Wednesday, 9 October 2019

Brexiters will come to regret rejecting May's deal

I am a leaver. But I didn't celebrate that morning in June 2016. Vote Leave Ltd dug a number of holes that would ensure a long and bitter battle to get Brexit over the line in a situation where it was already going to face implacable opposition. For me it was just another day in the trenches. So too will be Brexit day when we leave without a deal. There won't be much to celebrate.

Obviously I will take some great pleasure in this arduous phase being over and watching the remainer wailathon as they're visited with much deserved karma for their obstructionism - which is in part responsible for the failure of this process. But no deal is by no means a success. The failure of the Article 50 process merely starts another process of negotiation and another fierce political battle. One where the UK is excluded from a number of pivotal markets and will find itself putting out brushfires all over the shop.

At that point, the EU will have a gaping hole in its customs frontier which is a major liability that threatens to weaken the single market, undermining the sovereignty of the EU. Brexiteers assume that our departure leaves a gaping hole in EU finances which will change EU attitudes considerably. This is a major miscalculation in that the £39bn was never a lump sum, nor is it an especially large figure in terms of EU income. The EU's first priority will be to address the frontier problem in Ireland.

For some time now I have said on this blog, at least three times a week, that the price of even opening up talks will be a customs protocol for Northern Ireland and it's not going to look much different to that which is already outlined in the withdrawal agreement. A number of EU officials and diplomats have said this and it seems like the logical thing to do. That's exactly what I would do in their position.

The assumption that because the EU loses an important export market it will face internal pressure to soften its stance underestimates how seriously the EU views the threat of an unpoliced border without formal arrangements with the EU. In the first instance the UK remains aligned in most senses so the immediate risks are minimal - so through a mix of fudges and waivers the EU can stave of the installation of customs facilities for the interim. That is time enough to gradually tighten the noose at Calais and step up the process of freezing the UK out of lucrative services markets - enough for it to hurt.

I doubt it will take very long before we are once gain bickering about customs formalities and "regulatory alignment", with the Johnson administration still failing to grasp the basics, ensuring we remain in a limbo for some months with no indication as to when or how we are going to repair our trade and cooperation with the EU. There lies further damaging uncertainty for business and foreign investors.

The obvious reality that seems to escape Brexiteers is that the EU is a trade superpower with greater clout than us but also one that places greater value on its founding ideals than it does commercial expediency. It has taken the necessary unilateral measure to safeguard its own immediate interests so those mythical pleas from "German carmakers" will fall on deaf ears. More likely the EU will face demands not to allow the UK any competitive advantages while EU firms hoover up our share of the EU market.

The question, therefore, is how long the Johnson administration can withstand the onslaught of negative economic signals and the manifestation of real job losses. For Johnson to then cave in on an NI protocol he could have had without all of this mess would be too much of a loss of face so he'll continue to play the victim, keeping the UK in a state of limbo. For a time the Tory tribe will promote the narrative that the EU is refusing to do a deal with us and is blockading the UK out of spite. That might work for a while but when the public start to experience real problems Johnson will start sliding in the polls and eventually the letters will go in to the 1922 committee.

By that point, anyone not still drinking the Brexit kool aid will view Brexit as a manifest failure and the task of rebuilding our relations with the EU will likely fall to the centrists whereupon they probably will ask for a customs union (still not knowing what one is or what it does) and then there's a chance we could end up with an economic settlement which is more BRINO than May's deal ever was.

But that's karma for you. The Telegraph, Spectator and the rest of the Tory blob have played up the idea that May's withdrawal agreement is a customs union when in fact the requirement is alignment with the rules of the Union Customs Code. It may not have been what the Brexiteers had in mind but the simple truth being that we would end up in any circumstances aligning with the EU both on regulation and tariffs because it is in our interests anyway. The EU regulatory sphere spans thirty three countries directly and influences the standards and regulations of a dozen more and the EU;s rules of origin ensures that substantial variance in tariffs would not be the boon that Tories seem to think it is.

For now the Brexiteers have the power and they think they've won. They seem to think that Brexit day is the end of the matter where we move on to other things. Sadly this is not the case. Our external relations are a continuum and there is no end point. Leaving without a deal only ensures the road to a new normal is longer and harder and much, much more costly. The power then ends up back in the hands of those who never wanted Brexit in the first place who'll be keen to undo as much of the damage as possible. The economic imperative will override the fundamental democratic argument underpinning Brexit.

That is the essential problem here in that this is very much a "Tory Brexit", seeing Brexit as a Trojan horse for a radical economic experiment rather than something worth doing for a principle. They may have won the key battles but failed to win the argument - and having failed to set us on a course to a viable destination, leavers will have a new fight on their hands to stay out of the EU. The promise of sovereignty loses its shine when you're not meeting mortgage payments.

Though no deal is a collective failure on the part of our media and politics, the ultimate responsibility will lie with Boris Johnson and to a large extent Dominic Cummings - who favoured bluster and bluff over knowledge. From the outset they've viewed this as a game of 3D chess necessitating plots, schemes, gambits and trickery when all it really demanded was for the UK to agree a coherent position and work with the EU to deliver it.

Here the Commission has fallen back on the instruments it favours because it sees no real reason why it should complicate matters for the sake of a departing member. It has, however, been consistent in saying that if the UK could devise a viable alternative then they'd be open to it. That the EU is apparently "intransigent" is because no serious alternative has ever been presented. The EU has been clear enough that any solution must not compromise its customs and regulatory territory. Both May and Johnson attempted to subvert the process and unsurprisingly came to a dead end. 

The problem was that every mode of a negotiated exit involves facing up to a few uncomfortable realities that Brexiteers have steadfastly refused to acknowledge. Theresa May tried her hardest to square the circle and in the end admitted that something had to give. That cost her the premiership and she was replaced with the ultimate charlatan who promised the Tory tribe they could have the moon on a stick with no penalty. It is that fundamental arrogance combined with a galactic ignorance (cultivated by the leave inclined press) which perpetuated the notion that we have the upper hand and it's all there for the taking.

With talks having stalled today it now looks more certain than ever that we'll leave without a deal. The only hope I see is if the withdrawal agreement can somehow be resurrected. Forlorn hope though that may be. It's still our best chance of reaching a viable destination.

Initially I was opposed to the WA since the Tories were hell bent on leaving the EEA which leaves a binding framework with none of the single market advantages but once it became clear EEA was probably a dead option, and the deal was the only deal, I learned to like it simply because no deal is a disaster. In the longer term a negotiated exit would probably reveal in time that an FTA is insufficient and that we'd end up working toward a shadow EEA - having made Efta untenable.

The bottom line is that we either accept suboptimal terms now or worse terms later when we're in serious trouble. The withdrawal agreement is at least a lifeline, kicking off a fresh process and a new debate where, if the government is serious about preventing the activation of the backstop, it will be looking at whole UK solutions which will naturally lean toward the single market.

One way or another I think something close to single market membership will be the longer term destination. The only question is how we get there. If we allow the Article 50 process to fail then the road will be longer and considerably more painful. The only discernible upside is that it will destroy the Tories and utterly discredit the ultra Brexiters which is almost a price worth paying. But only almost. The price is too high even for me. 

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