Brexit: the case of country that walks away from what it wants most

3 december 2017

Brexit. Are you still paying attention to it? In continental Europe, not many are. For all its importance, it is basically a sideshow. Probably this is a good thing for the European negotiators. It gives Michel Barnier and his colleagues a stable base on which to negotiate. If the source can be believed, Brexit was not even a topic in the failed coalition talks in Germany, as all three parties agreed wholeheartedly on the European position.

How did we get into this mess?

So, it really does not look well for the British government in the negotiations that are now taking place. The payment to be made by the British on the ‘Brexit bill’ is getting closer and closer to the 80 million Euro or so requested by Europe (but we will all stay silent on this, don’t we?). Meanwhile both the Irish government and the Democratic Unionist Party threaten to derail the whole process with their concerns about the borders with Northern Ireland. No doubt other countries are waiting in the wings with their concerns and demands. Britain faces a remarkably united front in a way many who care about the future of Europe should think about deeply, for better and for worse.

Still, it is not only the British that should ask themselves, ‘What have we gotten ourselves in for?’ All of us should ask: how on earth did we get ourselves into this mess? Without this reflection, it is just a matter of time before we get ourselves into another mess (and still have the Brexit one to deal with).

How deep the divide?

Here two sources are provided that each give an answer to that question of how we got into that mess (again).

It starts with an article in the Financial Times (warning: paywall) about the negotiations the British did in the ‘60’s (failed) and ‘70’s with the EEC, the predecessor of the EU. There are remarkable similarities in the way the British underestimated the dynamics of the negotiation process. It makes for interesting reading, because if ever there was a repeat of history, it is now (though, if anything, the conditions for British success are even less favourable than then). The same misinterpretation of motives, the same way the British underestimate the impact of the European ‘mechanistic’ way of negotiation. Unbelievable.

Flying above the beach

The other thing that should be read is this: the transcript of a lecture that Sir Ivan Rogers gave recently at Hertford College in Oxford. He was not only from 2013 to 2017 UK’s former EU ambassador, but before that also David Cameron’s main adviser for Europe, based in the Prime Minister's Office at Number 10. It is a long read, to be sure, but it is absolutely well worth reading it. This not only for its fascinating account of how the decision on the Brexit referendum came to be made, but also because it shows very well which (mis)conceptions there were and are in both the British and EU camp when it comes to negotiation.

In his speech, he sort of flies above the divide between Britain and the EU, like a Spitfire without bullets left above the beaches of Dunkirk. And if I may further misuse the metaphor; with below him the grey helmets of tens of thousands of pensioners forced to abandon their sunny homes on the continent. Here I will deal first a bit with the point about the negotiations and then summarize a few of my own findings.

The case of the country that walks away from what it wants most

One of the many interesting quotes from the lecture holds the key to both present and past negotiations between the continent and the EU:

“Whether others fear that you will walk away in any negotiation depends not on frequency, volume and vehemence of threats to do so. It depends on whether, as they assess them, the other side thinks you can walk away to a better state of the world than you are walking away from.”

Time and again, David Cameron came with proposals to create a special place for Britain within the EU. In a way he knew that the British proposals never stood much of chance to be adapted. Each proposal was made more from the perspective from British political realities then from a clear assessment of what the other countries wanted to hear, but there was one thing that rang true to at least some of the member state: to let the internal market work better. Further economic integration, fostering trade, was something no one could reasonably object to. This position was the base from which all the more contrarian proposals could be launched. In political terms, for a long time there was no reward in challenging the EU partners too much. A defensive, sometimes obstructive, position was for a long time good enough, and often more for internal British consumption than from a desire for immediate change. Meanwhile the virtues of the internal market were sold to anyone with ears to hear.

The remarkable thing is that the present negotiations seem to work from the presumption that a working internal market is something the continent wants, not the British. The world is better off without Britain in the internal market. The British would not put it as literal as I put it here, but this is de facto their position. The benefits of free trade outweigh that of the internal market? I do not know who believes this, but certainly not the last four British governments. Even Margaret Thatcher poured much money and effort into building that internal market. And now they are walking away from that internal market, walking away from what they perhaps wanted most of all the members.

What changed the world?

So, what changed the world? Two things stand out from Sir Ivan Rogers lecture. The first is the rise of the net contribution to the EU budget, the second the issue of the influx of Eastern European labour to the UK. From continental perspective, this is incomprehensible. The first was a direct consequence of the enlargement of the EU, which was championed most of all by Britain. The second is even more idiotic one, from continental perspective. Not only did the British already have an exception from the agreement to take in refugees the way other European countries have, the British government very much accepted at the time the influx from Eastern Europe, even forgoing the adjustment period that all the other countries applied (economic growth that year was projected to be rather slow, also because of demographic factors. Adjusted for the production capacity of the foreign workers the figures became better).

But this was all before the economic crisis. Never popular with the British people, the EU became an easy scapegoat for all that was economically wrong, never mind that the City of London was at the financial centre of it all. The longer British and EU kept on rationalizing from the perspective of the internal market, the longer they ignored the rising sentiment against the EU, the more it became a very frail negotiation strategy. It does not look like David Cameron ever did something very ‘wrong’. He probably did better than his predecessors. The internal market strategy just ran empty. Resurrecting the danger of losing that market as central part of the referendum strategy, was in that sense also an empty strategy. Into that emptiness came the danger of more strangers taking away our jobs, a foreign court as supreme master and the idea that we British know better to run the economy than the mules in Brussels do.

Reinventing the world as it is

Let’s go back to the present by going back to that quote: “Whether others fear that you will walk away in any negotiation depends not on frequency, volume and vehemence of threats to do so. It depends on whether, as they assess them, the other side thinks you can walk away to a better state of the world than you are walking away from.”

So far, the EU has shown a united front. It has a clear negotiation strategy. It accepts a Brexit, as article 50 has been invoked. It does not want or need to humiliate Britain. Yet, as long as it holds on to the four basic elements of the EU, including the free flow of people, the result will be a Britain that is no longer part of the internal market. Even with a ‘soft’ Brexit, the implications are bad. But the world has changed so much in some British eyes, it is not impossible that a ‘better state of the world’ will mean walking away from the negotiation table, with no foreseeable return. Then what?

Considering the depth of the divisions within Britain, there is no way the EU can or should force the British back to the negotiation table. Damage limitation, that should be the bottom line. They really have to do this themselves. Maybe the failures of the negotiations in British eyes, will also mean a breakdown of the British government. But even then, the resulting new elections will only be a first step – given Labour’s own problems, no more than that – towards a more realistic view and perhaps another, more realistic negotiation. Remain will not be in the cards for a long time, if ever. If it would happen, it is probably because Germany and other key countries will give up on free flow of people, but that is certainly not in the cards yet – and has never been the real reason for Brexit. No, reinventing the world as it is, will take a long, long time.

What now, Britain?

Working from the assumption that any outcome of the negotiations will be a loss-loss scenario, it is the British that will have to get their act together first. More than anything, this means getting their industrial base in order. Have a look at this scheme, comparing German and British productivity numbers: most of Britain is at the level of the worst parts of East Germany. It cannot compete. Restarting the economy means reinventing the educational system. It can work – history shows Britain has done it before - but it will take many years.

It could be, though it is hard to imagine, that many British will say that the City of London will come out well from Brexit. This would be good enough for the whole of the British economy. In this scenario, the City will deregulate and cut rates for financial services like a madman, making London more the financial centre of the world economy than ever. Perhaps it would work for a short while for the British – if you don’t care for the people in Nottingham and Wales – but it is more likely that European and other countries will sense that the City beast is wounded and push the city out of business with a combination of even sharper rates and a safer regulatory environment.

There is something else that is urgently needed for the British (and others): a rediscovery of the middle ground. There is a small passage in Ivan Rogers lecture, that is of wider significance than a purely historic one. It has to do with membership of the EPP, the Europe’s Peoples Party. Leaving the EPP was logical from the position the Conservative Party had taken, the decision might even have helped him to become party leader, but it meant that David Cameron did no longer sit on the table where the most important decisions were made. Well, he was warned. But Ivan Rogers gives it deeper meaning by stating: ‘Not many Tories now intuitively understand Christian Democrats in the way they did 20 years ago. The same is true in reverse.’ In my terms: the Conservatives have left the middle ground. Successive prime ministers have recognized the danger in this. John Major tried to gain the centre ground with ‘citizen’s charters’ and other means. Cameron was serious when he proposed the ‘Big Society’. Theresa May is serious about housing and income inequality. There plans are laughed at, destroyed by the politicians and press from both the left and right. It was clumsily done, but what Theresa May had proposed in terms of pensions, was basically the right thing to do. It cost here the last election. Today’s walkout of the members of a policy committee on social mobility, shows how difficult it has become to get together on something everyone should be able to agree on. Yet, it is hard to see any British recovery without a recovery of the middle ground.

Please, start talking again, really talking

How I detest the British press, as they are very much to blame for the situation Britain is in now. As an Anglophile, I think the editors are slaughtering their country for nothing but financial gain. But the less emotional part of me, knows nothing will change as long as the media outlets will find readers and viewers. It is up to the people in Little England to rediscover what is important to them, starting with throwing away their normal news outlets. The divide is deep between people in Britain. So deep that people, even within families, no longer talk with each other about Brexit, not even daring to say what they voted for. I guess the debates should start at their kitchen tables, rediscovering middle ground.

Peter Noordhoek

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