Monday , October 14 2019
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Today’s Brexit Non-News: The “Precious” Irish Backstop Must be Defended

Summary:
Ursula von der Leyen, the European Commission President candidate, says she will not reopen Brexit talks. Please consider Ursula Von Der Leyen Signals She Will Not Reopen Brexit Talks. Ursula von der Leyen, the nominee to lead the European commission said she still hoped the UK would remain in the European Union, while indicating she had no intention to renegotiate the withdrawal deal agreed by Theresa May and EU leaders. “I think it’s a good deal, but it is your responsibility and your noble task to sort this out,” she told a British Liberal Democrat MEP in the European parliament, in her first public comments on Brexit. In a thinly veiled message to the Tory leadership candidates Jeremy Hunt and Boris Johnson, Von der Leyen said the tone and attitude with which Brexit happens were

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Ursula von der Leyen, the European Commission President candidate, says she will not reopen Brexit talks.

Please consider Ursula Von Der Leyen Signals She Will Not Reopen Brexit Talks.

Ursula von der Leyen, the nominee to lead the European commission said she still hoped the UK would remain in the European Union, while indicating she had no intention to renegotiate the withdrawal deal agreed by Theresa May and EU leaders.

“I think it’s a good deal, but it is your responsibility and your noble task to sort this out,” she told a British Liberal Democrat MEP in the European parliament, in her first public comments on Brexit.

In a thinly veiled message to the Tory leadership candidates Jeremy Hunt and Boris Johnson, Von der Leyen said the tone and attitude with which Brexit happens were crucial, adding: “Brexit is not the end of something, Brexit is the beginning of future relations and it’s of absolute importance that we have good cooperation.”

“I think the backstop is of utmost importance and we absolutely know how crucial this nonexistent border is for you,” she said in response to an Irish MEP. “Having the backstop in the Brexit deal is precious, important and has to be defended.”

Non-News or Fake News?

The Guardian story is either non-news or fake news for several reasons.

  1. She might not get the position. I have about a 30% chance that she won't.
  2. Assume she does. What did you expect her to say? She made a statement she was guaranteed to make. There is as much value in her claim as stating 1+1=2.
  3. It is not even her call to reopen Brexit talks. She could not do that if she wanted to.

Point 1 is speculation on my part, but I do suspect she will hand out enough bribes to the Greens to get nominated.

Point 3 is fake news. It is not her call to reopen talks.

Point 2 is the strongest point. She made a mandatory statement that conveys virtually no information.

No Information Conveyed

Ursula von der Leyen can oppose a change but it is not her call.

No one on the EU side will ever admit they are willing to talk until the talks take place.

Can They Change the Backstop?

It's possible, but highly unlikely. It would take all 27 nations to agree.

The backstop might not change, but there could be a timeline on it or other changes to mitigate it.

Talks?

Talks are a given. Von der Leyen made an interesting, and correct observation:

Brexit is not the end of something, Brexit is the beginning of future relations and it’s of absolute importance that we have good cooperation.

The EU can decide to cooperate, or not.

I propose they will, for reasons mentioned previously.

  1. Ireland will be in a world of hurt. The estimated first-year to Irish GDP is 4.1%. It would be unlike the EU to purposely throw another EU member under the bus.
  2. European exports to the UK will crash.
  3. Germany is already smarting from a global slowdown. Merkel is no longer call the shots, but she is open to talks.
  4. If the EU will not budge at all, Johnson may apply more pressure by saying he will not even pay the breakup fee. That extra money the EU desperately needs for its budget or it will have to raise taxes or cut expense.

Saying vs Doing

We know what politicians say they will do, but we do not know what they will really do when the time comes.

The EU never believed May would walk.

In about one month the EU is likely to find out Johnson really intends to walk.

At that point, the ballgame changes.

The open issue is whether there is enough time to get all 27 nations to agree to do anything. There will be a very intense month of intense negotiations.

No Extension

An extension will not cut it. Johnson has to deliver Brexit by Oct 31.

I will make a small allowance of a 1-month+ extension on a pair of requirements.

  • There is an agreement in principle by all EU nations and they need an extra month or so to implement some parts of it.
  • There is no chance of a UK election within the extension period that can undo the agreement.

Binary Choice

  1. Revised Deal
  2. No Deal Brexit

The decision is not up to UK MPs, the Queen, elections, or referendums.

The decision is up to the EU.

“Brexit is not the end of something, Brexit is the beginning of future relations and it’s of absolute importance that we have good cooperation.”

Does the EU mean that or not?

Mike "Mish" Shedlock

Mike Shedlock
Mike Shedlock (Mish) is a registered investment advisor representative for SitkaPacific Capital Management (http://www.sitkapacific.com/). Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

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