Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 7 December 2017

Has Ireland scuppered Brexit?

Should I be shocked that no quantitative Brexit impact assessments were commissioned by David Davis? Is it surprising that there has been no cabinet discussion of the final trade deal? Not if you accept the parallel I draw here between Brexit and Trump. Brexit is an expression of ideology or feeling, an act of faith. An impact assessment is therefore beside the point, and just dangerous to the project. I think you only get outraged by this if you haven’t really accepted what the true nature of Brexit is, and how it came to pass. By this I do not mean why people voted for Brexit, but why a large section of the UK press and Conservative party made it their primary political project. The true nature of Brexit means that the normal rules of politics do not apply, and could not apply.

I was surprised about Ireland. I did not realise until September [1] what it would require from Theresa May. Back in March as Article 50 was triggered I thought that would inevitably mean an open ended transition period (despite lots of talk about 2 years), and so the final destination of Brexit would not be decided until after the next election. If the Conservatives lost that, Corbyn would satisfy himself that the EU would not hinder his economic programme, and we would end up staying in the Customs Union and Single Market (CU&SM). [2]

But will the question of the Irish border change that? Those that constructed the Article 50 process understood that any country leaving the EU would be desperate for a deal, which is why there is a two stage process. The two stage structure maximises the chance that the EU will get the deal they want on the first stage issues. In terms of citizen’s rights and the leaving bill that has proved correct.

What the EU realised long before the UK was that Brexit involved a unique problem. The UK’s only land border with the remaining EU could not be allowed to become a hard border without putting the Good Friday agreement at serious risk. Yet the EU requires a hard border, and the WTO would insist that the UK recognised that (again Brexiter talk of not building one is just nonsense). Ireland’s most important priority was that there should be no hard border, and as a result the rest of the EU agreed to make that part of the first stage.

Once again, this shows you the nature of the Brexit project. Any Brexiter interested in reality would have realised that Brexit put the Good Friday agreement at serious risk, any would have at least thought about the problem. But Brexit is not a reality based project, and so they did not. We should be thankful that the Irish government made this a priority.

In simple terms there are therefore only two possibilities for Brexit that avoid a hard border. Either the UK stays in the Customs Union and Single Market (CU&SM), or just Northern Ireland does and there is a sea border between two parts of the UK. (What 'alignment' means is what the EU chooses it to mean.) The UK government still wants to pretend that other possibilities exist: something technological or that the stage 2 agreement they come to will not require a hard border. But the Irish government quite rightly insists that if neither of those two happen, the UK government recognise that at least part of the UK will stay in the CU&SM. That in the agreement the UK almost signed a few days ago.

It was scuppered because the DUP quite rightly wanted to know which of these two arrangements the UK government had in mind. Above all else, the DUP do not want a sea border between Northern Ireland and the rest of the UK, because they see that as making unification much more likely. I suspect the fact that whatever May said in her last minute phone call was not enough to satisfy the DUP means they will be prepared to bring down the government unless they get some sort of public guarantee that there will be no sea border.

In which case, May will finally have to call the Brexiters' bluff. Maybe she can convince them to keep faith in their rhetoric that there is a technological fix (there isn’t) or there will be a final trade agreement that deals with the problem (there won’t be) and let her commit to no sea border in the eventuality that neither happen. If she cannot, their only other option is the nuclear one of trying to force May out. As the latest poll I have seen suggests the Conservative party membership’s favoured candidate is Someone Else, that looks like a risky move. But if they take that risk, Ireland will indeed have made a difference.

But if they do not, and May does sign up to stage 2 on the basis of UK membership of CU&SM as the fallback position, does that change anything? You would think it should, but because it is the fallback position the UK government will start negotiations over a transition arrangement and a final trade agreement. After we officially leave May will then resign and the Conservatives will set about the task of trying to win the next election. Trade negotiations with the EU will be put on the back burner. We end up at in exactly the same place as I expected we would be back in March.

The only difference is that it will be blindingly obvious that this is all for show. Having signed up to staying in CU&SM as a default, the EU has zero interest in concluding any other kind of agreement, particularly as it will not safeguard the border. It will just be a matter of time before the arrangement whereby we stay in the CU&SM is formalised. But will any British politician that matters have the courage to tell the British people the truth?

The truth is that all their vote has achieved is that they will now have no say in the rules the UK has to follow. Instead whoever wins the next election will come back with some ‘deal’ over freedom of movement which few still care about because no one is coming to the failing UK economy. And of course the Brexiters will cry betrayal because we are, as far as they are concerned, still in the EU, and we will be back to where we were before the referendum, except with no say in the rules we have to obey.

I would really like to think that this can be avoided. Perhaps before we formally leave the EU, enough Conservative MPs (and despite all the noise from some Remainers about Corbyn, it is Conservative MPs who matter) will put country before party and call for a second referendum. Ireland increases that possibility, but from the evidence so far I do not see it happening.

[1] As someone told me, being ahead of the UK MSM on this is a very low bar.

[2] For all those who insist that the Labour leadership wants to leave, you have to realise two things. First, by the time Corbyn takes over we will have left, and he has no interest in pursuing the sunny uplands of trade deals with countries like the US. Second, there is nothing in the CU&SM that really hinders his immediate economic programme. So why leave the CU&SM just after he gets elected? It would profoundly alienate those who voted for him and damage the economy on his watch.  

12 comments:

  1. However this thorny issue is resolved I wouldn't hold your breath about a second referendum. This research shows that the result might be a lot closer than you think:https://whatukthinks.org/eu/analysis/half-time-in-the-brexit-negotiations-the-voters-scorecard/

    Paradoxically in some ways it is a good thing that May is in a weak position about this; if she had been stronger then there might have been the temptation to try and force this through which would have done nothing for Anglo-Irish relations; as it is she has no alternative to dealing with the issue.

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  2. "no one is coming to the failing UK economy"
    - iirc, net migration was still 200k in the latest figures. Do you think you could make some attempt at accuracy, instead of hyperbole? Do you think net migration will be not only zero, but negative?

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  3. It has long seemed obvious that a 300-mile open border between a non-EU country and an EU one was a smugglers' dream. You could smuggle sub-standard products into the EU on an industrial scale. I guess the EU thought of this long before I did.

    On the same lines the EU has surely prepared some form of retaliation should the UK attempt to undercut it by going for a "Singapore" economy: low wages, lax financial regulation, few workers' rights, bare-minimum public services.

    Will the British electorate stand for a "Singapore" economy? Wouldn't the Conservatives be blamed---and lose many voters---for the privations which would follow? Hardline Brexiteer MP's must have considered this and think it worth the risk. Because they think it is a price worth paying? Or do they think the Tory tabloids will weave their familiar magic and persuade their readers to keep voting Conservative?

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  4. Henry Hill at Conservative Home walks us through the process to trigger a leadership election, "To reiterate: under the old system anybody who could scrape together a proposer and a seconder could put themselves over the top. Now you need 48 letters to Graham Brady, the Chairman of the 1922 Committee, whereupon the door is thrown open to a free-for-all as MPs whittle the would-be contenders down to the final two, who face the membership."

    I wonder if Have I Got News For You has kept that tub of lard which stood in for an absent Roy Hattersley?

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  5. Eu has probably , possibly their long term intention as it no longer fits geographically into EU, scuppered Ireland and they would take heed to start re appraising exactly where they stand, how they see their future and how the operate if/when EU does start to isolate them. Remember Eu will remember that they nearly left once and so will never trust them again , anyway,

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  6. An excellent piece. However, you don't really seem to have addressed the scenario where May is possibly forced out. Hard Brexit leader? Soft Brexit Leader? Election?

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  7. What is it exactly that absolutely has to be inspected in a shed on the Newry-Dundalk road and cannot be managed in any other way and would have serious consequences if that inspection did not happen?

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  8. Like a lot of UK commentators you are envisaging all sorts of arrangements which just aren't on offer from the EU and never will be. The European parliament has insisted that a transition period should have an early sunset clause - there will be no indefinite transition period. AEU50 and the EU's negotiating guidelines say that a transition period must be to a future framework agreed before March 2019 (Oct 2018 in practice). Membership of the SM and CU is not on the table as a future framework (best they can do is EFTA / EEA which HMG has already ruled out or some version of Canada which would mean border controls. So, unless the political landscape in N Ireland changes or the UK government calls the DUP's bluff (if bluff it be), a hard border in the island of Ireland is inevitable.

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    1. ... and the standard Brexiter response is who is going to set this hard border up? The UK government does not believe it needs one. The Irish government says it isn't going to do it.

      wortht also reading Lord Trimble on this https://blogs.spectator.co.uk/2017/11/david-trimble-the-taoiseach-should-stop-trying-to-out-sinn-fein-sinn-fein/


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    2. You raise a very important point I have not seen properly discussed. The UK cabinet seem to believe everything is open to some quick stitch up. But you and the EU regard the EU as a group bound by law and fixed negotiating rules that cannot be finessed away. Is this not very much like the attitude of greece before they got clobbered by the EU into severe austerity. The greeks just never took them seriously. But the EU had the whip hand and the greek position was bluff as they would not contemplate a war style economy?

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  9. Think you've got that about right.

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  10. On footnote 2, indeed; moreover, a new Corbyn government confirming that it intended to conform to single market and customs union rules indefinitely would build bridges with the business community while demonstrating economic literacy as well as common sense, perhaps heading off possible pressure on the pound and financial market pressure linked to his other plans. A win-win.

    But what about before the election? Would he campaign on such a stance? Given that continued de facto continuing membership of the SM and CU is in the national interest, when will be the right time for him and Starmer to declare that, and then risk accusations that they are ignoring the referendum result or not doing anything about immigration, given Labour's own brexit divisions? They also will wish to avoid spotlight falling on Labour, preferring it to continue to be the Tories'mess.

    If a transition period is to be linked to a declared UK future trading framework by October 2018 as Chris N reasonably makes the point from his interpretation of the latest draft agreement presaging progress to Phase 2 (however,some sort of continuing de facto SM and CU arrangement is almost certain to remain on the table, as otherwise we will be back to no deal tat both the EU and UK will wish to avoid) the crunch for Labour to declare its own colours will come at some point next year.

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