Brexit deal or no deal

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Theresa May, aka the yellow submarine, is famous as a politician who doesn’t actually advocate any particular policies. Largely because she knows that any idea she comes up with is generally going to be a bad idea (e.g. the treatment of the Windrush or the dementia tax).

So its probably not a huge surprise to hear that her brexit trade policy has been criticised from both sides of the house, with both leavers and remainers arguing against it. Even Donald Trump turned his nose up at it. And its almost certain to be rejected by the EU. Its effectively been declared dead before the ink’s had a chance to dry.

And the Tories are now taking a pounding in the polls, slipping behind labour again, with a sharp rise in UKIP support (recall that in some marginal seats every vote for UKIP is effectively a vote for Corbyn, given that labour is often the 2nd party in those constituencies).

The downside is that the brexiters will see this as furthering their goal of a “no deal” brexit. However there is a dangerous flaw in their logic (inevitable really, most of them are posh kids used to getting their way by holding their breath until they turned blue and the nanny panics). Arguing no deal is better than a bad deal, is the sort of thing you’d hear a dead beat husband say to justify not show up to his divorce hearings (which just means his ex gets the car, the house, the kids, the dog and half of all the money!).

They seem to think we’re playing a version of the TV gameshow Deal or No Deal, with the EU cast in the role of the unseen banker. However, the truth is a little different. And if we were playing a version of Deal or no deal, then the box is already opened and we know what’s in it (a bill for tens of billions of euro’s and a drop of several points of GDP) and the banker/EU can decide what else to put in the box or how much its worth and make the UK accept the deal regardless of how awful or unfair it is.

In the event of a “no deal or a break down in talks, then the EU will activate its contingency plans and its lawyers will decide what the implications of a no deal brexit are. In effect, they’ll go through what the UK has already agreed to and signed and pick the bits out of that which they like (and ignore the bits they don’t like). In other words the only one who gets to “have their cake” in a no deal brexit is the EU.

And keep in mind what the UK has a agreed to already includes a hefty exit bill, continued freedom of movement and the UK (or at the very least NI) remaining part of the customs union, forever! Which hardly sounds like the sort of outcome the brexiters would want.

Now granted, the UK can try to defy the EU….if we ignore the little fact that over half the UK’s food is imported from the EU and how dependant the UK is on electricity from the continent (southern England depends of several GW’s worth to get through the winter) or gas from Norway (40% of all imports, Norway being part of the EEA and thus trade will be affected by a no deal brexit). I think the definition of the term “fucked” is when experts start to seriously debate how you should go about stockpiling tinned food.

And, as discussed previously, sooner or later a court case will go against the UK government and they’ll be forced into an about face. e.g. a car maker sues them due to delays at the ports and either wins a massive compensation bill or an injunction prohibiting customs officials from interfering with their trucks.

As the Irish labour leader recently pointed out, what the brexiters are proposing to do is renege on international treaties (you know the sort of stuff Hitler and his cronies got in a spot of bother over), which is almost certainly illegal under international law. Contrary to what Trump says (he suggested suing the EU, then again he has a habit of using slapp lawsuits, which he usually loses!) the UK is likely to be the loser in any such legal cases.

Hence why its possible that at some point in the event of a no deal, the International court of justice in the Hague (not to be confused with the ICC, or the ECJ in Luxembourg) will get involved, or more specifically the PCA (the Permanent Court of Arbitration). They are basically the UN equivalent of VAR and they could well be called in to rule on the legality of a no deal brexit.

While I’m not calling myself an expert on this (plus we are into uncharted legal territory anyways), but my guess is that they’ll rule that no, you can’t just break an international treaty because you feel like it (or because Russian trolls managed to con large number of voters into doing something really dumb). The UK can only break treaties its signed by the mutual agreement of both the UK and EU.

Equally however, the PCA might also rule that some aspects of article 50 aren’t legal either. Notably the imposition of this artificial deadline (which is clearly intended to give the EU the upper hand in the closing stages of negotiations). The court could well rule that no, talks have to keep going on for as long as they have to. And if that’s inconvenient for either party, well tough!

So its possible that the outcome of a no deal (e.g. a cabal of hard brexiters ousts Theresa May and ends negotiations), would be several months of chaos, which is then interrupted by court rulings that annul everything, forcing the UK and EU back to the negotiating table. If the UK wants out quickly, then they can just sign whatever exit terms the EU’s lawyers have prepared. Yes it will be an awful deal, but just close your eyes, think of England (because Scotland, NI or Wales won’t be hanging around for much longer in such a scenario!) and sign. Equally if the EU wants the UK out of the room in five minutes flat, then compromise on some of those red lines.

So the consequences of a “no deal” could actually be the UK stays locked in negotiations with the EU more or less indefinitely. Of course it probably won’t get to that. Because it will quickly become obvious to brexiters and remainers alike that the Tory party simply can’t deliver on brexit, at least a brexit that doesn’t involve economic chaos and the breakup of the UK. They will therefore pivot behind Corbyn who will win a snap election.

Corbyn is arguably a more committed brexiter than anyone in the Tory party (in Westminster’s circles he’s known as “May’s chief whip”). Largely because he has bigger fish to fry (overturning every piece of legislation both the Tories and new labour have passed since 1970!) and he’ll want to get the talks over with as soon as possible. And he’s willing to compromise on areas such as freedom of movement or the custom’s union to do it. But of course, this will mean the UK remaining tidally locked in the EU’s orbit forever more (or until the penny drops and people ask what’s the point of being in the EU’s orbit but having no influence over it? leading to a 2nd vote and the UK rejoining).

So before the brexiters reject Theresa May’s policy….or more to the point, the edited version that Brussels will approve of in a few weeks time! Consider that this is probably the best brexit deal they will get. The alternatives are likely to be either one negotiated by Corbyn, or a 2nd referendum overturning the previous result. With the splitting up and/or collapse of the Tory party shortly thereafter.

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8 thoughts on “Brexit deal or no deal

  1. “or until the penny drops and people ask what’s the point of being in the EU’s orbit but having no influence over it?”

    Do Norway and Switzerland have no influence? [I really don’t know, I don’t follow them much – do they?]

    One of the possible points of it could be the Uk having the ability to determine its own economic policy. Perhaps that’s better than being back in and forced to beg for (and likely continue to be denied, like Italy and Greece) permission to repair the Uk economy. To specify about some earlier posts, I believe that one of two things needs to happen for a decent hope of repair of eurozone economies & political relations – either a central treasury that’s allowed to have a big budget and run a deficit and fund various ‘fiscal transfer’ activities, or the end of the common currency and a lot of fiscal/economic power returned to the individual member countries. A bit private-debt direct relief program would also help. The whole thing needs to be sufficiently reformed so that there’s successful business models other than wage-supression, private debt bubbles, or being a tax shelter.

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    • Norway & the Swiss have the following influence, whenever the EU changes its rules they can A) take it or B) leave the EEA….or become a paid up member of the EU! Neither is invited to EU summits, nor do they have any commissioners, or MEP’s, etc.

      Okay, they have a bit of wriggle room, e.g. they could challenge anything they think is grossly unfair or illegal via the ECJ. There’s also a complaints procedure in the customs union. But the UK plans to withdraw from the ECJ (don’t ask!) & the customs union, so the UK will even lack that level of influence. As the EU has pointed out, the UK will be a “third country”, a rule taker not a rule maker.

      I don’t propose that the EU is a perfect institution. But its about least worst options. Without the EU we’d not be taking action on climate change, third world debt, opposing Trump/Putin, etc. Go count how many wars there were in Europe in the 70 years prior to the EU coming along.

      The question is would Italy/Greece have been better off outside the EU? Well almost certainly the answer is no. Similar countries in the region (e.g. Albania, Moldova, Macedonia) are all much worse off. Even accounting for the hit Italy & Greece took from the financial crisis, they are still better off.

      Second question, would Greece/Italy be better off if the EU hadn’t helped during the financial crisis? Almost certainly, no, the banking sector’s in both countries would have collapsed and everybody would have lost their entire life savings. This is why both have elected populist governments who went to the edge of the abyss, threatened to leave, but then crept back once they’d managed to peer over the edge.

      Ireland were arguably in a far worse position than either and we’ve recovered. Clearly, while yes the EU needs to take some share of the blame, but the politicians down south (mostly right wing governments) also need to take their share of it, as do those who’ve elected them and tolerated the petty corruption and black economy that’s held back both countries for decades.
      https://theconversation.com/populist-eurosceptics-have-a-nationalist-vision-of-the-future-but-it-rests-on-flawed-assumptions-96045

      Instead of taking responsibility however, they’re blaming foreigners (the EU, immigrants, refugees, IMF, George Soros, tellytubbies, etc.)

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  2. The question is, what do you think needs to happen to the EU to make it work? Because it obviously isn’t working now. The incredibly brittle economic design does not withstand recessions well. Wage-supression-mercantilism, tax-sheltering, and private-debt-bubbles appear as ‘good’ economic models within the EU structure, but they are bad for international relations and/or not self-sustaining (obvious in the case of private debt bubble countries). This brittle economic design seems to be encouraging conflict, not preventing it. It also seems to me that in the midst of this, the true top-priority is possibly being exposed – preventing a direct confrontation between Germany and France. But if France continues to fail economically or has another downturn in the future, I suspect even that objective will be rendered moot.

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    • Firstly, the EU, like any large organisation can be slow to change, but it does eventually. And ultimately it has to follow along with the leadership of member states. If your complaint is that the EU is too right wing, that’s because most of its member state government’s are right wing governments. It has no power to change that. What are you proposing, it should only listen to the policies that you like? That it should only allow leftie’s to elect MEP’s?

      Secondly, I’d take any criticism you hear about the EU with a pinch of salt. Fascists hate it because it was basically set up to thwart them. Those on the left blame it for things that aren’t its fault, because they don’t want to blame their own government (which they might well have been party too) and its always just easier to blame foreigners for your problems (which sounds and easier sell “all our problems are because of the EU” or “all are problems are because you morons were stupid enough to elect a bunch of right wing dolts who ran the country into the ground”). I mean what do you think would happen if France left the EU, money will rain from the sky? Or would they be even worse off?…As I fear the UK is about to prove!

      Thirdly, what is the alternative? I’ve been hearing this sort of stuff for years and I’ve yet to hear anyone come up with a workable alternative. In the absence of such an alternative the right will apply there’s. The brexiters plan is to basically gut public services, end manufacturing and small hold farming or fishing and turn the clock back to the day when workers had the right to do what they were told. Poland & Hungary’s alternative is turn themselves into a white’s only country. Trump will help blue collar workers….so long as they know their place, don’t bring up things like their “rights” & look the other way while he and the plutocrats rob them blind.

      So in the absence of any alternative, all those on the hard left do by criticising the EU is shill for fascists….which is basically the motto of Italy’s 5Star movement right now!

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    • More directly though, I’d make the EU more democratically accountable, i.e. a fully elected executive, possibly even a president. Some devolution of certain powers to compensate back to national governments would help.

      However, the problem with that is that A) We’re talking about the transfers of more power to the EU. And B) Democratic elections means the possibility of nutters getting into power. While there are checks and balances you could put in place, PR or a two stage voting system, its always a risk.

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  3. How many center-‘left’ national leaders supported the common currency and the Maastricht treaty? I don’t know if it was ever about who was too ‘right’-wing or left-wing, and I think especially in the post-global-financial-crisis political environment that’s really not a relevant description of the political environment anymore. It’s about the disconnect between how the different countries are trying to run their economies (correct me if I’m wrong, but I’m guessing that center-left German leaders have tended to support its large trade surplus, low public debt, and some wage suppression. I’m also guessing that center-right Merkel has supported or at least not tried to touch Germany’s renewables transition, generous welfare state, and large annual paid vacation) and probably also a disconnect between what people want vs. what a semi-permanent political class believes. And a continuing misunderstanding of what causes financial crises (witness the property bubble unfolding under the ‘left-wing’ Canadian PM or increasing private debt in ‘socialist’ Scandinavian countries).

    An aside, while I’m at it: Ireland may appear to be out of the woods now, but I hear the recovery has been export-fueled (and private debt is very high, which generally makes the economy fragile). Isn’t it ironic that pro-EU Ireland by definition seems to be pinning its economic future on the existence of stable economies under Theresa May/( future Corbyn?) and Donald Trump? https://tradingeconomics.com/ireland/exports-by-country

    The unsound EU system encourages the unstable economic models, doesn’t handle the resulting economic crises effectively, and this encourages the existing tendency to blame foreigners. For instance, much easier to accuse southern Europeans of being lazy and corrupt than to recognize the systemic problems with the EU. And I hope that more of this attitude isn’t imported into the US. It’s not particularly good politics for a main democratic party line to be accusing West-Virginians and Michiganders of being lazy losers.

    “More directly though, I’d make the EU more democratically accountable, i.e. a fully elected executive, possibly even a president. Some devolution of certain powers to compensate back to national governments would help.

    However, the problem with that is that A) We’re talking about the transfers of more power to the EU. And B) Democratic elections means the possibility of nutters getting into power. While there are checks and balances you could put in place, PR or a two stage voting system, its always a risk.”

    Now we’re talking…so there might be an ‘alternative’ after all. I don’t know much about the EU governance structure, but have heard similar remarks from Steve Keen about the relative current impotence of the European ‘parlaiment’.

    Broadly, I suspect that to work, the EU has to pick a direction – either a step back towards much more national sovereignty and the end of the national currency, or a step closer to a “united states of Europe” model. For example, to actually mean something, your hypothetical elected EU president should have access to a sizeable EU budget and should be allowed to borrow to fund it. Perhaps same for the European parlaiment, which might be given the power to propose legislation in this model. The power of the EC should probably be diminished. If this level of fiscal/political integration (the level necessary to actually compensate for a lack of country-level currency and fiscal control and trade imbalances) isn’t politically possible in present-day Europe, then I suspect they should go in the other direction.

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  4. Pingback: A 2nd EU referendum? | daryanblog

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