Wednesday, 28 June 2017

Punishment and excuses

The Brexit Secretary came up with a new formulation of ‘no deal is better than a bad deal’ this week when he said that no deal would be better than a ‘punishment deal’.  It has a nice ring to it in terms of rhetoric, but it’s every bit as silly as the previous formulation.  And it glosses over the fact that there will be two agreements, not one. 
As far as the second deal, the trade deal, is concerned, we already know that the worst possible outcome is to revert to WTO rules, and that outcome is the inevitable result of no deal.  There is simply no means by which the EU27 can offer worse terms than that; so there is no way of ‘punishing’ anyone.  And we already know that no deal which leaves the UK outside the single market (an inevitable consequence of rejecting freedom of movement and the jurisdiction of the ECJ) can never be as good as membership of the EU.  So any agreement will be better than WTO terms but worse than current terms; ‘no deal’ cannot be better than even the worst negotiated deal.
But prior to that trade deal, the first deal – and the one that has to be largely agreed as a precursor to any trade deal – is about the terms of exit.  There will be many elements to this, but the only one that offers any scope for meting out anything resembling ‘punishment’ is the agreement over the amount to be paid by the UK to the EU.  This has regularly – and wrongly – been presented as though it were some sort of ‘exit bill’.  It is not; it is a calculation of the amount of money which is required to be paid to meet the UK’s obligations under agreements to which it is already party. 
There is certainly plenty of scope for a difference of opinion over which elements should be included and the number of pounds to be attached to each element, and if the EU27 really wanted to punish the UK for daring to leave, this is where they have the most scope for doing so.  The Institute of Economic Affairs has suggested that the total could be as low as £26billion; rumours from within the EU suggest a number anywhere up to £100billion. 
Whether it would be in the EU’s interests to demand an excessive sum is another question entirely; getting something from the UK is obviously better than seeing the UK walk away without paying anything.  And it’s ‘true’ that the UK could simply walk away and pay nothing; but it isn’t the cost-free option as which some seem to see it.  In the first place, seeking a trade deal on better terms than the WTO terms with the EU immediately after walking away from previously agreed commitments isn’t exactly the best way to get them in the right frame of mind for the negotiation.  And in the second place, it would seriously harm the UK’s reputation and ability to make agreements with anyone else.  Who, after all, would want to negotiate a deal on anything with a country which thinks it can tear up a contract at will and walk away with no consequences?  Who would trust such a country?
So, on the specific issue of the amount to be paid, both sides have a clear interest in coming to an agreement  Threats to the contrary by one side will be more of an obstacle than an aid in reaching that agreement.  I can’t believe that David Davis doesn’t understand all this; his abject capitulation over his previous suggestion that the scheduling of talks would be the ‘row of the summer’ certainly suggests that he has a better grasp of reality than his rhetoric indicates.  So why go to so much trouble, repeatedly, to make things harder for himself by trying to raise the stakes?  I wonder if he really wants a deal at the end of the day or not; perhaps he’s just setting the scene to be able to blame those nasty foreigners for the outcome that he really wants – an excuse to walk away.

1 comment:

Jonathan said...

Yes, how much does David Davis really get? I have a theory about this.
David Davis is not your typical Tory in the sense of being from the socially higher strata and therefore, being English, gifted with an inbred confidence and certainty about his own and Britain's place in the world based on Oxbridge, cricket, the Queen, the mother of Parliaments and (a memory of) Empire. Think Jacob Rees-Mogg as a caricature of this. Like our very own Stephen Crabb (Haverfordwest) David Davis was brought up in a Council House. I think it means they try possibly too hard to wave the Union Flag, hence they favour Brexit. But it also means something else. I think there is a good chance that actually David Davis knows how many beans make five. He has a natural affinity for personal liberty ie puts limits on police powers. He doesn't think "all our policemen are wonderful" as JR-M would because he has probably seen them in the raw.
My theory is that DD's antennae are telling him that Brexit is not sticking and is falling apart. He does actually have antennae which not all politicians do.
Don't expect any overt U-turns. But watch as he propounds the middle way more and more, as the Brexit panjandrum loses momentum. When it eventually stops, watch Davis the pragmatist shrug his shoulders and say "there we are then...we did our best....water under the bridge". He will not froth at the mouth. Just my theory. But you heard it here first.