Friday, 27 November 2020

Zeno's Brexit

The Ancient Greek philosopher Zeno articulated a series of paradoxes, one of the most famous being the ‘dichotomy’ or ‘race course’ paradox. In order to reach a destination, a runner must first reach the half-way point, but to reach that point must first get a quarter of the way there, and to do that must get an eighth of the way there, and so on. Since this generates an infinite sequence that never quite adds up to the full distance, it is impossible for the runner ever to reach the destination point.

Brexit has often felt like being stuck on such a never-ending journey, and never more so than over the last two months. Recall that the last of the scheduled rounds of the transition period talks finished at the beginning of October. Then Boris Johnson set 15 October as the absolute deadline, after which he would walk away, which he sort-of did but actually didn’t once Michel Barnier had placated him by using the ‘right words’ about the negotiations. Then it was reported that 19 November was regarded by the EU as the absolute deadline, but here we still are.

Endless rumours

Throughout, there have been leaks of progress and of the opposite, and speculations at the end of each week that ‘early next week’ will see the breakthrough of a deal, or the abandonment of the search for a deal. This week has been no different.

Early in the week it was rumoured that the EU was about to ‘cave in’ to British demands but by Thursday there were reports that the EU might pull out of the talks today (Friday). There were reports that Michel Barnier had called an ‘urgent’ meeting of fisheries ministers for Friday, with speculations this might betoken an imminent deal … or an imminent collapse of talks … but within hours it became clear that that it was not urgent, and probably betokens nothing. At the time of writing, it has just been reported that contrary to previous reports Barnier will be coming to London after all and there will be talks over the weekend. Some reports suggest a deal may be done – yes – early next week. Others are now talking of the EU summit of 10 and 11 December as being the crucial date.

So we remain in the hall of smoke and mirrors. We do know, so familiar have they become, that the stumbling blocks are level playing field, fisheries, and governance. One possibility that has been touted (£) as regards one or both of the former two is to use review clauses so as to, in effect, create interim agreements allowing a deal to be done in time (although even so it will take very nimble footwork in both the UK and the EU to ratify such a deal).

This is both a plausible and a depressing prospect. Plausible because it offers both sides a way of ‘kicking the can’ down the road in the way that has often characterized the Brexit process. Depressing because it would mean that, come 1 January, the answer to the question ‘is there a deal or not?’ would be a less than resounding ‘yes and no’. Actually, this will be the answer anyway because there will be a myriad of things left in the air even if there is a deal. These include financial services regulation (of which more below) and carbon trading. Still, it would be particularly anticlimactic if the very areas so long held up as preventing a deal were to be left hanging ambiguously.

Lack of trust

Even if this, or something like it, is what happens it seems (to me) that the issue of governance cannot be fudged in this way. An imprecise or 'gentleman’s' agreement to settle fine details later, on the basis of trust, might once have been possible. But it is no longer so because of the manner in which the UK has conducted itself.

It’s actually possible to identify a very precise moment when trust was broken: it was Sunday 10 December 2017 when the then Brexit Secretary David Davis said on the Andrew Marr show that the phase 1 agreement of the Article 50 talks was merely “a statement of intent” and not binding. It was this which led the EU to put that agreement into legal text (which Theresa May then rejected as unacceptable because of the Northern Ireland-only backstop, but to which Johnson later signed up).

Davis’s 'gaffe' was pivotal in undermining trust and was compounded by several other episodes including the way that Boris Johnson treated the Political Declaration in a similarly cavalier way. Both cases showed that in the absence of a legally binding text, Brexit Britain could not be trusted to keep to its agreements. Even worse, and the final nail in the coffin of trust in the UK, was the Internal Market Bill (IMB) with its clauses which even reneged on what had been the legally binding treaty.

It is such considerations, but especially the IMB, which surely lay behind Ursula von der Leyen saying this week that “'we want to know what remedies are available in case one side will deviate in the future, because trust is good but law is better. And crucially in the light of recent experience a strong governance system is essential to ensure what has been agreed is actually done”. It should be said that whilst many of the costs of Brexit are inherent to it, this squandering of goodwill and of international reputation by the UK is one of the costs that have arisen not because of Brexit itself but from the incompetent, antagonistic and dishonest way in which it has been executed.

Nowhere near ready

On the subject of incompetence, it is becoming ever clearer just how woefully unprepared the UK is for the end of the transition, even with a deal. Northern Ireland businesses, in particular, face “a very, very difficult time” in January. In England, a trial run of France’s new border procedures this week saw massive lorry queues build up in Kent. This was not, as leading customs expert Dr Anna Jerzewska explained, because the French operation wasn’t working correctly. It was because it was working correctly but the UK systems are not yet operational.

The scale of these problems was indicated in a leaked letter from the Road Haulage Association, describing the process of working with the government on border issues as “a complete shambles”, whilst many of the detailed practical complexities are explained by international freight forwarder John Shirley on the UCL European Institute website. None of this is news to those experts who work in this area, nor to those who have listened to them over the last few years (hence readers of this far from expert blog would have been well aware of it). But their concerns were dismissed as Project Fear and swept aside by unkeepable promises of ‘frictionless trade’.  

It is almost beyond belief, though also entirely predictable, that Michael Gove is blaming the now inevitable disruption on the EU for its ‘rules are rules’ approach to border controls. Nothing more clearly illustrates the moral and intellectual bankruptcy of Brexit than for one of its leading architects to eschew responsibility for the inevitable adverse consequences of what he advocated.

Whilst much attention is being (belatedly) given to the mechanics of goods trade, it shouldn’t be forgotten that built in to the government’s preference for hard Brexit are other consequences, including the still unresolved issue of data protection adequacy. This is hugely significant for both trade and for security cooperation, but does not form part of the negotiations being instead reliant on a decision by the European Commission. So no one yet knows what the situation will be on 1 January and probably will not know for a while afterwards.

Then there is the inevitability of a major worsening of market access for services trade of all sorts. That goes well beyond financial services, of course, but these – whatever their public unpopularity – are a major part of the UK economy and they generate significant employment and tax revenues. How they will be regulated is also not part of the future terms negotiations. It has long been known that they will lose ‘passporting’ rights and the remaining best hope is an ‘equivalence regime’. But as Vicki Pryce, former Joint Head of the Government Economic Service, has explained we know for a fact that this will not be in place for January. Within this general picture, there are also particular issues emerging for European derivatives trading in London (£), a market where many trillions of assets are traded under the regulation of the European Securities and Markets Authority.

Follow the money? (A short detour into political theory, which some may want to skip)

The chilling effect of Brexit on financial services leads to some interesting questions. I am regularly told (sometimes in rather lofty tones, as if such a thought had never occurred to me) that my discussions of Brexit would be improved if only I were to ‘follow the money’ which, apparently, explains all. What this usually implies is some version of the argument outlined by George Monbiot this week that Brexit is the creature of one kind of capitalism – which he calls “warlord capitalism” – that has captured the Tory Party and is at war with another kind of capitalism which he calls “housetrained” and is horrified by Brexit. That’s an important observation, and as he says relates to the extraordinary shift in the modern Conservative Party away from its traditional business base, including the City, which has in turn had a big impact on how Brexit has developed.

But an observation is all it is – it doesn’t explain why it is the ‘warlord’ money rather than the ‘housetrained’ money which is being followed by the Tory Party (or anyone else). Following the money is sometimes a good dictum, but it doesn’t take you very far when it points in quite contradictory directions. To understand why the Tory Party has taken the path it has would require a detailed study of its recent history and its funding, taking in why it incubated such extreme Euroscepticism (as it was then called) long before its funding base shifted, and considering the role of its mainly elderly and nationalist membership.

Beyond that, this type of analysis rests, at least implicitly, on a version of Marxist theory whereby the (economic) base is primary and to a greater or lesser extent determining of the (cultural) superstructure. Culture then becomes little more than the dancing puppet of economic paymasters and their interests. When it comes to political explanation, that almost inevitably leads proponents of such analysis to some form of ‘false consciousness’ argument in order to explain why so many people support and vote for things which are against their economic interests.

And, indeed, this is precisely where Monbiot ends up, when he writes that he sees “Nigel Farage and similar blowhards as little more than smoke bombs, creating a camouflage of xenophobia and culture wars. The persistent trick of modern politics – and it seems to fool us repeatedly – is to disguise economic and political interests as cultural movements” (my emphases added).

The limitations of such an analysis have long been identified. In particular, it’s instructive to recall how in the 1980s writers on the left, especially the sociologist Professor Stuart Hall, started to explain that Thatcher kept winning elections because contrary to the assumption of economic primacy, in Hall's words, “material interests … are not escalators which automatically deliver people to their appointed destinations, ‘in place’, within the political ideological spectrum”. It’s an important insight that remains true.

Coming to Brexit specifically, viewing leave voters as the unwitting dupes of ‘warlord capitalism’ and funded by Robert Mercer doesn’t take us anywhere. For whilst (some) remainers may believe that to be so, it has a precise mirror-image in the repeated claim made by (some) leavers that remainers are the mouthpieces of the ‘global elite’ and funded by George Soros. Of course remain voters no more accept that to be true of themselves than leave voters accept the mirror-image accusation aimed at them. Neither claim has any analytical value, or explains anything. Rather, they are tactics to discredit or demonize opponents.

Ultimately, the injunction to follow the money is not just reductive but is also a circular and unfalsifiable argument. For just as some now say that the fact of Brexit is explained by capitalist manipulation of leave voters so too, had remain won, some would have said that that was explained by the capitalist manipulation of remain voters. All you have to do, they’d say then as they do now, is to ‘follow the money’. In fact, it would very likely be the same people saying it, since Monbiot virtually does so when pointing to how the remain campaign was funded by the likes of Morgan Stanley and Goldman Sachs. Trying to explain Brexit by ‘following the money’ takes you into an analytical cul-de-sac.

So whilst the debate about the relationship between economics and culture is a perennial one, and discussing it is well beyond the scope of this blog, in general I think of them as inextricably bound threads, not base and superstructure. I prefer both/and explanations to either/or explanations, prefer contingency to determinism, and see as much cock-up as conspiracy.

In any case, what this blog does cover is the weekly goings on and how they fit into the wider Brexit process. It would be absurd to think that each twist and turn ‘is exactly what the hedge funds wanted all along’ but if one did hold so reductive a view it would be as tedious to keep writing it as it would to keep reading it.

Back to the same old stuff

Coming back now to the main line of discussion, namely preparedness for the end of the transition, overall, a government report leaked this week identifies “notable risks” of “systemic economic crisis” potentially leading to public unrest in the new year due to a combination of Brexit, Covid and other factors (flu, flooding). Again it is fair to say that such a scenario was not inherent in Brexit but arises from the way it has been done. In particular, it was blindingly obvious in June that Covid meant that ending the Transition Period in the middle of the following winter was utterly reckless. That it was not extended can be blamed primarily upon the influence of a relatively small group of Tory MPs – and the larger but still small section of the population who share their views - whose obsessional hatred of the EU has made them immune to all reason. That an entire country should have its fate decided by such people is both a tragedy and an indictment of the political system.

Even now they are proposing as tests for the acceptability of any deal that may be done criteria which, as Professor Anand Menon of King’s College London points out, are effectively impossible for a deal to meet and which have already been failed by the Withdrawal Agreement which has been signed. And even now, as Brendan Donnelly, Director of Federal Trust, writes it is the “specific dysfunctions of the Conservative Party” which will frame whether Johnson agrees to a deal or not. It is already reported (£) that the ERG will oppose a deal if it doesn’t respect their peculiar view of ‘sovereignty’.

Donnelly also mentions that Labour’s stance on backing any deal will also play a part. What that part will be is unclear, not least because the nature of any parliamentary vote that may be held is unclear. There will be no straightforward ‘meaningful vote’ to accept or reject a deal, and there are various different, including some quite complex, mechanisms the government could use for ratification. Depending which is chosen, parliament would have various more or less effective ways of delaying, and possibly even derailing, ratification, posing different choices and options for those wishing to do so.

It is clear that Labour are split on how to approach this (whatever ‘this’ turns out to be), and although the rumours suggest that Keir Starmer will want his MPs to support a deal whatever it contains others are arguing for abstention. I’ve been critical of Labour’s stance on Brexit for years, and of Starmer’s near silence on it since becoming leader, but I can see that this is a genuinely difficult dilemma. The reason for that is that whilst no deal would be worse than a deal – not least for Labour voters – they are both bad outcomes to different degrees. The Tories may have put themselves in the position of having to pick from them, but why should Labour allow itself to be complicit? Yet to the extent that supporting, opposing or abstaining might all affect the outcome (assuming a sizeable Tory revolt) then that complicity is unavoidable.

There will also be significant parliamentary issues in the event of no deal. Of course there would be no vote on that, but there would be votes on the Internal Market Bill and, with the possibility of a substantial Tory revolt on that, it is questionable whether the UK would have a functioning internal market of its own, at the very moment it left the single market of the EU. This would be a profound crisis in its own right.

Back to Zeno

All this remains up in the air, with – really, this is astonishing - barely more than a month to go. For now we continue on the journey that apparently never ends. But Zeno’s paradox may not be an apt reference after all because, as well as suggesting that the race course can never be completed (the ‘progressive’ version of this paradox), it equally means that it can never be started (the ‘regressive’ version of the paradox). And, alas, we know that it did start, over four years ago.

So perhaps we need to look instead to Classical mythology to describe our situation, maybe to Sisyphus endlessly rolling his rock up the hill or, as seems more appropriate to the painfulness of it all, poor old Prometheus having his liver pecked out by an eagle day after day.

Prometheus of course was being punished for having stolen fire from the gods and given it to humans, and Sisyphus was an all-round bad egg (murdering, cheating and generally getting above himself).

It is not clear what crime we have committed to have to endure the endless torture of Brexit.

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