Posted on May 7, 2018 by Yves
Smith
Brexit watching has become an
exercise in waiting for inescapable realities to start penetrating the
astonishing delusion and fundamental incomprehension of the UK ruling classes
and the media. What is remarkable is that the denialism persists despite the EU
having said “No” as many ways as it possibly could on certain basic issues.
Our best guess is that the EU
is going to stick to its plans of forcing a crisis in June over the Irish
border issue. Our view is that EU’s chief negotiator Michel Barnier erred in
giving May breathing room last December by signing the so-called Joint
Agreement. That reaffirmed the UK’s commitment to the Good Friday Agreement,
while in remarkably flabby language, set forth three options for the border.
The problem is that the two that appeared to offer political escape routes for
the UK were never going to work and the EU and everyone who hadn’t swallowed a
lot of Brexit Kool-Aid knew that.
Recall that Barnier once said
that it wasn’t the EU’s job to solve the UK’s political problems. Yet he relented
with the Joint Agreement, apparently to forestall an ouster of May by the hard
Brexiteers, who appeared then to be able to pull off a palace coup. The only
rationale for the EU to have saved the Government from
rule-by-the-even-more-stupid was to spare the EU the costs and disruption of a
crash-out Brexit.
But as we discuss below, a
crash-out is now the most likely outcome. And if that is indeed the case, the
EU has strong incentives to make that clear as soon as possible so as to give
businesses as much time as possible to assume the brace position.
UK Debating on Train Tracks as
Brexit Locomotive Bears Down
Richard Smith astutely
remarked that the Windrush affair illustrates how Theresa May operates, and
those habits have made what would have been at best a difficult Brexit into a
certain disaster. May adopts rigid targets and keeps trying to beat everyone around
her into compliance. That can work in the narrow sense of achieving your
immediate goal (irrespective of ignoring warning signals that point to
long-term costs) if you are in control of your environment. Ironically, May’s
snap election backfire has had the perverse effect of giving her more
short-term control over the party, since having a fragile coalition has meant
neither the soft nor hard Brexit faction has been willing to press its case too
hard and risk a crisis that would result in new elections.
The Cabinet is in the midst of
yet another row that is dominating most UK media coverage on May’s “customs
partnership” idiocy. The caliber of the political debate suggests that what
passes for the British elite had better have some excuse like having contracted
mad cow disease en masse to explain this pathetic performance to posterity.
The most embarrassing part is
that it isn’t even hard to explain why the UK is wasting huge amount of its
most important resource, time left to Brexit, on non-starters.
A “customs partnership” or
“continued membership in the customs union” doesn’t solve the problem the UK
wants solved. A Guardian story yesterday, Brexit: jobs at risk without frictionless trade, warns Greg
Clark, unintentionally makes clear how the UK has sent a huge pack of
hounds to bark up the wrong tree. From the story:
Tory Brexit moderates and
business groups have made a last-ditch attempt to push for Theresa May’s
preferred customs plan, with the business secretary warning that thousands of
jobs would be at risk unless there is frictionless trade.
Greg Clark dismissed the idea
that the prime minister’s idea for a customs partnership – in which the UK
would collect import duties on behalf of the EU – had been rejected at a
meeting last week of May’s Brexit inner cabinet.
This is painful to read. It’s
the sort of thing that makes you want to grab the speaker by the lapels and
shake them. “What about ‘A customs union does not mean frictionless trade’
don’t you understand?”
Richard North has been
debunking this idea from every angle conceivable, including posting images
showing border checks from the hoary old days of the European Economic
Community, before an internal market was achieved in 1993.
The EU has already rejected
May’s “customs partnership” idea. Turning the mike over to North, from his
current post:
The public face of Brexit has
lost all contact with reality.
It’s so far gone that Greg
Clark speaks of the discussions at last week’s “War Cabinet” having been much
more “professional” and “collegiate” than you would ever think from the report.
This, believe it or not, is
the meeting that devoted itself to exploring the two nonsense scenarios that
have already been ruled out by the Commission…
If this was entirely a
domestic matter, the government could perhaps get away with it, but the big
difference is that anything that comes out of the current phase of stupidity
will be tested in Brussels, not only by the genial Michel Barnier but by the
hard-faced guardians of the treaties, buried in the deepest recesses of the
Berlaymont….
The British cabinet is
delaying choosing between two types of customs arrangement. Yet each of those
two possibilities was long ago rejected by Brussels: one is unworkable the
other does not exist.
The Ireland Deadline Looms
Barnier has said that the UK
needs to resolve the Irish border matter by the June negotiating round. The EU
will not discuss the future relationship nor will it sort out details of the
transition period before that is resolved.
The EU now has no incentives
to relent. In fact, Barnier probably did the EU a great disservice. There was
no reason to think the UK would be any more willing to accept a sea border as
the only solution for Ireland a few months later than it was last December. If
the UK is going to wind up subjecting itself to a crash-out Brexit due to its
inability to deal with the consequences of its choices, it is better for all
parties to know that as soon as possible to allow them to do what they can to
minimize damage.
The Government is refusing to
acknowledge that it has no answers. Per North’s discussion above, it somehow
keeps telling itself and the British public that the EU is extorting the UK and
scheming to steal Northern Ireland. The reality is, as we and others have
explained ad nauseum, that the UK leaving the internal market means there has
to be a hard border somewhere with respect to Ireland. The EU27 was never going
to stand for Ireland turning into a route for smuggling non-EU compliant goods
into Europe.
The Tories and their media
allies are sure to scream bloody murder when the EU sticks to its word on
Ireland, using words like “blackmail” and “extortion”. At best, Barnier might
give the Government another month to faff about, but there is no reason to the
UK to come around. Indeed, one can imagine EU officials telling corporate
contacts and regulators privately to prepare for a crash-out, having that get
back to the Brits, and having that depicted as yet more dirty dealing.
As I often say, it would be
better if I were wrong. One sign of that would be if EU business lobbies,
editorials, or prominent politicians were calling for Brussels to ease up on
the UK so as to assure that a transition deal gets done. Readers of the
Continental press are welcome to correct me but I have seen no evidence of
anything of the kind. Even though Europeans probably are underestimating the
cost of a crash-out Brexit to them, they’ve made a decision that political
considerations are paramount, and that means cutting the UK no slack. And
they’ve had the great good fortune that Brits have been so utterly incompetent
and high-handed that it is hard to have any sympathy for them. But as usual,
the people most responsible for this debacle will be largely insulated from its
effects.
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