This Brexit Blog was written on Sept 3rd, 2018

 

After another week of negotiations between the EU and the UK we are no further along. If anything, things have gone backwards. To coin a phrase, we are in for a long, hot winter.

As we wrote in last week’s BEERG Brexit Briefing, the real issue for the immediate future remains the “politics of hard numbers” in the UK House of Commons. Of course, the UK government and the EU are working to finalise the Withdrawal Agreement by the end of this year at the latest, the October deadline having slipped, however, as any decent trade union negotiator will tell you, there is not much point in coming back with an agreement if the members are in no mind to accept it.

Sometimes the mood is just ugly and it can take a strike to break the logjam.

If the 60, or so, Conservative Party, Moggite, “vote against anything”, ultra-Brexiteers oppose whatever Withdrawal Agreement Prime Minister Theresa May reaches with the EU then she simply doesn’t have the votes to get it through the Commons.

The Moggists are now campaigning under the rubric “Chuck Chequers” the plan on which May still places all her Brexit bets, even after the EU has said no.

I wrote the above paragraph on Saturday. Sunday brought news that now one of the “loyalist” MPs, Nick Boles, was also leading a campaign to “Chuck Chequers”.

He wants the UK to stay in the European Economic Area for the moment as a half-way house to a free trade agreement à la Canada. Now the Boles plan, as outlined, is nuts as it essentially depends on the EU agreeing that the UK can put itself in a position where it increases its negotiating leverage vis-à-vis the EU: “please sir, can I have a big stick with which to beat you”.

But that is not the point.

Boles represents a further vote leakage from May. Mogg-ists to the right of her, Boles-ists to the left. Who wants to be caught in the middle with May?

This morning, Monday, saw a savage attack on May’s plan from Boris Johnson, until recently an underwhelming foreign secretary. The subtext of Johnson’s article in the Daily Telegraph is: I want to be prime minister instead of May.

Expect fireworks at the Conservative Party annual conference later this month. September may turn out to be the cruellest month.

As we suggested last week the British Prime Minister may have hoped to get the necessary votes from Labour Remainers, though our own view is that few of them would be prepared to do so because of the risk of being deselected as Labour candidates for the next election.

The decision of the Brexit-supporting Labour MP, Frank Field, to quit the party and sit as an independent is another nail in the coffin of May’s hope of Labour votes.

Field, a long-time Labour MP, was being threatened with deselection by his local party because of his support “for the Tories”.  Any Labour Remainer who had thought about going over the top will now think again.

Now, the politics of Labour and Brexit are extremely complicated; and it is not our purpose to discuss them here. The point we want to make is that any MP who opposes the party line on May’s Withdrawal Agreement, which is likely to be to vote against anything she negotiates, runs a very high risk of deselection.

Some may be willing to take that risk but, I suspect, not enough to cancel out the 60 Moggite votes. And now the Boleites.

Just days before Field’s decision, UK newspapers were full of stories that the EU was “weakening” and was going to do a Brexit deal with the UK after all. These “all is changed, changed utterly” reports were based on the complete misinterpretation of a couple of remarks by the EU’s chief Brexit negotiator, Michael Barnier, and French President, Emmanuel Macron. The UK journos heard what they wanted to hear, not what was being said.

This was confirmation bias in play. They were soon put right. Lest there be any lingering doubt, over the weekend Barnier laid it on the line. According to the Guardian:

Michael Barnier has said he is “strongly opposed” to the prime minister’s Chequers proposals on future trade, as he advised European car manufacturers that they will have to use fewer British-made parts after Brexit.

In his most damning condemnation yet of the UK government’s plans, the EU’s chief Brexit negotiator said the British offer on customs was illegal and its suggestion of a “common rulebook” on goods would kill the European project.

Instead, in an intervention that will concern the 186,000 people directly employed by the car industry in the UK, Barnier warned European manufacturers that the streamlined system of imports and exports between the UK and the rest of Europe would come to an end.

Damian Green, a close backbench ally of the Prime Minister, accused Barnier of “not having a plan” and said that the only plan on the table was the UK government’s Chequers proposal.

Green is wrong. Barnier does have a plan. It is called the European Union and it is Barnier’s job to defend it, not to find ways of helping the British out of the hole they have dug themselves into.

Much of the UK newspaper commentary over the past week, often of the breathless “I just learned from a senior source” type, missed the point that, right from the start, the EU has laid out a two-step approach to the Brexit discussions, in line with the provisions of Article 50 of the Lisbon Treaty.

• Step One: first, negotiate a Withdrawal Agreement (WA) and then, when the UK has left the European Union,
• Step Two: negotiate an agreement to cover future relationships between the UK, now a third country, and the EU.

The WA negotiation itself breaks down into two steps:

• Phase A covering a range of issues that the UK needs to settle with the EU arising from its proposed exit; and
• Phase B, to begin once Phase A was settled, to cover the “framework” of the future relationship.

As we noted in last week’s BEERG Brexit Briefing, agreement on the Phase A issues of citizens’ rights, financial obligations and an Irish backstop was reached last December, though the UK has since spent the time trying to argue that what was agreed on the Irish backstop wasn’t really agreed at all.

The EU has stood firm behind Ireland and has made it clear to the UK that what was agreed was agreed and that there can be no backsliding. Backslide on Ireland and there will be no agreement.

Nevertheless, last December’s agreement allowed the WA talks to move to Phase B, discussions on the future “framework” of the relationship between the EU and the UK.

As we also noted in last week’s Briefing the UK wants the “framework” talks to be more than that. It wants them to spell out in detail the future relationship between the UK and the EU. hence the UK’s “Chequers” package.

The EU has said, repeatedly, that it will not go into detail but has indicated that it will offer the UK an agreement that goes beyond any agreement it currently has with a third country.

That future agreement will have two dimensions: a market dimension and a non-market dimension. The non-market dimension will cover issues such as security cooperation, defence and home affairs. The market dimension will cover the level of access the UK will have to the EU’s single market covering both goods and services and custom arrangements.

To date, it would appear that there has been a good deal of progress on the future framework for the non-market dimension. Much less so on the market dimension.

It bears repeating that the dynamics of the process underway is driven by the decision of the UK to leave the EU. The UK was not asked to leave, nor was it expelled.

The process is not a normal negotiation where both sides believe that they will be better off when a deal is done, maybe one side more so that the other, but both would still be better off than they were before the talks began.

Brexit is not just a zero-sum game. It is a negative-sum game. Both sides will be worse off, even if ardent Brexiters deny that fact. Brexit is not a classic negotiation. It is a damage limitation exercise.

When you are trying to limit the damage, you do not make late night concessions to the other party. In fact, you don’t make any concessions to the other party at all, because in such a scenario any concessions are to your own detriment. In response to UK politicians and commentators demands that the EU should “show imagination” and “compromise and be flexible”, be less “legalistic” the answer is simple: Imagination, compromise, flexibility and less legalism will cost us and benefit you. Now, why should we do that?

As is clear from the Barnier quote above the EU believes that what the British are proposing has the potential to completely destabilize the European Union and leaders such as Merkel and Macron are not going to go there.

Brexiteers have argued that what they dread is a Hotel California Brexit, where the UK checks out but can never leave.

Actually, another hotel analogy is more appropriate.

All global hotel chains have multiple brands, from top-of-the range luxury to bargain basement budget. Take the French chain Accor. You can either stay in a Sofitel at hundreds of euro a night or an IBIS budget hotel for maybe €60 to €70 a night.

What the UK wants is a Sofitel room and service at an IBIS price.

The Times writer David Aaronovitch recently recalled, in a Twitter post, that the “definition of chutzpah, famously is the man who kills both his parents and then begs for leniency because he’s an orphan.”

David Lidington, effectively the UK deputy prime minister, has maybe now offered us the Brexit definition of chutzpah. He turned up during the past week at the annual summer conference of MEDEF, the French employers’ association, and said the EU had no alternative but to accept the Chequers “deal”, which the UK tabled 18 months into a two-year negotiation, because now there was no time to negotiate anything else.

It is a little like turning up at a Sofitel at five minutes to midnight and demanding a room at IBIS prices and telling the night manager that if he doesn’t give you a room he will be responsible for you spending the night on the streets.

If the manager is French no doubt his reply will be: “I’m sorry, I can’t do that. But we can provide you with a camp bed in the luggage storage area until such time as you sort yourself out. Perhaps we could call it an overnight transition arrangement, or a sleeping implementation phase, if you prefer.”

In other words, in this life you generally get what you are willing to pay for.