Article 50, Brexit, British Government, Irish border, Northern Ireland, Theresa May

That #Brexit Winding Road may be a Cul-de-Sac

This post was written on Monday Dec 4th, 2017.

may-tusk-junckerThere was a time, before the Internet and social media, when politicians could say very different things to very different audiences and get away with it. Not so today. To coin a phrase, what you say in Brussels is known in Belfast before you finish your sentence.

As I write this, at 18:30 Paris time, reports of what actually happened in Brussels today are still somewhat unclear. But it does appear that all parties thought a deal was done until the UK said no at the last minute. Speaking to Irish radio, the Taoiseach (Irish Prime Minister), Leo Varadkar said:

“The U.K. had agreed a text on the border that met our concerns … I was then contacted by [Juncker and Tusk] and confirmed Ireland agreement to that text… I am surprised and disappointed that the U.K. Govt is not in a position to agree to what was approved today”

Reports suggest that the Democratic Unionist Party (DUP) said it could not support the agreed text as it appeared to split Northern Ireland economically from the rest of the UK as Northern Ireland would, to all extents and purposes, still be in the EU’s single market and customs union while the rest of the UK would not.

As UK Prime Minister, Theresa May, needs the DUP’s 10 votes in the House of Commons to keep her government in office, the “Ulster says No” stance of the DUP left her unable to tell the EU that the “UK says Yes” to the Article 50 deal that was on the table.

But even if the DUP had not blocked the deal, May’s ability to get what was agreed on citizens’ rights and the financial settlement through the Conservative Party would have been problematic, as we argued in our last post: https://beergbrexit.blog/2017/12/03/long-and-winding-brexit-road/.

That is still our view.

One thing is now clear. If the DUP blocked today’s deal then there are no circumstances in which the Irish government will in any way soften the position it has taken in the talks to date.

The UK prime minister may allow herself to be held hostage by the DUP. For an Irish government to do so would be political suicide. Further, before today the Irish government had the solid support of the other 26 EU member states. The UK’s behaviour today will have will convince them that they were right to be so supportive of the Irish.

Other EU member states will be asking themselves this evening just how reliable is the UK government as a negotiating partner? What, if anything, can the government deliver? How does the process now move forward with any credibility?

Because a key currency in negotiations is credibility.

When I tell you it is a done deal, it is a done deal. My word is my bond. When I break my word my credibility is shot. Why would the other side make me an offer if they can’t be sure I can deliver?

So, what happens now?

The UK government has put itself in a position where it cannot meet the expectations of all those involved in the Brexit process. Cut a deal with the EU on the terms offered by the EU and a significant part of the Conservative/Brexiter/DUP coalition will be outraged. Keep the coalition together and there will be no deal with the EU and the UK will exit the EU without any agreement as to future trading arrangements. Business will be outraged.

Choices have to be made within hours, days at the most. No more hiding behind language that could mean all things to all men… and women.

Brexit is a process built on negativity. Brexit is against things: …Against the European Court …Against the European Commission …Against European laws …Against immigration.

There is no coherent answer to what Brexit is for. A Global Britain, free trading with the world? A “drawbridge economy”, keeping jobs in and people out? Close to the EU without being part of it, or pushing the EU as far away as possible?

Since the UK voted to leave the EU the EU has known clearly and precisely what is wants. To preserve its internal legal order and the integrity of the single market. It has gone into the process with defined objectives.

On the other side, the UK has been trying to satisfy dissipate parts of a coalition which want incompatible things. But there are only so many impossible things you can believe before breakfast.

Since we started writing this briefing we have consistently said that business should hope for the best, plan for the worse. Increasingly, we think that business should just plan for the worse.

Article 50, Brexit, British Government, Brussels, Divorce, Northern Ireland

#Brexit: A Moment of Truth Fast Approaching

Written on Sunday Nov 26th.

Brexit4After we wrote our weekly Brexit Briefing last Friday, the news broke that the European Union (EU) had given the UK until Monday, December 4, to table revised and meaningful proposals on the three Article 50 issues, the rights of citizens, the “Irish question” and meeting financial obligations if it wishes the EU27 to agree at their December summit to move the talks to discussing the future relationship between the two parties. As Politico noted:

European Council President Donald Tusk set an “absolute deadline” of December 4 for the U.K. to submit a revised offer on the Brexit bill and a credible solution for the Irish border, telling U.K. Prime Minister Theresa May on Friday that otherwise it would not be possible to move on to the second phase of talks, a senior EU official said.

The official said May had accepted the timeframe, and that Tusk warned her if London misses the deadline, the European Council would not be able to declare “sufficient progress” at its December summit.

Of the three issues, citizens’ rights seems the easiest to resolve, with reports that the two sides are not that far apart. Bear in mind, however, that the deal on citizens’ rights would only apply to EU citizens already in the UK on an agreed date. What happens with regards the rights of EU citizens to live and work in the UK after Brexit is entirely a matter for the UK. Work permits and visa regimes beckon.

However, at the time of writing, (Sun, Nov 26th), it seems to us that it will be impossible for the UK to present proposals on the other two issues that will be acceptable to the EU. This will mean that the EU27 at their December summit will not agree to allow the talks to move on to discussing with the UK “the framework for its future relationship with the Union.”

Newspapers reports suggest that such a decision would, as a result, have to be deferred to the next meeting of EU leaders in February 2018, to give the UK further time to resolve the Article 50 issues.

But if the UK cannot present acceptable proposals on the Irish issue and the financial settlement by December 4th it is difficult to see how it could do so by February, for reasons we explain in this note. There is a very real prospect of the talks coming to a shuddering end and the UK exiting the EU without a deal in the absence of a radical rethink on the part of the British.

The Irish Question: The UK has said that Brexit mandates that as well as leaving the EU’s political structures it must also leave the EU’s single market and customs union. This inevitably means that there will need to be borders between the EU and the UK. With one exception these borders will be sea borders, between Calais and Dover, for example. That exception will be a border between Ireland and Northern Ireland, the only future land border between the EU, of which Ireland will be a member, and the UK, of which Northern Ireland is a part.

The EU has some 40 land borders with non-EU countries. They are just a fact of life with little emotion attached to them. Not so a potential border between Ireland and Northern Ireland, for reasons we explained in last week’s blog: (link here). As the Irish political sociologist, Kathy Hayward puts it, a border in Ireland

…isn’t ‘a stick to beat’ brexiting GB. It is a wound of deep conflict. It is a join of close contact. It is a thread of careful agreement. There is no mere ‘grandstanding’ or ‘posturing’ here. This is not a game.

If the UK continues with its decision to stay outside the customs union and the single market then it is inevitable that there will be a hard border in Ireland, with all the unpicking of that “wound of deep conflict” that will follow.

That is the consequence of the choice that the UK has made. That consequence is the responsibility of the UK, and the UK alone. There are no magical “technical electronic solutions”, no diplomatic language fudges, available to settle the issue.

Given this, as the Irish journalist, Fintan O’Toole, puts it in the Observer on Sunday, November 26th,

So what is the Irish government supposed to do? What happens with the border is a vital national interest. Ireland is desperate to hear what Britain has in mind. Instead, it has been told not to worry its pretty little head about it, but trust in the reassurances of its betters. It is being placed in the position of a 1950s wife, whose husband is betting the house on a horse race while he tells her, with increasingly irritation, to stop worrying because the nag is sure to romp home.

But there is little the UK can do to adjust its position as the Prime Minister, Theresa May, is the prisoner of the Northern Ireland-based Democratic Unionist Party (DUP), on which her minority government is reliant. At their annual conference on Saturday, November 25th, their leader, Arlene Foster, announced that she had written to all 27 EU governments telling them

“We will not support any arrangements that create barriers to trade between Northern Ireland and the rest of the United Kingdom or any suggestion that Northern Ireland, unlike the rest of the UK, will have to mirror European regulations. I have written to the heads of government of each of the EU 27-member states setting out our views.”

So, no possibility then, as has been suggested, that Northern Ireland might stay in the customs union and single market, even if the rest of the UK exits.

As things stand, it is inevitable that the Irish government will veto the move to phase two of the Brexit talks. This would probably have happened anyway, but given the current political situation in Ireland, where the government faces a no confidence motion over a long-simmering scandal involving the police force, it copper-fastens it. If the government falls as a result of the no confidence motion and there is an election then no political party is going to allow itself to be outbid as being “soft on the Brits”. The shadow of history looms large in Ireland. See here.

Even if the government survives the same logic applies. If the Opposition is prepared to bring the government down over a police scandal then it will certainly do so if the government is seen to yield to British pressure. If Theresa May’s government is captive to the DUP, then the Irish government is captive to the opposition. Neither government is going to break free of these constraints between now and December 4.

The financial settlement: The financial settlement is almost as intractable as the Irish question. Simply put, the EU takes the position that the UK committed, as a member of the EU, to budget and other expenditures of around €40 – €60 billion and that it needs to settle these liabilities now that it is leaving.

When these liabilities are settled the discussion can move on to future relationships. The EU view is that paying money already owed buys no future benefits. It is worth noting that Berlin puts the number owed at between €60 and €90 billion, and insists that no conditions be attached.

The UK accepts that there are financial liabilities and has made an offer of around €20 billion in settlement, far short of what the EU says is required. At a UK cabinet meeting on Monday, November 20, it was agreed that the offer could be increased to around €40 billion.

However, as the London Evening Standard reported:

…it is believed no exact figure has been set, and the extra funding would only be on the table in exchange for fast-tracked talks on post-Brexit trade arrangements, and the framework for a two-year transitional deal after formal withdrawal in March 2019.

This position was confirmed by a report in the Guardian which said:

A source close to those attending the session made clear that this referred to the total package including the future trading relationship as well as the divorce agreement, which focuses on EU citizens’ rights, the Irish border and the financial settlement.

The Guardian report further noted that a spokesperson for the PM had said:

“It remains our position that nothing’s agreed until everything’s agreed in negotiations with the EU”

So, the EU want an unconditional commitment from the UK to settle liabilities of around €50 billion. The UK would appear to be willing to offer around €40 billion, but only as part of a total package that involves talks on the future EU-UK relationship, a transition to that relationship and a deal on what that relationship actually will be.

Two mutually incompatible positions. The payment will either be unconditional or conditional. It cannot be both. Given that the EU will not put the integrity of its internal legal order at risk the UK’s conditional offer is unlikely to be accepted and May cannot come back with an unconditional offer because of opposition to such a move within the Conservative Party.

But then the UK cabinet, and the wider Conservative Party, with little real knowledge of the EU and how is works, has always harboured unreal expectations when it comes to Brexit. As the Observer (26/November) reports the former UK ambassador to the EU, Sir Ivan Rogers, as saying after a lecture last Friday:

…May’s Brexit strategy was “an accident waiting to happen”. Speaking after a speech at Hertford College, Oxford, he said completing the Brexit process was “guaranteed” to take a decade. He said that the prime minister’s unrealistic hopes of securing a bespoke trade deal meant a car crash in the next few months was “quite likely”.

All of which leads us back to the argument we advanced at the start of this paper: “…if the UK cannot present acceptable proposals on the Irish issue and the financial settlement by December 4th it is difficult to see how it could do so by February…”
Fasten your seat belts. The “car crash” predicted by Rogers seems more than “quite likely” and may happen sooner rather than later.

BUT… and it is a very big but… there is no doubt but that there is a majority in the House of Commons which does not wish to see the UK leave the EU without an agreement and, truth be told, would probably prefer to see the UK stay in the customs union and the single market. But that majority is split between the two main parties, Conservatives and Labour, and feels constrained by tribal, political loyalties. With the blinding lights of the oncoming car rapidly coming into view will those loyalties shatter? Could the “silent majority” assert itself?

Could parliament take back control?

Brexit, British Government, Brussels, Irish border, Northern Ireland

Break, for the Border #Brexit

This blogpost was written on Nov 24th, 2017

welcometoniThe week opened with the UK cabinet agreeing that it would offer more money to the EU to settle its financial obligation triggered by its decision to leave but only on condition that the EU would agree to now move to talks about the future relationship and that the money would only be paid over when a trade deal was actually signed. This is an offer that, by Friday, even the ultra-Brexit supporting newspaper, the Telegraph, was admitting would be rejected by the EU.

The week closed with howls of rage from British politicians, often Brexit supporting, when the EU announced that UK cities were to be excluded from consideration from the prized European Capitals of Culture competition for 2023. An example of the EU punishing the UK, Brexiters argued, apparently ignorant of the rules that only cities from EU, EEA or applicant countries can be so nominated. Why would the EU subsidise cultural activities in a city in a country that had left the EU?

When you are thrown out of the culture club all you can say is: “Do you really want to hurt me, Do you really want to make me cry?”

The rage over the cities issue neatly captures a phenomenon that Chris Grey identifies in a blog post that “there is the strange sense from those who argue most vociferously for Brexit that, somehow, Brexit won’t change anything. For example, I’ve seen Brexiters ridicule the idea that leaving the EU could mean needing visas to travel to the EU or that it could mean restrictions on air travel within the EU.” On air travel see this.

A phenomenon also captured in an article by Tony Barber in the Financial Times that “the clamour for special treatment is particularly loud in hard-pressed areas of England that voted heavily to leave the EU in the June 2016 referendum.” For example, the seafood industry in Grimsby, which voted 70 per cent to 30 per cent for Brexit,

…fearing that competitors in French and German ports will gobble up its business, wants special free trade status after Brexit.

What might be described as wanting to have your fishcake and eat it.
But by far the biggest Brexit development of the week was the issue of the potential re-emergence of a border in Ireland moving centre stage in the negotiations and threatening to block them moving to phase two, talks about the future relationship between the UK and the EU after Brexit.

There are three issues on the table in phase one of the Article 50 (A50) discussions: the rights of EU and UK citizens living in the UK and EU respectively; the financial obligations that the UK has signed up for as a member of the EU and which now must be honoured; and issues relating to the island of Ireland.

A major theme in the UK Brexit referendum was that leaving the EU would allow the UK to “take back control” of its borders. As of today, as a member of the EU, the UK has no borders with other EU countries. In fact it has no borders at all as there are no non-EU countries around it. After Brexit, depending on how Brexit is defined, with one exception, all of the UK’s borders with EU countries will be sea borders, the English Channel and the North Sea, for the most part.

The one exception is the island of Ireland, with its long, tortured and bitter history with the UK. History in Ireland is not the stuff of the past. History is modern day politics. Orange marches on the 12th of July, celebrating the victory of King Billy at the battle of the Boyne, still have the potential to trigger confrontation. Northern Ireland has been without a devolved government for close on a year because of a dispute over Irish language legislation.

Ireland became independent of the UK in 1922, close on a 100 years ago. It became a republic in 1949. But six counties, located in the Northeast of the island, because of a Protestant/Unionist majority in those counties, opted to remain with the UK. What the Irish refer to as “partition”. From 1922 onwards, when partition happened, the unionist majority in Northern Ireland systematically discriminated against the Catholic minority, something ignored by UK governments, both Conservative and Labour. It should be remembered that the official title of the Conservatives was the Conservative and Unionist Party.

The border between the two parts of the island was clear and visible, manned by security forces on both sides.

In the 1960s, inspired by the US civil rights movement, Northern Irish Catholics began their own civil rights movement, marking the beginning of the end of the Unionist state. But the violent reaction of the authorities in Northern Ireland to the civil rights movement gave birth to the Provisional IRA, the “Provos”, and years of terrorist violence followed, with atrocities being committed by all sides.

The Good Friday Agreement (GFA) of 1998 began the process of ending violence and returning a degree of normality to Northern Ireland through a governance process that involved representatives of both communities. But the deep divides between the two communities have not healed to this day. Like a sleeping volcano, anger and hurt stand ready to erupt at any time.

The hard border between the two parts of Ireland also began to disappear, helped enormously by the creation of the EU’s single market, building on the already existing customs union. The disappearance of trade borders because of regulatory harmonisation across the island facilitated the disappearance of security borders. EU membership has boosted the peace process is myriad other ways. See: Irish-ambassador-Daniel-Mulhall-Brexit/

In Ireland where, to borrow some words of Yeats, “peace comes dropping slow”, the decision by the UK government that Brexit means leaving not only the political structures of the EU but also the single market and the customs union puts all that has been achieved at risk. If Northern Ireland, as part of the UK, is outside the single market and the customs union then the return of a physical border is inevitable. The return of a border could awaken the sleeping volcano.

If the UK, post-Brexit, wants to diverge from EU standards, and it does, see here, then border controls is the only way the EU can ensure the integrity of goods imported into the EU through Northern Ireland. But make no mistake. It is the choice made by the UK government to quit the single market and the customs union that results in the border.
Ireland has made it clear that it will veto moving to phase two of the Brexit process is the UK does not offer written, bankable, guarantees that there will be no border. The UK responds that this is an issue to be dealt with in phase two when the trade relationship is discussed. But how can it be when the UK has already ruled out the only options that would prevent the need for a border? A bit like an employer saying that they will open pay negotiations with a union but only on the understanding that a pay increase is a priori ruled out.

As Chris Grey points out in his blog, Brexiters appear to suffer from a touch of cognitive dissonance, where the consequences of Brexit are either denied or blamed upon the EU, and not attributed to or accepted as resulting from the vote to leave, as in the Capitals of Culture furore.

Jarring reality can break the hold of cognitive dissonance. Such will be the case with an Irish veto on moving to Brexit talks phase two. The UK was never slow to use its veto during its years of EU membership when it felt potential decisions cuts across its national interests. It can scarcely complain when other countries do the same.

The veto will be used. To quote the Irish foreign minister, Simon Coveney: “We have been preparing effectively for that summit for months now to make sure that Ireland’s voice is heard in the context of our future as a member of the European Union, in the context of ensuring we do not have a border on the island of Ireland again.”

The UK made its Brexit choices. Now it must live with the consequences. If the talks break, it will be for the border.

Footnote: As I write this, the newspapers are awash with talk that the Irish government may fall, triggering fresh elections over who knew what and when as regards a police scandal. An election guarantees an Irish veto as no party is going to campaign as the one who would agree to allow the UK to re-impose a border in Ireland. No doubt the UK Brexit supporting newspapers will complain loudly that “Irish politics” are derailing Brexit, ironically ignorant of the fact that Brexit is little more than the playing out of UK politics.

Brexit, Irish border, Michel Barnier, Northern Ireland

Is the UK’s #Brexit Cheque really in the post…?

This article was written on Nov 12th 2017.

13589652_f520It is becoming increasingly difficult to see Brexit ending well. Indeed, the process could hit the wall within weeks. Why? The complete and utter inability of the UK government to agree what it wants out of Brexit and, as a result, how to conduct the exit process. This should not be surprising given the closeness of the Brexit referendum vote: 52% to 48%, with the 52% only representing 37% of the total electorate.

It would appear that, when it comes to Brexit, the UK electorate roughly breaks down into three, though it is impossible to say exactly what weight to give to each of the three.

1. First, there are those who are totally opposed to Brexit and want to see the decision reversed.

2. At the opposite end of the spectrum are those who want, in the words of arch-Brexiteers, Boris Johnson and Michael Gove, the UK to become “a fully independent self-governing country”, irrespective it would seem, of the costs involved.

3. The third bloc, probably where most pragmatic businesses people are to be found, believe that if Brexit is to go ahead, then the economic disruption should be kept to a minimum, preferable through continued membership of the EU’s single market and the customs union.

On balance, and many of the polls show this, there is probably a majority in the UK who support leaving the political dimension of the EU but remaining within its economic dimension. The problem is that, what we might call the “economic remainers”, are split between the main political parties while the “Britain First” group of Johnson and Gove effectively control the Conservative Party, and thus the government.

Their control is such that within the past few days, the prime minister, Theresa May, has announced that she will bring forward an amendment next week to the European Union Withdrawal Bill which will embed the UK’s decision to leave the European Union at 12:00 midnight, Brussels time, on March 29th, 2019 in law. Irrespective of what happens between now and then.

The fact that there is no internal agreement within the UK as to the meaning of Brexit makes, as we note above, managing the process difficult, if not impossible. How do you get to where you want to go when you can’t decide on your preferred destination?

The first phase in the exit process is the Article 50 negotiations. The essence of Article 50 is found in the following language:

A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, the Union shall negotiate and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union.

The EU has identified three issues that must be resolved during the A50 discussion with the UK before talks can move to the issue of the “framework for its future relationship with the Union”. They are: settlement of the UK’s outstanding financial commitments with the EU; the rights of EU citizens in the UK and UK citizens in the EU; and issues relating to the island of Ireland, where the only land border between the EU and the UK will exist, post-Brexit.

When it comes to the settlements of the UK’s outstanding financial commitments to the EU the two sides are approaching it from mutually incompatible positions. The EU sees it as a simply a matter of the UK paying what it owes, a settling of accounts. Once outstanding accounts are settled then what happens in the future can be discussed. There can be no future discussion until all outstanding bills are fixed, or at least an agreement is reached on how the bills will be fixed.

The UK see it as a negotiation. We will pay what you say we owe provided we get future benefits for our money. There must be a quid-pro-quo. The UK has made an initial offer of €20 billion and now says that it will not increase that figure until the EU agrees to trade talks. Even then, it would find it politically impossible to increase the figure without an actual trade deal to show for it.

This was the week that EU patience with what it sees as UK gameplaying finally snapped. At a press conference last Friday, after what can only be described as two days on non-negotiations, the EU’s chief negotiator, Michael Barnier, said that the UK has two weeks to make a serious proposal on its outstanding financial commitments, put at roughly €60 billion by the EU, or else he would not be able to report “sufficient progress” to the heads of government of the remaining EU27 member states in December to allow talks to proceed to what the UK insists on calling “trade” but which Article 50 refers to as the “framework for its future relationship with the Union”. A big difference in understanding as to the substance of the next phase of discussions, if the process ever gets to that point.

As of today, it seems extremely unlikely that there is any sort of political consensus with the UK cabinet to do what Barnier asks. On the contrary, in a complete misreading of the EU’s position, there is a belief on the part of many of the “Britain First” grouping that the EU is so desperate for the UK’s money that it will fold and give the UK the trade terms it wants if only the UK would walk away from the negotiating table. David Davis appeared to confirm this when he said in a TV interview Sunday that the EU should not to expect a figure or a formula by which the UK’s obligations would be calculated.

Even if a solution could be found on the money, this week also saw what is probably the most intractable of the three issues, borders on the island of Ireland, take centre stage. A leaked document on Thursday last revealed that Ireland and the EU were demanding that Northern Ireland remain in the single market and the customs union to avoid a hard border between the two parts of the island, a demand immediately rejected by the UK government, which is dependent for its survival on the votes of the Democratic Unionist Party from Northern Ireland.

The UK accepts that there should be no return to a hard border in Ireland, which would put the peace process at enormous risk. But it can offer no concrete solutions as to how this can be done outside the customs union and the single market. “We’ll find other ways around that”, was all that the UK’s Brexit negotiator, David Davis, could offer when asked in the same TV program mentioned above.

However, the reality is that there is no way around it. If Northern Ireland is outside the customs union and the single market then a hard border is inevitable if the EU is to protect the integrity of its internal market from goods being smuggled from Northern Ireland into Ireland, and onwards into the rest of the EU. Magical thinking and as yet undiscovered technological solutions are not going to solve the problem.

Conservative politicians and sympathetic commentators were quick to assert that the “newly hardened” Irish position, as they deemed it, was the result of Sin Fein/IRA pressure on the Irish government. No such thing.

This has been the Irish position all along. It is just that, as with other matters, the UK government has not been paying attention to what the Irish have being saying, just as they have not been paying attention to what the European Parliament is saying on citizens’ rights.

The Irish don’t have a veto on the final Article 50 agreement, if ever one is reached. But they do have a veto on whether or not “sufficient progress” has been made in the Article 50 discussions to allow the process to move on to the discuss the “future framework”.

They are not about to throw that leverage away.

The Irish position is simple: with its extreme definition of what Brexit means, out of the EU, the single market and the customs union, the UK created the problem. If it wants the process to move forward, it had better solve it now.

Post-dated commitments that it will be solved in future trade discussions will not be accepted. Like post-dated cheques, post-dated commitments too often bounce.

Indeed, that might be a useful metaphor for where we are. The EU (and Ireland) wants guaranteed, certified cheques now if the process is to progress. But all the UK is offering is post-dated cheques, with the figures to be filled in a later date.