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Collapse or retreat are the only options left for ministers

Critical Brexit talks mean Britain is facing its most perilous period since the Second World War, with the stage set for a pre-Christmas crisis. But, says JONATHAN LIS, there are grounds for optimism

You would not necessarily know it from reading the news, but this country is currently facing its most perilous fortnight since the Second World War. If ministers make a false move, our political and economic systems could shatter – fast. Do not despair, however. Even though the short term looks bleak, in the long term we can feel optimism.

Now, as the prime minister might say, let me be clear. The chances of a European Council deadlock in December remain high; and an absence of progress will precipitate an immediate political and economic shock.

But that will – must – also bring the government to its senses. For all the sabre-rattling, a no-deal scenario remains as far-fetched now as it did at the start of the Article 50 process. The consequences of crashing out of the EU in March 2019 diffuse so widely and calamitously across the body politic that no governing party will emerge from the wreckage for a generation. There is no chance of no deal.

Key to the inconceivability of no deal is the phrase itself. If Brexit means Brexit, no deal means no deal. The EU officials I have met insist that David Davis is simply mistaken when he opines to parliamentarians that ‘whatever happens, we’ll have some sort of basic deal… without the bits we want’.

According to the government, we may not manage to negotiate a trade agreement by exit day – which will, of course, prove devastating for our economy – but the country will continue to function. Thus ministers suppose that cancer patients will still easily receive radiotherapy, nuclear power plants will still operate, and planes will still fly. Ministers are wrong. These activities currently depend on our relationship with the EU: specifically, our membership of the European Atomic Energy Community and the European aviation instruments, such as the Open Skies Agreement, governed by the European Court of Justice.

If we fall out of the EU with no deal, we fall out of every law, instrument and agreement. The operations they support will, as an immediate consequence, lose their current legal basis.

What, therefore, motivates ministers’ notion of a ‘partial’ or ‘orderly’ no-deal scenario – the reassuringly styled ‘deal no-deal’? On the British side, we find two steadfast leitmotifs of Brexit delusion: that Britain can have its cake and eat it, and that the EU will step in to save us from ourselves. Thus, because the EU wants planes to fly to and from the UK just as we do, they will overlook the collapse of talks and absence of British concessions to devote time and resources to a comprehensive agreement that we need more than they do. They will not.

The EU is unmoved by British exceptionalism, manifested either through the idea that the UK, as a new third country, is entitled to special privileges, or that it can somehow walk off a cliff and remain intact. EU officials see the situation clearly and simply. The UK owes Brussels a substantial amount of money by way of commitments that it has already made as a member state.

If it meets its obligations, there will be a comprehensive deal. If, however, it decides to leave its 27 partners holding a 60 billion euros baby, there will be nothing further to discuss. A cliff-edge will hurt the EU, but devastate the UK. Neither London nor Brussels needs to read the government’s impact assessment papers to understand either this basic fact, or the fundamental power imbalance which underlies it.

And so to next month’s European Council – and specifically, the matter of time. Although, as things stand, we are leaving the EU in March 2019, a draft deal needs to be completed by October 2018 so that the European parliament and British parliament can consider the text.

This not only guarantees that a last-minute deal (or back-room fudge) on, say, aviation, would be impossible – as the European parliament is legally obliged to vote on any issue relating to our withdrawal – but also necessitates imminent British movement on money.

As Michel Barnier has made clear, imminent means the next fortnight. David Davis’s complaint at the apparently arbitrary confected deadline again reveals an unwillingness to see matters from the EU’s perspective: Council officials will begin to draft the summit conclusions in two weeks, and need to know whether those conclusions will recommend initiating the next phase of talks, or staying where we are.

If the 27 heads of government recommend staying where we are, a crisis will hit Britain just in time for Christmas. Businesses and investors have, on and off the record, given the government a deadline of early 2018 to agree transitional arrangements before they decide to implement their contingency plans – which mostly involve an exodus from the UK. Given that the next opportunity to trigger negotiations on trade and the future relationship will be in March, those businesses will be forced into action.

Countless EU citizens on whom the economy depends, and who depend on a deal, will see the writing on the wall. If we must wait until March to begin negotiating in a seven-month time frame, many will conclude that the future will not be worth waiting for. In this scenario, we would expect the government to capitulate quickly, offering the necessary financial commitments and guarantees on citizens’ rights. It may yet do so in the next two weeks.

Here is the next problem, however: while most realise a deal cannot be achieved in seven months, some still believe that it can be done in ten. It cannot. The much-vaunted status quo transition will not confer the status quo.

The numerous EU bodies and instruments open only to members will almost certainly be excluded. These include Europol, the European Arrest Warrant, the EU’s Common Foreign and Security Policy and Security and Defence Policy, and dozens of third-country agreements in which Britain’s continued participation will require universal consent. With numerous key British interests at stake, the UK and EU will have to re-negotiate the vast bulk of these relationships by October. Such an ambition would be all but impossible even with skilled British leadership, but our Herculean task has, in this myth, been outsourced to Icarus.

Against such a background, the increasing gloom of EU officials is perhaps unsurprising. Senior Brussels diplomats are privately (and, increasingly, not so privately) despairing at London’s disarray.

They witness May’s political weakness, and backtracking from the Florence speech, and wonder whether she will be able to sell increased financial commitments to either her party or the right-wing press.

Given her current paralysis, many fear that the eventual manoeuvre may in fact veer towards the Brexit fundamentalism of the hard Tory right. Officials debate whether civil servants are not telling ministers the truth, or if ministers are simply not listening; either way, Brussels fears that the government does not understand this process, or the true meaning of no deal, and has ultimately disengaged from the national interest.

One senior figure, who previously thought a no-deal unlikely, now estimates it at over 50% – and speculates that London may simply let the clock tick past the deadline, before blaming ‘the bloody unreasonable EU’ for the ensuing catastrophe.

So if a cliff edge is on the cards even if negotiations progress next month, why should we be optimistic? The reasons lie in both Westminster and Brussels. If the government insists upon a ruinous path, the numbers in parliament exist to thwart it. Enough Tory MPs appreciate the electoral cyanide of no deal, and will not prop up a prime minister determined to drink it. The government will fall – and when its replacement asks the EU to extend or revoke Article 50, officials suggest that either request will be granted. The government may indeed re-discover rationality without needing to be toppled; and the EU’s response will be the same.

The basic fact remains that the EU will not throw us off the cliff if we do not wish to jump. If we face no deal, an extension will allow time for sensible negotiations, as well as a period of reflection which, perhaps through a second referendum, re-evaluates the popular appetite for Brexit.

The government should of course act sooner and request an extension now. Most EU officials would welcome this, and assert that the problem of British MEPs fighting the 2019 European elections could never outweigh the crisis of a cliff-edge, with its hard border for Ireland; they would also not wish to jeopardise the prospect that we might, in the end, stay in the club.

The government opposes extending Article 50 on the grounds that it will create uncertainty – as though they would rather confirm the date of their death than undergo an operation that might save their life.

The decision to enshrine exit day in the Withdrawal Bill confirms this profound strategic error. But in the end, the government will reverse its stance, or collapse. May and Davis may cause severe turbulence, but even they will work hard to ensure the planes still fly. Extension is the new frontline in the Brexit debate, and gathering momentum: the only means of ensuring a Brexit that does not burn down both our economy and Ireland’s. It is also the only way to stop this process altogether.

So, as you read the stories of doom in the run-up to next month’s summit, stay calm. If the government does not sign a deal, it will not survive. And if push comes to shove, no deal likely means no Brexit.

Jonathan Lis is deputy director of the think tank British Influence

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