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The Brexit Negotiation Process

by Frank Schnittger Thu Jul 28th, 2016 at 03:56:41 PM EST

A reader who wishes to remain anonymous writes (By email):

Is it yet clear what the process for British Exit is and what is to be negotiated?" UK politicians seem to depict a different view of what is involved than the EU Commission. I think the answer is important and is not being given enough attention in the UK.

Cecila Malmstrom (EU Commissioner for Trade) has stated that the process is two stage and sequential. First UK leaves completely to third country status and WTO rules.  Then, UK can begin to negotiate its future relationship, i.e. the terms of access to the single market is what some, but not all, Tory politicians think is necessary.  [UK can either negotiate that break cleanly within two years of A50 or it happens at the end of that unless extended by unanimous agreement.]

Paragraphs 3 and 4 of the official statement following the 29th June meeting of the 27 seems to support this view though the statement is not intended to clarify that Malmstrom view.

  1. Once the [A50] notification has been received, the European Council will adopt guidelines for the negotiations of an agreement with the UK. In the further process the European Commission and the European Parliament will play their full role in accordance with the Treaties.

  2. In the future, we hope to have the UK as a close partner of the EU and we look forward to the UK stating its intentions in this respect. Any agreement, which will be concluded with the UK as a third country, will have to be based on a balance of rights and obligations. Access to the Single Market requires acceptance of all four freedoms. [My emphasis]

Again delusion sets in amongst the Tories when they think UK is going to control movement but have full access with all the existing benefits. [I am aware that Switzerland has failed to come up with such a deal and is running out of time to resolve its position following the Feb 2014 Swiss referendum].

Liam Fox [UK International Trade Secretary] has described Malmstrom's view as "bizarre, stupid, preposterous and ridiculous" according to the Guardian.

It would be interesting to find out if Juncker, Tusk and Michel Barnier take the same position as Malmstrom. But I don't think I am in a position to ask them. Perhaps you are or know someone who can?


My response:
Until Article 50 was adopted as part of the Lisbon Treaty there was no procedure for any member state to leave the EU and the European project was seen as an irreversible process towards "an ever closer Union", albeit with some members perhaps proceeding more rapidly than others.  This is what the UK bought into in 1972, whether it's citizens realised it or not. It is also worth noting that there is no tradition of popular referenda in the UK prior to accession to the EU, so it can be argued that EU membership has occasioned greater accountability to the UK people, not less.

As you are aware, there is currently no precedent for Article 50 being invoked, so we are all in virgin territory, so to speak.  Article 50 merely sets out the bare bones of a process and these things are always open to interpretation - something ultimately only resolvable by reference to the European Court of Justice, if it remains in dispute.

It is not uncommon for  complex negotiations to begin with "talks about talks" to establish the precise procedure and format for such talks. I think you can take it that Malmstrom's and Fox's comments are part of the normal jockeying for position that often precedes such talks, as both sides seek to set the agenda and influence the process to be followed. Ideally Prime Minister Theresa May would like to have the outcome of those talks predetermined before Article 50 is ever invoked, so she knows exactly what she's getting, and prepare accordingly.

Malmstrom is articulating the polar opposite view - first leave, and then we will start again from scratch to determine the precise shape of the UK's relationship with the EU as a third party - a process that could take many years and with a very uncertain outcome.  I can well understand why Liam Fox is outraged.

If you were to take Malmstrom's position literally, it is difficult to see what there is to discuss for two years after Article 50 is invoked. Indeed the UK could just say that it wants to leave immediately and the European Council could agree and ratify that decision by weighted majority vote at its next meeting. The UK would then have the same status as any other country which is part of the WTO or EEA (take your pick) but which does not have a bilateral trade deal with the EU.

But that would be counter to what I believe to be the spirit behind Article 50.  The whole purpose of the article is to provide a time limited space where all these things can be trashed out in advance so that everyone knows where they will stand once the maximum period of 2 years has elapsed - thus limiting the period of uncertainty, but also providing for a reasonable period of time for the post Brexit relationship to be defined and agreed.

Whatever about pre-talks jockeying for position, or talks about talks, the EU has, however, perhaps to the dismay of some in Britain, spoken with one voice on one issue:  If the UK is serious about leaving the EU, the only process for doing so is as defined in Article 50, and no substantive talks can take place beforehand.  There will be no back door or back channel "informal" agreements reached beforehand.  The reason is clear: the EU wants to limit the length of the period of uncertainty to a maximum of 2 years.  

This is understandable, but it also places the UK at a severe disadvantage.  It has to enter the 2 year period with no certainty as to the outcome might be, and if no agreement reached, it is out of the EU with no bilateral deal or special access to the Single Market whatsoever other than as provided for under WTO or EEA rules.  Any extension of the two year period, or deal reached thereafter, is subject to unanimous, not weighted majority, agreement by the EU Council, and the UK is then at the mercy of any member state with a grudge against it - cf. Spain and Gibraltar...

It is therefore in the UK's interest to progress the negotiations as expeditiously as possible, especially once Article 50 is invoked, and to try and get as much informal consensus as possible both within the UK and within the EU even before that clock starts ticking. However there is no incentive for EU leaders to agree anything before Article 50 is triggered, and so I expect progress to be very limited before then.

Significantly, Theresa May has already visited Berlin and Paris in a bid to reach some informal understandings and to buy time before Article 50 is invoked, but it is noticeable that there has been no queue of EU leaders beating a path down Downing Street to make things easier for her to steer the discussion. The only exception to this to date has been the Irish Taoiseach, Enda Kenny, who has special concerns in relation to the Northern Ireland Peace Process, the common travel area between Ireland and the UK, and the very high level of bilateral trade between the two countries.

Everyone else is keeping their powder dry... except Jean-Claude Juncker, the UK bête noire, who has appointed his toughest negotiator, Michel Barnier to head up the EU side of the talks.  Expect Theresa May to try to appeal to Merkel and Hollande over the heads of the direct negotiators in an attempt to get a better deal.  However she may well get a cold shoulder. Hollande is in a very weak position to make any concessions, and Merkel is sensitive to suggestions that Germany will now be even more dominant within the EU.  

Any final decisions will have to be made by the European Council as a whole, where many Prime Ministers are under pressure from nationalist and separatist movements within their own borders.  This is one decision that Merkel will not be able to make on her own. No doubt May will cultivate other friendly voices, besides Ireland, to be sympathetic to her side. But insofar as the EU is in an existential crisis as a consequence of Brexit, no pro-EU leader can afford to make the leaving process easy for the UK.

Most difficult negotiations end up with a display of brinkmanship on both sides. Little progress is made for many months and then there is a flurry of activity as the deadline approaches. It is in the UK's interest to drive the process along as quickly as possible, because otherwise they will become hostages to any member with an outstanding issue with the UK or the EU, even issues not related to Brexit per se.

Boris Johnson has already indicated that he expects the negotiations to end in a trade-off between some access to the Single market, and some controls on EU immigration into the UK.  Will he get a sympathetic hearing from committed Eurocrats for whom the "four freedoms" are the founding articles of faith of the Union?  Will he even get a sympathetic hearing from otherwise friendly eastern European member states whose citizens are the primary intended target of the immigration controls? A points based immigration quota system as suggested by Brexiteers will only exacerbate the "brain drain" characteristics of that migration from those member states point of view.

Much has been made of the Brexiteers' claim that the EU needs the UK more than the UK needs the EU - on the grounds that the UK runs a trade deficit with the EU. This is patent nonsense and nationalist cant. The percentage of EU exports that go to the UK is far less than UK exports to the EU. The German car industry may be important, but it has many other markets to target, and the UK has to get its vehicles from somewhere. Even if Merkel tried to steam-roll a German exporters friendly deal through the Council, she might well not succeed. Many member states are not as dependent on exports to the UK, and will extract a heavy price from Germany if it wants to give the UK a special deal.

Part of the problem for the UK is that it's principle exports - financial services - are also the easiest to relocate elsewhere. I would be surprised if there is a single major financial services player in the City which is not now urgently preparing contingency plans to relocate large parts of their business to Frankfurt, Paris, Dublin, or wherever. And why would the EU want to put a stop to that process?  In contrast it is hard to think of any substantial businesses which are now thinking of urgently re-locating from the EU27 to the UK. The traffic will be almost all one way.

Krugman has stated that he finds it hard to see why the Brexit vote will be damaging to the UK economy in the short term. He sees the most damaging aspects of Brexit as being mainly long term. But as a former manager in a global business I find it hard to believe that almost every major business is not now urgently reviewing its investment plans in the UK. Even those not directly dependent on access to the Single Market will be worried about declining consumer confidence and spending and the effect of other businesses delaying or cutting back on investment decisions.

Sure, some deals already in train will proceed, perhaps bolstered by the devaluation of the Pound. But that is about buying existing assets on the cheap, not necessarily creating new ones. EU firms now heavily dependent on exports to the UK will also be looking to diversify their target markets - forced to do so in any case by £ devaluation if not by the prospect of tariffs per se.

So as you can see, I am not an optimist that this will end well for the UK. Virtually all negotiations end up with some face-saving formula which appears to give most people at least some of what they wanted. But the UK is not starting from a good place, and the marvellous future of freedom to trade with the rest of the world envisaged by the Brexiteers is likely to lead to a great deal of disillusion. Why isn't the UK doing this already in any case? The EU is not stopping it.

I'm not even sure Theresa May is committed to getting a good deal. She put all the Brexiteers in charge of the negotiations so she can blame them for any failure. But this is also the exact opposite of what was required to coax the EU into being generous. Why on earth would the EU want to reward their chief tormentors? Relationships still matter in the world of diplomacy, and mutual respect and trust is vital to a successful negotiation. I am not privy to the inner thoughts of Juncker, Tusk and Michel Barnier, but they are now all key players in the game and everything they say has to be viewed in that context. Expect lots of game-playing for the foreseeable future!

And as you say in the UK: Good luck with that!

Display:
Frank Schnittger:
The German car industry may be important, but it has many other markets to target, and the UK has to get its vehicles somewhere.

We've often heard the claim from Brexiteers that Germany will push for a sweet deal, because the car industry needs the UK market. But how much? I did some quick research and this is quite surprising:

Germany's 2015 car exports WW: 4.4 M passenger cars
Single export country is... the UK with 810 K - about 18% of total exports, even ahead of the USA with 620 K.

After that: France and Italy (270 K each) and China (204 K). Other countries are below the 200 K mark.

by Bernard on Thu Jul 28th, 2016 at 08:28:14 PM EST
Frank Schnittger :
Sure, some deals already in train will proceed, perhaps bolstered by the devaluation of the Pound.  But that is about buying existing assets on the cheap, not necessarily creating new ones.

Well:

SoftBank to buy UK chip designer ARM in $32 billion cash deal | Reuters

Japan's SoftBank  will buy Britain's most valuable technology company ARM for $32 billion in cash, an audacious attempt to lead the next wave of digital innovation with a chip designer that powers the global mobile phone industry.

[...]

While the drop has made British assets much cheaper for foreign investors, the chief of the telecoms and internet group played down any suggestion that this was an opportunistic deal.


The chancellor's reaction to SoftBank's takeover of ARM was ludicrous | Business | The Guardian

So this is what Theresa May's new industrial strategy looks like: the UK's most successful technology company of the past 20 years is being sold to a big Japanese buyer while the chancellor whistles, on the basis of no detailed scrutiny, that the £24.3bn deal is a fine thing. Apparently it shows that "Britain has lost none of its allure to international investors" since the EU referendum.

Philip Hammond's response to SoftBank's planned purchase of ARM Holdings was ludicrous, or at least grossly superficial.

by Bernard on Thu Jul 28th, 2016 at 08:38:03 PM EST
It was the ARM deal I had in mind when I wrote that passage. It was perhaps the only remaining major British owned strategically import IT business left. I'm not sure how brexit effects it's business model or what tariffs it might post brexit. I suspect it's one of the few cases where brexit makes little difference and devaluation sweetened the deal. But what's to prevent Softbank moving the IP offshore in any case?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Jul 28th, 2016 at 09:09:18 PM EST
[ Parent ]
Frank - you seem to be under some kind of misapprehension that the Tories are essentially reasonable and rational people.

Not so. In the 40 years or so since we installed Thatcher, the British ruling class, and a good percentage of British voters, have drifted further and further away from reality.

I've posted about this earlier, but it's worth repeating: Britain is no longer capable of rational action.

There is no individual in the Tory party who is capable of genuinely understanding the current situation, or gaming the likely outcomes. After decades of neoliberal extremism, we've been reduced to rat-pack politics - vicious but stupid predators fighting over scraps of personal advantage.

Neoliberal selection has left us with plenty of corrupt chancers, but no one of even average strategic competence.

The UK no longer exists as a country that lives in the present. The shell is there, the institutions remain, but the spirit has retreated into senility and a fantasy world of nostalgia and unearned greatness.

I saw a Facebook post today which explained that many farmers were now outraged by Brexit, because they hadn't understood it meant their EU subsidies would end.

This is the level of insight the UK operates at now.  

So - my guess is WTO rules are the likely outcome.

This will be a crippling disaster for British businesses and the economy as a whole. The idea that the UK can make up the difference by trading with rest of world is comically delusional.

There's a slim hope Brexit will be stalled, and the referendum will be overturned. It's hard to see how that would be possible, but it's the only outcome that actually works for everyone - including those who want it least.

Otherwise, Little Englanders will try to negotiate with a much bigger and more powerful continent on hugely unequal terms, and will be rapidly disabused of their delusions. They will be extremely angry - with Europe, with each other - and Theresa May's brilliant cabinet will split into factions ruled by vicious backstabbing.

Right-wing voters will be demanding a suicidal economic break. Left-wing voters will be demanding that Brexit never happens.

If there's anything still standing by 2020 when the next election is due, we'll be extremely lucky.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Jul 29th, 2016 at 12:00:28 AM EST
[ Parent ]
ThatBritGuy:
and will be rapidly disabused of their delusions.
Rapidly?
From observation, and also from what your wrote above, it may take quite a bit of time for the delusions to dissipate, if ever.
by Bernard on Fri Jul 29th, 2016 at 06:42:08 AM EST
[ Parent ]
Most will likely find some lame excuse. Who could be accused of 'stabbing Britain in the back'? Tories would not want that honor.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jul 29th, 2016 at 02:15:58 PM EST
[ Parent ]
US and UK: Divided by a common language, united by a common, economic malignancy.
by rifek on Thu Aug 11th, 2016 at 01:11:12 AM EST
[ Parent ]
In a few years it could well be the case that all of the computer devices we use are based on the ARM architecture. This takeover has little to do with the present and future position of the UK in the world.

The question is: can another ARM emerge in the UK after Brexit?

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 07:14:49 AM EST
[ Parent ]
The spirit behind article 50 was that it was never to be used, thus it's useless.
by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 06:41:45 AM EST
No, it's very useful for the EU, because it defines the process on terms disadvantageous to anyone wishing to leave.  Without Article 50 there could be years of wrangling about how a member can or can not leave which would create massive uncertainty and disadvantage for all.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 09:48:17 AM EST
[ Parent ]
There's still going to be years of wrangling about how a member can leave: Article 50 isn't fit for purpose.

Our dear leaders, at every level, have cocked this up utterly.

The UK government have no idea what Brexit means, have no mandate for any solution, all of which are awful, none of them seem to understand how the EU works and have ended up having to try to do something with a glorified, badly designed opinion poll that came to a unsatisfactorily close conclusion. The main opposition party decided that blowing its own foot off was a suitable response to the greatest political crisis in the UK for some time.

The EU crowd reacted with utter incompetence, demonstrating they hadn't been paying proper attention to what had been going on and making bellicose statements when they should have shut-up and "respected a member states constitutional process" and bloody well quietly schemed for a good outcome.

Meanwhile the markets are pricing in a low probability of Brexit ever happening, which will probably increase the economic shock if it actually does.

And we're still on a path to war in Europe within a generation.

by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 09:56:34 AM EST
[ Parent ]
Once Article 50 is triggered the UK is out after two years regardless of the outcome of any negotiations.  After that it is just a case of the EU negotiating a trade deal with the UK as it would with any third party. Failing that you have WTO rules and Tariffs which are generally not all that punitive but which will have a damaging overall effect on trade and growth, but far more for the UK (and Ireland) than for the EU as a whole.  

The whole episode could also act as a cautionary tale for any member who wants to diss everyone else, and actually strengthen the EU27. The loss of the UK's neo-liberal influence could actually re-invigorate the "social market", dirisgiste, and ordo-liberal tendencies within the EU resulting in more EU level state interventions, greater fiscal transfers, and more social solidarity and cohesion across the EU as a whole.

The EU elite needed a wake-up call in any case, and the UK may have given the EU some belated service by providing it. Throughout the Brexit debate in the UK there was never any positive mention of what the UK could give to the EU.  It was always a case of not getting enough in return.  That has been the dominant narrative ever since Thatcher negotiated the famous rebate.  It would be poetic justice if the UK lost that rebate in any calculation of the contributions due in return for access to the Single Market.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 10:54:43 AM EST
[ Parent ]
Once Article 50 is triggered

"Once AI is ready ..."

"When we have commercial nuclear fusion ... "

I note that the assumed and approved EU position has become win-lose rather than win-win, which is rather depressingly stupid.

I find the idea of Brexit stupid and depressing and and symptom of the EU's failures. Meanwhile it's become an occasion for EU nationalism and "kick the Brits!"

How I hate nationalism.

by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 11:19:36 AM EST
[ Parent ]
If Article 50 is not triggered, there is no Brexit, and no need for us to have this discussion.  The whole episode will become little more than an unpleasantness within one member state, to be sorted out within that member state, by whatever means they see fit, in accordance with their constitution. Moreover, a member state whose influence within the EU has nearly always been retrogressive and whose influence may now, thankfully, either be changed, or at least much reduced...

That isn't schadenfreude or EU nationalism, it simply hoping for a better future for all the people of the EU, or at least those who wish to remain part of it.  As for the UK, I wish them all the best too.  I just think they have made a serious mistake...

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 11:36:49 AM EST
[ Parent ]
I love people's certainty on these matters.
by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 11:45:31 AM EST
[ Parent ]
I'm being factual. Referenda are advisory in the UK. They do not have the force of law.  A government can ignore the result - although it would probably be slaughtered at the next election.

Theresa May will probably let the process grind on to an unsatisfactory conclusion and then call an election or referendum on the outcome of the negotiations - all the while praising the efforts of her negotiators and blaming EU intransigence.  Yes, this is speculation.  YMMV.  Predicting war is easy, but doesn't make it any less likely.  I appreciate your criticisms, but perhaps you would like, some day, to give a positive view on something.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 11:57:48 AM EST
[ Parent ]
Brexit without article 50 is also possible.

So is some sort of face-saving operation for the UK (which would, if it was anti-immigrant, fit nicely into the agenda of a lot of EU leaders).

A positive view? Maybe after we have a nice little war people will be moderately sensible for a generation or two. How's that?

by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 12:02:26 PM EST
[ Parent ]
So your idea for making a positive contribution here is to praise the moderating effects of war?

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 01:22:23 PM EST
[ Parent ]
Once Article 50 is triggered, any referendum will have to be between a bad deal and no deal (i.e., hard Brexit), not between a bad Brexit deal and the EU status quo.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 1st, 2016 at 01:21:42 PM EST
[ Parent ]
I was going to respond to your suggestion that this whole episode will led to a new European war, but that part of your comment seems to have disappeared.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 11:40:05 AM EST
[ Parent ]
It's in the previous comment. And this is just part of the general drift in that direction.
by Colman (colman at eurotrib.com) on Fri Jul 29th, 2016 at 11:44:58 AM EST
[ Parent ]
"Lose-lose' is the most likely outcome. It would help if more realized that fact.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Jul 29th, 2016 at 02:21:34 PM EST
[ Parent ]
It's not like the EU could do much to avoid lose-lose once the UK chose Brexit.

So far, the EU has won a bit. The foul little agreement Cameron extracted from the European Council in February is null and void. And good riddance to that.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman

by Migeru (migeru at eurotrib dot com) on Mon Aug 1st, 2016 at 01:19:16 PM EST
[ Parent ]
If Theresa May does not trigger Article 50 she may well have both a Tory party revolt and an English popular revolt in her hands. Presumably the Tory party conference in the Autumn will clear things up. There should be no obstacle to triggering Article 50 between October and December.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 1st, 2016 at 01:17:12 PM EST
[ Parent ]
the assumed and approved EU position has become win-lose

How could it be otherwise? There is no win-win solution to this, either the UK or the EU will come out defeated to some degree of this process. There is no path  leading simultaneously to a gentle exit and a deepening of the Union.

If the UK never triggers Article 50, then the EU wins. And perhaps the UK loses the least...

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 07:21:51 AM EST
[ Parent ]
The UK doesn't "lose" by staying in. Certain political forces in the UK do.
by Colman (colman at eurotrib.com) on Tue Aug 2nd, 2016 at 09:41:07 AM EST
[ Parent ]
And we're still on a path to war in Europe within a generation.

This is new (for me)? Who against whom? Is Russia involved? Will there be nukes?

Humans are incapable of solving the problems they create.

by THE Twank (yatta blah blah @ blah.com) on Sat Jul 30th, 2016 at 07:58:51 PM EST
[ Parent ]
Will refreshments be served?  😁

Humans are incapable of solving the problems they create.
by THE Twank (yatta blah blah @ blah.com) on Sun Jul 31st, 2016 at 10:01:16 AM EST
[ Parent ]
Most likely candidates are civil war in Greece, civil war in Spain and war between Hungary and weak neighbour with an Hungarian minority.

But this can't be news to you, you read it years ago (and commented) right here: http://www.eurotrib.com/story/2013/3/4/42525/06144

by fjallstrom on Sun Jul 31st, 2016 at 06:46:57 PM EST
[ Parent ]
Speaking of Greece ... how IS Greece doing these days? What's life like for the average Greek?

Humans are incapable of solving the problems they create.
by THE Twank (yatta blah blah @ blah.com) on Sun Jul 31st, 2016 at 11:31:38 PM EST
[ Parent ]
You did say Spain.
British warships must be sent to Gibraltar to "protect it from Spain" during Brexit negotiations, a former Ministry of Defence special adviser has said.

Luke Coffey, director of the Allison Center for Foreign Policy Studies, argued the step was needed as part of measures to fend off Madrid's bid for joint sovereignty as discussions with the European Union continue.

by gk (gk (gk quattro due due sette @gmail.com)) on Thu Aug 4th, 2016 at 07:55:04 AM EST
[ Parent ]
Ah, gunboat diplomacy. That's so cuuuuute.

So very 19th century, which is where most ideas from the Centre for Policy Studies belong

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Thu Aug 4th, 2016 at 12:00:25 PM EST
[ Parent ]
And I suppose that has been the dominant mode of the UK's relationship with "Europe" for the past 1000 years.  The 45 year period of EU membership - 1973-2018 - may come to be seen as a strange interlude of cooperation with Europe in the years to come...

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Thu Aug 4th, 2016 at 01:38:50 PM EST
[ Parent ]
There is actually some precedent in leaving the union:  https://en.m.wikipedia.org/wiki/Greenland_Treaty

Greenland became member-territory when Denmark joined in 1973, got home rule in 1979, voted to leave in 1982, left in 1985 with the Greenland treaty. I am curious of what it's 79-85 status was, but probably not member state.

Anyway, I agree in general on the negotiation-positions, but disagree on one point. If the EU has an interest in getting the process done ASAP, then the EU also has in interest in getting the talks about talks going so the UK can trigger article 50 sooner. The interest in punishing UK might be larger though. Thus the insecurity might go on for some time.

by fjallstrom on Fri Jul 29th, 2016 at 12:07:42 PM EST
Greenland was never a full member in its own right, but joined as part of Denmark.  The analogy only works if Scotland is granted continuing member status inheriting the UK's membership, with England & Wales leaving the EU and UK, effectively.  That would be a somewhat ironic!

I think the UK has a far greater interest in getting this done quickly than the EU.  The longer the uncertainty goes on, the more UK bound FDI decisions get delayed or diverted elsewhere.The more City firms think about and perhaps act in terms of relocating parts of their business elsewhere. The longer consumer and business confidence and spending is reduced - far more so in the UK than in the EU. The position of the UK government will also be undermined if the economy goes into prolonged recession,  Devaluation can offset these factors to a degree, but only for limited time period.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Fri Jul 29th, 2016 at 01:14:53 PM EST
[ Parent ]
But isn't there a great risk for the UK that they will lose that FDI in the case of Brexit anyway, in particular one with poor negotiation result?

If so, then as far as UK is concerned the current uncertainty might be better than giving up the only lever they have to force the rest of EU into talks-about-talks on UKs terms.

by fjallstrom on Sun Jul 31st, 2016 at 06:55:58 PM EST
[ Parent ]
The EU is not going to do talks about talks. They have made that transparently clear.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Mon Aug 1st, 2016 at 01:12:49 PM EST
[ Parent ]
That is the EUs current position, yes. And Franks argument is that UK will bow to that because of economic pressure from the current insecurity. But if the UK fears a negotiation resulting in a worse outcome then the current insecurity, then that points towards not triggering article 50 before they have had talks-about-talks and have an understanding of a better outcome then the current insecurity.

If the UK doesn't trigger article 50 any time soon, and also does not take any steps towards cancelling the results of the referendum, we could have a stale-mate. UK insisting on talks-about-talks while blaming Brussels for prolonging the enevitable, and EU refusing talks-about-talks. The question is then which side handles the political pressure better.

by fjallstrom on Thu Aug 4th, 2016 at 01:36:47 PM EST
[ Parent ]
If the UK doesn't trigger Art 50 soon there will be increasing voices within the UK arguing that so much time has passed that the conditions under which the referendum was held do not prevail any longer and so the Parliament is not bound by the referendum result, which was nonbinding in the first place. Then you can expect the Tory party to come under internal pressure and casual violence against EU migrants to increase.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Aug 5th, 2016 at 07:47:54 AM EST
[ Parent ]
Then you can expect the Tory party to come under internal pressure and casual violence against EU migrants to increase.

That's going to happen anyway unless they're all expelled. And then they'll turn on some other group. (And you think 3M people are going to be expelled without violence?)

by Colman (colman at eurotrib.com) on Fri Aug 5th, 2016 at 09:56:48 AM EST
[ Parent ]
Which tends to reinforce the largest point I have always made about Brexit: That people and governments, especially in the UK, tend to blame the EU for everything, even things that are within their own control. There is nothing to prevent the UK triggering Article 50 tomorrow and being out within a week following an emergency Council meeting and attaining the same third country status as any other WTO member.

The only reason they don't do this is because they want a more favoured status and relationship with the EU: one the EU is under no legal obligation to concede, even if there are some partial models (but not precedents!) to follow in the case of Norway or Switzerland, which were never part of the EU. Yes, mutual joint interests will probably result in some special status for the UK/EU relationship being agreed, but this is a policy choice being made by the UK Government of behalf of its electorate (and business interests).

It is totally illogical an irrational to blame any of the is on immigrants, but of course that doesn't mean it won't happen.  And of course those same immigrants are vital to the UK's economy, meaning their departure will contribute to the UK's longer term economic decline. The UK is in danger of entering an ever declining downward cycle here unless this situation is managed pro-actively and well. The damage to the EU will be marginal by comparison.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 6th, 2016 at 09:52:28 AM EST
[ Parent ]
Theresa May has already said Article 50 will be triggered "early in the new year". She would have difficulty explaining to the UK electorate why this hasn't happened, if it doesn't happen.

Theresa May does not intend to trigger article 50 this year, court told | Politics | The Guardian

In an article for the Sun last week, the newly appointed Davis said the process of consulting "should be completed to allow triggering of article 50 before or by the start of next year". There have been reports that civil servants were working on a deadline of Christmas this year while Theresa May has indicated that she wants to secure the support of the SNP leader, Nicola Sturgeon, before beginning the exit process.

Presumably Nicola Sturgeon would require a new Scottish Independence Referendum, post Brexit, as the price of her agreement. But the argument here isn't really about the economics of Brexit, but about the politics. Any failure to trigger Article 50 - whatever the economic reasons for doing so, would be trumped by the political fall-out. Theresa May's government would be accused of breaking it's pledge to the electorate, the Tory party would split, and a new election could deliver a very different outcome.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 6th, 2016 at 10:05:39 AM EST
[ Parent ]
Hmmm, I have come late to the party, but it's all been said.

ah well.

I think TBG is close to the mark when he argues that the Conservatives have abdicated far too many of the concepts of good governance to be truly capable of piloting this process to a safe port. Even if May tries, she will find herself forced to choose between the good of the country or holding the Tory party together. There are far too many within the leave tendency who believe in the cleansing effects of "creative destruction" who will veto the very compromises necessary to ensure safety. Even then, the choice of rock or hard place may seem luxurious compared to those the UK will face over the next few years.

We would be mad to invoke A50 at all. But if we must, which we do because the very authority of Parliament would be brought into question if we didn't, then I'm sure that, whatever the rules say and the powers that be demand, there will be talks about talks and memoranda of understanding. However, the UK doesn't possess the negotiating appratus to deal with the legal complexities of trade deals in the 21st century. The EU has done all that for us for 40 years and the expertise has withered. So, all those memoranda will fade as well.

So, everything will go to WTO basic. Except, probably, we will swallow TTiP whole because our polticians  will need to have a trade deal of some kind with a major country to prove that we can. And TTiP is practically ready for signature tomorrow. All we need is to be utterly stupid........oh wait.

ps Small war. If Trump is elected, we will have a small war sometime between 20th Jan and 1st Feb, when Russia annexes the Baltic states.

If not, well let's be honest, the ME and Turkey are a little rats nest that won't improve anytime soon. Greece and or Bulgaria may find natiness spilling over.

Plus the financial instability in Italy is a contagion that the EU cannot cope with under current rules. That could rip the euro apart.


keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Aug 1st, 2016 at 01:35:07 PM EST
ps Small war. If Trump is elected, we will have a small war sometime between 20th Jan and 1st Feb, when Russia annexes the Baltic states.

Wait, that wasn't hyperbole? Did I miss anything?

by generic on Tue Aug 2nd, 2016 at 01:06:31 PM EST
[ Parent ]
Trump seems to be up to his neck with the Russians financially. That is one of the main ideas as to why Trump is refusing to release his tax details.

It is noted that Putin has already had army exercises in the area and indications there has been some softening up de-stabilisation work done in Estonia.

Putin has never made any secret of his desire to re-establish Russian hegemony across much of the old Soviet Empire. That was why he reacted so negatively to attempts to woo Ukraine into the EU economic zone and maybe even NATO.

The US has never ratified the annexation of Crimea, but Trump has already said he'd do so. And he's talked about NATO only being invoked on behalf of countries which pay in, suggesting that the Baltic states have no strategic value and so can be shaken down for protection money. Which I doubt they could afford, so Trump is effectively signing off on invasion

And Putin wants them. So.....

Now we have Poland, which would totally freak out and you have all the ingredients for unpleasantness before February 2017.

Except, of ocurse, Trump ain't gonna win, so Putin won't do anything

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Aug 2nd, 2016 at 01:43:03 PM EST
[ Parent ]
Not to overcompensate for the western media's russophobia, but this line of argumentation seems rather weak to me.
Trump may very well be a Russian Manchurian candidate but aren't mob ties and not being rich enough good reason enough to not release tax returns? And anyway not being bellicose enough is something you'll get impeached over in the US.

The Russian and NATO maneuvers I'd classify as the usual primate flinging of fecal matter.

The main reason why I don't take the threat of a Russian invasion seriously is as follows:

Not knowing Russian I can't say anything with any confidence about Putin's statements about re establishing the old Empire. However he has been in power for decades and I haven't seen any reckless expansionism into the old Russian sphere of influence. When Georgia attacked the Russians didn't do any land grabs nor really meddled in the local government. When they were faced with the prospect of being turfed out of the Black Sea they grabbed the real estate around their base. They didn't set the old president on a tank and drove into Kiev nor did they annex the east. The latest Russian involvement is in Syria which shares with the above being militarily low risk and in defense of strategic assets(Tartus in this case).
Given this history I consider it really unlikely that the Russians even want the Baltics. As far as I know they are strategically worthless, the population is dominantly hostile toward Russia, whatever strategic resources they hold are a rounding error compared to Russia's reserves and the military operation would hold unprecedented risks compared to anything Putin ever ordered. I'm not sanguine about possible successors but I'm reasonable sure that Putin is the kind of calculating evil that won't risk blowing up the world to grab a few square miles of Baltic real estate.

by generic on Tue Aug 2nd, 2016 at 03:59:09 PM EST
[ Parent ]
maybe, but as Trump isn't going to be Prez, it don't matter.

And there's a long way to go till November

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Tue Aug 2nd, 2016 at 04:50:04 PM EST
[ Parent ]
That assumes Putin is innumerate, which I am pretty sure he isn't. If Russia pick a fight over the Baltic, and the US stays out of it, the Russians still get crushed. Look up the force strengths. In order for "take the Baltics by force" to be in the cards, he'd need not only a manchurian candidate in the US, he'd need one in nearly half the EU governments. Russia isn't the warsaw pact - it doesn't have the planes, the manpower, or the tanks that alliance did.

It has the nukes. That guarantees territorial integrity.

It doesn't prevent the EU from just blowing the entire Russian air force out of the sky if it crosses into the EU with hostile intent, nor from unloading the umpteen thousand tanks that the EU keeps around from a railhead in Poland and rolling the red army back across the border.

by Thomas on Tue Aug 2nd, 2016 at 06:34:21 PM EST
[ Parent ]
that sounds good, I like that.

keep to the Fen Causeway
by Helen (lareinagal at yahoo dot co dot uk) on Tue Aug 2nd, 2016 at 07:08:06 PM EST
[ Parent ]
All of that assumes that European leaders would have the balls to actually take Putin on over an invasion of the Baltic states which are hardly core to the European project, and much closer to the Russian one with many ethnic Russians living there.  I'm not sure that "NATO" would respond much more energetically than it did over Ukraine and the Crimea, even with Hillary in power, although Trump would probably strike a deal for a monopoly of the coastal property rights and a few golf courses.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Aug 3rd, 2016 at 09:10:05 AM EST
[ Parent ]
Only a very great fool would plan a war on the assumption an enemy that outmatches you will decline to fight. Putin is not an idiot.
by Thomas on Thu Aug 4th, 2016 at 04:32:06 AM EST
[ Parent ]
There is quite a difference between the Baltic states that are members of both NATO and EU and Ukraine and Georgia that has been battle-grounds in the new cod war ever since the West decided that Putin had gone to far (opposing the Iraq war, jailing a few oligarchs, nationalising oil).

Considering that Russia has not gobbled up small states where they already has a military presence, like Georgia, or the eastern ukrainian republics that asked to be annexed by Russia, I don't see where the whole "Russia will annex the Baltics" comes from. Other then projection and Rysskräck from the West, that is.

by fjallstrom on Thu Aug 4th, 2016 at 02:31:23 PM EST
[ Parent ]
God, that would be such a bizarre and pathetic war, two largely unmotivated powers in decline throwing largely untested (in that they have never been used against real opponents) weapon systems against each other in a clash over territory that neither side really wants.

I also have my doubts about Russian designs on the Baltics, for all the reasons mentioned in other comments.  It just makes no sense.

by Zwackus on Fri Aug 5th, 2016 at 12:43:48 PM EST
[ Parent ]
However, the UK doesn't possess the negotiating appratus to deal with the legal complexities of trade deals in the 21st century.

Someone was saying on ITV the other day that the UK needs to complete over 40 bilateral trade agreements or treaties with countries outside the EU. On average, these treaties took 7 years to complete.

Time is clearly an issue at this stage, perhaps more than expertise. Even if these negotiations are starting from scratch.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 07:36:00 AM EST
Another excellent article published at EuroTrib on this issue.

My understanding at this stage is that the UK will either accept an economic defeat (by sticking to the Brexiters' aspirations) or a political defeat (disregarding the Brexit argument and protecting the economy).

The EU already lost something, in particular since many Council members appeared not to expect this expectable result. Long term things might be somewhat different if the UK concedes defeat - particularly if the option is for a political defeat.

But in the meantime there is Scotland. If they leave the UK then Brexit acquires an entirely different meaning, and the EU will clearly come out on top.

As for Northern Ireland, it is probably the hardest issue to solve. Just one aspect: the Schengen treaty obliges the Republic to enact thorough border controls once Northern Ireland is out of the EU. A rough ride ahead for the region.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 07:48:22 AM EST
Neither the UK or Ireland are in Schengen.
by Colman (colman at eurotrib.com) on Tue Aug 2nd, 2016 at 08:11:01 AM EST
[ Parent ]
Ireland and the UK have both signed into Schengen cooperation agreements. They enjoy the status of partial participants.

This participation requires the free movement of people, therefore, if Brexit is to be taken literally, the UK will also exit Schengen cooperation. Under that scenario, the new Northern Ireland - Republic of Ireland border will enter a statute similar to the Norwegian - Russian border. By default this means thorough border controls.

Some have suggested a special agreement between the UK and Ireland to leave the border as it is. However, this puts Ireland's partial participation into Schengen in question.

I refrain from issuing any definitive prediction on this matter, because it really is a thorny issue.

You might find me At The Edge Of Time.

by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 11:39:39 AM EST
[ Parent ]
Irish Taoiseach, Enda kenny, has been busily making the argument that the Peace Process is a special case.  Having gotten a bit of a brush off from Merkel in Berlin, he got a much more sympathetic hearing from Theresa May in Downing Street and Hollande in Dublin.  I have already discussed the problematic aspects of the Brexit process for Northern Ireland in some detail in Brexit and a United Ireland, but no one - not even in Ireland - sees the future status of Northern Ireland as being a deal breaker for either May or the EU in the forthcoming talks.  That is also why the Irish Government may get their way and achieve some kind of special status for the island of Ireland in whatever new relationship is negotiated between the UK and the EU.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Aug 2nd, 2016 at 01:57:59 PM EST
[ Parent ]
I missed the bit about Merkel brushing Kenny off over Northern Ireland. She really is a piece of shit of an Empress of Europe.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Aug 2nd, 2016 at 07:41:57 PM EST
[ Parent ]
To be honest, nobody made too much of it. It's early days in the "negotiation" and at this stage every one is carving out their formal broad brush positions.  In Germany's case, that means one deal between UK and EU with no side deals or special cases for previously existing pre-EU common travel areas or trade deals.  I wouldn't really expect her to say anything different at this stage, as otherwise there could be a proliferation of 27 special cases.

Northern Ireland simply isn't strategically important enough for anyone except Ireland to become a major stumbling block to a final deal.  Irish diplomats will do their homework, network diligently, and hype the risk of the Peace Process breaking down. In the end a few clauses specific to N. Ireland and Ireland/UK will be included if there is a formal Brexit agreement.  

The problems arise if there simply is no deal and the UK simply falls out of the EU at the end of the 2 year Article 50 period. Then force Majeure could take over, and Ireland will simply refuse to operate border controls whatever the EU might say.

That could become a major flashpoint and crisis in Ireland/EU relations which it would be unwise to underestimate.  Northern Ireland could become a "back channel" for technically illicit EU/UK trade ignoring tariffs and other controls, although the UK might still want to operate immigration controls at ports connecting with N. I.

These things have a habit of festering on for quite a long time before a solution is found.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Aug 3rd, 2016 at 09:25:26 AM EST
[ Parent ]
In Germany's case, that means one deal between UK and EU with no side deals or special cases for previously existing pre-EU common travel areas or trade deals.
I thought we were talking about the Good Friday agreement, which is definitely not pre-EU.

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Aug 5th, 2016 at 07:42:25 AM EST
[ Parent ]
The Irish Government will deliberately conflate the three, arguing that the Good Friday Agreement is predicated on continuing and ever closer ties between the Republic, Northern Ireland, and Britain.  The tsxt of the GFA agreement is very explicit in this respect, and sets up a number of institutions to underline and strengthen those ties, specifically because Unionist agreement is dependent on close ties with Britain, and Nationalist agreement is dependent on ever closer ties with the Republic.  Border controls would be anathema to all of that.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 6th, 2016 at 10:26:19 AM EST
[ Parent ]
Ireland will be supported by EU in Brexit talks, Minister says

The Government is confident it will be supported by all EU member states when it makes an argument for Ireland's "unique" circumstances during Brexit negotiations, according to Minister for Foreign Affairs Charlie Flanagan.

The Minister confirmed he had spoken personally to every foreign minister in the EU and said they were unanimous in acknowledging the unusual challenges facing Ireland once Britain left the bloc.

The main issues include the retention of the invisible border with Northern Ireland, the status of the Common Travel Area between Ireland and Britain, and EU involvement in the peace process and institutions established by the Belfast Agreement, as well as the substantial trading relationship between both islands.



Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Sat Aug 6th, 2016 at 03:59:14 PM EST
[ Parent ]
So you're assuming neither the UK nor Ireland would police the land border even if they're supposed to?

A society committed to the notion that government is always bad will have bad government. And it doesn't have to be that way. — Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Aug 5th, 2016 at 07:43:39 AM EST
[ Parent ]
Practically, it depends on the difference between the right to travel and the right to work. If the outcome is that Visa free travel between the UK and EU breaks down then the border problem becomes impossible.

If the outcome is simply that EU people lose their right to work in the UK, then border controls don't matter except for checking for excluded individuals at the Irish border - which is a non-Schengen one anyway, so passport controls are carried out anyway. I don't know what you do with those individuals, since they have a right to work in Ireland, and you can't control the IE/UK border in a way that really stops them crossing.

You'd need a much less porous border than used to operate even at the height of the troubles, and the potential for smuggling gangs (there's a long standing fuel smuggling business due to different taxation regimes) to earn money would make the whole thing either impossible or appallingly oppressive.

by Colman (colman at eurotrib.com) on Fri Aug 5th, 2016 at 09:55:39 AM EST
[ Parent ]
One thing to remember: According to Varoufakis Schäuble's goal was to throw Greece out, make an example out of them for noncompliance. As things turned out the Greeks accepted an unacceptable deal and are now a great warning of the evils of EU membership.
So assuming nothing else changed I wouldn't be surprised if he tries the same thing again now that the UK has volunteered. Him intervening against sanctions for Partugal and Spain fits that picture.
My prediction is for an EU offer that errs on the economic self destructive side.
by generic on Tue Aug 2nd, 2016 at 11:06:31 AM EST
Yup: the EU is also run by right-wing nationalist idiots.
by Colman (colman at eurotrib.com) on Tue Aug 2nd, 2016 at 11:34:18 AM EST
[ Parent ]
He (or whomever) just intervened to save Rajoy's back.

You might find me At The Edge Of Time.
by Luis de Sousa (luis[dot]a[dot]de[dot]sousa[at]gmail[dot]com) on Tue Aug 2nd, 2016 at 11:40:47 AM EST
[ Parent ]
Thus also, perhaps inadvertently, demonstrating that the EU is about more than just short term economic advantage.

Index of Frank's Diaries
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Tue Aug 2nd, 2016 at 02:00:34 PM EST
[ Parent ]


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