Friday 26 April 2019

Britain looks set to squander the extension period

Decades ago, when I was an impecunious student, from time to time I would receive the dreaded letter from the bank warning me about the size of my overdraft. In those far off days there was actually a branch manager who knew you and, moreover, summoned you in person for a stern lecture on financial responsibility. In response, I would make suitably contrite noises in the hope of securing the manager’s indulgence until – another reminder of a long-vanished time – the arrival of my next grant cheque or housing benefit payment.

The sensible response, having warded off disaster, would have been to mend my ways and become the model of financial rectitude my bank manager urged me to be. Instead, I would breathe a sigh of relief and resume my spendthrift ways until the next, inevitable, crisis.

The British polity seems to be approaching the stay of execution on a no-deal Brexit in a similarly cavalier way.

Nonsense, absurdity and worthless platitudes - again

The government’s talks with Labour are, supposedly, continuing but almost nobody genuinely believes these will yield anything. In the unlikely event that their proposal for a permanent customs union were to be agreed, it is a racing certainty that Labour would find a reason not to support this agreement, because there’s no political mileage for them in sharing responsibility with the Tories for the Brexit mess. But, even if they did, it probably wouldn’t get agreed by parliament. And even if it did get agreed by parliament, then it couldn’t be enforced once the future terms negotiations start. And if, even so, it were pursued in those negotiations then it wouldn’t, in itself, yield either ‘frictionless trade’ or a solution to the Irish border issue. So the talks are nonsense piled upon nonsense.

Equally nonsensical are the main parties’ current positions as regards the European Parliament elections. The Tories don’t really have a position, and still seem to be hoping that the elections won’t happen. Assuming that hope is not realised then, presumably, they will go into the election with Brexit policy of supporting May’s deal which many of their MPs and most of their members don’t agree with, and many of their voters won’t vote for.

Labour’s members support another referendum and, for the most part, are opposed to Brexit. Yet, at least for now, all that their party has produced is a document with vague pieties about seeking a “better deal” on Brexit, including the absurdity that this will mean businesses not having to pay to trade with Europe (this is code for a customs union, and implies that tariffs are the only cost of Brexit to business). Yet the UK will have a “proper say” on EU trade talks (this is code for what is itself a coded defence against the accusation that a customs union means not having an independent trade policy, and is so vague as to be meaningless anyway). Also promised is a “close relationship” with the EU, which is code for not having a policy at all. These platitudes are utterly worthless.

Malthouse madness - again

In the meantime, unbelievably, Tory MPs have decided that the best approach to Brexit is pointlessly to resurrect a proposal that is literally impossible and which therefore has precisely zero chance of success. This is the idea, variously referred to as the Brady amendment or the Malthouse Compromise, of removing the backstop arrangements for the Irish border from the Withdrawal Agreement (WA) in favour of non-existent ‘alternative arrangements'. The latest twist of this madness is to do so via an amendment to the UK legislation for Brexit, rather than the previous version of seeking to do it by re-negotiating the WA with the EU, which either removes the backstop altogether or puts a one year time limit on it (which, of course, would mean that it was no longer a backstop).

The ‘logic’ of this – and to describe it this way, even in scare quotes, is painful – is that it will demonstrate to the EU that only by removing or time-limiting the backstop in the WA will a deal pass through the British parliament – and if they don’t then no-deal becomes ‘their fault’. The fatuity of this is extraordinary. For one thing, it’s not even clear that parliament would pass such an amendment. But that isn’t the main point. For many months now, in various guises, this idea has been rejected by the EU for the very obvious reason that it cannot possibly work, for reasons outlined numerous times, not least on this blog (see, for example, the previous post).

The fact that anyone thinks it is remotely serious to go around this Mobius Strip of Brexiter madness again is yet another indication that Britain looks set to squander the latest extension period. There is also every possibility that at some point before next October there will be a Tory leadership contest, even though it has been decided not to change the ‘no confidence’ rules, using up a fair bit of that time without any prospect that the outcome of it will in any way provide a viable Brexit policy.

Whether or not there is a contest, the repetitive drumbeat throughout the coming months will be provided by both the Ultras in the Tory Party and Farage’s Brexit Party, and by their bag carriers in the media, insisting that we ‘just do’ Brexit. Still unable, and not even interested in trying, to explain how to ‘do’ it, this message purports to be a solution to the political mess when in fact it is just a restatement of its underlying cause. That, and pretending it is a message endorsed by the sacred cloak of ‘the 17.4 million’ is at the root of why Brexit, and the British polity, have fallen into such chaos.

I was in Germany this week where, amongst other things, I gave a talk on Brexit. In it and in the questions afterwards, as well as in various conversations with people, I tried to explain what was happening and why. Over and over again I was asked some version of the question ‘but, surely, that’s just nonsense’? And, embarrassingly, so it is: to almost anyone outside of the Brexit debate in the UK what is happening makes no sense. If – as sometimes seems the case in the British media – it were just a matter of domestic politics then that would not much matter. The problem comes when, as the nature of Brexit means it must, this domestic nonsense comes up against the realities of the outside world.

Time is running out - again

It cannot be emphasised strongly enough that the latest extension is not a long one. Just because of the normal run of the political calendar a good chunk gets knocked out by summer holidays and party conferences. Joe Owen of the Institute for Government has just produced a very useful outline of the main time constraints, and how they would play out in different scenarios. It notes that “the timetable is much more constrained than it looks”.

In December 2017 I wrote a blog post arguing that Britain had to finally get real about Brexit because there were, in effect, only nine months to go. This was predicated on the original timetable in which the deal had to be ready by September or October 2018 for ratification. That realism never emerged and, hence, there is still no deal ratified now. And there is still no sign at all of any realism on any of the things identified in that post as needing to be addressed.

But just as I wrote in that blog post that businesses would have to make decisions well in advance of the political timetable so, now, are there reports of a “stockpiling panic” with a shortage of warehousing capacity in the event of an October no-deal because it would coincide with normal Christmas increases in stock holding. More generally, with little reason for confidence in a political resolution, it’s reasonable to assume that business relocations will continue in the coming months.

For unless something changes soon, the new 31 October deadline will be upon us. In a report this week for the European Policy Centre, Andrew Duff argues that “the most likely scenario is continued political paralysis in the UK leading to a demand for a further extension of Article 50 in October”. If this paralysis means there has been no progress by the time of the June review, he predicts that the position of EU leaders and, especially, Angela Merkel will harden (indeed, the German foreign minister has already suggested (£) that the October extension will be the last).

In a similar vein, writing in the Financial Times this week (£), Wolfgang Munchau suggests “the UK does not really have more than five months to make a decision. In reality, the effective timescale is just a few weeks”. He also goes on to argue that the consensus of EU leaders is likely to shift against the granting of a further extension beyond October.

When the extension to October was granted, Donald Tusk, the President of the European Council, advised the UK not to waste this time. For now, there is little evidence that his advice is being heeded. Worse still, there is no evidence of a will or a way to do so.

Thursday 18 April 2019

A quiet week reminded us of some Brexit realities

It has been a mercifully quiet Brexit week, with a palpable sense of exhausted relief all round. True, there have been the opening salvos in the European Parliament election campaign. I’m not going to write much about those now, though, in anticipation that the election – if it goes ahead – will surely be the subject of future posts.

My only initial thoughts are that the remain parties really do need to develop some kind of pact or co-ordinating agreement (to the extent this is allowable under electoral rules), and that the initial Farage Brexit Party bounce may not prove very durable. After all, newly launched parties often achieve spectacular opinion poll results (witness the 18% recorded for TIG a week after launch in February). The Brexit Party faces a particular challenge in presenting itself as ‘new’ precisely because Farage, although their greatest electoral asset, is hardly a fresh face. He has an appeal to those who already find him appealing, and appals those who already find him appalling, but is unlikely to galvanise a whole new following.

The Pelosi delegation

Leaving all that aside for now, there’s been one (relatively) ignored event which served as a reminder of several Brexit realities. A delegation of senior US politicians led by Nancy Pelosi, the Speaker of the House of Representatives, has been visiting the UK and Ireland, including the border between the two countries. The message they have brought is that any damage done to the Good Friday Agreement (GFA) and the peace process would undermine the prospects of a future US-UK trade agreement.

There are various strands to this which are worth unpicking. One, which is important to remember, is just how heavily the US was involved in, and is invested in, the peace process. It was one of President Clinton’s major foreign policy initiatives, and his Special Envoy, Senator George Mitchell, played a key role in brokering the agreement. That commitment and active involvement continued under the Bush and Obama presidencies. And although it is true that Trump has been much less engaged, Pelosi’s comment this week that the GFA is a “beacon to the world” is a reminder that Northern Ireland still matters to the US.

By extension, this is also a reminder that leaving the EU is not just a matter of renegotiating that relationship. It has knock on effects in terms of re-calibrating all of the relationships, both economic and geo-political, that the UK has with the wider world. Brexit affects all of those – from Japan, to India, to Russia – in a variety of ways, adding multiple layers of complexity to what is already a complex process. Brexit is Brexit, to coin a phrase - but it is not just Brexit.

Brexit and a UK-US trade agreement

A second strand is the role that the idea of a US-UK trade agreement has played, and continues to play, in the Brexit debate. Obama’s warning during the referendum campaign that Britain would be at “the back of the queue” for such a deal was greeted with fury by Brexiters, whilst Trump’s subsequent enthusiasm for one has delighted them.

In fact, the economic reality is that a UK-US deal would be of negligible value – in the range of 0.1% and 0.3% of GDP, in the long-term according to government modelling (see p.14 of link). To put that figure into context, Brexit has already led to UK GDP being an estimated 2.5% smaller than it would have been had the vote gone the other way.

But, as with the more general Brexiter infatuation with an ‘independent trade policy’, economics is not really the issue. There’s never been any realistic suggestion that the UK will achieve better trade agreements on its own than as part of the EU. The issue is the political symbolism of it being an ‘independent’ policy, not that it is a better ‘trade’ policy.

That, actually, is not so unusual. Many aspects of the trade policy of many countries have little to do with trade and economics. Rather, they are also bound up with domestic political interests, geo-political strategy, and diplomatic and military relationships. Indeed, it is precisely Pelosi’s message that political factors would be relevant to whether or not there would be a UK-US agreement. For that matter, the EU stance on a future trade deal with the UK will in part be political rather than economic. That is why, for particular example, the Brexiter ‘Malthouse Plan B’, in which the Withdrawal Agreement is torn up, but a trade deal negotiated anyway, is a fantasy.

Just as a UK-US trade deal has a symbolic – even totemic – appeal to Brexiters, so too does it play an important role in critiques of Brexit. In particular, the spectre of ‘chlorinated chicken’ stands as an example of, and as a symbol of, the danger of an erosion of regulatory standards post-Brexit. The wider concern it references is a recognition that Britain would be too weak – and, no doubt, too eager for a deal – to maintain these standards. Moreover, for at least some Brexiters, the erosion of regulatory standards (including those for workers’ rights and environmental protection) would be not just something forced upon Britain but something to be actively welcomed.

In any case, whether standards were weaker or stronger, the key issue coming back to the Irish border is simply the possibility of their being different to those in the EU. It is this regulatory divergence from the single market – more than leaving the customs union – which goes to heart of why hard Brexit entails a hard border. This fact, more than any other, is what has given the lie to the pre-referendum Brexiter claim that there would be no implications for the Irish border.

Pelosi, the ERG, and the Irish border

This, then, is the third strand of the significance of Pelosi’s visit. During the London leg, her delegation had lunch with leading members of the ERG – Rees-Mogg, Francois, Jenkin and Baker. Reportedly, this led to Pelosi delivering a sharp rebuke to Mark Francois for being condescending (this would have been something to witness, since Pelosi is a talented, serious and heavyweight politician whereas Francois is, let’s say, less obviously impressive in his endowments). The hapless Francois apparently “turned from already red to even brighter red”. The point of contention was the now familiar Brexiter conspiracy theory that the Irish border issue has been ‘concocted’ by the EU and Dublin in order to derail Brexit.

That claim matters hugely, because it is central to the Brexiter belief that Theresa May unnecessarily agreed to the backstop and, therefore, has ‘betrayed’ Brexit. It seems certain to play a central role in the race to succeed her as Tory Party leader. The idea that the border issue is either non-existent or, at least, readily solved through ‘technological and administrative solutions’ – solutions which do not currently exist anywhere in the world, be it noted – has moved from the ERG fringe to become part of the Tory mainstream. The pivotal moments in this shift came with the government endorsement of the ‘Brady Amendment’ and with the development of the ‘Malthouse Compromise’.

The key to understanding why the latter was pivotal is the word ‘compromise’, because what it referred to was the endorsement of both ERG members and hitherto pragmatic Tory MPs like Damian Green and Nicky Morgan. In other words, like so much of what has characterised the Brexit debate, it is not about the realities of Brexit itself but about the internal dynamics of the Tory Party. Hence we now see potential contestants for the leadership endorsing it (£) in order to burnish their credentials. But as Peter Foster, the extremely well-informed Europe Editor of the Daily Telegraph, pithily put it “the point is, this stuff is – frankly – garbage” (the whole thread of which this tweet forms a part is well worth reading).

Pelosi is just the latest figure – albeit one of the most important – to try to explain to Brexiters why their attempt to pretend the Irish border is a non-issue is, indeed, garbage. It is unlikely to have an effect, though, and they will continue, no doubt, to refer to cherry-picked quotes from Varadkar, Barnier and others to pretend otherwise. I’m not sure that it is even a lie, anymore anyway, for most of them. It seems more to be a matter of group think in which what they want to be true must be true because they all agree it is true. Be that as it may, it is plainly false and if the next Prime Minister comes to office on the basis of a promise to implement it* then the prospects for the future Brexit negotiations are very poor. Indeed, if we get that far, it virtually guarantees that the ultimate outcome would be no future terms deal and the implementation of the backstop.


*Note: for the avoidance of confusion, the ‘it’ here is some version of Malthouse Plan A (i.e. the scenario I am envisaging is a Withdrawal Agreement being agreed by Parliament and ratified, May resigning, and her replacement then undertaking the future terms negotiations). It is of course a nonsensical scenario in that Malthouse Plan A entails revising the Withdrawal Agreement, which in this scenario would already have been passed. But anyone who thinks that nonsensical scenarios can be ruled out hasn’t been paying attention to the politics ofBrexit. In fact, it is doubly nonsensical because if the alternative arrangements envisaged by Malthouse A were ever proved to exist then their implementation is catered for in the Withdrawal Agreement. Thus, if Brexiters believe they are, or will be, developed then their objection to the backstop is redundant anyway. On reflection, perhaps this footnote only adds to rather than avoids confusion.