This blog was written on Sept 21st, 2018

In our Brexit Briefing last Tuesday (here) I wrote:

“So, how will Brexit end up?”, they ask. My answer is that I have no idea. I have been following Brexit developments in detail over the past two years and have written some 60 or so of these Briefings. Yet, I have absolutely no idea of what is going to happen between now and March 29^th next year. Quite frankly, neither does anyone else.

What happened yesterday in Salzburg, when the EU brutally said that Mrs. May’s Chequers plan was unacceptable and would not work underscores the truth of this statement.

In the run-up to Salzburg it had been widely reported, especially in the UK press, that Mrs. May would use the occasion to appeal to the EU’s political leaders to go over the head of the “Brussels theologians” and show more flexibility in accommodating UK demands to be both in and out of the EU’s single market and customs union at the same time. “In” so as to ensure continued frictionless trade in goods between the UK and the EU so preserving the UK as the European off-shore manufacturing base for US, Japanese and, in the future, Chinese companies.

“Out” for services allowing the UK to cut buccaneering trade deals, with which a swath of UK politicians have an ideological obsession, with non-EU countries.

(For the arguments on why this approach was never going to work see this excellent article by former Irish ambassador, Bobby McDonagh: here)

Even before the so-called “Chequers deal” was signed-off, and it was a deal only to the extent that it was a deal between the warring factions of the UK government, the EU was already signalling that it was never going to be accepted.

The EU saw it as the latest wheeze from the UK to try to cherry-pick the single market to the UK’s advantage. Pick the benefits that suited the UK, such as allowing supply chains to continue to function, while walking away from obligations such as the free movement of people, the jurisdiction of the European Court and budgetary contributions.

The EU’s position was put clearly, and repeatedly, not just by the EU’s Brexit negotiator, Michael Barnier, but also by political leaders such as France’s Macron and Germany’s Merkel. But if the UK heard the message they did not understand it.

I think there are three main reasons why the UK got it so wrong.

First, with a handful of exceptions, no one in the UK political and commentariat class speak any European languages. They, therefore, don’t read French or German or Spanish or any other European country newspapers. Their understanding of the positions of European leaders is derived from what they read in UK newspapers or see on UK television. What they read and see is reflected through the prism of UK cognitive bias.

For example, unequivocal statements from Barnier, Macron or Merkel about the integrity of the single market were reported as “negotiating positions” which would be abandoned at the midnight hour to get a deal. Even yesterday, after EU leaders binned Chequers, May was repeating this:

“I have always said these negotiations were going to be tough… And at various stages of these negotiations, tactics would be used as part of those negotiations.”

Late last night the UK transport secretary, Chris Grayling, was saying much the same thing:

… the negotiation where people were setting out “robust, firm positions” was typical of the EU. “They build up, there’s tough language and actually a deal is done at the last. And I’m still confident that we will reach agreement”.

Because of this lack of languages UK politicians do not seem to grasp that European politicians read the UK papers and follow UK political debates. So, when Michael Gove suggests the UK will tear up any agreement after Brexit or Liam Fox hints that he is going to use executive powers to abandon EU food standards they take note. What they read gets factored into their policy positions. Quelle surprise.

Which brings me to the second point.

The UK has always misunderstood the dynamics of the process. UK politicians believe that they are engaged in a negotiation of equals and that it is a “classic” negotiation in which both sides move towards one another incrementally. I make an offer, you make a counter offer. On the eve of Salzburg the UK mantra was that its position had “evolved” and now it was up to the EU to respond.

For the EU Brexit was never a negotiation. It is a damage limitation exercise.

The UK has decided to leave the EU in the hardest fashion possible. Not just to leave the political structures of the EU, but also to walk away from the single market and the customs union. To become a “third country”. In modern times, Brexit is the first example of a country wanting to put distance between it and its biggest market, rather than get closer to it. It is a negative sum game in which both parties will be worse off, not better off.

In such a negotiating game any concession you make to the other party is, in fact, a decision by you to accept a cost instead of forcing the other party to take the hit. No rational economic or political actor willingly does that.

So, here’s something that seems to have come as a surprise to the UK. In a “negative sum negotiation” the bigger party, the party with the greater leverage, is generally the one who gets to decide. Look at the numbers. 27 EU member states: 1 UK. The EU is some six to seven times bigger than the UK. As my American friends would say: “Go figure”.

The UK sees the EU’s position on Ireland through this classic negotiating prism.

The UK is a “big” country, Ireland a “little” one. The EU is just using the Irish border as negotiating leverage. When it comes to it, the UK calculated, the EU will abandon Ireland. So, lets sort everything else out and leave Ireland to the last and then say to the EU: “Are to going to throw the deal away over Ireland?”

This is what May tried to do Thursday morning when she told Leo Varadkar, the Irish Taoiseach, that the UK’s position paper on the Irish border would not be ready by the October summit. From reports, it seems that when Macron heard of this he decided to draw a line in the sand and persuaded his fellow EU leaders that they had had enough of British games.

EU solidarity with one of its own members counted for more than cutting a deal with a country that was leaving, moreover a country whose politicians and press had spent years belittling the EU. They are still at it this morning. For example, see the front page of the Sun here  

You reap what you sow.

I saw a tweet in the past few days which likened the UK’s negotiating approach to a person who orders a €100 meal in a restaurant. When the bill arrives, they offer to pay €20. When the maître d‘ points out that the bill is €100 the guest offers to pay €40, saying to the maître d‘ “my position on this bill has evolved. Now it is up to you to show flexibility and come and meet me”. As the maître d‘ wants to safeguard the integrity and reputation of his restaurant you know what his answer will be.

The third reason why we are where we are is that the UK has no fixed constitution, no written rules by which politicians have to abide. To put it bluntly, they make up the constitution as they go along. All that counts is that the government has a majority in parliament. If it has a majority, it can more or less do what it wants. There are no real checks and balances built into the UK system.

Because of this “flexible constitution, the constitution is what the government says it is” UK politicians constantly accuse the EU of “excessive legalism”, of blindly following the rules. However, the only way you can hold a multination grouping of 28, soon to be 27, countries is through rules that are properly applied. With a court to decide on disputes. Of course, rules can be interpreted flexibly. But, in general, that flexibility is only available for members of the club, not for a country that is departing.

All three factors left UK politicians believing that they were in an old-fashioned, EU minute-to-midnight negotiation.

In summary, the UK believed that it was negotiating itself a new class of EU membership where it got the benefits it wanted while avoiding the obligations it found irksome. That was a negotiation the EU was never going to get involved in.

The substantial outcomes of all negotiations are determined by power dynamics. But the way you play your cards can have an impact at the margin and on the personal relationships between the parties. For example, a good relationship between the negotiators will be of assistance to the party who has the greater difficulty in selling the deal back home. They can be cut some slack as to how the deal is framed. Warm words are better than harsh words.

It seems that May played a bad hand badly when she spoke at dinner on Wednesday night. From all reports she appears to have told her European peers that it was her Chequers deal or no deal. If they did not give her the Chequers deal then the UK would leave without a deal. The classic “if you don’t give me your money I am going to shoot myself gambit”. Never works.

If the UK leaves the EU on March 29^th next without a deal then on March 30^th it will have no deals. With anyone.

On March 30^th the remaining 27 members states will have a deal. It is called the EU. The 27 will have the single market and the customs union, and all the rest that comes with EU membership. Not to mention hundreds of agreements with third countries. Sure, the EU will suffer economic damage from Brexit but it will have the mechanisms to adjust, and adjust quickly.

There is a very long few weeks ahead. No one can say what will happen.

Will the UK further “evolve” its position? I somehow doubt it.

As the pro-EU Conservative MEP, Charles Tannock puts it, too many of his Tory party colleagues “are unquestioning adherents to the EU evil empire dogma & Brexit sunlit uplands creed”.

Businesses need to step up their “no deal” contingency planning. Fast.