Tuesday, August 20, 2019

If Boris can survive September, the EU may rethink its stubborn stance


Published in The Daily Telegraph

It was always predictable how the first few weeks of Boris Johnson’s premiership would play out. It would have been astonishing to see him abandoning his demands to “scrap the backstop” right after entering office. The same can be said about the EU side, which has repeated ad nauseam that the binding part of the Brexit deal agreed by Theresa May is non-negotiable. 
Now, ahead of the Biarritz G7 Summit, and as the Prime Minister prepares to meet his counterparts in Paris and Berlin, things are getting more interesting. Johnson has come out with a document detailing – to an extent – how his Government wants to renegotiate the binding part of the deal. This was swiftly followed by the EU side – including Ireland – ruling out any renegotiation of the Withdrawal Agreement, with the EU Commission arguing that the Government’s “letter doesn’t provide a legal operational solution to prevent the return of a hard border”.
In other words: the European side is telling Boris Johnson to explain how he would solve the border conundrum. It’s the EU’s view that this may well take up to 15 years. At least that’s what Austria’s leading diplomat charged with Brexit estimates. The UK Government does admit that “alternative arrangements” may not be ready by the end of the transition stage, on 1 January 2023, but Boris Johnson vows in his letter to "look (...) at what commitments might help" so to reassure the EU that he is interested in a solution.
It used to be the case that many in the EU were hoping Brexit would simply not happen. By now, the chances of Brexit being stopped have flattened, partly due to the Brexit Party's success in the European elections. The EU side is nevertheless still hoping that Parliament will somehow depose Johnson and his Government, with a successor requesting another extension of the UK’s membership which would then be followed by the UK agreeing to the terms of the Withdrawal Agreement negotiated by Theresa May. Few have considered how Parliament would pass this – after an election which may terminate the careers of many Remain-supporting MPs.
The first week of September, therefore, will be crucial. It should give an indication of the chances that Boris Johnson will still be Prime Minister by the end of October. The EU knows this; so do not expect any major concessions from them until the situation in Parliament becomes clear.
After that, rationally, there should be movement. One would expect the EU to at least have some kind of “plan B” in case it did need to make some concessions, and it's not difficult to imagine what this would look like; likely an offer to make the backstop time-limited, for, say, 20 years. This offer would then of course need to be communicated by the Irish government, so it doesn’t appear as if the other EU members had pressured one of the smaller member-states. 20 years would of course be unacceptable to the UK, but we should not forget that when the EU wants a finger, it asks for an arm. Even those more wary about making concessions to Boris Johnson in the EU could support such a plan B - it would at least shift the blame away from the EU for any ensuing “no deal” disruption.
The Prime Minister, meanwhile, now thinks “an agreement is possible” on “a” Withdrawal Agreement, which should build confidence among EU countries that Boris is not aiming for “no deal” and that any concessions made by the EU won’t be futile. If the UK government now becomes more specific about what it wants to replace the backstop with, this would deal with EU concerns that Boris has only promised to “look at” a possible solution in case alternative arrangements wouldn’t be ready by the end of the transition period. The work of Prosperity UK is inspirational here
However, if the EU refuses to discuss reopening the binding part of the deal even if it is clear that the alternative is, in fact, Britain leaving without one, Brussels will truly be responsible for no deal. Denmark won concessions in 1992 and there are several precedents of the EU reconsidering deals agreed with governments after referendums and parliamentary votes contesting them. Importantly, Theresa May did tell EU leaders in November that she could very well fail to push the deal through Parliament, so the UK cannot be accused of having acted in bad faith here.
It is fair to demand that Boris comes up with more detail, but how responsible is it to continue to refuse any changes whatsoever to a draft agreement which both sides knew had a slim chance of being accepted by Parliament? The Irish Times reports that “there is as yet no real detail” provided by the Irish government “about how the border will be managed in the event of no-deal”. So a disruptive “no deal” troubling the peace process is not all that far-fetched, sadly, unless the Irish government decides to throw all of its obligations to guard the EU’s external border out of the window.
In his letter, Boris Johnson writes that the EU "presents the whole of the UK with the choice of remaining in a customs union and aligned with those rules, or of seeing Northern Ireland gradually detached from the UK". When the UK is attempting to formulate compromises, the time has come for the EU to make a move towards abandoning their excessive demand.


Wednesday, August 07, 2019

Can we expect the EU to behave "rationally" in the face of "no deal"?

Published in The Daily Telegraph:

Brexit negotiations have descended in a game of chicken, with the EU repeating that it is unwilling to reopen talks on the binding part of the deal Theresa May struck. This rules out pretty much any concession to the UK..

It was predictable that the EU wouldn't simply change its tune the day after Boris Johnson became PM, but what will happen in the next few weeks? Will EU capitals look at the withdrawal agreement again, and perhaps change the terms of the Brexit negotiation mandate  they have given to the European Commission in order to offer concessions?

Rationally, that's what they should do. Avoiding a "no deal"  Brexit would deliver much more of what Ireland is trying to achieve than letting a no-deal Brexit happen. After all, a o deal may hit Ireland's economy harder  even than the British, and because the Irish government would need to put up a border of some kind, both the peace process and Irish relations with its EU partners may come under strain.

As for the other EU member states, a deal is rationally preferable to no deal too. Any damage to the UK economy would do little  to soothe the pain inflicted upon the Belgian, French, Dutch and German economies. Amid predictions of a German recession and the escalating trade tensions between the US and China – to which the EU is particularly vulnerable given its weaker industrial base – one can hardly think of a worse time for Europe for a "no deal" Brexit to occur.

So will the EU be rational? Nobody can predict the future, but there are a number of reasons to suppose there is at least a chance.

First of all, the EU side has  shown some flexibility already during the Brexit process. In November, it conceded that as part of the "backstop", the whole of the UK – and not just Northern Ireland – could enjoy tariff-free access to the EU. Another example is how, in the spring, after weeks of grand statements that the EU was "prepared" to go for no deal, it was ultimately only an isolated French President still pretending this that this was true. It wasn't very credible then, given how Calais had been plagued by customs strikes for weeks, with question marks hanging over bureaucratic preparedness for all to witness. Various reports, including one from the CBI, have highlighted how  today, too, the EU isn't exactly as well-prepared as it claims.

More fundamentally, claims that the EU would be unable to violate certain sacred – and often arbitrarily defined – "principles" are simply factually incorrect. During the eurozone crisis, emergency bailout funds worth billions and billions of euros were agreed over a weekend, in open violation of the letter and the spirit of EU rules, given how Germany had only sacrificed its D-Mark in return for a Treaty ban on bailouts. During the chaos of the migration crisis, member states simply stopped applying the letter of the Schengen agreement, which scraps passport checks, once again dubiously bending the law.

Over the years, the EU has reconsidered deals it had struck with governments, after referendums and parliamentary votes contesting them. In the 1990s, the Danish received an opt-out from having to join the euro and other grand EU schemes, after the Maastricht Treaty was rejected in a referendum. Lesser concessions were granted to the Irish after they rejected a new European Treaty twice in the 2000s, to the Dutch after they rejected the EU-Ukraine Treaty in 2016 in a referendum, and to Wallonia's Parliament when it refused to agree the EU-Canada trade deal in the same year.

Some have argued that these were all concessions to member states, which are not likely to be offered   to  the UK since it is  leaving. But, given how economically integrated the EU27 are, that overlooks the fact that this is really a negotiation to prevent damage due to a part of the pan-European economy breaking off. This is an intra-European divorce and the UK leaving is no minor  matter, as its economy is equal in size to the economies of the EU's 19 smallest member states.

The EU has, moreover, been flexible to non-EU countries in the past – for example to Switzerland and Ukraine, entering into trade frameworks with both in which the sacred "four freedoms" were split. The EU-Ukraine Treaty, for example, does not include freedom of movement of persons, something which EU propaganda has in other circumstances described as intrinsically linked to openness to goods and services trade.

There are nevertheless also good reasons to think the EU won't be rational and will continue to refuse concessions. If Boris Johnson doesn't reassure them that any concessions will actually result in a deal, it gets tricky. And  the EU side may be complacent when it comes to no deal. They may think that predicted massive job losses can reasonably be avoided through mitigation measures, while forgetting that they may also  find themselves in a context of mutual blame sharing, which would make such measures harder to agree. How big would French President Macron's room to be flexible be, for example, if French fishermen lose access to UK waters, which is an automatic consequence of no deal? And how much room for manoeuvre would Irish politicians have, if they attempt to blame the UK to deflect domestic criticism that they had not properly prepared for no deal? It's not clear that the EU side have thought this through, so don't bank on them being the adults in the room.