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.

Brexit: bewilderment, dismay and shame

It’s difficult to feel anything other than bewilderment and dismay at the events unfolding in Britain. My comment at the beginning of my previous post that this week would see some of the dust clear proved somewhat wide of the mark.

Instead, in a plot worthy of Yes Prime Minister, Theresa May instructed her MPs to support an amendment which rebelled against her previously stated policy that the Withdrawal Agreement (WA) could not be re-negotiated, to the effect that the Northern Ireland backstop should be renegotiated so as to be replaced by ‘alternative arrangements’. This, the ‘Brady Amendment’, was passed.

The ‘Malthouse Compromise’

In the meantime, a new, somewhat related, Brexit rabbit hole was opened up. The grandiosely named ‘Malthouse Compromise’, more prosaically called ‘Plan C’ (£), consists, confusingly, of a Plan A and a Plan B. There is nothing new about either of them. They are re-treads or amalgamations of various documents that have been circulated by the ERG and allied groups for several months*. But, significantly although surprisingly, this initiative has the support of non-ERGs from the more remain wing of the Tory Party, such as Nicky Morgan.

Plan A is effectively the existing WA with the backstop ripped out to be replaced by the miraculous ‘alternative arrangements’ proposed by the IEA’s Shanker Singham (formerly of the now defunct Legatum Institute) and others last December. These arrangements are, in the main, the technological solutions which the ERG and its allies insist exist but which no one else has found sufficient evidence of. In a sense, Plan A is a more developed version of the Brady amendment.

If Plan A fails then Plan B is effectively the ‘managed no deal’ canard, whereby there is no WA but, nevertheless, an agreed transition period and various side deals on security etc. Implicitly, as with Plan A, the envisaged future trade relationship is Canada +++ but Plan B also invokes the latest ERG factoid, concerning GATT Article XXIV which, unfortunately, doesn’t mean what they think it does.

These ideas have been endlessly debunked by a series of experts – they are the “junk ideas” I referred to in a recent post as “having no foundation in political reality”. They have already been advanced and rejected not just by the EU but by the UK Government. The latter is an important point to make, given the climate of accusations of EU punishment, and it was made by Sabine Weyand, the EU’s formidable deputy Brexit negotiator and trade specialist.

In a very rare public appearance this week Weyand pointed out that, as regards alternative arrangements and technological solutions for the Irish border, UK negotiators had tried and failed to identify these. But, she pithily observed, this was not their fault, since such solutions “do not exist”. She also pointed out what should be obvious, that the negotiations over the WA are now closed.

Back to Brussels

Yet it does need to be pointed out. Although Theresa May has not gone so far as to endorse the ‘Malthouse Compromise’ – really, I can hardly bring myself to use this terms which sounds like a trashy thriller – only calling it “a serious proposal which we are engaging with sincerely and positively”, she has committed to going back to Brussels to re-open the WA in order to amend the backstop. To that extent she has more or less embraced Malthouse Plan A. And there can be little doubt that what most of the Malthousers want from that is it to be removed altogether. Otherwise, presumably, most of them won’t support any amended deal when it comes to the ‘second meaningful vote’. Then, the pressure will be on May to adopt Malthouse Plan B as the pre-ordained direction of travel from Plan A.

The best way of thinking about this is to imagine the converse situation, in which the EU at this late stage announced that despite what has been agreed in the negotiations only by, say, increasing the financial settlement and changing the backstop back to being Northern Ireland only will it be possible to secure sufficient support from the European Council and Parliament. The outrage of Brexiters can easily be guessed at, and the UK response would almost certainly be a flat refusal.

That may be the EU response, as some early reports suggest. I hope not, because it will just feed the absurd punishment narrative and allow Brexiters to pretend that they had sought a deal in good faith and been rebuffed. Better, and perhaps more likely, for there to be some new declaration or form of words which will then put the responsibility that they so hate back in the hands of the Brexiters. On this, much may hinge for the future both in terms of UK politics and EU-UK relations.

The economic damage is mounting

Whilst all this is going on, there is some really serious damage being done. As has been planned for a while, the European Medicines Agency has moved from London to Amsterdam. With it will go not only 900 jobs but a central part of the ecosystem of the pharmaceutical and biomedical industries – which are strategically crucial for the UK and in which the UK has been a leading global player. It’s worth recalling that in April 2017 the first Brexit Secretary, David Davis, opined that there should be no reason why it couldn’t stay in Britain post-Brexit. Like so many other Brexiter claims, it was known to be nonsense by experts but their knowledge was dismissed and mocked.

We now have companies spending huge amounts of money on stockpiling goods in warehouses in case of there being no deal, and almost every day brings news of another company moving its Headquarters out of Britain. The entire P&O fleet is to be re-registered in Cyprus. A group of leading food retailers has written a letter to MPs warning in stark terms of the dangers of food shortages. In any other time that would be seen as extraordinary. Now, it barely survives one day of the news cycle. And, of course, as with every other warning it is immediately trashed as Project Fear or, with the cynicism of the unworldly, as an excuse by supermarkets to unnecessarily raise prices.

Every Brexiter MP and commentator is an instant expert on the food industry, just as they are on the car industry or aerospace, knowing far more than those who actually work in and run those businesses. Or, for those of such self-evident ignorance that any claim to expertise would cause instant laughter, a more boorish approach is taken. Hence one of the most shameful of recent events, when Mark Francois, Deputy Chair of the ERG, denounced the CEO of Airbus, one of the UK’s most important employers, for being German, tore up his letter warning of the consequences of no deal, and talked about his own father having stood up to German ‘bullying’ on D-Day. It would be hard to find a more compelling image of the silliness and sheer nastiness of the Brexit Ultras.

Britain’s shame

In fact, I was wrong to say that bewilderment and dismay are the only feelings to be had about what is happening. There is also shame. The shame not so much of being a member of a country where such political oafery exists – all countries have their share of that, after all – but of one whose entire political class has brought us to this. I don’t (just) mean Brexit, I mean a country made so weak and incompetent that it is reduced to begging the friends it has reviled for non-existent solutions to problems of its own making, for fear of fantasists, charlatans, numbskulls and thugs.

And, worse, since that unholy alliance is beyond appeasement and reason it is rather more likely tonight – despite the passing of a non-binding, and in itself rather meaningless as it is not a vote for anything, amendment that rejected a no deal outcome - than before that the UK will be leaving the EU with no deal. If so that will be the very worst outcome of Brexit, and nothing remotely like what voters were promised, leaving Britain facing a calamitous future.

 

*For fuller discussion of the Malthouse Compromise, see Ian Dunt’s piece. He summarises it as follows: “It would not get the support of the EU, it cannot be done in time, it does not solve the problems it claims to, it is legally and strategically unsound, grossly misleading and full of lies about WTO laws its authors have not fully understood”. Otherwise, pretty sound. See also this article by David Henig, former civil servant and trade expert.