Would it Be a Disaster ?

Behind all the hype and noise concerning the Brexit negotiations between the UK and the EU which in truth may merely be the usual smoke and mirrors one associates with anything EU and mandatory at every Council of Ministers they have ever held. The final deal may well have been sketched out and agreed upfront long since and the rest is designed to make it look ‘important, hard won’ and not too easy.

But suppose it isn’t and the possibility of there being no deal is very real, from a UK perspective would that be such a bad thing ? I suspect that the answer to that is no and indeed, no deal would favour the UK far better than actually having one with the EU.

Dealing in Bad Faith or Just Self Interest ?

One phrase guaranteed to put my teeth on edge and cringe comes from people talking about Anglo American relations as a “Special Relationship”, this is total bollocks. There is obviously a cultural and historical link between all countries in the Anglo-sphere but in the end, that is all it is. I do not think you can over quote Lord Melbourne on this:

“I hold with respect to alliances, that England is a Power sufficiently strong, sufficiently powerful, to steer her own course, and not to tie herself as an unnecessary appendage to the policy of any other Government. I hold that the real policy of England—apart from questions which involve her own particular interests, political or commercial—is to be the champion of justice and right; pursuing that course with moderation and prudence, not becoming the Quixote of the world, but giving the weight of her moral sanction and support wherever she thinks that justice is, and wherever she thinks that wrong has been done…I say that it is a narrow policy to suppose that this country or that is to be marked out as the eternal ally or the perpetual enemy of England. We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow…”

For the EU in their negotiating tactics, self interest is to be accepted, this doesn’t make them our enemies as such just our opponents and it is in this light that we should see their tactics.

Quite apart from chiselling as much cash out of the UK as is possible to compensate for the reduction in budget contributions caused by the UK leaving the EU, the primary other objective is to ensure that the UK’s freedom of action to trade on our own terms is as crippled as far as possible post Brexit. A successful UK economy is not what they want lest other member states decide to follow the UK out of the EU.

As part of this strategy, they have decided to drag out the talks process by as much as is possible in order to apply pressure to both the UK economy and the Government so that in the end, the UK out of desperation will accept any deal they are offered. Part of this tactic was to put up a series of initial “demands” that they know can be spun out as not yet being met by them, this will go hand in glove with off the record “teasers” that they are already preparing to open trade talks “very shortly”. This is not bad faith just self interest as they see it however wrong they are in reality.

So let’s look at the three key issues: The status of EU citizens living in the UK after Brexit, the Irish border and How Much We “Owe” them because we are leaving. They are all red herrings to delay reaching a deal in a timely manner.

The Status of EU Citizens

The idea that the ECJ should have jurisdiction over EU citizens living in the UK after Brexit and that the ECJ should be supreme over British Courts is obvious nonsense. If I were to live in another country as I did for a time in the USA, I would expect to be subject to the laws and rules of that country and if I don’t like them, I would leave end of story.

The UK is not know as a country that sends people to death camps nor is its operation of the legal system random, political, erratic or subject to the whims of individuals. Additionally all residents should be treated equally and be subject to the same rules and legal processes regardless of where they came from originally. There is no more sense in EU citizens resident in the UK being subject to the ECJ than UK citizens living in the EU imagining that they are not subject to local laws and customs of where they are.

The Irish Border

This has fuck all to do with the EU period, it is a matter for the British and Irish Governments to handle because both are sensitive to the nuances of Loyalist and Nationalist politics and both have a committed interest in the Good Friday Agreement. The British taxpayer also has a substantial financial interest in Northern Ireland per capita funding there being the highest of any other part of the UK. There is also the matter of the Common Travel Area which first came into force between the UK and the Irish Republic back in 1925 though it has been subject to suspension or modification from time to time since, this might be another such occasion.

The situation is fairly simple, if the people in the North want to keep the border open as it is now and it being the only land border between the EU and the UK, you move the “hard border” to the UK mainland because all the UK borders will have to be hardened prior to Brexit taking place anyway. Inevitably post Brexit, the UK will need to start work following public consultation of course, on creating a combined identity/state benefits/driving licence etc card of some kind. This time instead of Tony Blair going off half cocked, involving the credit card and banking companies in the design because they have a vested interest too, will not only reduce development costs but also introduce invaluable expertise. The point of mentioning this being that as outlined above, the CTA would suffer in the short term but using these cards could be bought back to life at a later date.

Settling the Bill

In her Florence speech Theresa May offered to continue paying full membership fees for the two year transition period following Brexit, a commitment of some £20 billion but it has been ignored and for good reason, the UK could just walk away without paying a penny beyond March 2019. Since we joined it is estimated that the UK has paid in net around £200 billion so it is a little curious to imagine that the UK “owes” the EU a single Euro. It is a total nonsense demand but also illustrates just how badly Brussels miscalculated in its rebuff to David Cameron’s attempt to reform the structure, if the ongoing UK contribution was so important to them, they should have tried harder.

This is the one thing we should turn on them because it is they that need the money and they therefore have to feel the ‘heat’ of what this money means. Without the UK’s annual contributions either they will have to cut their programs to reduce the size of the Budget or, the existing net contributors will have to increase their contributions to cover the shortfall. If they do the latter, they need to explain to their taxpayers just why they are paying more in rather than reducing the EU Budget because the money belongs to their taxpayers not them.

By the same token, Theresa May is not spending her own money, in offering to pay two years budget contributions after we have left the EU, she has to show her taxpayers that she is getting them value for money which means she needs to show them the whole shape of the deal, NOW. The point is, this is purely a political decision that needs to be made now and not next year not just for the benefit of British business but also EU based ones.

Projecting No Deal

I don’t think that the UK has anything to fear by opting for the ‘No Deal’ scenario and probably has everything to gain by doing so. As is often said, business hates uncertainty, let them know what kind of regulatory regime they will be involved in and they will adjust accordingly. The real problem for WTO rules lies not really in the tariffs being levied but in the regulatory regime with regard to product/service standards which is of course part of the advantage of belonging to the EU’s Single Market.

However this advantage in the medium term should not be overstated because as things stand, UK businesses will be ‘compliant’ to EU standards today and can obviously adjust as those change in the years ahead, as they would in any other non EU market they sell into. The Customs Union is a different beast but in simple terms the UK cannot remain in either the Single Market or the Customs Union and be able to trade freely with the rest of the world. Beyond this, there can be no concessions from the EU on free movement so put in a nutshell, there is no easy path forwards for either party so accepting that upfront leads to the only logic possible, the No Deal.

The advantage of declaring a no deal at this stage is that the UK can get on with preparing its customs and immigration structures whilst businesses both sides of the Channel can get on with making the necessary adjustments they need to make to comply with the situation they will face from April 2019. Secondly it takes the pressure off both sides to reach a negotiated deal and get it ratified in time as there will be No Deal to consider.

In turn this will give both sides the opportunity to think about what they can sensibly expect from each other as well as defining what they need from each other. If we are being honest, it is obvious that the Article 50 provision of the Lisbon Treaty just doesn’t work and there are lessons to be learned from this experience that the EU needs to take onboard if this ever happens again in the future.

Conclusion

It is my view that we should declare that No Deal seems possible and therefore move to making preparations for this. I will end by returning to Lord Melbourne and the first part of the original quote which whilst it refers to things of a military and very 19th Century nature could as well be used in our current situation:

“I hold with respect to alliances, that England is a Power sufficiently strong, sufficiently powerful, to steer her own course, and not to tie herself as an unnecessary appendage to the policy of any other Government.”

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