Whodunnit?

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During the press conference following his meeting with the German Chancellor, Boris Johnson ridiculed the Northern Ireland Protocol with the words, “Imagine if bratwurst could not be moved from Dortmund to Dusseldorf because of the jurisdiction of an international court – you’d think it was absolutely extraordinary”. It’s a fair point, and I’m sure that Angela Merkel would indeed find it a truly extraordinary state of affairs. But then she would also probably find it extraordinary that anyone would even suggest such a ban on moving bratwurst from Dortmund to Brussels, or Copenhagen, or any other city within the European Single Market. Even more extraordinary and incomprehensible to her would be any suggestion that a German Chancellor would voluntarily negotiate and then sign a legally-binding international treaty agreeing to restrictions on moving bratwurst between Dortmund and Dusseldorf. But then, according to Boris Johnson, it’s something that “no British Prime Minister could ever agree to” either. I wonder which one it was who did just that?

The start of hostilities?

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It is, and always has been, true that any signatory to an international treaty or agreement can decide unilaterally to repudiate that treaty and walk away from any responsibility it has under such a treaty. In that sense, it is entirely lawful for the UK parliament to rip up the Withdrawal Agreement which was signed just a few short months ago. But what is not true is that one party to an agreement can unilaterally repudiate parts of such a treaty and expect other signatories to abide by what remains. It’s a corollary of the EU mantra, ‘nothing is agreed until everything is agreed’: once one part is disagreed, everything is disagreed. Claiming, as the UK government has done, that the UK parliament has the sovereign right to reject part of an agreement after signing it may be ‘true’ in terms of domestic law, but that sovereignty does not extend to obliging the other parties to continue to abide by their side of the bargain. Under the doctrine now being promulgated by Downing Street, no international treaty would be worth the paper it was written on if any country could unilaterally opt out of any bits it doesn’t like whenever the whim takes it. Unless, of course (and I don’t rule this out in the case of the current occupant of Number 10) one believes that the UK is so special that it has rights which don’t extend to other countries. After all, constitutionally, the sovereign power of Westminster comes from the monarch, to whom it was granted by god, not by the people.

The obvious retaliatory move by the EU27 would be to impose a hard border on the Republic’s side on the isle of Ireland. Indeed, if they want to preserve the integrity of the Single Market, it’s hard to see how they can avoid doing so. The UK can – and presumably will – decide not to have border posts on its side, and allow all goods straight in. (Although, under WTO rules relating to ‘most favoured nation’, doing that in the absence of a trade agreement means that they have to allow the same access for goods from all other countries in the world, unless they intend that their first act as a member of the WTO is to breach those rules as well. I suppose that’s something else that can’t be ruled out.) Perhaps forcing the EU to create a hard border is part of the game plan – I can already hear them saying “We never wanted this – it’s those wicked Europeans doing this”. It’s just possible that, in the circumstances, such a border might not provoke a return to violence: the extreme unionists on the one hand will be pleased that their status as an integral part of the union is being protected, and the extreme republicans on the other may be less willing to attack Irish/EU border infrastructure than they would be if the border posts were British. It’s a gamble, though – and not just in terms of potential violent responses: it might also push more people towards supporting reunification in Ireland.

Failure to establish controls at the border in the absence of controls between the two islands inevitably risks the integrity of the Single Market, and I don’t rule out the possibility that, insofar as there is a cunning plan here, it is precisely that. The Brexiteers have long believed that Brexit would bring down the whole EU edifice (indeed, Farage has often said – including, according to a recent report, in a meeting with Barnier - that “the EU will not exist after Brexit”). The ‘logic’ of Brexit was always the destruction of the EU – being just outside a large bloc like the EU never made sense. They expected that Brexit would start a stampede, but to date it’s had the opposite effect as other countries gaze on in stunned amazement. From that perspective, the proposed repudiation of parts of the Withdrawal Agreement makes eminent sense. But the EU would be entirely correct in interpreting it as a hostile act by an aggressive neighbour. Things look set to get a great deal worse.

Boris' brilliant idea

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It might, of course, just have been some sort of strange Old Etonian dare that the PM was set by his old school chums.  Getting someone to tell porkie pies about real, actual pork pies sounds like the sort of jolly prank that I can imagine them playing on each other for their own amusement.  Whether much else of what he said in his criticism of US rules which keep UK products out of the American market was true or false is unclear, but given the source, it’s probably safer to assume that it was mostly invented.

He did make one interesting point though, when referring to the ‘fact’ (in quotes because I simply don’t know whether it is true or not, but let’s run with it for the moment) that a UK company wanting to sell insurance into the US has to deal with 50 different regulators rather than just one or two.  In essence, he may have hit on a brilliant idea here – rather than a group of states each having their own sets of rules and regulations, they could band together and agree a common set of rules which would make trade between groups of states potentially much easier.  Perhaps the countries of Europe could take up the idea as well.  We could call it, oh, I don’t know, how about something along the lines of a single European market?  Then, with a large and homogeneous ‘home’ market, it would become easier to sell our wares into other large homogeneous markets with fewer regulatory bodies needing to be involved.  I can’t imagine why no-one has thought of this before.

Direct and indirect causes

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Different people have reacted differently to the announcement by Honda that it is to cease production and close its plant in Swindon, depending largely on their views over Brexit.  Opponents of Brexit have been quick to claim that Brexit is clearly a factor, whilst Brexiteers have, quite rightly, pointed out that Honda’s statement placed no blame on Brexit; indeed, it specifically stated that it was not a Brexit-related issue.  That statement may not be quite as definitive as it sounds, though.

It’s certainly true that there have been major changes in the industry, and that the move away from diesel cars is happening faster than many would have predicted.  And it would be surprising if Honda, like other manufacturers, wasn’t looking more to a future which depended more on electric vehicles.  In that situation, ending production of a vehicle whose life-span is nearing its end anyway is an entirely normal, non-Brexit-related business decision.

More interesting, though, is the question which is not being asked as a follow-up.  As far as I can see, the company is not planning to produce fewer cars in total, merely changing the emphasis away from one type of vehicle to another.  And those new cars need to be produced somewhere – the company has decided to do that in Japan.  So, the question which hasn’t been widely asked is this: given that you already have a factory capable of producing vehicles with a trained and experienced workforce, why close that and invest in new capacity elsewhere instead of repurposing the existing facility?

The company’s own statement gives us the answer to that when it says that it is due to the relative size of the market in different locations.  Now we know that the original investment in the UK was part of a strategy to target the EU market from the inside rather than across tariff barriers; and we know that the new EU-Japan trade agreement facilitates trading with the EU directly, without needing a base within the EU.  We also know that the terms of trade between the UK and EU post-Brexit are a complete unknown at the moment, but there is no conceivable Brexit scenario (other than cancelling it completely) which will not make trade between the UK and the EU more difficult than it is at present – and potentially significantly more difficult than simply supplying the market directly from Japan.

So, in taking the short-term decision to stop production of the current model, I can well believe that Brexit was not a significant factor.  But in making the longer-term decision as to where to put future investment, not only can I not believe that the changes which Brexit is leading to are not a factor, but I also believe that if they weren’t, then the directors of the company would be guilty of a grave dereliction of duty.  And this matters; it matters a lot.  We are going to see a lot of changes happening, and in many cases it is going to be extremely difficult for anyone to say, with absolute certainty, that this decision or that decision was a direct result of Brexit. 

At the level of individual decisions, the Brexiteers will have a degree of what Nixon once called “credible deniability”, and they will attempt to use that to deny any causal link between their project and the economic damage which it does.  But we shouldn’t lose sight of the fact that whilst the changes resulting from Brexit may not be the direct cause in many individual decisions, they will undoubtedly be part of the context considered when those decisions are being made.  The influence of a deliberate decision to place the UK outside the world’s largest free trade area will not always be direct and obvious, but it will be extremely pervasive overall.

We can't decide for others

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The pro-Brexit Daily Express got itself quite excited yesterday about the apparent hint from Michel Barnier of a super-duper extra-special Brexit deal for the UK the like of which has never been seen before.  It seems however that they have just not been paying attention – as the Guardian reported, this is nothing new, he’s been saying the same thing all along.  The EU27 have been keen from the outset to maintain strong links with the UK and have always been willing to negotiate a bespoke deal.  What they have not been willing to do, however, is to change the single market rules to suit a departing member; the obstacle to that super-duper deal isn’t in Brussels, it’s in London.

That fact was underlined by the attempt by David Lidington, effectively the deputy to the Prime Minister, to issue an ultimatum to the EU27 – agree to what we want or we walk.  Ultimatums have never been a particularly brilliant way of negotiating anything, and when they’re being issued by the weaker party to the stronger, and when following through on them damages the weaker party more than the stronger, then the stronger party can surely be excused for scratching its collective head and saying ‘OK, go on then’.  The ‘ultimatum’ amounts to a demand that the EU27 not only give the UK all its current benefits, but also start dismantling key aspects of the single market in order to do so.

That’s something to which they were never and are never going to agree; a deal is on the table any time the UK is prepared to drop its red lines.  Whether that is ‘proper’ Brexit or not is another question, but it would at least buy enough time for the UK to decide what it really wants (and offer an easy way back in if sanity is ever restored).  But the underlying reality – that it is the UK which has made the decision to leave, and it is the UK which must bear the consequences of that – was neatly summed up by the President of France, Emmanuel Macron, when he said that Brexit “…is what the British people have chosen for themselves, not for others …”.  That encapsulates the problem at the heart of the Anglo-British nationalism driving the Brexit project – the belief that a vote by the UK electorate not only binds the UK government, but also somehow mandates the rest of the EU to comply with whatever the UK wants.  The old-style imperialists still don't understand the modern world.  Ultimatums, like gunboats, belong to the diplomacy of the past, not the present.

Why bother?

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My initial reaction to the lack of resignations from Brexiteers following Friday’s ‘agreement’ by the UK cabinet was that they were so confident that the plan would be rejected by the EU27 that agreeing to the ‘plan’ was not so much a concession on their part as a prelude to the no-deal crashing out which they crave.  It certainly appeared as though May’s rebadging-with-conditions was putting down a series of conditions to which the EU27 could never agree; and her demand that the EU now start to be flexible sounded like the usual Brexit demand for the EU27 to abandon at least some of the basic tenets of the single market.  But yesterday’s resignation makes me wonder whether at least some of the Brexiteers are starting to realise that the plan does actually contain the outline of a possible deal, if we regard it as a two-year late opening position, rather than a last minute set of immutable demands.

Take the “combined customs territory” for instance.  It sounds a lot like a new name for a customs union, and the chief difference between the two seems to be that the May plan assumes that the UK will have the right to negotiate different tariffs from those set by the EU.  This is obviously fraught with difficulty; apart from being a smugglers’ charter for any goods where EU tariffs and UK tariffs are different, the proposed use of technology which doesn’t yet exist to control where imported goods end up looks like being completely impractical when one considers raw materials turned into components turned into finished goods.  Without a physical border check to determine whether the contents of a lorry are what the electronic ‘paperwork’ says they are, the potential for UK firms to gain an unfair competitive advantage is something that the EU will never allow.  But what if the ‘right’ to negotiate different tariffs was accompanied by an agreement that the ‘right’ would never actually be used?  That’s hardly an unusual approach from the EU, and it would leave the ‘combined customs territory’ different only in name from the customs union.  I can’t see the EU27 being particularly averse to allowing the UK to call it something different.

Or take the proposal to replace freedom of movement with a ‘mobility framework’.  If the only difference between the two is that the UK starts to apply restrictions already allowed for in the EU treaties (or can be negotiated to that point) – something which successive governments have decided not to do – then why would the EU object to the UK simply using a different nomenclature?

Or consider the ‘harmonisation’ of rules instead of membership of the single market for goods.  If the UK is prepared to guarantee that it will follow all relevant EU rules for goods (in which the EU has a trading surplus with the UK) and accept that the interpretation of those rules is down to the ECJ, whilst excluding services (in which the UK has a surplus with the EU), then why, in principle, would the EU27 not be willing to discuss the details of how that compliance is guaranteed and implemented?

The amount of money which the UK will need to pay into the EU budget will be something of a sticking point; it will certainly be higher than the May plan envisages.  But a little bit of creative accounting under which it becomes a series of individual payments for specific services will allow it to be presented as something other than a contribution to the central EU budget – again, as long as the amount they receive is consistent with other deals and meets their requirements, why would the EU 27 be particularly bothered about what the UK decides to call it?

The only way in which May’s plan can be considered to adhere to any of her red lines is by assuming that those red lines apply only to what things are called, not to what they achieve.  The plan, as Brexiteers are coming to realise, not only ignores the substance of all those precious red lines, but might also provide a sound basis for negotiating something which will end up looking an awful lot like the Norway option which Brexiteers correctly characterise as Brexit-in-name-only, and under which the UK would follow the rules whilst having no input into them.

If only we had an alternative government-in-waiting which was prepared to look at all of this and ask one simple question: “Why bother?”

Rebadging the unicorn

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‘Badge engineering’ is a long-standing practice in both the car industry and the IT industry, and basically amounts to selling identical products with different labels or badges on them.  It never really fooled anyone, and wasn’t usually intended to; it was more about appearing to sell products targeted at specific markets by using brand names familiar to the relevant audience.

Today’s so-called crunch meeting at Chequers looks like an attempt at something similar, except that in this case, there is indeed a deliberate attempt to mislead.  From what has been revealed so far, it seems that the Prime Minister’s latest composite proposal is an attempt at rebadging something very close to membership of the single market á la Norway in such a way that the Brexiteers will think that it amounts to non-membership whilst those who think otherwise get a nudge and a wink to say that nothing much will change at all.  The deviations from the Norway model will still cause problems and are likely to be rejected by the EU, but this proposal isn’t really aimed at the EU27 at all.  The only aim of the proposal is to get the cabinet united around a proposal from which the PM and her team can then negotiate a route to a form of membership of the single market, called something different.  And as long as, at the end of those negotiations, the only difference is what it’s called, the EU27 are likely to agree.  A rose by any other name, etcetera…

It’s almost a wizard wheeze, except for the simple fact that it’s so obviously a ruse that no self-respecting Brexiteer would be able to swallow it.  Richard Murphy suggested yesterday that the main question to be asked is “Who will have quite the Cabinet by Monday?”.  It’s a reasonable question; the gulf between the two sides in the Tory party is so large that there is no chance of any substantive agreement being reached on anything which is remotely likely to be acceptable to the EU27.  If they do manage to reach agreement today with no resignations, it will be because they’re continuing to demand that the EU27 gives them that unicorn but they have solemnly agreed to call it something different.  In short, another fudge which kicks the can even further down the road.

The Prime Minister said today that the Cabinet have a ‘duty’ to come to an agreement on what they want.  For once, I agree with her – but that duty didn’t suddenly come into being today.  They’ve been under the same duty for the last two years, ever since the referendum vote, but it’s a duty about which they have signally failed to do anything.  It’s not clear why that is suddenly going to change.  And whatever she says, she certainly doesn’t trust the people whom she has appointed to the cabinet further than she can see them.  Telling Ministers that ‘they will have to hand in their phones and any smartwatches on arrival at Chequers on Friday’ (as the BBC report) doesn’t strike me as the action of someone who has any confidence that she can rely on the people around her.  And if even she doesn’t trust them why on earth should the rest of us?

Trying to spot the difference

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Since the outset, it has been clear that there is only one way of avoiding border controls on the island of Ireland, and that is a common regulatory framework governing all goods and services traded across that border.  And there are only two ways of maintaining a common regulatory framework – either the UK follows the same EU rules as the Republic, or else the Republic opts out of the EU and follows the same rules as the UK.  The latter is, of course, the preferred option of Brexiteers; not for nothing has Farage been attempting to stir up support for ‘Irexit’.  And a few extremists on the Tory side have also made it clear that they think that the Republic should follow its former masters as the next step in the dismantling of the whole structure of the EU, and a return to the good old days of wave-ruling.

It’s all part of their fantasy world, a world in which a vote in the UK means that everybody else must change so that the UK can continue as though nothing has happened; a world in which everyone else pays the cost of decisions that we make.  To date, they’ve found ways of kicking all the cans down the road, in some cases by making promises that it later became clear that they never had any intention of honouring.  But sooner or later, reality will catch up.

One of the biggest obstacles to that dawning of reality is a Labour opposition which indulges in the same fantasy thinking, pretending that using different words to describe the same thing somehow turns the unachievable into a practical and realistic prospect.  Last week, Corbyn reiterated that “Labour will not support any Brexit deal that includes the return of a hard border to this island” in a speech in Belfast, but he continues to reject any and every solution which would actually ensure that that could be the case.  In substance, albeit not in rhetoric, his position is indistinguishable from that of the Tories.  May and Corbyn are both demanding that there should be no border across Ireland whilst rejecting the common regulatory regime required to ensure that.  They’re as bad as each other.

Labour might be the biggest problem

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The repeated defeats for the government over the Brexit bill in the House of Lords are certainly a problem for the Prime Minister.  Much of the so-called ‘progress’ in negotiations with the EU27 has been achieved by simply kicking the can further and further down the road, whilst phase 1 of the real negotiations – those internal to the Conservative Party – continues, not only with no sign of resolution, but with every indication of hardening attitudes and increasing bitterness.  And until the successful conclusion of that phase 1, something looking less likely on a daily basis, substantive discussions with the EU27 will remain where they have been since day 1, namely making limited progress in private meetings on some of the technical details, but getting absolutely nowhere on the key issues.

But their lordships have caused an even bigger problem for the Labour Party – and more specifically, for its leader.  With the requirement to negotiate continued membership of the single market, via the European Economic Area, now included in the Bill, the House of Commons will have to vote very explicitly to either retain that amendment or to overturn it.  It seems highly probable that, on an entirely free vote, the Commons would vote to retain the amendment, whilst on a whipped vote, sufficient Labour and Tory MPs would be prepared to follow their respective leaders to kill the amendment.  It’s a crunch point for Corbyn, even more so than for May.  Corbyn has an open goal in front of him; a chance to lead his party into a vote which would almost certainly see the downfall of the current Prime Minister and government, and possible even a catastrophic split opening up inside the Tory Party, yet all the indications are that he will opt to throw May a lifeline and support her determination to leave the single market, and her entirely debunked argument that it is somehow possible to have the ‘exact same benefits’ without membership.

There is, of course, something to be said for a political leader who decides that sticking to his core beliefs is more important than seizing party political advantage; principles are still important to some of us at least.  The problem, in this case, is in identifying exactly what those principles are.  Replying to the five Labour MPs from North-East England, who have broken ranks to call for a referendum on the terms of Brexit, a spokesperson for Corbyn was reported as saying that ‘staying in the EEA could undermine a future Labour government’s ability “to intervene” in UK industries with particular issues around state aid and reversing privatisation’.  The problem with this is that the argument that membership of the EU somehow prevents a government from nationalising industries or providing state aid has been thoroughly debunked many times, including by people within Labour itself.  What membership of the EU prevents is not state aid or nationalisation per se, only forms of state aid or nationalisation which give unfair competitive advantage to a business.  And that’s something also banned by WTO rules, and something to which I suspect Labour itself would strongly object if done elsewhere with the aim of undercutting UK industries.

That leaves us with the rather vague objection that membership of the single market whilst being outside the EU would leave the UK as a rule-taker rather than a rule-maker; obliged to follow the rules whilst having so say in their preparation and agreement.  It’s entirely true, of course.  But it’s going to be equally true of any arrangement which comes anywhere near providing the ‘exact same benefits’, and Labour are being utterly dishonest in continuing to argue otherwise.  It is clear by now, even if it wasn’t before, that there are only three options open to the UK: the complete break favoured by the ideological Brexiteers; continued membership of the single market through the EEA whilst being outside the structures of the EU itself; and remaining a full member of the EU. 

Outside the hard-core Brexiteers of the Tory Party (a comparatively small group in reality), parliamentary opinion looks to be divided between the second and third option, largely as a result of differing opinions on whether the referendum result was absolute and final or whether in the light of evidence and shifting opinions there is value in asking the people to confirm or change the decision taken by referendum.  The tragedy is that it is the first option which is looking increasingly likely as the Brexit tail wags the dog, ably aided and abetted by an opposition party whose leader seems determined to support the hard-core Brexiteers for reasons which even he himself seems unable to articulate clearly to anyone.

What are the right assumptions?

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Much of the reaction to the leaked government report on the consequences of Brexit is entirely predictable.  The report made it clear that on none of the scenarios modelled was there a plus side to Brexit in economic terms; the only question was how bad it was going to be.  Remainers have, of course, seized on the forecasts as evidence that Brexit is a really bad idea, whilst Brexiteers have responded with their usual disdain for ‘experts’. 

There’s some truth on both sides.  As the critics have rightly pointed out, any such report can only be as good as the assumptions made in producing it, and the track record of economic forecasting is not exactly one to be proud of.  Two things on which I have no doubt are that the long term is essentially unpredictable, and that plugging in a different set of assumptions would produce a different range of outcomes.  Despite the inherent unpredictability of some factors, and the fact that the degree of unpredictability inevitably increases as we look further and further forward, I still think that making an attempt at modelling the impact is a better way forward than not even trying and depending on blind faith, which is what some of the Brexiteers would seem to prefer.  That means that any rational debate has to concentrate, first and foremost, on the robustness of the assumptions being made – and those who want to challenge the results need to be able to say why and how those assumptions are wrong.

The fact that an increasingly broad range of economists are coming to similar conclusions is not, in itself, proof that they are right.  ‘Groupthink’ can and does cause such convergence in other fields, and it could be a factor here, but the very existence of a clear and growing consensus should be at the very least a cause for giving the matter a bit more thought.  Merely dismissing anyone who disagrees as an ‘expert’ who therefore knows nothing isn’t a very sound basis for decision taking.  The problem which the Brexiteers have in challenging the report was, for me, summed up by the response of the unnamed Treasury source: “It does not, however, set out or measure the details of our desired outcome - a new deep and special partnership with the EU”.

Let’s be clear – this is a source within government saying that the work done by the government (and not just by the ‘government’ in a generic sense – this was work done by civil servants in the department actually charged with negotiating the outcome) doesn’t cover the option preferred by the government.  In any other circumstances, that would be an astounding admission.  In circumstances where the government has shown a complete inability to define what it does want, however, it’s the only possible result.  How can anyone model a situation which is not defined in terms other than a ‘deep and special partnership’  with no detail of what that means, and when those using the phrase consistently refuse to acknowledge the simple truth that it can only mean ‘less deep and less special’ than the partnership which currently exists?

The simple challenge to them should be this:  OK, you’re telling us that the assumptions are wrong – so what are the right ones?  The day that they can answer that question is the day that it might be possible to start modelling what they have in mind.  But they also need to bear in mind that assumptions that the EU27 will simply allow the UK to have all the benefits with none of the costs might well produce a much rosier outlook in a mathematical model, but they will be less useful as a prediction tool than employing Mystic Meg.

Splitting hairs

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At a time when the government has managed to set itself impossible objectives over the most important change facing the UK for decades, the main opposition party, Labour, sometimes seems to be going out of its way to be even more incoherent on the same issue.  Whilst I actually agree with the Brexiteers that remaining part of the single market isn’t really leaving the EU at all (it achieves few of the objectives which they originally set themselves), it’s clear that the short term economic damage would be much more limited.  I had thought that Labour was edging towards that position, but Corbyn has managed to lead them away again, by saying that the UK cannot stay within the trading block.

Technically, what he and those speaking for him are saying is correct; “The single market is not a membership club that can be joined”.  It isn’t, and there is no way of applying to join it as a member.  It’s hair-splitting, though.  It is perfectly possible to continue to ‘participate’ fully in the single market without being in the EU, as Norway does.  It involves accepting the rules of the single market, of course, but that’s ultimately all a single market is – a set of rules and regulations followed by all and enforced collectively.

Obtaining the benefits of participation in the market depend on adherence to, and enforcement of, those rules and regulations, but in saying that “we seek through negotiation to retain the benefits of the single market” without committing to doing that, Labour are effectively suffering from the same delusion as the Tories.  The difference between ‘participation’ and ‘membership’ is mere semantics, but if they want to be pedantic, let them carry on.  The more significant difference is between ‘participation’ and merely seeking to ‘enjoy the benefits’, and until Labour move from the latter to the former, their position will continue to be, in substance, no different from that of the government.

Progress?

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Today’s news about an apparent ‘breakthrough’ in talks over Brexit is better than many of us had expected, although whether it’s much more than a form of words to enable the next stage to commence remains to be seen.  The wording looks like a bit of a fudge; something which can be interpreted in more than one way in order to satisfy multiple audiences, but which will need to become a lot clearer than that over the coming months.

The statement that "the UK will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all island economy and the protection of the 1998 Agreement” seems to avoid both a hard border across Ireland and the imposition of a hard border in the middle of the Irish Sea, but the devil will be lurking, as ever, in the detail.  How will they determine which areas of ‘alignment’ are the ones which support ‘North-South co-operation’, for instance? 

There was talk, in advance, of effectively remaining in the single market for some sectors but not others, but regulating that produces immense challenges.  It could mean, for example, that lorries containing agricultural produce will flow freely but those containing widgets won’t.  It doesn’t take a genius to work out that the implication of that is that those claiming to be carrying meat might just need to be checked to make sure that there are no hidden widgets – which brings us straight back to the hard border issue.  The simple, practical, cheap, and effective way of determining in which areas alignment should be maintained is not to bother – this agreement looks to me like the first step towards tearing up another of the government’s red lines and remaining in the single market.  It’ll take a few more months of drama and crisis to reach that point, though.

I thought that yesterday’s remarks by the Chancellor, that any suggestion Britain might walk away from talks without paying off its obligations to the EU was “not a credible scenario.  That is not the kind of country we are.  Frankly, it would not make us a credible partner for future international agreements” was one of his more sensible pronouncements.  The fact that he was so roundly ‘corrected’ by Number 10 within hours by a spokesperson for the Prime Minister saying that honouring our debts was “dependent on us forging that deep and special future relationship” makes it clear that reality is dawning on May only slowly, and only one step at a time.

The end state – something which the Cabinet have not even felt it necessary to discuss yet, apparently, probably because thy know that they won’t agree – looks increasingly like being membership of the single market and customs union, no independently-negotiated trade deals, a continuing role for the European Court of Justice, continuing payments to the EU’s funds, and acceptance of EU rules with no input to their drafting.  Brexit means anything but Brexit.  No wonder the Brexit ideologues are getting increasingly restless.

Delusion and reality

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One of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away. For Brexiteers, the hard reality that they are not going to persuade anyone to give them any new concessions by threatening to simply renege on existing financial obligations has been a long time coming, but there does seem to be an inkling of progress towards a more realistic position.  It’s not agreed yet, of course, and we don’t yet know the final figure.  It will almost certainly be higher than the headline figure being quoted, but a bit of skilful negotiation on both sides might be enough to hide the final total in a plethora of rebates, discounts and conditional payments.

There has also been talk for a while about progress on protecting the rights of EU citizens.  If it weren’t for the innate dislike that some people seem to have of all foreigners, this should have been the easiest of all to resolve.  All they ever had to do was to extend the rights of UK citizens to match those of EU citizens.  Again, progress has been hindered by an unwillingness to give the citizens of the UK more rights.  I think it’s called ‘taking back control’.

That leaves the one that the UK imperialists always thought was going to be the easiest of all to settle, and that’s the question of the border with the Republic of Ireland.  There was never any rational basis for assuming that it would be easy, but a failure to understand that the republic is an independent state, with full membership rights of the EU, rather than some sort of vassal state of the UK has blinded them to the fact that the EU 27 were always going to be more likely to unite behind a loyal continuing member than to abandon that member's interests in pursuit of a deal with a troublesome departing member.  The treatment being meted out to Ireland by some sections of the press well displays the lingering imperialism and exceptionalism which has dogged the UK for generations.

In purely logical terms, I have some sympathy with the position adopted by Liam Fox, which is that the nature of the border required depends on the nature of the trade deal between the EU and the UK, and might therefore be better dealt with in phase 2.  Or rather, I would have more sympathy if the UK government had not, during phase 1, removed from the table all the practical options which would allow an open border to continue, demanding instead that the EU come up with a proposal to avoid the logical consequences of Brexit for the border.

The key word there is practical, and how it is interpreted.  It has long been clear that the real objective of the Brexiteer ideologues isn’t simply to remove the UK from the EU, it is to abolish the EU and replace it with a purely economic relationship based entirely on trade.  How else can anyone interpret the demand for a trade agreement as good – or better – that the one we have, but without membership of the single market or the customs union?  Now if somebody believes – as I suspect that Fox does – that Brexit is just the first step towards that goal, and that the UK crashing out with no agreement on a future relationship will help to bring that about, then the position being adopted actually makes some sort of sense.  But to repeat the opening line, one of the problems from which the delusional often suffer is that the real world has a tendency to intervene, and can’t always simply be imagined away.

Who's got the ball?

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According to the Prime Minister, having made a few of what she calls concessions in her speech in Florence, the ball is now in the EU’s court; it’s their turn to make concessions.  It makes me wonder whether the PM and her government understand the nature of the negotiations in which they’re involved.

Actually, in most types of negotiations, she’d be right.  Typically, a negotiation between two parties sets out to improve on the current situation in ways which benefit both parties – the infamous and over-used phrase ‘win-win’ applies.  In such a circumstance, both parties know that allowing both sides to gain something means that both have to concede something, and they take turns in the process of negotiation.  And if they can’t reach an agreed position acceptable to both, then they can simply walk away from the talks, and the current situation continues.

In the case of Brexit, however, one of the parties has effectively said “we want to renegotiate this deal so that we’re considerably worse off, and we want you to change your rules to weaken your single market in order to mitigate the effects of our decision, oh, and by the way, we’re cancelling the agreement between us regardless of what you say”.  Not so much seeking ‘win-win’ as demanding ‘lose-lose’, accompanied by a degree of puzzlement as to why the other side doesn’t immediately see this as a brilliant idea. 

In return for committing a massive act of economic self-harm, the UK demands that the EU makes it possible for states to enjoy all the benefits of the single market with none of the costs, thereby threatening the integrity of both the single market and the EU itself.  In this context, the part of the Florence speech floating the idea of a two year transitional phase amounted to saying, “We’re going to reduce the amount of self-harm that we do to ourselves, but in return, we want you to start making changes which damage your single market”.  ‘Meeting in the middle’ when both sides gain is one thing; but ‘meeting in the middle’ when both sides are expected to lose is another thing entirely – especially when one side’s view of ‘fairness’ is that it lessens the impact on itself whilst increasing it for the other.

A normal part of any negotiation is to understand what ‘the other side’ want to get out of it, and ensure that what you offer them is attractive.  It may well be that May, Davis et al really do believe that weakening the rules around membership of the single market will be a good thing for the EU27 as well as for the UK.  I think they’d be wrong, but I could understand such a viewpoint from people who wish that the EU didn’t exist at all.  But they’ve not only failed to understand that things might not look the same from the other side, they’ve made no effort at all to explain to the EU27 why this is such a good idea, or how it will benefit them.  Instead, they merely demand concessions and call out the EU27 as bullies and dictators if they fail to give them.

When I read about the ‘progress’ being made in the Brexit negotiations, I’m reminded of the old story about a trade union negotiator who returned to his members and told them, “I’ve got some bad news and some good news.  The bad news is that I haven’t been able to get us a pay rise; in fact I’ve had to accept a pay cut.  But the good news is that I’ve managed to get it backdated”.  The way things are going, I suspect that even that trade union negotiator would get the UK a better deal from Brexit than the current team.

It's not just about economics

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On Friday, the Western Mail’s leader column pronounced in large bold letters that “Brexit must not hit our country's poor”.  As a statement of what most of us would hope for, it’s hard to argue with that.  But how widely held is that view in reality?

As part of the argument in support of its position, the opinion column went on to say “Regardless of how anyone voted in the referendum, nobody will want Wales to fall off an economic cliff in 2019 when the UK leaves the EU.”  I’m far from certain that that is a true or accurate statement.  I have the impression that a quick and total break is exactly what many want and thought they were voting for.  And it was, I thought, perfectly clear during the referendum itself that many of those arguing for Brexit wanted exactly that outcome, believing, in effect, that the ultimate gain from Brexit was worth the pain involved.  That may not have been – indeed was not - what they actually said, but there was enough information to the contrary available for people to understand the likely outcome.  But – as we all do, in our own ways – people chose to believe the ‘facts’ which supported their own predispositions in a classic real-world illustration of confirmation bias.

And from reports I’ve seen on opinion surveys since the vote, including those where respondents have said that the ‘benefits’ of Brexit are so great that they’d be prepared to see relatives thrown out of work in order to realise them, I’m not sure that opinions have changed very much.  Whether I like it or not, I cannot escape the fact that the majority of those who voted in Wales supported Brexit, nor the conclusion that by doing so they voted in favour (in the short term at least) of damaging the economy of Wales, in favour of ending the regional assistance from which Wales has benefited, and in favour of making themselves and the rest of us poorer.  The reasons for doing that are varied: perhaps a belief that ‘taking back control’, or reducing immigration were valuable ends in themselves, or perhaps in the belief that short term pain would lead to long term gain.  Whatever the reasons, they voted for leaving the EU with all its consequences, and much of what the Western Mail and Wales’ politicians seem to have been saying since amounts to an attempt to remain a member for as long as possible, but call it something different.

The desire for Brexit was never primarily an economic one; those making the case always knew that there would be an economic hit as a result.  It wouldn’t fall on the leading Brexiteers, of course; it was always going to be the poorer families, nations, and regions which would suffer.  In the same way, my own wish to remain was never primarily an economic one either; it was about Wales’ place in the world and how best to get there.  There are economic consequences, of course; there will be winners and losers, but over the long term, the economy will adapt – it’s what economies do.  Whether it will recover to the extent that it makes no difference over the very long term is an open question to which we can never really know the answer, since we only get to live through events once.  It’s a wholly unnecessary and self-inflicted pain in the interim but sadly it’s what people voted for, no matter how much the Western Mail and others may try to argue otherwise.

The real problem that I have with all the arguments about mitigating the effect and seeking a way through the mess which causes as little damage as possible is that they’re not tackling the underlying problem, and may be in danger of confirming rather than challenging the views of those who supported Brexit.  What was lacking at the time of the referendum – and is still lacking from our nation’s ‘leaders’ – was any attempt to make a positive argument for the European integration which brought the trade and economic benefits rather than a simplistic negative argument against losing those benefits.  Those who built the EU’s structures – just like those who argued for Brexit – never did so for primarily economic reasons.  It was always about a vision for the future of Europe.  There are flaws in the way that they have attempted to realise that vision, but that doesn’t detract from the fact that they had one.

Underlying the whole debate about Brexit and its consequences is a major gulf between differing views about what sort of Europe we want to see and what our role in it should be, whether as Wales or as the UK.  Treating it as solely an economic issue and concentrating the debate on mitigating the economic effects is ignoring that clash of world views.  It does no more to change the world view of those supporting Brexit than repeatedly telling them that they were duped and misled (even if that happens to be true).  But it is on the underlying conceptions of the world and the role of Wales and the UK in it that the debate needs to be centred if there is to be any chance of a change of attitude.  Changing course for solely economic reasons will only reinforce the belief that we are somehow being ‘dominated and bullied’ by ‘Brussels’ into doing what 'they' want.

Fudge isn't leadership - it's just a snack

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This article in Monday’s Guardian by Shadow Trade Secretary Barry Gardiner has drawn a great deal of criticism for saying, in essence, that Brexit is going to make us all worse off, but that’s what people voted for and that’s what we must therefore do.  As far as the conclusions that he draws are concerned, I agree with the criticism.  It should be incredible that the main opposition party can conclude that a policy is a really bad idea and then go on to support it with enthusiasm.  He’s not alone in taking this strange view of leadership by politicians – one of his colleagues said much the same thing yesterday, but went on to add that the Labour Party’s position could be flexible if public opinion were to change.  It’s a complete abdication of leadership and principle, and suggests that, at any time, the Labour Party’s political philosophy is whatever a perceived majority happen to think.

There are parts of Gardiner’s analysis, however, with which I entirely agree.  His opening paragraph:

“Most trade agreements arise from a desire to liberalise trade – making it easier to sell goods and services into one another’s markets.  Brexit will not.  Brexit arose from key political, rather than trade, objectives: to have control over our borders, to have sovereignty over our laws, not to submit to the European court of justice (ECJ), and not to pay money into the European budget.  When negotiations start it will be the first time countries seek a trade agreement with the clear understanding that they are increasing barriers between them.”

reflects a point that this blog has made a number of times: there is no such thing as a ‘soft’ Brexit, there is only continued membership under a different name. 

(Although I don’t entirely agree with his claim that both sides are entering the negotiations with the understanding that they are increasing barriers between them; I suspect that the Brexiteers really don’t understand that even now.  That’s one of the worst aspects of their position – and it’s largely mirrored by that of the Labour Party when they talk about having “the exact same benefits” whilst being outside the single market.)

I agree with his statement that Brexit arose primarily from political rather than trade objectives, and that the only way to give expression to those political objectives is to opt for the so-called ‘hard’ Brexit being pursued by the government.  That ignores, of course, the frequent statements made by Brexiteers during the referendum campaign that Brexit did not mean leaving the single market, but that was politicians campaigning, a process in which lying has become the norm.  It should always have been clear that, if the slogans about taking back control meant anything, they meant leaving the single market, whatever politicians looking for votes may have said at the time.

Gardiner is simply being honest in what he says.  A Welsh Labour MP, Wayne David, made a similar point yesterday, when he said that it would be very difficult to accept membership of the single market as being compatible with Brexit.  Whilst many of us see the so-called ‘Norway Model’ as more attractive than Brexit, I fully understand that it actually means a greater loss of sovereignty than formal membership of the EU, since it requires adherence to laws and rules with no representation in devising them. 

The real problem facing us is not people like Gardiner or David who are openly and honestly spelling out the consequences of the vote that was taken last year, but the fudging politicians who pretend that it is somehow possible to give expression to that vote whilst remaining a member of the EU in all but name.  It isn’t, and the better and more honest position is to argue that a mistake has been made on the basis of an utterly false prospectus and give people the opportunity to correct it.  The idea that democracy is – or ever can be – about a single irrevocable vote on one day in one set of circumstances is a misuse of the word ‘democracy’.  We need politicians to provide honest leadership on the issue, but they mostly seem too cowardly to do that.

Lead, don't follow

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Today’s Western Mail headline declares that there has been a surge of support for a ‘soft’ Brexit according to an opinion poll conducted for the paper.  On closer reading, what the poll actually seems to say is simply that the balance of opinion between remaining in membership of the single market and controlling immigration has shifted in favour of the former.  That’s hardly surprising as the implications become clearer on an almost daily basis, and the lie that was spun last year about being able to do both becomes increasingly obvious. 

I remain unconvinced, however, that there is any such thing as a ‘soft’ Brexit, and the politicians that tell us that there is are being disingenuous.  In this instance, I agree with the comments made by a spokesperson for Tory group leader Andrew RT Davies and quoted in the report – “There is no such thing as a soft Brexit or a hard Brexit.  You either leave the European Union or you don’t.  Remaining bound by EU laws, unable to make new trade deals, and unable to control immigration would mean that we haven’t left at all.”  That is surely true – that which is being described repeatedly as a ‘soft’ Brexit amounts, in effect, to continued membership but without the influence and input which comes from membership.

That’s not to say that I think that would be a bad thing; it would certainly be preferable to the complete departure from the EU which is now the official goal of Labour and Tory alike.  It’s just that I think it’s a dishonest position to hold.  If politicians really believe that continued membership is the right solution, it would be preferable for them to come out and say so – and campaign for that outcome.  Anything else is just regurgitating the lie of the Brexiteers during the referendum, which was that we can retain all the perceived advantages with none of the perceived disadvantages. 

It’s true, of course, that any politicians adopting the stance that I suggest would initially at least be pilloried by the likes of the Daily Mail (although some of us might see that as more a badge of honour than a stain on their character), but opinion is already shifting, and I suspect that they’d find themselves on the right side of history.  And in the long term, they’d earn more credibility by leading than by waiting until they can tamely follow public opinion.

Asking for the moon

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The Tories have been criticised for seeking a so-called ‘hard’ Brexit, but in fairness to them, I don’t really believe that there is any other sort.  The logic of withdrawal from the EU also implies withdrawal from both the single market and the customs union, and those who are arguing otherwise are being less than honest with the public.  Insofar as people thought that they were voting against immigration and foreign control over laws and regulations, and for ending payment to the EU, the Tory position is entirely consistent with the outcome of the referendum.  To the extent that it looks inconsistent with the claims of the Brexiteers during the referendum campaign, it is because those campaigners were telling outright lies when they said that the UK could enjoy all the benefits with none of the costs.

I know that, in theory at least, it is possible to retain membership of both the single market and the customs union whilst being outside the formal EU structures, which is roughly the position in which Norway finds itself.  The problem with that position in relation to the perceived reasons for the referendum outcome is that it implies acceptance of freedom of movement, acceptance of the jurisdiction of the ECJ, and the payment of a share of the costs of running and regulating the market.  The Tories have set themselves against all three of those, and Labour have also set themselves against the first whilst remaining at best ambiguous, to date, about the other two.  And yesterday, Labour reinforced their commitment to leaving the single market.

In that context, Labour’s repeated call for getting the “exact same benefits” as membership of the single market is nonsensical, and they know it.  They’re no better than the Tories in this instance – just as the whole referendum was about trying to bridge the divide within the Tory party so Labour’s call is about trying to bridge the divide in the Labour Party between those who want to stay in the EU and those who want to implement the referendum decision.  The result is that they sound as dishonest as the Brexiteers during the referendum, in that they’re effectively saying that we can have the benefits without the costs.

The same statement applies to any other party which talks about some sort of ‘soft’ Brexit.  Insofar as the term means anything at all, it means continued adherence to EU rules about freedom of movement, continued adherence to single market regulations, continued payments to the EU, and continued compliance with the ECJ – all without any influence or input into the rules and laws with which we must comply.  So, whilst in theory this so-called ‘soft’ Brexit is a possibility – and particularly so in the light of the new parliamentary arithmetic - in practice it requires a significant climb-down from the position taken to date by Labour as well as a willingness amongst a small number of Tories to rebel.  There are no signs of that happening.  With no willingness to compromise, the Labour Party’s position on Brexit is to all intents and purposes the same as that of the Tories – demand the impossible and then accept a complete break when they don’t get it.

Any hope that ever existed of getting terms as good as the single market without membership of the EU always depended on one thing and that was that the decision of the UK to depart would be the first domino which brought the whole house down and destroyed the EU.  Had that happened, the idea of a new trading arrangement between the states of Europe without the elements of political union which have developed over the years would have been a theoretical possibility, although even then I suspect it would take decades to bring about.  But the actual effect of Brexit has been to strengthen the unity of the other 27 members – and in that scenario, everything the Brexiteers promised is just pie in the sky, and the UK’s position looks like the bluster and bluff which it was from the outset.  For sure, the UK’s team might say that they want the EU to continue as a strong entity with which we can trade, but that’s actually the reverse of what they need in order to make sense of the hole which has been dug.  They need a weak and disintegrating EU - and very definitely not a ‘strong and stable’ one.

Rather than aping the Tory demand for the moon to be delivered on a plate, the rational response from Labour would be to point out the absurdity of demanding all the benefits with none of the costs, and let the Brexiteers stew in a broth of their own making.  As consequences become clearer, they could be highlighting the fact that the best way of getting membership benefits of any organisation is through being a member, instead of which they’re backing up the Brexiteers’ ludicrous claim that those benefits are available anyway.  It’s not offering the alternative for which people will increasingly be looking as the full consequences become obvious.  Worse still, it’s not only Labour who are failing to offer Wales that honest and rational alternative.

Of horses and stable doors

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Labour’s ‘six tests’ for determining whether they will support the final Brexit deal represents a significant hardening of attitude by the party, but it’s a bit late in the day.  The demand that any deal should ensure that the UK gets the “exact same benefits” as it currently enjoys from the single market and the customs union sounds a lot like arguing that, actually, we are better off staying in; but adding to it the other demand that it should also ensure the “fair management of immigration” makes it sound like another wishy-washy fudge in which we get the benefits but ignore the rules.  I don’t know what else the remaining EU members can do to clarify that membership of the single market necessarily implies acceptance of the rules on freedom of movement, but on this point, it seems that Labour’s ears are made of the same cloth as the Tories’ ears.

The biggest problem with this toughening of the party’s stance, though, is that it is too little too late.  Labour MPs voted overwhelmingly in parliament for a Brexit bill which gave the government carte blanche to take the UK out of the EU, the single market, the customs union, and any other arrangement which has anything to do with being European.  And they accepted an act which fails to include any provision for a meaningful vote on the terms of the deal at the end of the negotiations.  Trying to set conditions retrospectively looks insincere at the least.  It looks more about putting them in a position to criticise whatever the Tories do than about trying to make a real difference; presumably in an attempt to boost their own party’s support. 

The logical outcome of the policy position outlined at the weekend is that the party will oppose Brexit, seek to reverse the decision taken in the referendum, and seek to negotiate a few minor changes to the EU treaties; anything short of that is just playing political games.  They won’t do that, however; there’s no chance.  They’re simply too hogtied by their acceptance that people voting for what is increasingly obviously a false prospectus is an unchallengeable outcome. 

Labour and others can argue all they like about the mandate being only to leave the EU itself, not to leave the single market or the customs union, but the Brexiteers have always wanted a complete break.  They might not have said that quite so explicitly during the referendum campaign, but repatriating full control over all laws and regulations was never going to be compatible with staying in the single market.  That much was obvious last June – anything else which was said was just campaigning.  It was dishonest campaigning, sure, but Labour are hardly in a great position to take the moral high ground on that issue.

If Labour and other opposition parties were to come out and say openly that, actually Brexit isn’t such a good idea at all, they might be credible.  But saying that they support Brexit whilst setting conditions which they know to be impossible is neither credible nor honest.  Aiming for the best of all worlds (for their party at least) in which they get support from leavers and remainers alike is more likely to lead them to the worst of all worlds in which they gain the trust and support of neither.  They’d be better off with a principled stand one way or the other - but then most of them would have difficulty recognising one of those if they saw it.

There's oldspeak, newspeak, and mayspeak

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"When I use a word," Humpty Dumpty said in rather a scornful tone.  "It means just what I choose it to mean - neither more nor less."  Theresa May has clearly been reading her Lewis Carroll.

Yesterday, she declared in her speech to her assembled minions cabinet members, diplomats and reporters that the UK would be a country open to the world.  That’s ‘open’ in the mayspeak sense of ‘closed’, of course; with strict border controls preventing any foreigners from getting in.  Still, perhaps we can expect a major recruitment campaign for the UK Border Agency – see, Brexit does create jobs after all.  Or then again, perhaps not.

It wasn’t the only example in the speech of words not meaning what they appear to mean at first sight.  Take her comment that no deal is better than a bad deal, for instance.  It’s a nice sound bite, and makes her sound like a tough negotiator – but what does it actually mean?

We know by now that the worst case in any possible trade arrangement with the EU27 is that the UK falls back on WTO rules.  It’s surely obvious that even the maddest of EU negotiators wouldn’t seriously try to put anything worse than that on the table; any negotiation at all (and therefore any deal resulting from such negotiation) will, by definition, be better than that, because we're negotiating up from that point.  But what she has, in effect, said is that unless she considers it a ‘good’ deal she will reject it and walk away with the WTO option.  Unless they give her what she wants, she’ll walk away with something even worse – like all good mayspeak, it’s the exact opposite of what the words seem to mean when first heard.

Putting a gun to your head and threatening to shoot yourself unless the other side backs down is an approach which works well in a comedy film, but only because the script writers can decree that the audience are sufficiently stupid and credulous to fall for it.  Someone needs to explain to her that, in this case, she’s not writing the script.

It gets better (by which, obviously, I mean worse).  Having said for months that she couldn’t even spell out what she was aiming to get because that would betray her negotiating hand, she’s now told the other side, in very plain terms, that she’s quite happy to walk away with nothing.  It’s going from one extreme to the other.  Why even bother negotiating?

There are people arguing that a vote for Brexit didn’t necessarily imply a vote for leaving the single market, and that she’s therefore going beyond the mandate that the electorate gave.  Strictly speaking, that’s true – leaving the single market wasn’t on the ballot paper.  But once you interpret the referendum outcome as being first and foremost a vote for controlling borders (although that wasn’t actually on the ballot paper either), then the decision to leave the single market necessarily follows.  For all the talk since 23^rd June, it has been clear from the outset that abolishing freedom of movement and remaining in the single market were incompatible.

I was surprised, at first, that the pound bounced back up as she spoke – until, that is, it was explained that the part of her speech that caused the bounce was the part referring to giving MPs and peers a vote on the final terms.  The currency traders believe, apparently, that that leaves open the possibility of parliament voting to reject the terms of any deal.  It’s a theoretical possibility of course; but the government will control the terms of any vote, and it’s more likely to be about the terms on which we leave rather than whether or not we leave.  And even if it were to be on the principle, does anyone believe that the parliamentary majority in favour of staying would actually vote according to their consciences?

Overall, the speech has left me upbeat and optimistic.  In mayspeak terms, anyway.