May's Munich speech: seriously ambiguous

Munich may not be the most historically auspicious place for a British Prime Minister to give a speech about European security, but Theresa May delivered what Charles Grant, the widely respected Director of the Centre for European Reform, rightly called a serious speech. This, perhaps, reflects that after her years in the Home Office security is an area where she feels comfortable and knowledgeable. Even so, it contained many ambiguities when the time for ambiguity is running out.

Was the speech intended to be conciliatory and reassuring in stating “unconditionally” Britain’s commitment to Europe’s internal and external security? Or was intended to be threatening in its detailed references to Britain’s intelligence and military capabilities? Was she saying we need each other, or that you need us more than we need you? Perhaps both, and, if so, perhaps for difference audiences?

Was the reference to the need to prevent “rigid institutional restrictions or deep-seated ideology” getting in the way of a deal on security a staggeringly unreflective remark given that the Brexit Ultras, indeed Brexit itself, are the most obvious embodiment of such dogma? Or was it a warning to those same Ultras of the need to be flexible? Was it saying to the EU that whereas the options for trade have been framed in terms of pre-existing models (Norway, Canada) that for security could be bespoke (though, strangely, she invoked trade as an area where there are precedents for a bespoke deal)? Or did it mean that if security could be dealt with on a bespoke basis then why not trade and everything else? Or did it in fact imply, as Sky News’ Political Editor Faisal Islam suggested, a different model, that of the Ukraine Association Agreement?

The references to the role of the ECJ were potentially highly significant, but again ambiguous. She accepted that “when participating in EU agencies the UK will respect the remit of the European Court of Justice”, but the sentence before said that any agreement “must be respectful of both the UK and the EU’s legal orders” (and a spokesperson later said that she had just meant that the UK would pay “due regard” to ECJ rulings). So does this mean Britain accepting actual, or perhaps de facto, ECJ jurisdiction with respect to participation in those agencies or not? Does it imply, instead, some kind of new UK-EU legal body (I have thought, ever since the White Paper was published, that this was where things were heading) and if so how would it work and what would the implications be for participation in other agencies, such as Euratom? The ECJ red line, first drawn by May in her Party Conference speech in 2016, has created some of the most intractable problems for Brexit – but was she softening it or restating it in the Munich speech?

The meaning of these ambiguities is itself ambiguous. Is it that she dare not be clear for fear of causing uproar within her party? Or that she is not clear in her own mind what she means? Sometimes, I have the sense that May is simply not alive to the implications of the phrases that she uses. Going right back to the ‘Brexit means Brexit’ months, before the Lancaster House speech, she used to speak of retaining frictionless trade in goods and services. This seemed to code a soft Brexit, since that is the only way of achieving such trade. But subsequently it emerged that this was not what she meant, even though she still uses the same phrase, and it sometimes seems that she does not understand the complexities and subtleties of what is involved in Brexit – for example the full implications of having set herself so firmly against any role for the ECJ. That may seem an extraordinary thing to say of a Prime Minister and seasoned politician, but if the picture created by Tim Shipman’s widely acclaimed book Fall Out is accurate it may be correct. There, she is portrayed very much as a blank canvas on to which her advisers painted pretty much whatever they wanted.

Whether studied or uncomprehending, her ambiguity has in the past served her well, allowing different people to project on to her whatever they find conducive. This has enabled her to walk the line between EU and domestic pressures and between different factions in her ever-more fractious party. The Munich speech reflects that: it can be read as slowly inching her Ultras towards pragmatism or slowly inching the EU towards creating the bespoke Brexit that she apparently thinks possible. (Shipman’s book is again revealing on this, both in suggesting that she does, indeed, reject the ‘Norway-Canada’ duality and, also, that she regards the ‘opt out and selectively opt back in’ approach that she adopted to the EU whilst at the Home Office as the template for Brexit, although few regard it as realistic. Tellingly, she made reference to exactly that experience in her Munich speech).

However, such ambiguity is fast becoming a fatal weakness. Had we but world enough and time, to use the words of Marvell’s famous poem, it might be viable to keep walking the tightrope and, perhaps, to gradually push whoever it is she wants to push towards whatever it is she wants to push towards, if indeed she knows. Since she sent the Article 50 letter, though, time has been at a premium and has now all but expired. May’s speech in Munich may have been serious but the ambiguities within it, as well as her wider ambiguities about Brexit, cannot persist for much longer. Within the next few months, if not indeed the next few weeks, she will need to come off several carefully-constructed but inherently fragile fences.

How long will a Brexit trade deal take?

The most remarkable Brexit development this week has attracted surprisingly little attention. Interviewed by Faisal Islam of Sky News during her visit to Saudi Arabia, the Prime Minister revealed a key fact about the forthcoming negotiations. Namely, she indicated that there was no prospect of a trade deal with the EU being signed within two years, and that if and when it happened it would be with the UK as a third party (i.e. outside of the EU) rather than as part and parcel of the Article 50 negotiations. This means, in turn, that it will fall under a different process which requires unanimous ratification by EU member states, rather than the qualified majority of the Council (plus simple majority of the European Parliament) needed to agree the exit terms.

In one way, this is, indeed, not newsworthy. Anyone with any real familiarity with the issue already knew that this was how things would be, and it was heavily trailed by the EU during the referendum campaign and since. Article 50 only covers the exit terms (albeit “taking account of” the shape of future arrangements) and it would actually have been quite conceivable that no trade talks would even begin until after these had been settled. In fact, the EU position on this has turned out to be relatively soft, with the Council (and now the Parliament) agreeing to begin talks on future trade once they judge that ‘sufficient progress’ has been made on the exit terms negotiation.

However, what makes Theresa May’s interview remarkable is that hitherto she and the government had at the very least implied that exit and trade talks would be completed within two years, and certainly had asked in the Article 50 letter that they would occur in parallel from the beginning of the Article 50 period. It’s true, as Ian Dunt – one of the few journalists to have picked up on the full significance of the Sky interview – notes, that May had been rather ambiguous in the past. She had talked of ‘reaching an agreement’ within the two years which would then take longer to implement. That could, at a pinch, mean just the outlines of an agreement but, as Dunt points out, implementation could not begin until agreement had been completed. So the strong implication was undoubtedly that pretty much everything would be agreed within the two years. That is now ruled out, as are parallel talks from the outset of the process.

Whatever ambiguity there may have been in the government’s position until now, there is no doubt at all that Brexiters claimed – both before the referendum and since – that a trade deal, and moreover an advantageous trade deal, would be easy to achieve, and in less than two years. For example, last October Boris Johnson claimed that 18 months was “absolutely ample” to get a “great deal”. As recently as 30 March veteran Eurosceptic Peter Lilley said that “there’s no reason why it [a trade deal with the EU] should take more than ten minutes”. Even taken as a figure of speech that is clearly absurd. Similarly, as I have pointed out in another post, many leading Brexiters including Lord Lawson, David Davis and Peter Hargreaves all indicated during the campaign that a quick trade deal was not just possible but virtually guaranteed.

That this is now demonstrably untrue is extremely important. During the referendum campaign voters were repeatedly told that trade could be protected and that to say otherwise was ‘Project Fear’. Most mendaciously of all, the Vote Leave campaign actually promised voters that a new deal would be agreed before the legal process to exit was started. They were misled, as on many other things, and that matters in itself. It also matters because the length of time it will take and the uncertainty about the terms on which it will happen, if at all, directly affect companies’ willingness to invest and their decisions about relocation. In many cases, as is being seen in the financial sector, relocation processes take a long time and must therefore be decided on well before any completion of trade negotiations. With those relocations go jobs and taxes.

So now that May has acknowledged that there will not be a trade deal in two years, how long will it take? People are still being misled. The Daily Mail report of the PM’s comments was that there would be deal 'ready to sign' at the end of two years. But that is very clearly not what she said or implied. The best estimate would still seem to be the two to ten year period which Sir Ivan Rogers was hounded out of office for reporting in January. He has since suggested that a ratified deal by the mid-2020s is likely. It is worth noting that at the same time he predicted that the EU would not allow a sector-by-sector single market deal, and that has now been proved right by the EU Council’s draft guidelines.

Brexiters like Peter Lilley and Lord Lawson often argue that this deal can be much quicker than a normal trade deal because standards and regulations are already harmonized between the UK and the EU and it is this which takes the time in trade negotiations. But that misses the point that, precisely, this will not be a normal trade negotiation. Normally, the intention is to improve the ease of trade. This time, it is to erect barriers. If the Brexiters mean that the UK can in effect stay in the single market in every way except for freedom of movement of people and CJEU jurisdiction then they have misunderstood what the EU means by ‘no cherrypicking’. The points of long dispute will not be about current standards harmonization, they will be about, primarily, future standards harmonization, dispute resolution systems and possibly a preferential immigration system for EU citizens. Of course that could be shortened simply by agreeing to the existing system – which would mean staying in the single market! But that, of course, has been rejected by the government. Moreover, because this deal will need unanimity there will have to be votes in all national and some regional parliaments before ratification. That all takes time and can be unpredictable, as the recent CETA experience has shown.

So for all these reasons the Rogers’ estimate of timescale still looks reasonable. This, then, means – and May, again, seems to have conceded it is so – that there will be a long period during which the UK remains within the single market, under CJEU jurisdiction and with freedom of movement. It will not be a ‘no deal better than a bad deal’ WTO scenario, as talks will still be ongoing. An additional aspect of this is that it will also mean that the UK is still in the customs union and, therefore, that no new trade deals with non-EU countries can be signed in the interim. How long the interim will last is impossible to say. The EU Parliament this week suggested a maximum of three years. I suspect that that could be negotiated to be longer but even if not it still takes us to 2022.

If so, that is well beyond the 2020 General Election and it is by no means inconceivable that an interim period would even go beyond the 2025 General Election; some have suggested a seven-year EEA interim after completion of EU exit in 2019, taking us to 2026. The political consequences of that are very difficult to imagine or predict. One is that since the UK will have left in 2019 it will no longer have any representation within the EU and certainly no MEPs in the European Parliament (a strange and ironic way of ‘taking back control’).  How will Tory Eurosceptics react? Will the Tories even be in power, and if they are will Theresa May still be PM? What will British politics and attitudes to Brexit look like in 2020, let alone 2026?

To get a sense of how much things can change in such a time frame, just suppose that the interim period did go on until 2026, ten years after the referendum. Then consider what was happening in 2006, ten years before the referendum. That was when David Cameron in his first conference speech as Tory leader warned his party to stop “banging on about Europe”. O tempora! O mores!

Lessons from Gibraltar

The response in the UK to the EU Council’s draft negotiation guidelines has been instructive. Most attention has been focussed on the paragraph (22) relating to Gibraltar, to the effect that no UK-EU Brexit agreement will apply there without the agreement of Spain*. This gives Spain a powerful voice in the Brexit negotiations and calls into question the sovereignty of this disputed territory, as well as indicating that the EU is likely to side with Spain in that dispute. Gibraltar, which voted overwhelmingly to stay in the EU (and, in a previous referendum, to stay in the UK) is significant not least for being the only part of the UK other than Northern Ireland to have what on Brexit will be a land border with the EU. (Readers of the blog will have been alerted to this facet of Brexit, as I pointed it out in my post in last October; for a detailed briefing on the quite complex issues relating to Gibraltar and Brexit see this report by Joe Carberry and Jonathan Lis).

The first instructive point is that, although it was certainly not a major issue during the referendum, the dangers of Brexit for Gibraltar were pointed out by the Remain campaign. In May 2016 the then Foreign Secretary Philip Hammond said:

“I genuinely believe that the threat of leaving the European Union is as big a threat to Gibraltar's future security and Gibraltar's future sovereignty as the more traditional threats that we routinely talk about.”

The reaction from Brexiters was furious. Liam Fox, now the International Trade Secretary, was enraged that the possibility should even have been mentioned, saying “I think there are limits to what you can and cannot say in any campaign that goes way beyond acceptable limits” (sic). All this was reported in the Daily Express under the inevitable headline about ‘Project Fear’.

We can now see that Hammond’s concern was well-founded, and that it was perfectly legitimate to raise it. The same, of course, can be said of most of what was dismissed as project fear, as I pointed out in my post on the triggering of Article 50.

Moreover, and this is the second instructive point, whilst Brexiters may have shouted it down during the campaign they cannot do so now. As the slogans and false claims meet reality, reality wins out. The EU have, as a matter of fact, decided to take this line and now it has to be dealt with. No amount of bluster or outrage can change that. Screaming headlines in the British press are not just ineffective against the EU but, even, harden feeling against the UK. So this is, in microcosm, indicative of the entire shift that has occurred as a result of the triggering of Article 50. As I wrote in my most recent post, Brexiters now have to take responsibility for the consequences of their decision.

The EU’s stance on Gibraltar is a lesson in realpolitik. Of course both the EU and individual member states such as Spain are going to seek to pursue their own interests. On the Gibraltar issue, the UK did exactly the same thing at the time of Spain’s accession to the EU in 1986 (insisting on an open border). Brexiters can, and do, decry this as ‘bullying’ and even, in their hermetically sealed logic, as ‘proving’ that it is right to leave. But that doesn’t change anything: welcome to the real world of international relations (to which irresponsible and ludicrous implications by Brexiters of possible military action contribute nothing good).

In fact, although attracting less headlines, the EU Council’s statement in several other ways underscored the reality of the power plays which will now unfold. In particular, the UK’s desire, expressed in the Article 50 letter, for parallel talks on exit and on future trade has been rebuffed. The latter will only occur once the EU deems that sufficient progress has been made on the former, although that is a softer position than insisting on the complete conclusion of exit talks before future talks. Similarly, the Brexiter fantasy of sector-by-sector access to the single market was emphatically squashed, as was the possibility of bi-lateral negotiations between the UK and individual EU-27 states.

None of this, however, makes the EU’s stance ‘punitive’, as this piece by Vincenzo Scarpetto of Open Europe explains, and it should be understood in the context of a negotiation as discussed in this excellent analysis by Peter Ungphakhorn. It just means that the UK cannot dictate terms in a vacuum as Brexiters imagine. Moreover, completely undiscussed as far as I am aware, section five of the statement makes it very clear that whilst the UK remains in the EU it must “remain loyal to the Union’s interests”, something which I suspect in the months to come will become a matter of some significance.

There is another lesson from Gibraltar row. Brexiters always seem to think that dealing with the EU means, primarily, dealing with Germany and to a lesser extent France. But although these are indeed very significant, the EU is an association of member states and is not ruled from Berlin. The failure of Brexiters to understand this grows out of their narrative of how the UK lost sovereignty from EU membership whereas, in fact, the EU was an arena in which the UK (in particular, one might argue) could exercise and magnify its sovereignty. At all events, the coming negotiations will show that each country within the EU-27 will have some degree of influence.

Spain will be especially relevant not just because of Gibraltar but also because of the large numbers of British residents there and because of their stance towards Scottish independence, something, not coincidental to the Gibraltar row one assumes, revised just today. Ireland, for obvious reasons, will also be highly influential, but each member will to some extent have the opportunity to pursue its own agenda within the negotiations. All of the compromises and trade-offs that Brexiters bemoan about EU membership will not cease, but now the UK will face them alone across the negotiating table rather than as a powerful member, with powerful allies, within the EU. In a similar way, having for years mocked the EU Parliament as a ‘rubber stamp’, Brexiters now face the prospect that any exit deal will be subject to the approval of that body which is drafting its own red lines on what is acceptable.

We are going to have years, now, of Brexiter outrage at having to deal with the inevitable consequences of their policy, as if these were not both predictable and, in fact, predicted. Like a toddler’s tantrum, “it’s not fair” will be the repeated refrain when the world proves not to be amenable to their wishes. And this tantrum will not just be about the EU. Brexiters are excited by the possibility of regaining ‘our seat on the WTO’ but whether or not Brexit means ‘trading on WTO terms’ that is going to bring many more encounters with a reality that does not fit with Brexiter fantasies. An early indication of that came last week with a question from Indonesia to the WTO Agriculture Committee about post-Brexit trade issues. The US, Russia, China and Argentina have all “registered an interest” in this matter, which has potentially far-reaching implications for British agriculture. That may seem an arcane matter, but it shows how post-Brexit Britain will have to navigate a whole new world of complexities which will be as much, or more, political than economic. In this sense, too, the furore over Gibraltar is an instructive pointer to what the future holds.

*Note: there is some complexity in decoding what this means. The Sky News political editor Faisal Islam in a series of tweets today has raised the suggestion that its true meaning relates to any future trade deal under A218, rather than to A50 negotiations. This seems consistent with the wording of paragraph 22 of the Council guidelines which speaks of ‘after the UK leaves’ but is also puzzling (to me) in that A218 deals require unanimity anyway, so Spain would have had a veto already. No doubt more clarity will emerge, but at all events the explicit reference to Gibraltar in the guidelines is significant.

Update (4 April 2017): A comment below made me ask myself what the implications for Brexit are for the Channel Islands, something I don't recall having seen discussed. A quick search found this recent report: http://www.itv.com/news/channel/2017-03-23/brexit-to-have-significant-impact-on-channel-islands/