Theresa May’s Government Lives on—and So Does the Brexit Chaos


January 18,2019

Theresa May’s Government Lives on—and So Does the Brexit Chaos

If insanity is doing the same thing over and over again and expecting a different result, the British Prime Minister, Theresa May, and the other members of the government should be confined to a psychiatric hospital. Having narrowly survived a no-confidence vote in the House of Commons on Wednesday, in which a loss would almost certainly have led to a general election, May and her colleagues are now looking to resurrect her Brexit plan, or a slightly refined version of it, which was subjected to an overwhelming defeat in the Commons on Tuesday evening.

With just ten weeks until March 29th, when Britain is supposed to leave the European Union, May is hoping that the prospect of the country crashing out without any withdrawal agreement—an outcome that could cause shortages of essential medicines and industrial parts, as well as bedlam at the Channel ports—will persuade a majority of parliamentarians to back her plan as the least bad option available. Of course, this is precisely the same logic that the Prime Minister was relying on when she delayed a vote on the Brexit plan until Monday, after the New Year, and she ended up suffering what was widely described as the biggest loss ever inflicted on a sitting British Prime Minister. But, after what she has been through in the past couple of years, May can perhaps be forgiven for getting a little addled. The entire country is a little addled. More than a little.

In making the closing argument for the motion of no confidence during Wednesday’s debate, Tom Watson, the deputy leader of the Labour Party, was careful to acknowledge the efforts that May had already made to solve the political equivalent of Goldbach’s conjecture. “I think the country recognizes that effort,” Watson told the packed chamber. “In fact, the country feels genuinely sorry for the Prime Minister. I feel sorry for the Prime Minister. But she cannot confuse pity for political legitimacy, sympathy for sustainable support.” May’s strategy had failed utterly, Watson said, and “the cruellest truth of all is that she doesn’t possess the necessary political skills, empathy, ability, and most crucially the policy, to lead this country any longer.” The question facing the House, Watson said, was whether it is “worth giving this failed Prime Minister another chance to go back pleading to Brussels, another opportunity to humiliate the United Kingdom, another chance to waste a few weeks. The answer must be a resounding no.”

Making the closing argument for the government, Michael Gove, the minister for the environment, sought to divert attention from the humiliating setback that May had suffered, and the fact that more than a hundred Conservative M.P.s had rejected her plan. He turned his invective to Watson’s boss, Jeremy Corbyn, the leftist leader of the Labour Party, whom the Tories still view as their trump card. After noting that Watson hadn’t mentioned Corbyn during his speech, Gove, who is known at Westminster as a clever and slippery fellow, gleefully caricatured many of the Labour leader’s positions, claiming that Corbyn rejects Britain’s role in NATO and wants to get rid of the country’s nuclear deterrent. (A longtime antiwar activist, Corbyn has held these positions in the past, but official Labour policy, which Corbyn now supports, rejects them.) “No way can this country ever allow that man to be our Prime Minister,” Gove said, to loud cheers from the Conservative benches.

Since ten M.P.s from Northern Ireland’s Democratic Unionist Party, which holds the balance of power in a narrowly divided Commons, had agreed to support the government, Gove knew that he and the Conservative government were on safe ground. But although the subsequent vote—of three hundred and twenty-five votes to three hundred and six—assured May’s survival, it merely confirmed the Brexit stalemate. A bit later in the evening, the Prime Minister emerged from 10 Downing Street to say that she had invited M.P.s from all parties to meet with her in an effort to find a way forward. Corbyn quickly rejected the offer, saying that the Labour Party wouldn’t join the talks unless May explicitly ruled out a no-deal Brexit—an option favored by some right-wing Conservative M.P.s.

So the show goes on, a very dark comedy. The hardline Conservative Brexiteers, led by the faux aristocrat Jacob Rees-Mogg, are encouraged because they have defeated May’s plan, and they know the default position is that Britain will crash out on March 29th.

Like a First World War general, May is soldiering ahead. Corbyn, relieved for now of the alarming prospect of having to step into May’s shoes, still says that he wants to honor the result of the referendum—in which many working-class, Labour-supporting areas voted Leave—but also to negotiate a better exit deal. (How he’d manage this, he hasn’t said.) But many Labour Party members—a large majority of them, according to recent polls—want to stay in the E.U., and seventy-one Labour M.P.s have now expressed support for the People’s Vote campaign, which is advocating a second referendum. In the coming days, Corbyn will face strong pressure to clarify his position and commit to another referendum.

 

Image result for may survives vote of no confidence

How and when will it all end? On Thursday, the government announced that Parliament would debate and vote on May’s “Plan B” on Tuesday, January 29th. M.P.s who spoke with the Prime Minister said that she still thinks she can tweak her deal and win, but few people outside of Downing Street believe it. The E.U. has ruled out making any more significant concessions. Both major parties are horribly split. And when the pollsters present the British public with the three options on offer—a no-deal Brexit, a Brexit on May’sterms, or a decision to Remain—there is no clear majority for any of them.

“I cannot recall Britain falling so low,” Philip Stephens, a veteran political commentator for the Financial Times, wrote in Thursday’s paper. “The Suez debacle in 1956? As supplicant at the door of the IMF 20 years later? These were moments of national shame. They were moments also that passed. The impact of Brexit has been cumulative. Each chapter in the story heaps on more humiliation. However it ends, the damage will not be quickly undone.”

And who, ultimately, is to blame? Before the vote on Wednesday, a BBC News crew approached David Cameron, the former Conservative Prime Minister who decided to hold the 2016 Brexit referendum, near his home in West London. He said that he didn’t regret that decision, even though the result went against his wishes. (He was a Remainer.) Then he set off on his morning jog.

A previous version of this post misstated the day that the vote on Theresa May’s Brexit plan took place.

https://www.newyorker.com/news

The Sum of All Brexit Fears


December 29, 2018

The Sum of All Brexit Fears

The Leavers lied: The costs of withdrawing from the European Union were always destined to outweigh the benefits. Alas, the responsible, imaginative, and inclusive political leadership needed to minimize the damage is nowhere in sight.

 

LONDON – Day after day, week after week, most British citizens think that the turmoil over their country’s proposed exit from the European Union cannot get any worse. But, without fail, it does. Turmoil turns into humiliating chaos; a political crisis threatens to become a constitutional crisis.

Meanwhile, the date of the United Kingdom’s departure from the EU gets closer. It is fewer than 100 days until the UK leaves, and at the moment there is no deal in sight that is acceptable to both Parliament in Westminster and the European Commission and European Council in Brussels.

The problem began with the 2016 referendum vote to leave. Unfortunately, despite plotting and planning for this outcome for years, Leavers had no idea what quitting the EU would actually entail. Their campaign was rife with delusions and dishonesty. Leaving, they said, would mean a financial bonanza, which the UK would inject into its National Health Service. Negotiating a trade deal with the EU after departure would be easy. Other countries around the world would queue up to make deals with Britain. All lies.

The Brexit talks themselves, when they finally began, were hampered by the incompetence of the ministers put in charge. The UK’s negotiators were long on ideological certainty and short on workable solutions.

Moreover, the red lines that Prime Minister Theresa May laid down at the very beginning made their work more difficult. We must not only leave the EU, she argued, but also the single market and the customs union. We could not accept any jurisdiction by the European Court of Justice. We must be able to end the freedom of European citizens to come to the UK to staff our hospitals, pick our crops, fill gaps in our professional services, and increase our prosperity.

One of the central problems to emerge from this mish-mash of nonsense was how to avoid re-establishing a hard border between Northern Ireland and the Republic of Ireland if the UK stayed within May’s red lines. Such a border would (as the head of Northern Ireland police noted) jeopardize the 1998 Good Friday Agreement, which brought peace to Northern Ireland after three decades of violence.

Recent negotiations have stalled on this point, because a successful outcome must square a circle. Britain has already accepted that Northern Ireland will have to stay in the customs union until the UK has concluded a long-term trade deal with the EU. Until then, there will have to be an insurance policy – a “backstop” – against possible failure. But hard-liners within May’s Conservative Party, and Democratic Unionist MPs from Northern Ireland, on whom May depends for her parliamentary majority, will accept only a backstop with a time limit, which is no real “stop” at all.

At the root of May’s difficulties is a simple truth that she and others are unwilling to accept. It is well-nigh impossible to negotiate an exit deal that is both in the national interest and acceptable to the right-wing English nationalists in her party. This became crystal clear during a grim week for the government earlier this month.

After May and her advisers concluded that the exit deal she had negotiated with the EU would be defeated in Parliament by a large majority, they suspended the debate before voting took place. May then announced that she was going to talk to other EU presidents and prime ministers to get the sort of reassurances that might satisfy her right-wing critics.

Those critics have operated increasingly like a party within a party. Halfway through May’s frantic diplomatic safari, they announced that they had gathered enough support to trigger a vote of no confidence in her leadership of the Conservative Party. She won the vote with about two-thirds support, but with her authority badly dented.

Capping an awful week, European ministers made clear that they were not prepared to reopen the agreement with Britain to renegotiation. They could offer “best endeavours” and “good will,” but no more.

So what happens next? May’s supporters think she is determined; others reckon she is simply obstinate and blind to reason. She has continued to put off any debate on her own proposals. Critics say she is trying to push any vote as close to the exit date as possible, in order to pressure MPs to support her plan. “Back my plan or face the disaster of no deal,” she seems to be saying. “Support me or we’ll jump off the cliff.”

But pressure is building for Parliament to take control of the process and work through a more acceptable range of options. Is there a majority in favor of May’s deal? Is Parliament totally opposed to crashing out of Europe with no deal? Should we seek a Norway-style relationship with Europe and aim to stay in both the single market and the customs union, at the cost of continuing to accept free movement of workers? Should we try to postpone the date of our EU departure until we have sorted out what exactly we want? Should there be another referendum, passing the final decision back to the people?

A fog of political uncertainty hangs over Britain after Christmas. Only four things seem clear. First, the Conservative Party will have growing difficulty accommodating its fanatical English nationalist wing. Second, to save the UK from disaster, Parliament will have to get a grip on the process. Third, life outside the EU will, in any case, leave Britain poorer and less influential in the world. And, lastly, whatever the outcome, Brexit will be a divisive issue for years to come.

The Brexiteers lied. The costs of leaving the EU were always destined to outweigh the benefits. Alas, the responsible, imaginative, and inclusive political leadership needed to minimize the damage is nowhere in sight.

Chris Patten, the last British governor of Hong Kong and a former EU commissioner for external affairs, is Chancellor of the University of Oxford.

The Continuing Agony of Brexit


December 18, 2018

The Continuing Agony of Brexit

https://www.project-syndicate.org/commentary/theresa-may-plan-only-way-out-of-brexit-agony-by-robert-skidelsky-2018-12

Those who are calling for a second referendum on the United Kingdom’s withdrawal from the European Union overlook an inconvenient truth: Leavers detest the EU more intensely than Remainers love it. So we must hope that Prime Minister Theresa May gets her amicable divorce when Parliament finally votes on it in January, 2019.

 

LONDON – So British Prime Minister Theresa May lives to fight another day. The Conservative Party in the House of Commons reaffirmed its confidence in her leadership by a far-from-resounding 200-117 vote. It is hard to think of another British prime minister whose leadership has been in such continuous crisis. Not so much an iron lady as a stubborn and dogged one, May has begun another round of effort to extract a few further concessions from European leaders to make her divorce agreement more palatable to her party, if not a majority of the public.

The British people decided in June 2016 to leave the European Union, by a slim 51.9%-48.1% margin in a national referendum. After invoking Article 50 of the Treaty of Lisbon, the United Kingdom is due to leave on March 29, 2019. But the Irish question, the Conservative Party’s internal politics, and parliamentary arithmetic have made the Brexit process anything but straightforward.

The UK and the Republic of Ireland share a land border separating the latter, which will remain in the EU, from Northern Ireland, which is part of the UK. Brexit, therefore, would leave Northern Ireland outside the EU’s customs union, and the Irish Republic inside it. Hence May’s agonized efforts to secure a deal that prevents a “hard” border with customs checks.

This is not just a matter of economic convenience. It is literally a matter of life and death. When Ireland won its independence from Britain in 1922, six mainly Protestant counties remained in the UK under a system of devolved government. Two legacies of the truncated United Kingdom survived: free trade and free movement of labor between Britain and the new Irish state.

The incomplete victory over Britain rankled in the predominantly Catholic Republic of Ireland; until 1999, the Irish constitution included a commitment to the “reintegration” of the whole island. At the same time, Northern Ireland’s dwindling Protestant majority clung ever more fervently to the British connection. Following three decades of violent conflict between the province’s Irish nationalist and Protestant groups, resulting in over 3,600 deaths, the Good Friday Agreement in 1998 established a Unionist-Nationalist power-sharing executive in Northern Ireland, along with a British-Irish Council as a nod to harmonious relations with the Irish Republic.

Any hardening of the frontier would jeopardize the fragile peace secured by the Good Friday Agreement. If the power-sharing agreement breaks down, men of violence on both sides would be waiting in the wings. To avoid this outcome, May’s plan provides for Britain to leave the EU but remain “temporarily” in the customs union, pending the negotiation of a free-trade agreement with the EU, with the “backstop” of a guaranteed open border between Northern Ireland and the Irish Republic, come what may.

As if this weren’t bad enough, Parliament is split between those who want to leave and those who want to remain. This cleavage cuts across the ruling Conservative and opposition Labour parties.

The Remainers fall into three groups: those on the left who see the EU’s “social market” approach as a source of protection for British workers; business and financial interests who count the economic costs of Brexit; and idealists who want Britain to play a constructive role in the political unification of Europe. The Leavers also comprise three groups: Thatcherites who view Brussels as a “super-state” bent on stifling free enterprise; a partly overlapping group that envisages Britain as an independent part of a global free-trade system; and the “left-behinds” who want to preserve Britain’s cultural identity and keep out foreigners.

The parliamentary arithmetic matters, despite the referendum result, because May was forced to concede that Parliament would have the last word on any deal she reached. This has given Remainers hope of reversing the 2016 outcome in a second “.”

Image result for theresa may brexit

The composition of parliamentary forces reflects May’s disastrous decision to call a snap general election in 2017, which resulted in her losing a Conservative majority. And the 317 Conservative MPs who remain are split about 200-100 between those who back May’s proposed Brexit plan and those who want Britain to “crash out” without a deal.

Support for May’s deal from the opposition – 257 Labour MPs, 35 Scottish Nationalists, and a few others – is uncertain, at best. Likewise, the ten MPs of Northern Ireland’s Democratic Union Party, on whose support the government now depends, are torn between wanting free trade with the South and fear of being sucked into the Irish Republic if and when the rest of Britain leaves the customs union. The DUP has denounced all talk of a special arrangement or “backstop” to enable Northern Ireland to remain in the customs union in lieu of a UK-EU free-trade deal.

Given the divisions in her own party, May will be forced to depend on Labour MPs to get her agreement through Parliament. No one knows how Labour MPs will vote, and the incentives facing the party are mixed. On the one hand, voting with the Leavers to scupper May’s deal would probably lead to a general election, which Labour could win. On the other hand, Jeremy Corbyn, the party’s leader, can have no great appetite to accept the poisoned chalice that May would pass on to him.

There’s an understandable temptation to say, “If Parliament can’t decide, let’s throw it back to the people.” But there’s no clarity about what exactly “the people” would be asked. It is playing with fire to seek a second vote on the ground that you did not like the result of the first one. And there’s one further issue to bear in mind: Leavers detest the EU more intensely than Remainers love it. If the Remainers win a second vote, a passionate resentment will sour British politics for years.  So we must hope that May gets her amicable divorce when Parliament finally votes on it in January.

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

Lessons from Europe


October 20, 2015

“In 2008, crisis resolution was also possible thanks to the concerted effort of key central banks. Nowadays the power of unelected bodies is rightly questioned and scrutinised. The main lessons from the long financial crisis in Europe may be lost amid economic nationalism. Experts tend to be the repository of such lessons, but there is little respect for experts in today’s politics “.–Paola Subacchi

Image result for Europe, Brussels landmark

More than a decade on from the most devastating financial crisis since the crash of Wall Street in 1929, politicians and commentators have been extremely careful in offering predictions on when the next crisis will occur. Playing with economic predictions is like playing with fire. Nobody knows this better than former British prime minister and chancellor of the exchequer Gordon Brown, who repeatedly promised ’no return to boom and bust’.

But there are reasons to be concerned. The gradual normalisation of US monetary policy could generate adverse spillover effects and disrupt global financial stability. Red lights are already flashing in Turkey and Argentina. A major correction in the United States’ stock market could trigger a significant shock for the rest of the world. High levels of debt, maturity mismatches and carry trades financed by short-term debt could fuel contagion through financially integrated markets. In addition, the deterioration of multilateral economic relations in the last 18 months might make crisis resolution more difficult than it was in 2008–09.

As things stand, even if we don’t know how the next crisis will materialise, where the epicentre will be and which countries will be hit, we can infer that it will likely be more disruptive than its predecessor.

What lessons can be drawn from Europe and its experience during the global financial crisis?

The European economy is expected to grow, in real terms, by 2.5 per cent in 2018, a slight slowdown from 2.7 per cent in 2017. Countries that were badly hit by the crisis have finally come out of the tunnel and some, like Ireland and Spain, are in very good shape. Against this overall positive background the European Central Bank (ECB) is slowly and gradually preparing to normalise monetary policy.

For years the economy was Europe’s key problem, now it is politics. The integrity of the European Union (EU) and its single currency is being challenged by populist politics that is building consensus on voter disaffection with rising inequality and the deterioration of living standards. Brexit, refugees and tensions between Germany and Italy on fiscal leeway are now threatening the entire EU project.

Europe’s brand of populism is anti-migration and anti-financial globalisation, and resents a supranational construction like the EU that by definition is at odds with economic nationalism.

Italy is the country that could trigger a perfect storm. Some members of the Italian cabinet have been playing with the idea of severing the ties with the Europe’s monetary union in order to regain control of monetary policy. Italy has been struggling for years with poor productivity growth and GDP growth. After some recovery in the past two years, the latter is now slowing down. Youth unemployment is at 35 per cent, one of the highest rates in the EU. Interest rates are on the rise, making it more expensive to pay interest on public debt that currently stands at 132 per cent of GDP. And the expansive fiscal policy promised by the two populist parties now in government is undermining investors’ confidence.

But Italy is not an isolated case. Euro-scepticism is on the rise, especially in countries in eastern and central Europe that joined the EU in 2004. In Britain it has been driven by the idea that an independent trade policy would better serve the interests of the United Kingdom. Having served notice to the EU on March 2017, the UK is due to leave Europe’s single market and custom union in March 2019.

Image result for Europe, UK and EU

It is unclear what the new relationship between the EU and the UK will look like. Political rifts inside the British government and the ruling Conservative party have resulted in a deadlock. In the meantime, a number of foreign companies, especially those in the banking and financial sector, have announced that they will relocate to the continent to maintain access to the EU market.

The prospect of a hard Brexit has taken a toll on sterling, which has dropped by almost 12 per cent against the US dollar between mid-April and mid-August 2018. The British economy is expected to grow, in real terms, by 1.6 per cent in 2018. But increasing interest rates forced by inflationary pressures and a weak sterling may pose further constraints on economic growth. The UK is a deficit country, with a deficit in the current account of 5.2 per cent of GDP and a high level of personal debt. A series of corporate collapses — most recently, the bankruptcy of the infrastructure company Carillion — may trigger some financial instability.

If there is a lesson from Europe’s experience with the financial crisis, it is to consider the long-term effects of crisis resolution. In 2011 and 2012, at the peak of Europe’s sovereign debt crisis, that followed the global financial crisis, efficiency in crisis resolution took priority over legitimacy. Draconian measures were imposed on Greece while fiscal austerity became the norm across the whole region. People, especially those in southern Europe whose economies had been decimated by the crisis, felt the hit and resented being told what to do by unelected bodies such as the ECB, the European Commission and the IMF. Today’s dysfunctional politics is significantly a response to those mistakes.

In 2008–09 international cooperation played a key role in crisis resolution. Even if the G-20 did not deliver overall reform of the international monetary and financial system, its broad-based governance system, inclusive of emerging markets, managed to get member states to work together.

Today this cooperation would be more difficult to achieve. While in 2008 politics was fairly neutral, today it is hugely divisive. The United States is in retreat and increasingly unwilling to lead. China is not ready yet to take over and to provide the financial safety net that would be necessary in case of a crisis. Europe, especially the leading countries such as Germany, France and the UK, are primarily focussed on domestic politics.

In 2008, crisis resolution was also possible thanks to the concerted effort of key central banks. Nowadays the power of unelected bodies is rightly questioned and scrutinised. The main lessons from the long financial crisis in Europe may be lost amid economic nationalism. Experts tend to be the repository of such lessons, but there is little respect for experts in today’s politics.

Paola Subacchi is a Senior Research Fellow at Chatham House, Royal Institute of International Affairs, London and a visiting fellow at ANU.

This article appeared in the most recent edition of East Asia Forum Quarterly, ‘Asian crisis, ready or not’.

 

The Brexit Endgame


October 17, 2018

The Brexit Endgame

https://www.project-syndicate.org/commentary/brexit-endgame-temporary-customs-union-by-robert-skidelsky-2018-10

Britain’s Leave campaign was a revolt against not only economic mismanagement, but also the pretension of supranational government. So Brexit’s outcome may indicate how the dialectic between supranationalism and nationalism will play out in much of the rest of the world as well, where it is the stuff of current politics.

brexit eu flag

 

LONDON – The United Kingdom’s “Remainers,” who still hope to reverse Britain’s decision to leave the European Union, have placarded British cities with a simple question: “Brexit – Is It Worth It?” Well, is it?

And yet economics also clearly shaped the decision. The Brexit propagandists brilliantly channeled palpable economic resentment, especially against immigration, into hostility toward the EU. But the resentment was against the home-grown damage inflicted on the British economy by its neglectful rulers. As Will Hutton and Andrew Adonis accurately note in their recent book Saving Britain, “Our problems are made in Britain; they can only be solved in Britain. Europe does not impede this mission…”

But Hutton and Adonis miss Brexit’s crucial non-economic dimension. They rightly recall the long and intimate relationship between Britain and the European continent. But Britain has never been part of a European state. Although the European Union is very far from being the “superstate” of Margaret Thatcher’s nightmare, its governmental aspirations lack legitimacy, not just in Britain, but among many of its members. Despite talk of European citizenship, politics remain obstinately national. Britain’s Leave campaign was a revolt against not only economic mismanagement, but also the pretension of supranational government.

So Brexit’s outcome may indicate how the dialectic between supranationalism and nationalism will play out in much of the rest of the world as well, where it is the stuff of current politics.

The Brexit endgame itself is far from clear. There are four possibilities.

One possibility is that Britain doesn’t leave the EU after all. The organizers of a campaign for a “people’s vote” – a second referendum on the final exit terms – believe that when people know the true cost of leaving, they will reverse the decision taken in 2016. A second vote could be triggered by the government’s failure to win parliamentary approval of the divorce settlement it has agreed with the EU.

A second possibility is that Britain “crashes out” of the EU on March 29, 2019, with no divorce deal. In this case, forecasters paint a doomsday scenario of economic collapse, gridlock on roads and rail, shortages of food, medicine, and fuel: 1940 all over again (but not exactly Britain’s finest hour).

Image result for brexit chequers plan“Half in, Half out”. Why not Out!

“…the Chequers plan for a continuation of free trade in goods between Britain and the EU. Britain would make sure that goods entering Northern Ireland, but bound for the EU via the Republic of Ireland, paid their EU customs duties and conformed to EU health and safety standards. “–Lord 

British Prime Minister Theresa May’s government is promoting a third possibility: half in, half out. Approved by the Cabinet in July at the Prime Minister’s country house, the so-called Chequers Plan proposes that when Britain leaves the EU, the two sides enter into a free-trade agreement covering goods and agricultural produce, but not services. The plan, devised by May’s adviser Oliver Robbins, is a heroic attempt to solve the Irish border problem.

That problem arises from a commitment by both Britain and the Republic of Ireland to keep a “frictionless” border between the Republic of Ireland, which remains in the EU, and Northern Ireland, which, as part of the UK, leaves it. But to maintain an open border in Ireland would mean creating a customs border between two parts of the UK.

Hence the Chequers plan for a continuation of free trade in goods between Britain and the EU. Britain would make sure that goods entering Northern Ireland, but bound for the EU via the Republic of Ireland, paid their EU customs duties and conformed to EU health and safety standards.

The Brexiteers in May’s Conservative Party oppose the Chequers Plan, because it implies too much integration with the EU. And EU leaders don’t like it, either, because Britain cannot be allowed to be in for some purposes and out for others.

The final possibility is another “half in, half out” scenario. Britain would leave the customs union, but remain in the European Economic Area, which includes the 28 members of the EU plus Norway, Liechtenstein, and Iceland. EEA countries, though free to set their own tariffs, follow nearly all of the EU rules and pay contributions to the EU budget. So the EEA option would be even more anathema to hardline Brexiteers than the Chequers Plan.

So what will happen? Most bets are on Britain formally leaving the EU in March 2019, but “temporarily” remaining in the customs union, giving it two or three years to negotiate the final divorce settlement. The Brexiteers will be enraged by such a “soft” exit, but it will probably be enough to ensure parliamentary approval. The referendum decision to leave the EU will be honored, but its harsh economic consequences will be postponed: a triumph of pragmatism over ideology.

If the Brexit trajectory turns out this way, it will be a good illustration of the double character –and function – of politics. John Maynard Keynes put the matter well: “Words ought to be a little wild, for they are the assault of thoughts upon the unthinking,” he wrote in 1933. “But when the seats of power and authority have been attained there should be no more poetic license. On the contrary, we have to count the cost down to the penny which our rhetoric has despised.”

Politicians exist to give voice to resentments bottled up by “unthinking” conservatism. They let loose feelings which we would be better off without, but whose suppression threatens political explosions. It is also their job to ensure that such irruptions do not have extreme consequences. From time to time, the balancing act breaks down, as it did in 1914, when the momentum of events overwhelmed belated attempts at compromise. It happened again in the 1930s, because fascism and communism were irredeemably extremist. But mostly politicians do their double job, which, in the last analysis, is to preserve domestic and international peace.

Thus, the Brexit compromise, if it happens, may be a moderately optimistic foretaste of the fate of populism in our century. The resurgence of economic nationalism which unites Brexit, Trumpism, and the European far right will not lead to the breakdown of trade, hot wars, dictatorship, or rapid de-globalization. Rather, it is a loud warning to the political center – one that may cause even the current crop of extremists to shrink from the consequences of their words.

 

No deal is often better than a bad deal. Not with Brexit


August 6, 2018

No deal is often better than a bad deal. Not with Brexit–Soft BREXIT,says The Economist

Britain’s dangerous bluff betrays a misunderstanding of its negotiation with Brussels

 Print edition | Leaders

Image result for The Economist

IN MOST negotiations, the maxim that “no deal is better than a bad deal” makes perfect sense. If you are buying a car, you must be ready to walk away or the seller has you over a barrel. The way to drive a hard bargain is to persuade him that he must offer you a good deal or there will be no deal at all.

Theresa May has made this commonsense principle the foundation of her talks with Brussels over Britain’s exit from the European Union. “No deal for Britain is better than a bad deal for Britain,” she said in January last year, setting out her red lines. With less than eight months until Britain is due to leave the EU, and only about four months left to reach an agreement on the terms of its exit, her government is still stressing its readiness to depart with no deal in place.

Image result for Brexit and May's Future

It is time to drop the pretence. Leaving without a deal was never a wise option. The government ought to have spent the past two years steering the public through the painful trade-offs of leaving the EU. As we have argued, Britain’s interests are best served by a “soft Brexit” that preserves markets and security. Instead, big-mouth ministers have kept expectations sky high, claiming that the deal “will be one of the easiest in human history” and that “there will be no downside to Brexit”.–The Economist

 

The trouble is that Brexit is nothing like buying a car. In most negotiations “no deal” means sticking to the status quo. If you are not prepared to pay the asking price, you can walk away none the worse and try somewhere else. The Brexit talks are different. If no deal is reached Britain will not maintain the status quo of its EU membership, but find its links to the continent abruptly and acrimoniously broken off. The metaphor is not buying a car, it is buying a parachute—having already leapt out of the aeroplane. “Walking away” would land Britain in a situation so calamitous that it should not even be on the table.

A no-deal outcome would be bad for the EU, too, particularly Ireland, whose small, open economy is closely linked to Britain’s. But Britain would be hurt most by a hard landing. Trading with the EU on the terms of the World Trade Organisation, which would raise both tariffs and regulatory barriers, would reduce Britain’s GDP by 4% within five to ten years, according to the IMF. The EU’s GDP would fall by about 1.5%. Worse still—again, for everyone, but chiefly for Britain—would be the turmoil from leaving without agreements in place over everything from airline safety to the transfer of radioactive material. The supply of such essentials as food and medicine could be disrupted, too (see article).

A hard landing

Image result for Brexit and May's Future

Boris Johnson–The Ambitious Tory Iago

For this reason, the EU has never taken seriously Mrs May’s claim that Britain is ready to walk away from the negotiating table. It sees her threat as a bluff—and it is right, judging by the lack of preparation in Britain for a no-deal outcome. Even with extensive (and expensive) planning, leaving the EU without a deal would have been difficult. As things stand, almost no work has been done to prepare for such an eventuality. Lately, Britain has taken to outlining desperate-sounding plans to stockpile medicine and set up electricity generators. Chaos would be hard to avoid.

Yet, although the EU’s negotiators in Brussels do not buy it, Mrs May’s slogan that “no deal is better than a bad deal” has struck a chord with the voting public. As the talks have dragged on and the EU has extracted concessions, such as a promise by Britain to pay a large exit bill, the desire to walk away has only grown. Polls show that nearly twice as many Britons would leave the EU with no deal as would support a compromise along the lines Mrs May proposed last month. By this logic, her eventual settlement with Brussels, if she reaches one, will look even more like a bad deal because Britain will have to give more ground. Many voters will thus quote the prime minister’s own slogan back to her, and argue to crash out.

The government is trapped by its own rhetoric. The louder it shouts in Brussels that it is ready for no deal, the more it emboldens voters and Brexiteer MPs to call for just such an outcome. Yet the more the government argues at home that Brexiteers should avoid the miseries of crashing out by embracing Mrs May’s compromise, the more it convinces Brussels that, except as a disastrous accident, “no deal” is not credible.

It is time to drop the pretence. Leaving without a deal was never a wise option. The government ought to have spent the past two years steering the public through the painful trade-offs of leaving the EU. As we have argued, Britain’s interests are best served by a “soft Brexit” that preserves markets and security. Instead, big-mouth ministers have kept expectations sky high, claiming that the deal “will be one of the easiest in human history” and that “there will be no downside to Brexit”.

Mrs May has belatedly come to accept the need for compromise—to the fury of a small coterie of hardline Brexiteers who would sooner crash out of Europe, kamikaze-style, than maintain any kind of obligation to the EU. The prime minister’s continued claims that Britain can simply walk away play into their hands. She must cease such talk. With a bit more compromise on both sides, a deal is reachable. Britain must seize that parachute before it is too late.

This article appeared in the Leaders section of the print edition under the headline “No ordinary deal”