Back to Brexit square one: No deal is better than a bad deal

Remember Brexit means Brexit? Will it or will it not happen? For Brexit watchers the issue is becoming ever more opaque and the possibility of a no deal being made is becoming an option with wide ramifications.

The recent Labour and Conservative party conferences in the UK have made the British electorate even more confused on what the two parties really mean and the added intrigue of back stabbing former ministers have only added to this uncertainty for the governing Conservative party.

Brexit dominated the party conference, with former foreign secretary Boris Johnson launching a fresh broadside against Prime Minister May’s Chequers plan for trade with the EU.

Others have gone further, and smelling political blood, Conservative MP James Duddridge announced he had submitted a letter to the powerful Conservative Party backbench 1922 Committee calling for a leadership contest. In response, Mrs May condemned the abuse of politicians and called for an end to “the bitterness and bile which is poisoning our politics”.

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This must be the understatement of the year. It is worthwhile recapping what are the main issues and obstacles being negotiated before assessing what an heir apparent like Boris Johnson waiting in the shadows offers as alternatives to Mrs May’s Brexit plans.

May has repeatedly said her Brexit proposals are the only viable ones. A thirty -year schism inside her party over Europe helped sink the premierships of the past three Conservative prime ministers — Margaret Thatcher, John Major and David Cameron, with Jeremy Corbyn’s Labour party now saying that they are ready to govern.

For and against

At the back of everyone’s mind - those for and against Brexit – is what all this uncertainty is having on the British electorate. In the June 23, 2016 referendum, 17.4 million voters, or 51.9 percent, backed leaving the EU, while 16.1 million voters, or 48.1 percent, backed staying.

A poll of polls published in September showed voters would now vote 52 to 48 percent in favor of remaining in the EU were there to be another Brexit referendum.

But again we are entering the realm of the unknown as researchers cautioned that a narrow victory for those hoping to reverse Brexit would be heavily contingent on getting those who did not vote last time to turn out. The sheer confusion about the issues involved might turn many voters away.

So what are these seeming insurmountable obstacles faced by both sides at the Brexit negotiations and are they in essence a bridge too far for some? The key ones are as follows. On trade both sides say they want frictionless and tariff free movement of goods.

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But the EU sees this as meaning the freedom of movement while the UK is stating that no deal can include the jurisdiction of the European Court of Justice (ECJ). The earlier December 2017 included a guarantee there would be no hard border on the island even at the cost of keeping the whole UK in accustoms union.

This was a red flag for the UK. The Chequers deal put forward by the UK proposes that the UK shares a common rulebook for goods and services after Brexit in an attempt to prevent a return of customs checks for goods crossing the Irish border.

But EU leaders believe it will undermine the single market by giving British companies a competitive advantage and pose a threat to the “European project”.

Churchillian figure

Mrs May however was adamant and cut a defiant Churchillian figure when she said that an EU backstop proposal which would see Northern Ireland remain inside the customs union if the UK could not agree a free trade agreement with Brussels in the divorce talks.

According to the Prime Minister , creating any form of customs border between Northern Ireland and the rest of the UK would not respect that Northern Ireland is an integral part of the United Kingdom, in line with the principle of consent, as set out clearly in the Belfast/Good Friday agreement so laboriously worked out to bring peace to Northern Island and indeed would bring down the Conservative government as the official title of that party is the Conservative and Unionist Party of Great Britain and Northern Ireland.

Just to underscore her point Mrs May stated that, in her judgment, it is something no British prime minister would ever agree to and that if the EU believe she will, they are making a fundamental mistake. This rankled with the European negotiators.

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EU diplomats warned that the prime minister’s statement only made a no-deal scenario more likely, and expressed their astonishment at May’s bellicose tone, but she was playing to British audience that admires its government for “ standing up “ to foreigners.

What to do about EU citizens and UK citizens in Europe after Brexit has been a second vexing problem for both sides. The EU says that it wants both set of citizens to enjoy the same rights after Brexit but that would mean the protection of the ECJ which again is another UK red line.

But red lines can be broken and the British prime minister also signalled that the UK would unilaterally safeguard the rights of the EU citizens living in the country in an attempt to reassure them that the impasse in negotiations would not affect their status.

Money and who owes whom after Brexit is another important issue to be resolved after the divorce. Britain has committed to EU spending in the EU budget for 2014- 2020 and made commitments to financial funds , aid programs and EU employee pensions, hoping that in some cases Brexit sees money flows back to the UK like the now discredited figures of millions coming back to the UK for the national health service.

Trump cards

The December 2017 deal agreed an amount of sterling 40 billion but the UK is now trying to make this post Brexit contribution conditional on other areas. The UK has a few trump cards of its own.

In her January 2018 Lancaster House speech, Mrs May threatened to withdraw security cooperation if talks led nowhere but in reality this is an empty threat as the UK would not wish to jeopardise its own security on counter terrorism and to cut off ties in medicine and science research.

The alternative would be for the UK to duplicate EU activity in defence and nuclear energy such as in the Eurotom program.

National pride is very much at stake here and the barbed language between the two sides has been ratcheted up to play to domestic audiences. Theresa May has accused the European Union of not treating the UK with respect, a day after she was humiliated at the Salzburg summit when the 27 EU leaders declared her Chequers plan would not work.

It was probably one of Mrs May’s “finest hours” when in a combative speech she added that throughout the Brexit negotiations she had treated her counterparts with “nothing but respect” and added: “The UK expects the same.”

Not to be outdone, other British ministers have been having a go at the EU forcing the head of the European council, Donald Tusk, to condemn Jeremy Hunt’s “unwise and insulting” comparison of the EU to the Soviet Union, as he piled pressure on the British government to compromise for a deal.

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Tusk also implicitly criticized Theresa May, after the British prime minister accused the EU of not showing her enough respect by stating, “emotional arguments that stress the issue of dignity sound attractive but they do not facilitate agreement.”

However, just to confuse matters, Brexit cannot be ring-fenced from what else is happening in Europe, adding another murky layer on who is supporting who for and against Brexit with the rise of populist and nationalist parties in Europe, giving hope to political remain allies in the UK, such as the Scottish SNP party and a large cross party Labour and Conservative members of parliament tactical alliance.

In the weeks ahead, with so many forces already in play, there is a new element: the interplay between the interests of the pro-European leaders and supporters of remain. The Greek Prime Minister, whose country stands to lose the most from a disintegrating EU project, has come out in support of the EU as have the leaders of Macron’s En Marche and the Liberal Group in the European parliament.

Pitted against them are the Hungarian Prime Minister and other populists in Europe in Italy and now Scandinavian countries riding primarily on an anti-migrant wave, but in this all-stakes battle, Britain cannot be seen to be rewarded.

So while Brexit issues seem to be focused on some narrower issues, the whole project has unleashed far bigger forces that promise to reshape the European continent for years to come, with few predicting the final end game.
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Dr. Mohamed Ramady is an energy economist and geo political expert on the GCC and former Professor at King Fahd University of Petroleum and Minerals, Dhahran, Saudi Arabia and co-author of ‘OPEC in a Post Shale world – where to next ?’. His latest book is on ‘Saudi Aramco 2030: Post IPO challenges’.