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Brexit: Snake Eyes

https://www.nakedcapitalism.com/2020/09/brexit-snake-eyes.html

It is hard to fathom how the EU and UK can extricate themselves from the Brexit mess that Boris Johnson has engineered, particularly given that EU leaders had lots of antipathy for Johnson even before he became Prime Minister. They seem more inclined to throw him an anchor rather than a bone.


For those of you who tuned out of this melodrama and missed the latest episode, the land border in Ireland was the Achilles heel of Brexit. The Good Friday Agreement is a tricky set of compromises and fudges that has been a tremendous success in practice. No one wants to touch this third rail except the ideologues in power in Great Britain. Even US Congresscritters have cleared their throats and said the UK can kiss its US trade deal goodbye if it messes with the GFA.


Yet Boris Johnson is proceeding to advance a bill through Parliament that would negate commitments he agreed to in the Withdrawal Agreement, the very same deal he touted as a great win for the UK when he pushed it through shortly after moving into No. 10. Johnson is blowing up the Ireland compromise he’d agreed to, of having Northern Ireland subject to EU restrictions on state aid, which for businesses that operated in Northern Ireland and Great Britain, would wind up applying to all of their UK activities. Johnson also wants to nix the Exit Declarations that Northern Ireland businesses would have to file for shipments into Great Britain. Johnson, when called out on the issue at the time of the vote on the Withdrawal Agreement, handwaved them away as “light touch checks“.The Government admitted then it had no idea how much compliance would cost Northern Ireland businesses.


And in blowing up that arrangement, Johnson risks blowing up getting any sort of EU trade deal by year end. We are back to a Brexit Groundhog Day tape loop, a digitally enhanced version of the “no deal Brexit” scenario. And there has been so much talk of “hard Brexit” and crash-outs that the general public has become inured to what it might mean. Admittedly, with Covid having already killed air travel, that’s one sector out of the Brexit line of fire. But even with all of the extra prep time, there’s plenty of UK downside. Goldman not only argues that the hit would be much larger than for Covid, but that it would also be possible to identify the magnitude of botched Brexit damage. From CNBC:


The blow to the U.K. of failing to reach a trade deal with the European Union would be more costly than dealing with the coronavirus, Goldman Sachs economists have warned.

In fact, the investment bank said the fallout of a no-deal outcome was likely to be “two to three times larger” than that of “the worst pandemic witnessed in post-war history.”…

Some analysts have suggested that these costs would blend in with the hit to the U.K. economy from the global pandemic, making it difficult to determine what will be the real source of economic pain in the years to come. However, Goldman Sachs economists disagree.

“We are sceptical of the argument that the sheer scale of the economic fallout from Covid-19 will obscure the economic impact from a breakdown in Brexit negotiations,” they said in a research note Monday.

The investment bank argued that the industries hit hardest by the coronavirus — such as recreational, food and drink, and wholesale businesses — are different from the sectors mostly likely to be punished by the U.K.’s departure from the European Union, which include chemicals, textiles and electrical equipment businesses.


Mind you, negotiations had not been going well but the EU’s position was it was ready to talk up until the last possible minute, which in theory is sometime October but in practice is probably as late as mid-November. And it’s also assumed that the Government might swallow its pride and ask for a short technical extension if negotiations were in their final stages but not completed by year end (remember, despite regular UK press reporting, the EU can’t “grant” an extension).


But Johnson has done terrible damage to the interpersonal dynamics, which already weren’t great due to Johnson being so well known to them, in a bad way, not just as a major EU basher, but as utterly unprincipled. But as a head of state, EU leaders were forced to treat Johnson as a man of his word even though they suspected otherwise. Craig Murray pointed out that in October 2019, he wrote that Johnson was laying plans to break the Withdrawal Agreement:


There is currently considerable alarm in the FCO that Legal Advisers have been asked about the circumstances constituting force majeure which would justify the UK in breaking a EU Withdrawal Agreement in the future…. The situation that Johnson and Raab appear now to contemplate is agreeing a “backstop” now to get Brexit done, but then not implementing the agreed backstop when the time comes due to “force majeure”.

There are two major problems with this line of thinking. The first is that it will give unionists an incentive to foment disorder in order to justify breaking the backstop agreement – indeed there is a concern that might be the tacit understanding Johnson is reaching with the DUP…

The second problem is one of bad faith negotiation, and this is what is troubling the diplomats of the FCO. To negotiate an agreement with the secret intention of breaking it in future is a grossly immoral proceeding, and undermines the whole principle of good international relations. I should like to be able to say that I am sure this cannot be the intention. But when I look at Johnson, Raab and Cummings, I am really not so sure at all. It is possible that Johnson will succeed in the apparently insurmountable challenge of securing a deal all parties can agree, by the simple strategy of promising some parties he has no intention of honouring it.


As Murray adds in his current piece:


For Johnson, the Withdrawal Agreement provisions on Northern Ireland were only ever a device to get him over an immediate political difficulty….He had simply lied to the countries of the EU in signing a treaty he never had an intention to honour. He simply does not see himself as bound by any notion of honour or honesty.

The UK…is a rogue state. It is led by a man whose word cannot be trusted even when he signs a treaty. Other states do notice this kind of thing. Whether you are in favour of Brexit or against it, nobody can sensibly suggest this kind of gross insult to the European Union is a sensible way to start a future relationship.


Barnier made the (barely) face-saving argument to EU ambassadors that Covid may be partly responsible since the Government benefits by shifting the public eye to alleged external threats.


Barnier was also compelled to dismiss the Government’s hair-a-fire claim the EU was retaliating by threatening to block Great Britain food shipments to Northern Ireland. Richard North kneecapped that assertion:


A case in point, he [Barnier] says, the EU is not refusing to list Great Britain as a third country for food imports (SPS). To be listed, we need to know in full what a country’s rules are, including for imports, he says. The same objective process applies to all listed countries….

And yet, as I remarked on Saturday, we raised this listing problem four years ago and we should not now be in a position, with only months to go, where it is still unresolved…

The EU’s listing process is by no means automatic. It is a lengthy technical and administrative process, the top tier of a three-tier system comprising: (1) listing; (2) approval of establishments; (3) process controls and inspection at points of origin and subsequent processing. It is through this system that the EU ensures that exporting countries meet the standards for foods of animal origin set out in EU law….

[T]he outrage is vastly overcooked. Listing is a technical process and either the UK meets the requirements or it doesn’t. This isn’t even for Barnier to decide. It is decided by the EU’s Health and Food Audits and Analysis Office, located in Grange, Ireland, and the decision to list is made by the Commission in accordance with the criteria set out in Regulation (EC) No 854/2004.


Even less technically-minded commentators can see through the Johnson/Frost bluster. From Rafael Behr in the Guardian


By reneging on the terms of a treaty negotiated with those institutions, Johnson’s internal market bill inaugurates a new chapter in UK-EU relations. It dissolves the pragmatic foreign policy tradition in an acid bath of Europhobic paranoia. The prime minister justifies the bill’s repudiating clauses on the grounds that Brussels threatens the “territorial integrity” of the UK. He conjures the prospect of a “blockade” – vindictive obstruction of agricultural goods flowing from the rest of Britain to Northern Ireland. It is a depiction too twisted by mendacity to work even as a caricature of the facts.


North returned to the listing matter today, since the Government is still trying to depict itself as a victim, when it needs to go through a bureaucratic process just like any other third country:


I am still puzzled by the prime minister’s original claim that the UK Internal Market Bill was intended to “break the blockade”, so to speak, in the event that the EU does not grant third country listing to the UK.

This, as we know, is the first of a three-stage procedure required before the UK can export live animals or products of animal origin from Great Britain to EU Member States and – through the exigencies of the Irish Protocol – to Northern Ireland….

Third country listing is an administrative procedure, requiring an applicant country to conform with detailed requirements set out in EU law. In much the same manner as an applicant for a driving license has to comply with certain requirements – such as passing a driving test – the applicant country must “pass the tests” or it doesn’t get listed.

But in the same way that you would not suggest that someone not qualifying for a driving license was “banned” from driving – which is an altogether different process – there is no question of the UK being banned from exporting. Basically, by choosing not to comply with the requirements, we will have excluded ourselves from the EU market, and from exporting to Northern Ireland. Unfortunately, The Sun is also using the same “ban” terminology…

Entirely reasonably, the EU is taking the view that unless the UK’s regimes comply with its statutory requirements – by the end of October – it will not list the UK. Indeed, it cannot. Under WTO anti-discrimination rules, it cannot treat the UK differently from any other third country.


Quite honestly, I can’t fathom why the UK thinks this sort of thing will cut any ice with the EU. EU leaders have written off the UK. They aren’t in the mood to spend more cycles on Brexit than they absolutely have to. They may be underweighting the damage they will suffer if the UK leaves with no trade deal. But the EU has also made clear there are certain tenets they won’t abandon, like the tradeoffs embedded in the so-called Barnier’s ladder. A more distant relationship from the EU means less advantaged trade access. There’s nothing hard to understand about this except even now, the UK refuses to understand it. And so we’ve had repeated displays of cakeism and pique.


The UK was already playing chicken with the EU. Pushing the accelerator harder, which is what the Government has done, does not change the fundamental nature of the game. There’s no reason to think the EU will be moved by the Government increasing its exit velocity. And having the Government behave in a fundamentally dishonest manner makes the EU even less inclined to respond to its tactics. Why reach a deal with someone who doesn’t respect agreements?


To change metaphors, most people become prisoners of their own character and habits. They can’t unbecome who they are. Johnson has never been trustworthy. He’s not committed to any position he takes, which is why some had a faint hope when he took office that he might ditch the Ultras.


But Johnson does appear to be wedded to his personal mythology of someone who can largely sidestep being tarred with bad outcomes via charm and deception. But there are too many eyes on him now for him to shape-shift as easily as he could in the past. And in this case, Peter Foster of the Financial Times, who broke the story of the so-called UK Internal Market Bill on the one hand said how it was drafted strongly suggested that it was not a gambit, even if there’s still ample delusion:




But even so, the EU is apparently in “This isn’t over till the fat lady signs” mode:




Back to Johnson. Even though they are very different characters, Johnson seems to hew to the “Chaos is a ladder” philosophy of Lord Petyr Baelish (Littlefinger) of the Game of Thrones. Both were skilled at deception: Littlefinger on an interpersonal basis, by his skillful use of information and ability to exploit insecurities and weaknesses, Johnson with broad public messaging via his energy, his charm, his lack of concern with truth and his speaking skills.


Littlefinger came to a bad end when his allies and sponsors worked out how he had deceived and preyed on them. Johnson’s Brexit promises will come crashing down unless he backs off from his confrontation with the EU. And while Johnson isn’t about to come to a medieval bloody end, it’s hard to see how he can escape responsibility if he persists in his current course.


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