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Time to talk some Brexit sense

Let us have an end to fighting the referendum campaign ad infinitum and ad nauseam. Now is the time to get real.   

lead PM Theresa May gives evidence before the Liaison Committee on matters relating to Brexit at Portcullis House in London, November 29, 2018. Press Association. All rights reserved.

For months now – years, even – commentary on the Brexit negotiations has been almost entirely negative. David Cameron threw in the towel as soon as the referendum result revealed how badly he had misjudged the electorate. Theresa May – who had campaigned alongside him for the UK to remain in the EU – was installed as Prime Minister, once the leading Leave candidates for the Tory leadership had comically self-destructed. She shouldered the task of negotiating an agreed withdrawal from the EU within the timeframe – an unrealistic two years – allowed by the Lisbon Treaty’s article 50.

Even though she took many months to initiate the process – somewhat to the displeasure of the most gung-ho Leavers – and appointed, within a cabinet of mixed Leavers and Remainers, leading Leavers to the key outward-facing posts of Brexit Secretary and Foreign Secretary, she chose to ignore the advice from “our man in Brussels”, Sir Ivan Rogers, to delay triggering article 50 till she had sorted out an agreed UK position (she fired him, instead). Perhaps instinctively, she decided to avoid having a lengthy and draining domestic argument before confronting the EU. Instead – and fulfilling her own leadership pledge, to launch negotiations within the first year of becoming Prime Minister – she started the process in March 2017, and then tried to bolster her internal position by springing a surprise election.

This manoeuvre backfired: the Conservative share of the vote actually rose, but as UKIP (deprived of its key campaign issue) collapsed, Labour revived, and Mrs May found herself unexpectedly running a minority government (given face-saving majority status thanks to a deal with Northern Ireland’s DUP). Her early attempts to set out her Brexit stall duly ran into the harsh realities of the task facing her: that the EU could command near unanimity in its negotiating stance, whilst her cabinet, her party and her nominal parliamentary majority were all deeply fractured. The EU could command near unanimity in its negotiating stance, whilst her cabinet, her party and her nominal parliamentary majority were all deeply fractured.

Understandably, the EU insisted that it was simply impossible to negotiate a new trading treaty alongside a withdrawal agreement within the time period available: in trade treaties, EU states have conflicting aims which need to be reconciled, which is why they take so long to reach maturity. The best the EU could offer would be a statement of intent for the future; but even this would require a settlement of outstanding liabilities, clarity on the status of EU citizens living in the UK (and vice versa) and a clear undertaking that any future relationship would protect the Good Friday agreement of 1998, most notably by avoiding the re-introduction of a hard border between the north and the south of Ireland. None of that would have been changed if Mrs May had increased her majority in the 2017 election.

Transition period

The notion of a transition period (or “implementation period” as May preferred to term it) was actually welcomed, albeit in muted fashion, by the vast majority of MPs, as in itself it did not eliminate their preferred – but conflicting – outcomes, and served to postpone some of the toughest decisions. Even so, a vocal minority within the Conservative Party, in the form of a caucus that styled itself the European Research Group, warned that they expected real dividends to be reaped by Mrs May in exchange for agreeing to pay the £39 billion that the EU calculated was owed by the UK on exit. The phrase “no deal is better than a bad deal” joined the EU formulation, “nothing is agreed until everything is agreed”, as mantras designed to keep everyone on board until hard choices needed to be made.

Yet, insofar as they accepted a transition in principle, the ERG also implicitly accepted remaining in the EU single market and customs union for a minimum of 21 months, and thereby accepting EU regulations without having any right to vote on them, within either the Commission or the European Parliament (the so-called “vassal status” so vociferously now denounced by Boris Johnson, despite his having acquiesced in it when in the cabinet).

Brexiteer hopes for resolving the Irish border issue, without binding the UK’s hands indefinitely, rested with technological advances that had the potential to render customs checks unnecessary for goods crossing in both directions. But the EU declined to accept what it called “magical thinking”. If, at the end of the transition, by the end of 2020, the system could be proved to work, well and good: but if not, and if no new trade deal had by then been agreed by the EU and the UK (a daunting prospect in a time period of just 21 months) then a “backstop” would be required whereby Northern Ireland would remain inside the customs union – and, because Mrs May, like virtually all her Westminster colleagues, could not contemplate a sharp differentiation between the status of Northern Ireland and that of “the rest of the UK”, so too would “the rest of the UK”, for as long as it took to conclude a trade deal, or until both the EU and the UK decided to give up the backstop.  

Mrs May’s insistence on keeping Northern Ireland visibly within the Union cut little ice with the DUP (whose MPs are all Brexiteers, despite representing a part of the UK markedly pro-Remain). This was because the EU required closer alignment by Northern Ireland with the single market during the backstop than would be allowed for the rest of the UK (Irish border issues, again) – a status that actually seemed beneficial to Northern Ireland; but in DUP eyes, any variation from the rest of the UK is impermissible (other than, say, laws relating to abortion and same sex marriage: and the DUP’s memory also seems not to stretch to the decades when successive renewals of the Prevention of Terrorism Act allowed a UK Home Secretary to “exclude” certain UK citizens from the mainland, and despatch them to Northern Ireland). The pressures of campaigning in the context of an in/out decision left many people, and most MPs, with an exaggerated sense of the benefits – or risks – of either outcome.

Sadly, the seeds of Britain’s present predicament were sown in the referendum campaign itself. The pressures of campaigning in the context of an in/out decision left many people, and most MPs, with an exaggerated sense of the benefits – or risks – of either outcome. Once Leave had gained the majority of those voting, the EU had only two choices: require the UK to respect the rules of its market as it made its inevitably slow exit by negotiation, or accept the pain of an abrupt departure.

Cardinal principles

Those Brexiteers favouring an immediate exit, adopting World Trade Organisation tariffs between the UK and the EU, and disputing or delaying the exit bill claimed by the EU, were willing to face the inevitable disruption to many aspects of life – not just trade – that such a course entailed, at least in the short term. In truth, most people voting Leave must have at least contemplated such an outcome, as there was no guarantee that the EU would offer acceptable – or any – withdrawal terms. That such an outcome – as Barbara Spinelli has eloquently explained to oD readers – risked leaving millions of EU and UK citizens in limbo, without the protections carefully inscribed in the withdrawal agreement, seemed of as little concern to the “no-deal on principle” group as the risk of renewed friction in Northern Ireland.

Anthony Barnett sees this mind-set as being in thrall (or worse) to Trumpite US ardour for deregulation: it is not a diagnosis I share, not least because Liam Fox, one of the ideologues he name-checks, remains loyal to the May deal: but that does not matter, because the exponents of no-deal Brexit were heavily outnumbered in Parliament by more cautious MPs, Brexiteers and Remainers alike.

The negotiation option, with all its hazards, found broad acceptance, and Mrs May’s early pronouncement of her objectives, in her Trafalgar House speech and elsewhere, kept virtually all her backbenchers onside, reluctantly or otherwise. Yet those objectives necessarily had to be adjusted to accommodate the EU’s own red lines, of which the most obvious was that non-members could not enjoy the benefits of the single market without some loss of rights or access: “cake and eat it” was not on the menu. Whether this stance was designed to “punish” the UK or “deter” other potential exit-minded members was immaterial: it was simply a cardinal principle of the EU. Non-members could not enjoy the benefits of the single market without some loss of rights or access: “cake and eat it” was not on the menu.

It was David Davis, as Brexit Secretary, who most directly encountered the EU position. His response was to protest against EU “intransigence”, or “bullying”, and increasingly absent himself from the actual talks in Brussels (he was one of those who encouraged May’s election stunt, thinking her likely triumph would set the EU back on its heels). In turn, Mrs May, faute de mieux, looked to her civil servants, most notably Olly Robbins, to keep the show on the road, and make a detached judgment as to what was actually achievable.

By the time of the fateful cabinet meeting at Chequers in July, it was clear that the only deal that might be on offer lay at the outer edges of acceptability. Even though the July document still envisaged a non-backstop solution to the Irish border problem, Davis promptly resigned, swiftly followed by Boris Johnson; and their vilification of “Chequers” as a sell-out led to a slew of more junior ministerial departures. Yet when Mrs May took her Chequers proposal to the Salzburg EU summit, she was severely and publicly snubbed, and was forced to repeat her public threat about preferring no deal to a “bad” deal.

The last haggle

Mrs May replaced Davis with Dominic Raab, a long-term Brexiteer, and he seemed willing to plug on with a modified Chequers formula, provided it survived the final round of negotiations. That last haggle, however, proved a step too far for him, and he too resigned in protest when he discovered that Mrs May had authorised Robbins to sign off on a convoluted backstop formula, which was the only one that Ireland and the EU would – with reservations of their own – contemplate.

Raab and like-minded Brexiteer MPs had insisted that the UK must have the unilateral right to end the backstop to avoid being locked into a customs union indefinitely, and so unable to conclude any of the third-party trade deals so often touted by the Leave campaign. Yet as Mrs May calmly pointed out, the backstop was an insurance policy to avoid undermining the Good Friday agreement by default if a UK-EU trade deal could not be completed by the end of 2020. An insurance policy that the insurer could unilaterally rescind was not worth much.

Instead, she relied on language. The backstop would only be triggered if the 2020 deadline was breached. Even so, both sides were required to show “best endeavours” to complete the trade deal expeditiously (a higher legal standard than “reasonable endeavours”, though still not entirely definable, and so “justiciable” with legal certainty), and an arbitration mechanism was devised whereby either party could argue that it was entitled to exit the backstop if the other party’s endeavours were demonstrably falling short of the “best” standard. And, if both parties agreed, the backstop could be ended even in the absence of a trade deal: for instance, if the technological alternative to physical customs barriers could be proved to be workable.

It is hard to see what more the UK could have done to square this circle. One option not canvassed was to hold a referendum in Northern Ireland to see if its population wanted to unite with the South. The Good Friday agreement provides for the UK Secretary of State for Northern Ireland to initiate such a poll if persuaded there was evidence that a majority did so wish. As the EU referendum showed a clear majority supporting “Remain” (the preference of the Irish government and all Republican parties in the North) as opposed to “Leave” (backed by the DUP, fierce defenders of the union with the UK), such a conclusion would not be entirely malicious – though the Irish government would be strongly opposed to such a vote, it has no say in the matter.

Perhaps during the transition (if we ever get that far), and especially if the DUP reneges on its deal to support the government in the Commons in protest at the EU deal, such a poll might be triggered. A vote for irish unity would certainly solve the border issue!A vote for Irish unity would certainly solve the border issue!

Meanwhile, dozens of Conservative MPs, Leavers and Remainers, have publicly rejected Mrs May’s deal because of the backstop formula, even though – as she sees it – the alternatives are no-deal or no-Brexit. Some of this may be positioning in advance of a possible leadership election, but essentially what we are witnessing at Westminster is a throwback to the situation before the referendum, where both main political parties were split over Brexit, such that only a popular vote, with all its risks and frailties, could settle the matter, and so avoid the potential advent to power of a single-issue party. The ticking bomb, designed by David Cameron, and whose fuse was lit by the referendum result, has now landed back in Westminster, with the potential to inflict serious and lasting damage on our political system.

The ticking bomb

Those MPs planning to vote against Mrs May’s deal have only three possible options in mind. The first is that a defeat for her when the deal is put to the test on December 11 might persuade the EU to abandon the backstop; or that the clock will then simply tick down to a no-deal outcome; or that somehow a second referendum can be held, allowing “the people” to decide, because Parliament was unable to do so.

The EU cannot have made clearer that the backstop is integral to any agreed withdrawal process: the prospect of it being abandoned is a fantasy (just as is the official Labour Party position that it could somehow negotiate a better withdrawal deal for the UK). Once that has become clear, it is open to Mrs May, if she is defeated on December 11, to return to the Commons in January, with a slightly re-worded resolution in support of her deal, and force every MP to accept that the only two remaining alternatives were indeed no-deal or no-Brexit (and she might twist the knife, by arranging for motions on both those options to be voted on, confident that neither could win majority support in the House). That will be the moment of truth. It is a little hard to understand the logic of embracing all the downside of a sharp break, including the erection of tariffs and customs barriers, only to advocate their removal a few months later.

There are those in the Conservative Party who believe that voting down the May deal, and accepting a more or less messy no-deal exit in March, could be followed by a free trade deal negotiation with the EU. However, it is a little hard to understand the logic of embracing all the downside of a sharp break, including the erection of tariffs and customs barriers, only to advocate their removal a few months later.

The only way such a course could be deemed superior to May’s route of staying in a customs union until the free trade deal has been concluded would be that part of the exit payment might be evaded or delayed (but that is a relatively modest amount in the context of the UK’s economy and the likely negative impact on GDP of a WTO exit, and is also a policy highly likely to poison the free trade negotiations themselves); that EU regulations would cease to prevail in the UK earlier than under May’s plan (even though, necessarily, such regulations would still apply to all UK exports to the EU, constituting over 50% of total exports); and that new free trade deals beyond the EU could begin to be negotiated. This option – remote at best – seems less and less realistic as you spend time examining it. The UK might stumble into such an outcome, but only a small minority in the Commons would explicitly choose it.

There is an even smaller group of Brexiteers who – perhaps with more consistency – advocate abolition of all tariffs for all imports in due course. That would render a free trade “deal” with the EU moot – after all, if EU exports to the UK were already tariff-free, why would the EU bother to lower tariffs to imports from the UK? The underlying idea is that there would be immediate benefits to UK consumers from lower prices, even at the expense of undermining the viability of much of UK manufacturing and agriculture. In theory, there would eventually be compensation in the shape of boosting trade with other economies keen to sign reciprocal tariff-free agreements. The tiny minority of Tory MPs who hold this position are highly unlikely ever to be able to implement it.

Most Brexiteers also seem unwilling to acknowledge the high likelihood that a slowdown in trade with the EU arising from one form or other of exit from the single market and customs union will lead to some foregone GDP growth over the medium term. The scale of this foregone economic growth, and the way it might be felt – if at all – by actual households, is open to plenty of conjecture, but it seems pointless to argue that it could not happen at all. My understanding of Brexit has always been that the potential social and political benefits of leaving the EU should compensate for any possible financial downside: but that does not mean that, after nearly five decades of membership of the EU, it makes sense significantly to exacerbate that downside in order to accelerate the timing of Brexit. The recent dire warnings from the Bank of England that a “disorderly Brexit” would cause an actual recession were dismissed by some Brexiteers as a re-run of what they call “Project Fear”.

The recent dire warnings from the Bank of England that a “disorderly Brexit” would cause an actual recession were dismissed by some Brexiteers as a re-run of what they call “Project Fear”. That is where political dogma overtakes political common sense: and it should be noted that, in terms of forecasting a decline in the rate of GDP growth and in the dollar value of sterling if Leave prevailed in the referendum, the Bank proved correct (against which, not entirely relevantly, Brexiteers point to the impressive rise in the number of jobs, and decline in the rate of unemployment, since June 2016).

The “People’s Vote”

Finally, we come to the “People’s Vote”, or a referendum on the outcome of the negotiation with the EU. In principle, there is nothing wrong with this idea: we would be able to measure support for “Brexit as negotiated” compared with the 17 million votes for “Brexit as you imagine it”. We would be able to measure support for “Brexit as negotiated” compared with the 17 million votes for “Brexit as you imagine it”.

Yet the very fact that “Brexit as negotiated” is abjured by so many Brexiteers strongly argues for having more than two options on the ballot paper, using a “transferable vote” method. Peter Emerson’s recent dissection for oD of different voting systems should give everyone pause in imagining that a second referendum would solve all our problems: but let’s look at what is currently proposed.

The main proponents argue that just three options should be put to the electorate: Mrs May’s deal, no-deal, or no-Brexit; but that begs the question as to why other options actively being canvassed at Westminster – “Norway”, “Canada” and variations of those positions – should be excluded. That these other options fail to solve some of the key issues – such as the Irish border, the nature of a customs union, or the free movement of labour – seems not to deter their supporters: nor do they address the practicality that such options could only be implemented after an agreed withdrawal. They still all fall into the category of “Brexit as you imagine it”. This does not stop people from passionately advocating them, but arguably renders them less immediately relevant than the three-way choice.

Virtually all the advocates of a People’s Vote are Remainers; and although they accept that a confirmation of the 2016 outcome should be binding, it is inescapable that their real expectation is a reversal of that decision. Yet they cannot be confident that such a result would settle the matter, and that Brexit would simply disappear from UK politics. Millions of disappointed Leavers would argue (as the German Army commanders did in 1918) that they had been “stabbed in the back”, and would fiercely resent the way “the system” had betrayed them. They might even revive UKIP for a one-off general election campaign: if even half of them voted UKIP, it would become the largest single party in the Commons. If they concluded that Labour was even more to blame than Mrs May for their disappointment, we might find that, alongside remaining Tory Brexiteers, they had enough votes to trigger article 50 once again, but this time spend the two-year notice period simply planning for a no-deal exit.

That may all seem far-fetched, not least because the biggest problem with the People’s Vote is how we could ever get there. The legislation needed to enshrine a second referendum, and the necessary campaigning time, would take any vote past the March 29 deadline for leaving the EU. Extending that deadline requires unanimous approval from the EU states: yet it is hard to see why the EU would agree, as a refusal would force Parliament to make the painful choice between no deal, the May deal and collapse of the Brexit project, with the first option unable to command a parliamentary majority, and the other two representing victory for the EU.

In any case, Mrs May has so far set her face against a second vote (as has, rather less than convincingly, the Labour Party), so she would need to be removed as Prime Minister to clear the way: yet it is hard to think of any candidate to replace her who has subscribed to the People’s Vote, let alone imagine any such candidate being chosen by the solidly Brexiteer Conservative Party membership who would have the final say in selecting a new party leader. Perhaps the only route to a People’s Vote would be if Mrs May found enough evidence in polling data showing her deal as the winner in a transferable vote system.

Perhaps the only route to a People’s Vote would be if Mrs May found enough evidence in polling data showing her deal as the winner in a transferable vote system: unloved and unwanted, but reluctantly endorsed in preference to both no-deal and no-Brexit. That is what YouGov found in its most recent survey.

Yanis Varoufakis has proposed a 12-month pause in the Brexit process to allow a general election to take place. Quite what an election could achieve is hard to see, given that both main parties continue to be split between Leavers and Remainers, that neither would therefore have a clear message for the electorate, and that – in any case – it is extremely rare for a single issue to decide a general election. Indeed, at the last election in 2017, there was just one national party committed to reversing the article 50 process: the Liberal Democrats. In theory, they should have appealed to all Remainers who placed staying in the EU above all other issues. In practice, the LibDems had a poor campaign and a poor result. It is therefore extremely hard to see on what basis the EU would agree to the pause suggested by Yanis: the whole point of the 2-year limit in the Lisbon Treaty was surely to put unbearable pressure on the departing state.

Logically, the only realistic alternative to Mrs May’s approach (ignoring the stumbles, sidesteps and convoluted progress she made in arriving at the only formula the EU was likely to accept) would have been to plan for a no-deal. This would clearly have scandalized the Irish, in effectively forcing them to create a hard border in order to protect the EU’s single market; it would also have risked so alienating the EU that even mutually advantageous agreements on air travel within a no-deal outcome might have been jeopardized. A UKIP Prime Minister, of course, elected on a no-deal platform, would be a different matter.

But one of the reasons for the Bank of England predicting severe economic consequences from a no-deal scenario is that so few private firms and public facilities have prepared for such an outcome. If the two years had been spent solely targeting no-deal, at least that risk might have been mitigated. However, such would have been the outcry from nearly all business and manufacturing groups at a policy of no-deal, it is hard to see how even a Prime Minister much more steely than Theresa May could have withstood the pressure to change course. A UKIP Prime Minister, of course, elected on a no-deal platform, would be a different matter.

Depressing

It is depressing to see so many MPs, in groups large and small, flailing around in desperation, unable and unwilling to recognize the hard realities of the UK’s position, yet too self-important to behave responsibly, let alone rationally. The projected negative impact of Mrs May’s deal (essentially, a calculation that there would be some slowdown in trading with the EU) is modest in the context of likely overall UK economic performance.

What is far more damaging to the UK’s standing in the world is the failure of the political class to recognize that context, acknowledge the possibility that people might willingly pay that price in exchange for other benefits, and instead continue to fight the referendum campaign ad infinitum and ad nauseam. Now is the time to get real. 

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