Friday, November 4, 2016

How Brexit Could Poison The British Political Agenda For Years

The British public will register the unpleasant picture of a government being chased by its own parliament.


The National Interest
November 4, 2016

On Thursday, a British court threw a spanner into the works of the British government’s Brexit tactic, saying that Parliament must be consulted before exit negotiations start. This is contrary to the government’s view that it has the power to do so without consulting Parliament. This is however only one of six major battlefields Prime Minister Theresa May faces and may not even be the most difficult one.

Brexit confronts Prime Minister Theresa May with six front lines: The Tory Party, the Parliament, and the British public, Scotland and Northern Ireland, the World Trade Organization (WTO), and the European Union. A plan to merge adversarial interests into a mutually acceptable outcome must be concocted – a narrow path through the woods, if there is one.

According to media reports, cards are being kept close to the chest. Tactics, ambitions, and objectives are not being disclosed; the adversary might take advantage. Nothing could prove less suitable to square this circle. Theresa May is not negotiating with enemies, but with friends and partners who are disposed to help if given a chance to do so. But how can they without knowing where she sees the solution? Admittedly there are items where you do not reveal red lines such as budget contributions, but for the grand bargain openness is required.

A large majority of the Tory Party respects the result of the referendum, but look for a compromise that will maintain links to the EU. Any efforts to accommodate the hardcore anti-EU wing will bring about new and stronger demands. They will hijack the agenda and depict the government as weak and indecisive. If Theresa May is not willing to put her foot down they will force her to choose between nation and party, betting she succumbs to ephemeral acclaim by choosing the party as David Cameron did.

Her domestic agenda complicates the picture. Key sentences at the party conference convey contradictory messages on free trade, new industrial strategy, and how to encourage, develop, and support sectors of the economy. The emphasis to employ local labor does not fit well into a free market philosophy. Is the party disposed to ditch Margaret Thatcher’s legacy? Occupying the center abandoned by Labour looks like a winner through the prism of the next election, but can the party stomach such a swing in philosophy? And can she juggle with two balls at the same time?

Despite a majority for remain in the Parliament, no one expects it to reverse the June 23 vote. Nevertheless MPs are adamant to protect their right to be heard, consulted, and voice their opinion. You ignore parliament at your peril. Thatcher labelled the European parliament a Mickey Mouse parliament and the birds let loose will come home to roost when in due course it votes on a possible outcome of Brexit negotiations.

As negotiations unfold the other member states will watch closely and the willingness to offer concessions depend on whether Theresa May has parliamentary support as she ultimately will need Parliament to endorse the outcome. The British public will register the unpleasant picture of a government being chased by its own parliament. If the Prime Minister tackles Brexit without a mandate from the voters and if she antagonizes parliament, what is left of her authority?

The dispute, constitutionally and politically, to negotiate – in this case leaving the EU (trigger article 50) – without a vote in parliament, plus the subsequent question of ratification by Parliament of a new treaty, intrigues and fascinates institutional experts. Notwithstanding this, what matters is politics. Can the government achieve and maintain solid Parliamentary support? Do the executive (government) and the legislative branch (Parliament) trust each other or will we see the British political system take a leaf out of the U.S. textbook and go dysfunctional? Will a vital interest for Britain be turned into party politics or personal vendettas?

Knowing that EU/Brexit cuts across party lines it is more likely than not that at the end of the day MPs will be allowed to vote according to conviction. That will almost certainly deliver a majority for the Prime Minister, but the question is whether it will be deemed large enough. In May 1940, Neville Chamberlain probably commanded a majority in the House of Common, but the prospect of a slim majority forced him to resign. Theresa May might face a somewhat similar scenario two years from now unless she seriously engages parliament. Furthermore, a slim majority in a messy situation will keep EU/Brexit on the political agenda for years, poisoning politics and opening the door for contesting whether it was the “right” decision taken by a “correct” procedure.

The British public possesses and radiates common sense to a higher degree than realized by the elite. Voters will interpret an uneasy or worse a rebellious parliament as a sign of the Prime Minister’s incompetence and gradually turn against the government. If she cannot rally other politicians around her course there must be something wrong.

The voters decided that Britain should leave the EU. Yes, but not the people. The turnout was 72.2 percent with 51.9 percent voting for leave. Translation: 37.6 percent of those eligible to vote took this decision. Furthermore they decided to leave the EU, but did not express any opinion about future relationship with the EU.

The task for the government is to shape a majority of people around a clear objective – a coalition perceived as a sincere attempt to bring Britain through what otherwise could turn into a national trauma.

In such a situation the Prime Minister cannot sit back waiting for events to unfold. She must reach out to the voters explaining how she wants to extricate the country from a potential trajectory eviscerating Britain for decades to come.

Maybe Theresa May and some of her colleagues do not see it like that, but voters know very well how seminal the June 23 vote was and demand sincerity and integrity plus, above anything else, honesty and boldness from the government. They want to be taken seriously.

She will have to contend with Scotland and Northern Ireland, who wish to stay as part of the United Kingdom of Britain and Northern Ireland as well as the EU. Scotland emphasizes the single market; Northern Ireland open border to the Republic of Ireland. Theresa May’s task is to deliver both instead of pushing these two parts of the UK into either/or. She showed awareness of that by visiting both immediately after moving into 10 Downing Street.

Since then, news has been anything but encouraging. The problems Scotland and Northern Ireland face as Brexit negotiations loom constitute vital interests for them – politically and economically. It is a non-starter to run the negotiations as the prerogative of the government in Westminster. They will feel sidelined and nourish suspicions that their interests were not defended with the same vigor as English interests.

Scotland’s First Minister, Nicola Sturgeon, has defined the situation, saying that the Britain Scotland voted in 2014 to stay in no longer exists and has drawn up the battle lines by demanding real power during the negotiations and continued full membership of the single market. She plays the institutional as well as the substantial card openly saying that if not, another referendum on Scotland’s independence may be called.

It is unclear, to say the least, what Theresa May will do if Scotland’s wish list for the negotiations deviate substantially from her own. If she cannot get Scotland on board or depict Nicola Sturgeon as unreasonable, Scottish resentment will grow, making a call for a second referendum on independence reasonable and logical in the eyes of many Scots.

A potential drama – constitutionally and politically – may evolve if the government in Westminster concludes a Brexit agreement judged unacceptable or unsatisfactory by Scotland. In such a case Scotland may attempt to use devolved powers to block the agreement’s entry into force. Likely? No. Thinkable? Yes.

The European Union wants to achieve three objectives. First: Get over Brexit as fast as possible and minimize costs for the EU and Britain. Contrary to some opinions, the Union harbors no wish to search for revenge – wasn’t it the French statesman Richelieu who in the seventeenth century said “revenge is a luxury I cannot afford.” Second: Ram it home that the plinth of the integration is not pick and choose, but that member states benefit from participating in all common policies. Gains from some sectors weigh more than losses in other sectors producing a win-win situation. Exemptions can be granted as have been the case for Britain and other member states e.g. Denmark, but must be fully compatible with the treaties. They do not exonerate a member state from the objectives of the treaty, but provide time and flexibility about how to get there ultimately. Third: Resist risks of disintegration or dismantling of what has so painstakingly been built. A drive towards stronger integration to defend vital, strategic interests can be expected. And they are: get out of low economic growth, the debt problem, refugees and migrant, defense in view of reduced U.S. commitment, a more assertive Russia, the risk of Ukraine becoming a failed state, Turkey no longer in the western camp, the Middle East in turmoil, North Africa a potential powder keg and China plus India eating into Europe’s share of the global economy.

Many maybe most of the 27 EU nations classify the crises confronting Europe as an existential question defining which Europe we will see emerge over coming decades. A Europe in conformity with values crafted since the Renaissance or a different Europe hijacked by political forces thought extinct on the old continent? They may disagree on many points, but fundamentally they agree that without the EU they would not stand any chance of finding a way forward. Europe and individual nation-states would become irrelevant.

The decisive element in the negotiations dominated by terrifying technical questions is in fact quite simple: Can and will Britain convince the EU that it leaves the Union, but not Europe? Declarations are not enough. Only by actions and deeds of tangible character will this be taken seriously. Does Britain share the worldview with the continental Europeans and fathom threats to Europe and policies to counteract them like the 27 members of the EU? The more Britain leans increasingly towards the United States and starts to probe how far it can neglect EU treaty commitments, while still formally a member, the less likely it is that the EU will offer concessions.

Theresa May and her government’s rhetoric does not resonate with this and if it translates into policies and negotiation stance, it will block any attempt to forge a “good” Brexit agreement.

Assuming that Britain does not stay in the single market and the customs union, it needs to enter the WTO which it left in 1973. Theoretically, nothing stands in the way of trading with other countries as a non-WTO member but without reciprocal tariff reductions and the dispute settlements mechanism the going will be tough.

There are many estimates of how long it will take to acquire membership. Surmised is that with some goodwill it could be done in a couple of years. This points to 2022 as the earliest moment to enter the fray in what really matters after Brexit: Negotiate free trade agreements (FTAs) with non-EU members of the WTO assuming that trade relations with the EU are covered by a Brexit agreement. If not, Britain might also have to negotiate an FTA agreement with the EU inside the WTO framework.

Reading the mass media, an outsider gets the impression that the British government takes the view that it bestows a favor on other countries offering FTAs and postures as a herald and defender of free trade surrounded by a large numbers of semi-protectionist countries, among which, one supposes, Britain places its erstwhile companions in the EU and the Union itself.

The reality may turn out to be somewhat different. The large majority of potential FTA partners know that a strong argument behind Brexit was to restructure trade away from Europe to high growth countries around the world. There is no altruism in politics and terms offered would reflect this. Partners would act like the Godfather movies “giving Britain an offer she cannot refuse.” They can do without an FTA; Britain cannot.

The financial sector accounts for 10–12 percent of the UK’s GDP and a prime British objective will be to enhance its role or at least defend its place in global finance. Those Britain negotiates with will spot an opportunity to cut a slice of this lucrative business, squeezing Britain where it hurts most.

A country can choose to go alone. There will be an economic price and we will have to wait a couple of years to know its size in the British case.

The core is, however, not economics but politics. In a globalized world the notion of sovereignty is to avoid a conflict between international rules and domestic politics in which domestic politics normally comes off second best. In the EU, sovereignty is pooled (not given away) to co-author rules (act offensively) with other member states pursuing analogous political goals. Countries doing so gain leverage and enhance control over their destiny.

Defining and defending sovereignty as a bulwark against the outside world, closing the door for what a country does not like (act defensively), amounts to presenting the rest of the world with the opportunity to write international rules in conformity with their interests. In reality, “take back control” is equivalent to handing control over to other countries with which Britain has no rule-based links.

Judged on what we know about the British government’s policies, the most likely spring 2019 picture is: Britain leaves the EU without any agreement, no willingness to extend the two year deadline, the treaty and EU regulations cease to apply, no membership of the WTO and no FTAs with any country around the world. There is one word for such a scenario: chaos. Add to this a determined Scotland reconsidering independence and possibly Northern Ireland doing the same and the hair stand on end.


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