Monday, February 20, 2017

An Unreasonable Brexit could be fatal for the UK

The weeks pass and the position of the Conservative Brexit government grows ever more unreasonable. Many people who voted to leave the EU would still have been perfectly happy with an "economic association", indeed it was the default option for probably the majority of those who voted to leave: "we should have an economic not political union". Leaving aside the practicalities of how much economic issues require political engagement, the idea of limited economic cooperation is not unreasonable.

However the current position of the Conservative government is that Brexit means the end of British membership of any European cooperation groups, whether political or economic. Brexit means not merely withdrawal from the EU, but the outer group of European Free Trade Area (EFTA) nations that are members of the EEA. It even means the withdrawal from the EU customs union. This total withdrawal is not the majority position of the British people: 48% voted to remain full members of the EU and it is quite clear that many, possibly most of those who voted to leave still expected some kind of ongoing relationship short of membership with the EU.

Then there is the growing evidence that the Conservative position of complete exit is going to cause considerable damage to the the UK- both economic and political. The disruption in Northern Ireland could even trigger the renewal of violence in the province. The rage in Scotland at being forced into a complete severance of EU ties is bringing separatism back on the political agenda, even despite the horrendous economic mess that that particular Leave vote would bring.  Then there is the limbo into which we have placed 3 million EU citizens living in the UK, as well as a large number of our own citizens living in the continuing EU. Already UK farmers report significant issues with seasonal labour. Universities have seen a significant drop in EU applicants. The reputation of the UK as an open and tolerant society is daily being undermined by the moronic racism that the vote has ignited in its wake. It is quite likely that all of the GM plants in the UK will close after the mooted PSA acquisition, with the cost of many jobs. The City is losing thousands of jobs to Dublin, New York and Frankfurt. All of this before we even understand what kind of relationship will follow the enactment of article 50.

Yet EU governments are thinking carefully. The timeline for article 50 negotiations is too short and it is clear that without creating transitional arrangements, the Brexit on offer will be extremely disruptive. In a sense the aggressive statements by Michel Barnier on outstanding payments owed by the UK are a good thing, since there is at least something that the EU would want from the UK. Otherwise Britain begins to look like a total loser in any negotiation. There is sympathy in many quarters at the position that the UK finds itself in, but also frustration at how little the HMG is prepared to commit to. The 12 points that Mrs May has offered are simply too general to be a basis for any substantive agreement, while the threats of simple reversion to WTO rules are too weak a negotiating position to have credibility- the UK cannot negotiate separate WTO rules for itself in time, even if there was no opposition from such members as Russia. Neither are there well functioning back channels into Brussels. The UK is deeply isolated and in a very weak position.

All of this could have been avoided if a reasonable position had been adopted by Mrs. May's government, but "Brexit means Brexit" actually means an extreme and damaging Brexit. Total withdrawal will come at huge cost. 

The result is increasing rage against the Conservatives. Even if one could accept that leaving the EU would lower barriers, rather than raise them- a highly debatable point- the disruption of moving away from the largest trade block and the largest economy in the world is unlikely to create any benefit in the short or long term. Even if one believed the "Singapore without the sunshine" hype of the Tory Libertarians, the fact is that the timing is very unfortunate to say the least. The rise of Trump could bring to an end of a century of Anglo-American alliance at a time when Russian mischief making creates a huge threat to our freedom. Even if one accepts that the Tory best case scenarios are even possible, the questions of basic competence in the Cabinet room are more than enough to raise as many fears as hopes. 

The population and economic power of all the other 15 Queen's Realms: Australia, Canada, New Zealand, Jamaica (which has given notice it intends to become a Republic) plus 11 very small countries in the Caribbean and Pacific, all combined, is less than that of Germany. Furthermore the idea that Australia is going to switch away from trading with Asia to the UK is obvious nonsense. The world trades with its neighbours, which is why we trade massively more with Ireland than we do with India, and that will be true whether we have a free trade agreement with India or not. The Imperial nostalgia of such figures as Jacob Rees-Mogg is not credible as a policy either politically or economically. So the EU states continue to regard the debate in London with a growing sense of disbelief and unease.

Of course, the European Union is itself going through significant challenges: the Dutch, French and German elections not least. The wildest hopes of the UK anti Europeans rests on victories for their allies in these countries. Yet the meddling of Mr. Putin- so successful in the UK and the US- may find limits in the rest of the EU. It would make a great deal of sense for the UK to delay Article 50 until new governments are in place in these three founder states, yet Mrs. may does not seem to have a keen awareness of her own interests, and her Brexit bulldozer has no reverse gear. We can make no predictions, but the chances are high that Marine Le Pen will not be the French President, that Geert Wilders will not be the Dutch Prime Minister and that there will be no breakthrough for anti-Europeans in Germany. The British will not be waiting to see anyway. So we have to find a way to start the discussions without causing meltdown from the very beginning.

Several EU governments have reached out to the UK, but have been frustrated by the continuing internal dialogue in London: it is not that there is no running commentary, there is still no credible sense of direction, except further retreat from any position that could be considered a compromise. The UK expects nothing, but is not prepared to ask for anything anyway. 

In the face of one of the most damaging acts of policy since the 1930s, the British government has not been able to create a credible negotiating platform. It is a serious failing and one that unless remedied this year will cause a decade long crisis. The UK is on a knife edge, and one that carries huge risks not merely of damage but humiliation. It may even be a final -existential- risk. 

British pragmatism was always reasonable. Now this lack of reason may in fact finally destroy the United Kingdom. It would be a pity, but "whom the Gods would destroy, they first make mad".

It is time for the UK to find a reasonable position and a reasonable tone of voice. 

Can Theresa May deliver?

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