Monday, 29 April 2019

Brexit's credibility gap

I'm on a loser trying to make the case for the Withdrawal Agreement on the table not least because the betrayal narrative is too useful to Brexit demagogues to actually do something pragmatic like taking the first tentative steps toward leaving the EU. Instead they reassert the usual mantras but at no point seek to acknowledge the real world implications of what they demand.

For starters the usual four mantras of controlling our money, laws, borders and trade hits the rocks with any serious examination. Since we know they do not want May's deal and no deal other than "no deal" is on offer we have to assume that is what they are gunning for. It doesn't pan out.

For sure, this would end payments to the EU but the subsequent collapse in trade would result in a corresponding collapse in tax receipts. But of course, according to the Brexit blob, trade carries on as normal and there are all kinds of magical devices that ensure continuity. In their universe the EU's Notices to Stakeholders simply do not exist.

Taking control of our laws is no so straightforward either. There is some regulatory red tape that we could prune away but here we encounter the "double coffin lid" problem where we find much of the regulatory impositions that come to us via Brussels begin life in Geneva or are obligations under international treaties such as the Paris climate accords. If you really wanted to "take back control" to ensure we really do have democratic control over our laws then Brexit is really only a starter for ten. We'd have to withdraw from a number of flagship global accords which would be unprecedented and politically difficult. 

Then of course, there is the classic dilemma that the more we diverge from the EU, the more border and customs formalities we must endure, adding layers of overheads to transactions which harms UK competitiveness. Harmonisation and integration of systems is part and parcel of modern trade. It is the global direction of travel and the regional trade superpowers tend to call the shots. 

As to taking control of our trade, the fact is the EU as our nearest and largest trade superpower has enormous leverage over its neighbours as we have seen in the way it imposes on Switzerland. If the UK wishes to maintain exports to the EU then it will be on EU terms and there is no scenario where we won't have to coordinate with the EU. Every FTA we sign has implications for our primary relationship and unilateral action has trade offs and consequences. The global fabric of trade deals is deeply interconnected and governed by a global set of rules and nobody operates entirely independently. 

Then, as far as taking control of borders is concerned, we can end freedom of movement, but it's only a bit part of a solution. Immigration control is multifaceted and requires joined up local enforcement and effective systems for tackling the negative symptoms. Here we find there are a number of impediments from stretched council budgets through to human rights legislation that are nothing at all to do with the EU.

From a puritan perspective, the only way to take control is not only to withdraw from the EU but also a number of other international bodies to the point where we might even question our membership of the WTO and its legitimacy. These issues are far from clear cut. 

But then reality intrudes. Post-Brexit the UK still has to make its way in the world, it still has to have formal trade accords with the EU and as the junior in what is always going to be an asymmetric relationship, we will have some bitter pills to swallow. We can leave without a deal but that is no basis for operating in the longer term and our relations will have to be rebuilt sooner rather than later.

This is point I tire of repeating. Leaving without a deal means the UK is subject to the full array of third country controls and even if the headline impacts can be avoided we are still excluded from a number of lucrative markets simply because we are not legally connected with EU regulatory systems. Trade is more than trucks shifting tins of beans through Dover. Much of it depends on peripheral instruments such as visas and recognition of accreditation and qualification.

In the immediate aftermath of leaving without a deal, there is a strong change that the government's absorptive capacity will be overwhelmed and anything broken will likely stay broken if it is not an existential priority. This is where business starts to bleed away in search of a more stable regulatory environment. It will take some months for it to become clear as to what exactly is happening with services exports. By then we will be looking at the fag end of a Tory government with a looming election and there is then a strong chance of a Labour government led by Corbyn. 

Being that Labour is not ideologically wedded to Brexit and shows no real interest in running an independent trade policy it will more than likely concede to whatever the EU demands and will probably agree to a customs union largely because they think it does more than it actually does. I strongly suspect the EU will not be of a mind to tolerate the legal holes in its frontier and will demand something akin with the backstop in order to open talks on a more comprehensive FTA.

So as much as no deal is incredibly damaging to the UK's standing, it is difficult to see where it gets us. The stated objectives of Brexiters will be defeated and there is no way to deliver a sustainable Brexit that actually delivers on the promises they made. A Brexit of a sort is deliverable but it requires taking on board all of the harsh realities and prioritising our red lines. 

This is something the Brexiters have failed to do. We are still in unicorn territory and nothing is likely to persuade them that the WTO does not provide any realistic answers to the multiplicity of critical problems created by Brexit. Worse still when you have a political movement behaving like toddlers, there is no possibility of constructive dialogue. 

Even worse is that all of the windows for alternatives are now closed. There have been opportunities along the way where constructive engagement by the Brexiteers could have guided May's hand, but all we got from Johnson and Davis was bluff, bluster and frivolity and the ERG are profoundly unserious people, still rejecting everything they are told, preferring instead to indulge in their own private fantasies.

Depressingly, we are still nowhere close to a solution. The Brexit movement appears to have galvanised around political chancers promoting their no deal fantasies, steadfastly refusing to accept the withdrawal agreement on the table, blaming May for the state of it rather than their own intransigence and lack of adult engagement. This brings us to a political impasse where the deal is practically deliverable but politically a non-starter.

Being that the deal is non amendable and the EU is not going to back away from its flagship position on the backstop (being far too politically invested) it is for the UK to reach an internal consensus which looks no more likely now than it did some weeks ago. It seems that we are destined to fanny around with yet more tedious soap opera until the final weeks before the October deadline only to have nothing to show for it. 

By that point, much will depend on the feeling in the Brussels. Barnier implored the UK not to waste this time but waste it we will and at no point will there be a coherent proposal from any wing of UK politics. We will have yet more pointless arguments about the Swiss border and another resurrection of the Malthouse Compromise, and the usual self-deception but nobody will look at the facts in the cold light of day. 

The fact of the matter is that the UK, by way of its own lack of direction, its issue illiteracy and lack of leadership, has been completely outgunned and outplayed by the EU and though the withdrawal agreement is a bit of a stinker, it's the only way we get to leave with our hide intact. Some call it a capitulation and a humiliation but it's a greater gamble to leave without a deal only to go grovelling to Brussels some months later to sign whatever is put in front of us as the wheels fall off the ERG's "fwee twade" dogma.

Meanwhile, there are some who suspect that we may yet enter a further extension of Article 50 come October. Your guess is as good as mine. Were that to happen there would need to be a reset and this perpetual limbo is unsustainable for both sides, but if that is how it plays out then we are still looking at a number of complex questions requiring comprehensive answers and any deal will ultimately attract the ire of Brexiters who simply refuse to engage in reality. It could drift on to the point where there is really then no choice but to put it back to the people and at that point, I would not be at all surprised if it returned a decisive win for remain.

It seems to me that if we are serious about leaving then we have to hold our nose and sign May's deal, taking into account the political declaration and the joint ambitions for phasing out the backstop. Brexiters, though, have convinced themselves that the deal is a trap designed to ensnare the UK permanently with no way out with a view to the UK rejoining. That may certainly be a risk but one that is overstated. The likelihood of rejoining is greater from a botched no deal Brexit than an orderly departure.

There are two fundamental errors in the thinking of the Brexiters. Firstly that their fantasy construct of what constitutes Brexit ever was deliverable - and that Brexit is an event rather than an intricate long term process. It was always going to have to be done in stages and the withdrawal agreement is on the first step in a process that is sure to last two decades at least. What matters to me, as a leaver, is that we are not part of the political EU construct. The rest of the extraction process will have to be done over time with great care and patience.

This ignorance, though, cannot be corrected. the Brexit movement in the public domain lis largely comprised of self-promoting chancers treating the whole process as a popularity contest, churning out pleasing slogans to bolster their own standing within the Brexit blob. To seriously engage in the process would require telling the hard liners a few things they don't want to hear and and cynical manipulators are not going to do that. Consequently the Brexit Party is the dregs of Ukip and former Revolutionary Communist Party activists - none of whom have the first idea what they are even saying.

At this point I no longer know for certain if we will leave the EU. A strong showing at the euro-election for Brexit favouring entities will be long forgotten by October, and for as long as key players keep working to prevent no deal then we could be in this Brexit limbo for a long time yet. All the while the mandate for Brexit drains away while its leaders hemorrhage credibility. The nation may yet conclude that if leavers are not prepared to take Brexit seriously, why should anyone else? 

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