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Brexit: Sleepwalking

Summary:
As UK-based readers know all too well, the odds of a no deal Brexit have risen, to the degree that the measured Sir Ivan Rogers in a speech earlier this week deemed it to be the most likely outcome. The effect of the Brexit extension has been to give a new shot of life to the Ultras. Even though leaving without a deal is still a minority position, the success of Nigel Farage’s Brexit party in the European Parliament elections and the threat it represents to the Conservatives has radicalized the Brexit debate. But a critical element has been the departure of Theresa May, which has finally led to a leadership contest that was delayed in large measure due to the antipathy for all the pretenders to the throne, most of all Boris Johnson. But even the fabulously tenacious May finally ran out of

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As UK-based readers know all too well, the odds of a no deal Brexit have risen, to the degree that the measured Sir Ivan Rogers in a speech earlier this week deemed it to be the most likely outcome.

The effect of the Brexit extension has been to give a new shot of life to the Ultras. Even though leaving without a deal is still a minority position, the success of Nigel Farage’s Brexit party in the European Parliament elections and the threat it represents to the Conservatives has radicalized the Brexit debate.

But a critical element has been the departure of Theresa May, which has finally led to a leadership contest that was delayed in large measure due to the antipathy for all the pretenders to the throne, most of all Boris Johnson. But even the fabulously tenacious May finally ran out of runway.

As UK based readers know well, the Conservative leadership battle is determined by party members, as in paid up party members, who number about 160,000. They are far more hard core about Brexit than Conservative voters generally, much the less the public at large. We ran this tweet in Links but it bears repeating:

Chris Grey described last week how the debate was playing out:

One notable feature of the current Brexit debate is the extent to which no-deal Brexit….has come to occupy centre stage, whereas it scarcely featured at all during the referendum campaign and is completely different to what leave voters were promised.

That shift has been underway for a long while, of course, but it has become pivotal to the Tory leadership contest where being willing to countenance, if not actually advocate, no deal has become the crucial test of viable candidacy….

The reasons for this shift are many, including the way the Brexit Ultras have consistently pushed to ever more extreme positions – soft Brexit became redefined as no Brexit, hard Brexit as soft Brexit and, eventually, no-deal Brexit as true Brexit. In this way, no deal became normalised and even mainstream.

Beneath that is the central lie of Brexit itself – far deeper than the £350M, although that was one manifestation of it. It is the proposition that it would be possible to leave the EU and yet largely continue to act as if still a member….

With respect to business and trade, this was encapsulated in the nonsense term ‘market access’, suggesting – or at least readable as meaning – something the same as now but without EU membership….

That was always a logical and practical impossibility, and it did not survive contact with the reality of the negotiations. The ‘Barnier staircase’ diagram neatly captured this: each form of being ‘out’ was different from being in, each UK condition or red line determined what form being out would take.

Needless to say, with the Tories refusing to budge from their fundamental delusion, we’ve seen a parade of familiar unicorns: the “managed no deal,” the techno-magical Irish border fix, the “don’t worry, we can trade on WTO rules,” the “don’t worry, we can stitch up trade deals quickly.”

Sir Ivan stooped to dismiss a well-loved unicorn, “We can withhold the £39 billion divorce payment”:

The real issue on the 39bn is not that failure to pay it would constitute a conventional sovereign default. I don’t believe that to bethe case, though I defer to the lawyers on that.

It is that manifestly, any failure to pay it completely guarantees that the EU would refuse to open Free Trade Agreement negotiations under Article 218 of the Treaty–a decision which requires unanimity. And patently will not get it if we refuse to honour the obligation the previous Prime Minister took, on her own Attorney General’s advice.

In a form of reflexivity, the acceptance that a crash out is now probable makes it more possible. European leaders appear to be on the same page as Rogers, which means they ought to get much more serious about contingency planning in the coming months.

As the odds of the worst sort of Brexit tick up, the EU has not budged one iota in its resolve that the only possible deal is the Withdrawal Agreement Theresa May negotiated.1 This is no surprise to anyone who has been paying attention. EU officials have spoken with one voice, for months, that what is too widely seen in the UK as May’s deal is the only deal on offer. As chief negotiator Michel Barnier underscored in a late May interview in the New York Review of Books (emphasis original):

If the UK wants to leave in an orderly manner, this treaty is the only option. If the choice is to leave without a deal—fine. If the choice is to stay in the EU—also fine. But if the choice is still to leave the EU in an orderly manner, this treaty is the only option. This is all that our legal constraints allow.

As we’ll discuss, despite the fulminating of the overwhelming front-runner in the Tory leadership contest, Boris Johnson,2that it should be easy to wrap things up, meaning get the EU to give ginormous concessions it has no reason to provide, by the end of the current extension, October 31, leading edge conventional wisdom is that the EU grants a short extension, say to December 31. The big reason for this assumption is the calendar. Eurocrats won't be back in the saddle till September. The next EU Council meeting is October 17-18. That's not enough time to get anything significant done, even assuming the EU was willing to budge. One wonders how many times Conservative-leanign press organs will try to spin unproductive UK meetings with EU officials as "A Deal is Nigh!" Sir Ivan explained how Theresa May's early speeches about Brexit succeeded in uniting the EU27 against the UK. That solidarity enabled Brussels to set forth the framework for how the negotiations were to be conducted, which were devised to work to their advantage (putting the issues where the EU27 were all on the same page first, for instance). May for her many faults was at least seen by EU officials as genuine, even if also badly informed, wanting in social skills, and rigid. Boris Johnson, who is widely expected to win the Tory leadership contest, for good reason will not be given the benefit of any doubt. As Sir Ivan delicately put it:

I fear I now expect that to be the syndrome we again face this autumn, with the near inevitability of a PM who would start with far lower levels of trustwith the EU than his predecessor progressively squandered. (I say “his” predecessor, because we already know the gender at least of the new PM.)

And as all the evidence and the bookies tell us is almost certainly going to be someone whose reputation with them would be of someone who had deliberately undermined the Agreement they had, over years, reached with his predecessor. But was now telling them, at best, that it was imperative that they reopen that deal and offer him a better one within days or weeks if there were to be any chance of ANY Withdrawal Agreement…

If, contrary to what is being said in orderto garner votes now, and in line with most EU expectations, he seeks an extension at the October European Council –recognising, as is completely obvious already,incidentally, that no new deal could under any conceivable circumstances, be negotiated and passed in the House by October 31–the 27 would, I suspect, be prepared to extend.

But only on the basis that a Withdrawal Agreement containing the backstop was not reopened.Andthat revisions to the Political Declaration and any texts elaborating on the process by which one might obviate the need for a backstop ever to come into force, or the steps by which it might be “phased out” after it had come into force, were the maximum on offer.

In other words, not a time limit, nor a unilateral exit mechanism, but some further explication of what is already in the Withdrawal Agreement and some warm words about the process to try and arrive an an alternative to the backstopover the next several years.

Seen from the other side of the Channel,there is simply no political upside whatever for the 27 to offer a new PM, particularly an avid Brexit campaigner and a populist with Trumpite attributes, the basis on which to say that he had delivered some fundamentally different and better deal.

Sir Ivan described why the EU would not be afraid of a crash-out: it would give them great advantage in negotiations. As Richard North recapped:

….a no-deal scenario should hold a few more terrors than it does. Not least of the reasons is that it hands control of the next phase of the Brexit process to the EU-27. It will “take back control” of the precise legal framework of the economic relationship, because it will legislate without consultation with us the economic framework under which we will have to operate….

Thus, Sir Ivan concludes, deliberately to walk out of the deepest internal market on the planet without a replacement, looser preferential deal in place is an act of economic lunacy…

No-deal, therefore, “is not a destination”. It is simply a volatile and uncertain transitional state of purgatory, in which you have forfeited all the leverage to the other side. You start with a blank slate of no preferential arrangements, and live, in the interim – probably for years – on a basis that the EU-27 legislate in their own interests, without you in the room and without consulting you politically.

Thus, much of our debate about “being ready” for a no-deal totally misses the point. It is the others who will largely dictate what we have to be ready for. Yes, says Sir Ivan, no-deal can and will be “managed” or controlled to a degree. And it would be. But by the EU.

But North also pointed out in a later post that the EU may not accommodating on an extension:

According to Irish premier Leo Varadkar, his fellow EU leaders are “enormously hostile” to the idea of another extension and may be minded to grant one only for another referendum or to give time for a general election. Certainly, there is no appetite for allowing more time for further negotiations, or for yet another round of indicative votes in the Westminster parliament.

Our NC panel of Brexit experts has kicked around the idea that a victorious Johnson would quickly call a general election, taking advantage of a presumed post-win peak popularity while seeking to kick Labour when it is weak. I discount this scenario. It is hard for Boris to out-Farage Farage; the Tories may lose enough votes to the Brexit party in some constituencies to throw seats to the LibDems or even (gah) the Greens. More generally, I don’t see how the Tories would gain seats, which makes a General Election look awfully risky even for an inveterate gambler like Johnson. And politicians of all strips could accuse Johnson for calling a General Election because he knows he can’t deliver on his election promise of wresting concessions from the EU, and/or is unwilling to honor the October 31 drop dead date.

Even so, Labour isn’t covering itself in glory. The major parties have so backed themselves into a corner that they can’t or won’t take any of the possible routes to a revocation of Article 50. In the Shadow Cabinet meeting earlier this week, Jeremy Corbyn resisted calls from within the party to support Remain in a new referendum. He stated:

We have committed to respecting the result of the referendum, and have strongly made the case for an alternative plan for Brexit as the only serious deal that could potentially command the support of the House. At Conference last year we passed our policy, the members’ policy. Over the past nine months, I have stuck faithfully to it.”

I have already made the case, on the media and in Dublin, that it is now right to demand that any deal is put to a public vote. That is in line with our conference policy which agreed a public vote would be an option. A ballot paper would need to contain real choices for both Leave and Remain voters. This will of course depend on Parliament. I want to hear your views, I will be hearing trade union views next week, and then I want to set out our views to the public.

Since Corbyn has said things that have been embarrassing on basic Brexit topics like what sort of deal he’d seek, I suppose the patter above should come as no surprise. The idea of making a confirmatory referendum (which should be a “yes or no” on a particular deal) somehow also allow voters to express second-referendum-ish views is quite a stretch.

No wonder UK voters are confused. It’s coming from the top.

____

1 The EU would accept the change of having so so-called “Irish backstop” apply only to Northern Ireland, an option informally called the “sea border”. But Conservatives have dismissed that out of hand as dividing the Union. It might also be possible to get the EU to reset the end of the transition period in light of a later Brexit and get stronger language that the EU is receptive to magical techno border solutions when they can be demonstrated to work.

2 The Tory leadership contest is down to overwhelming favorite Boris Johnson to Jeremy Hunt, who is less bloodyminded about leaving the EU on October 31 when the current extension expires, although Johnson has allowed himself some wriggle room on October 31 while maintaining he won’t need it.

Wags speculate that Johnson’s camp did a dirty and persuaded some MPs to throw votes to Hunt over his close competitor, Michael Gove. A ConservativeHome straw poll in April found Johnson would beat Hunt in a party contest by 61% to 33%.

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