on…

Written on Monday April 9th 2018

LightThere is an old Chinese saying that you should always give your enemy a “golden bridge over which to retreat”. After the battle, you may need to negotiate terms with the other party and a bruised, battered and bitter enemy can makes for a bad negotiating partner.

Over many years involved in labour negotiations, I have also found that it is a wise negotiator who ensures that a golden bridge is available in case their initial plan does not work. This is known as having a Plan B. A necessary precaution for, to paraphrase Mick Tyson, “Everyone has a plan A until they get punched in the face”.

Sometimes, however, you can be faced with another party who seems determined to burn all bridges behind them or, at the very least, to pack them with enough explosives that they can be detonated at any time. For such parties, Plan A must be the only plan for if there is no way back, no Plan B, all they can do is to stand and fight, or push forward.

Call this the Charge of the Light Brigade stratagem and it usually results in disaster.

At this point, early April 2018, it seems to us, that the UK government and the House of Commons is set on the Charge of the Light Brigade path, even if there is actually no majority in either the government or the House to go this way. This is because the major political parties have bought into, indeed promoted, an extreme interpretation of the referendum result of June 2016 as the immutable “will of the people”.

Further, the fact that the majority of the UK’s political and intellectual classes, along with most of the commentariat, have never really “got” what the European Union is about has led to fundamental errors in the way the Brexit process has been handled, leading them to believe that “golden bridges” were not necessary.

It has been said that the Brexiteers never expected to win and, therefore, never had any plan as to how to manage the actual Brexit process. We are not so sure that this is true. Give the depth of their emotional commitment to Brexit, it seems unlikely that the Brexiteers would embark on a referendum campaign that they expected to lose, thereby closing off the Brexit option for quite a long time aa the UK continued with EU membership on the terms that Cameron had negotiated.

It is more likely that they thought Brexit would be easy and they believed that the EU, as a result of decades of negative publicity in the UK, was a hollowed-out “evil empire” that would crumble in the face of Brexit Britain’s demands.

They appeared to think that the UK would, within months, be on its way out of the EU, cost-free, and with a trade deal equivalent to membership of the Customs Union and the Single Market, but without the obligations. The deal they thought they would get would allow them to negotiate trade agreements with countries, around the world, which would be queueing up days after the referendum vote to open discussions.

Of course, none of this has happened, is happening or is likely to happen.

While she had campaigned to stay in the EU, but not in a way you would have noticed at the time, the new Prime Minister, Theresa May, subsequently bought into this “Brexit is easy” myth with her “Brexit means Brexit” mantra.

May also appeared to burn the “golden bridges” with her interpretation of Brexit to mean an end to Single Market and Customs Union membership, as well as opting out of the jurisdiction of the Court of Justice of the European Union (CJEU).

A quick stock-check:

  1. There has been no cost-free exit from the EU. The UK will have to pay around €50billion to settle outstanding liabilities. The payments will run over many years.
  2. The CJEU will continue to exercise jurisdiction as regards the rights of EU citizens resident in the UK for around 10 years from today’s date.
  3. The EU has made it clear that there will be no trade deal with the UK before it leaves the EU on March 29th Just a roadmap for such a deal.
  4. The EU has also made it clear that there are no circumstances in which a trade agreement with the UK will mimic membership of the Single Market and the Customs Union.
  5. Rather than Brexit being easy, and something done quickly, the UK has had to ask for a “transition arrangement” after March 29th, 2019, which will run to December 31, 2020, during which the UK will be subject to all EU rules and procedures, but with no say in EU governance processes. Prolonging the UK’s membership of the EU on these terms was proclaimed a major negotiating success. Hard to imagine what failure would look like.
  6. Negotiations have not opened with other countries for trade deals, though they can begin after March 29, 2019, but cannot be implemented, if concluded, until the transition period ends. The question is, of course, who would want to negotiate a trade deal with the UK until the terms of the UK’s deal with the EU are known? Also, the terms already being talked about for such deals by the US and Australia shows the prices the UK will have to pay to secure them, prices the Brexiteers may find that the UK public is not prepared to pay. Trade politics will become domestic politics and such politics can be brutal.
  7. After the end of the transition, the UK will be able to control the movement of citizens from the EU to the UK. But the EU is will also be able to control the movement of UK citizens into the EU. If the UK introduces tough visa and/or work permit schemes for EU citizens, so also will the EU. For example, one prominent Brexiteer has suggested that EU citizens only become entitled to healthcare after 5 years. Would that also apply to UK citizens on holidays elsewhere in Europe?
  8. The government’s own analysis shows that anything short of continuing membership of the EU will result in the UK being poorer than it otherwise would have been.

Then, there is the small matter of a physical border on the island of Ireland.

There are borders today on the island between Ireland and Northern Ireland. But they are invisible political, constitution and social/cultural borders, rather than hard, physical, security or customs borders. The long-established Common Travel Area between Ireland and the UK and Northern Ireland meant people could pass freely while membership of the Single Market and the Customs Union meant border posts to check on goods weren’t necessary either.

May’s “red lines” implies that, in the absence of alternative arrangements, a new, hard physical border is inevitable on the island of Ireland, with all that means for the violence-ending Good Friday Agreement, which is twenty years in place this week.

The Brexiteers never paid any attention to the potential impact on the island of Ireland of what they were demanding. When the border issue came like an express train out of left field it came, to mix the metaphors, like Mike Tyson’s punch in the face. Hence the backstop that was agreed last December that, in the absence of any other arrangement, the UK will accept continued regulatory alignment between Ireland and Northern Ireland.

Acceptance of this provision was necessary to get the rest of the Withdrawal Agreement over the line. Only subsequently have UK politicians realised what this commitment will mean in practice and this realisation has given rise to attempts to walk back the commitment.

The attempted “walk back” is such that the EU has built the commitment into the draft legal text of the Withdrawal Agreement to make sure it doesn’t happen. But it would appear that the UK still doesn’t “get” the EU and doesn’t believe that it is serious when it says what it says about Ireland. As an illustration of muddled UK thinking, this text we came across the other day on Twitter is hard to beat:

My suspicion from listening to informed pro-Brexit sources [BBC correspondent – we have deleted the name referred to] is that they believe that at the very last moment, faced with a cliff edge in smoky rooms, the EU will crumble & agree to ditch Irish interests in order to keep useful UK financial assets available.

This language shows such an ignorance of the EU as to be breath-taking.

It sees the EU as a purely transactional organisation, cash-obsessed, rather than as a community of values and solidarity. As such, the writer expects the EU to sell-out the vital interests of a member state for cash from a non-member, and not just any non-member but a non-member that has left the EU because it had rejected that community of values.

The EU would not survive such a betrayal of a member state for what would be the point of the EU if it put the interests of a former member above those of a loyal and contributing member?

While the EU might do minute-to-midnight deals, it doesn’t do them anymore in smoky rooms and it only does them with members, not with non-members. The comment quoted is another example of the denialism that is all too prevalent about Brexit in the UK. Denialism is grounded in the belief that the UK can leave the EU, that nothing will change, and that the UK will still carry the same political weight as it does today because the UK is too big, too important, not to get its way.

A couple more of those Tyson punches will be necessary to break the spell of denialism.

Because the UK will not get the trade deal with the EU that Brexiteers promised, borders and controls will be inevitable. A hard border in Ireland beckons which can only be avoided if the backstop arrangements are triggered. But there is more than a fifty per cent chance that the May government will baulk at this because of its dependence on DUP votes in Parliament to survive. Which mean that the “no deal” scenario is a lot higher than many people, especially in the UK, believe.

All of this will be known by around October of this year when the Withdrawal Agreement has to be finalised to allow for ratification. Then the UK parliament will be faced with a legally-binding Withdrawal Agreement offer from the EU that proposes a Canada-style trade agreement, with maybe some additional agreements on “open skies” and on data flows, along with the backstop arrangements on Northern Ireland. Other key features of the Agreement will be language on financial obligations and citizens’ rights.

While the granular details of the future EU-UK trade agreement will not be available by October the framework that will be on the table will be such as to make it clear that the UK will be poorer as a result than it otherwise would have been and that frictionless borders do not exist outside the Single Market and the Customs Union. But, with her red lines, the government will have no obvious “golden bridge” back to the Single Market and the Customs Union.

We have written before that after March 29th, 2019, May will be able to say that she has delivered on the referendum instruction to leave the EU. Thereafter, in the trade talks she may seek to blur her redlines and stay in the Customs Union and the Single Market to “save the Union (of GB and Northern Ireland) and to “save the economy”. But when you have painted the lines so red, so often, it can be difficult to find a way to erase them.

Rolling over the transition might be an option but whether the politics of either the EU or the UK would allow that is hard to say some two and a half years out.

Until the Withdrawal Agreement is signed, sealed and delivered an air of uncertainty will continue to surround the Brexit process.

For the moment, all the UK can do is, like the Light Brigade, charge on. All businesses can do is to hope for the best, but prepare, very actively, for the worst. And with each passing day the time to do so gets tighter, much, much tighter.

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