MICHAEL WHITE on the search for a fudge as Britain runs out of road
PUBLISHED: 10:12 07 February 2019 | UPDATED: 15:28 07 February 2019
The UK government is barrelling down the Brexit motorway while ignoring the no-deal shaped brick wall in front of it, writes MICHAEL WHITE.
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The Conservatives’ Brexit truce didn’t last long, did it?
“Nice spot of unity you’ve got here, shame if anything happened to it,” ERG tough guy, Steve Baker MP, started mouthing at the weekend when the ink was barely dry on Theresa May’s fragile parchment.
You could almost hear Jacob Rees-Mogg whispering behind his hand: “I abhor violence, rhetorical or otherwise. But my associate Mr Baker went to comprehensive school.”
While Mr Baker was breaking plates Mrs W and I were on an anniversary trip to Amsterdam, which we visited on our honeymoon a few weeks after Britain joined the then-Common Market.
We’ve had our ups and downs, but – touch wood – no Wexit. And it was in a cheerful frame of mind, as we fiddled companionably with our iPhones in a bank-turned-café, that my eye fell on a stack of foreign papers and the prominent headline in the New York Times.
“As Brexit gets messier, the EU looks better,” the newspaper’s London bureau chief, Steve Erlanger, told his readers.
As you might expect, the thrust of the article was that Britain’s “messy, self-destructive’’ unravelling from the bloc is leading to a “chaotic breakdown”, to likely food shortages.
The prospect has reunited the remaining EU27 to the point that even “successful” populists in Italy, Poland, Hungary, the AfD in powerful Germany too, have quietly dropped their own threats to leave.
“Brexit has killed that idea stone dead,” our old pal, ex-Europe minister, once a passionate anti-European leftie, Denis MacShane, is quoted as saying.
He is one of several sources telling the NYT Britain has really shot itself in the foot – “imploding,” as a Dutch MP put it. Others acknowledge – rightly so – the risk that the populist surge is not over.
It may yet “hollow Europe out from within,” by attacking its weaknesses and destroying confidence in EU institutions.
That all sounds about right, yes, including the bit about the EU not yet being out of the populist woods. Italy is in recession, France and surplus-obsessed Germany are not looking healthy.
Here, it’s ten days since May got most of her party to back a string of negatives. No legal block on no-deal. No Article 50 delay (not yet) as B-Day looms on March 29, let alone handing the task to MPs. No People’s Vote.
No vote for her Withdrawal Agreement either unless the Irish backstop on offer can be remodelled. In the background, most of Brexit’s drip-drip economic news has been bad and getting worse.
“One in three firms” are making plans to shift some operation abroad, reports the Guardian; Barclays is moving £190 billion of assets – and ownership of its network of EU branches – to its Irish subsidiary.
So the negativity is not confined to Baker saying that any replacement backstop agreement with Ireland had better be good – or else.
Nissan’s withdrawal of its commitment to build the X-Trail SUV in Sunderland was driven by multiple calculations: global over-production, the flight from diesel, uncertainty about future technology – electric, hydrogen and driverless cars produced by challenger carmakers like Tesla and Google.
But Brexit clearly contributed a large element of uncertainty to investment cuts to defensive balance sheets.
Even Sunderland, which voted Brexit by 61%, is sounding less confident that it voted wisely.
Some 800,000 UK jobs, 4% of GDP, 12% of exports, hang on the (largely foreign-owned) car industry’s export-focussed market, much of it in you-know-where. It has been brilliantly successful (again) for a generation. What next?
The big picture beyond Sunderland is worse. Japan’s scandalous mistreatment of Carlos Ghosn, former CEO of Nissan-Renault, while in custody on corruption charges – relentless interrogation, restricted legal access and family visits, handcuffs – hardly helps confident corporate decision-making.
It also reflects badly on the international liberal order that Brazilian-born Ghosn embodies. A French citizen, he has been cut adrift by Emmanuel Macron, a fellow-elitist, clearly keener to obtain economic advantages for France from the new EU-Japan free trade agreement.
Business secretary and Remainer, Greg Clark’s £61 million bung to Nissan after the referendum shock in 2016 – his comfort letter was finally published this week – looks a bit crude, as does Whitehall’s threat to bounce the cheque.
But hey, May bribed the DUP to sustain her minority government after the 2017 election shambles. Now she’s offering money to Labour MPs who might back her Brexit plan in return for financial help to their hard-pressed constituencies.
Cries of horror, but that’s what American Congress members call normal pork barrel politics.
But the Clark letter also serves to remind Remain and (especially) Brexit voters that business is more complex than Boris (“f**k business”) Johnson has ever attempted to grasp, complexity in which the state has a major facilitating role.
Non-exporting business is connected to the outside world too, as even Britain’s pro-Brexit small traders may soon learn the hard way, as growth shrinks.
All this on top of Donald Trump’s crude nationalism, exemplified by secretary of state Mike Pompeo’s scarily vacuous speeches in Europe and the Middle East and by the president’s bombast in prosecuting the US trade war with China in ways damaging to both countries.
Brinkmanship and bluster, even when withdrawn at the last minute, do lasting harm to trust and mutual respect.
But at least the EU is adjusting to a changing world, you say? After four years of negotiation, didn’t it finally launch the new EU-Japan trade deal on February 1, a ‘cars for cheese’ treaty that covers 30% of global GDP? Yes.
Won’t that boost trade by an estimated £30 billion a year and save EU companies up to £900 million a year in tariffs (Japanese companies too, of course)? Yes, yes, and Britain and its car makers are set to remain beneficiaries of this arrangement for just over seven weeks. After that, what?
The Tokyo pact is a triumph for “free and open trade,” said Jean-Claude Juncker – well, relatively free and open by his own devious standards as chief architect of Luxembourg’s tax havens.
By opening its agricultural markets to EU products – the 15% duty off French and Italian wines disappeared on Monday – the Japanese hope to sell more home-manufactured cars but also raise the sluggish efficiency of their own farmers.
It must be 30 years since a Japanese MP tried to explain to me why local rice farmers needed protection from US rice at one eighth the price. “You put bread at the side of the plate during meals. But for us rice is sacred and in the middle,” was his drift.
In other words, tradition provides a convenient cultural barrier. In fairness, this was the time when the equally-protectionist French sent all Japanese VCRs to Poitiers to be ‘inspected’ and thereby slow down their penetration of the French market.
In the intervening decades free trade has expanded, but the Doha trade round stalled, then collapsed. Launched only in 1995, the still-youthful World Trade Organisation is under attack – not least from the White House – and protectionism is creeping back.
Shrill nationalist politics are just part of the swing away from globalisation in which unscrupulous politicians with no serious answers – check out Trump’s Mexican wall – exploit the legitimate fears of those losing out – even in Sunderland – amid wider gains.
All too often aggregated statistics and averages blandly mask individual pain.
The predators are greatly helped by Google-led, profit-driven breaches of our data and individual privacy, the scale of which we have barely begun to understand.
Harvard professor Shoshana Zuboff has been in London this week, promoting her book, The Age of Surveillance Capitalism. It makes the Cambridge Analytica data scandal look like a street mugging.
The tech revolution can be tamed and as it evolves into different models – the “splinternet” – Zuboff’s hunch is that the EU is making a better shot at regulation than the US, or in China where the response is state capture and control.
In return for being good (ie. obedient) citizens Beijing’s people get ‘social credits’ that allow them to continue using the net to buy a book or train ticket – or they don’t.
This week yielded a glimmer of hope for more ethical rules when Apple chief Tim Cook, whose iPhones contain tons of customer data he doesn’t monetise, attacked the way Google, Facebook and co do business. Good.
Back in the humdrum now of Brexit – our own little bubble of self-inflicted pain – the famous fog of war has descended on what may prove to be the final battleground. Or may not. Either way it is only the first stage of UK disengagement from its 46-year commitment to the post-war European project.
Far too much is confidently written about the likely outcome than is prudent given that all sides, in London and other EU capitals, are floating trial balloons, being less than frank and sometimes downright dishonest. Inject a note of righteous zeal and it’s a recipe for confusion.
Thus, on Tuesday, as the prime minister headed back to deeply-divided Northern Ireland, the newspapers diversely reported the outcome of Monday’s exploratory visit to Brussels of MPs who sit on the Brexit select committee, the one chaired by Hilary Benn.
The Guardian reported that Martin ‘The Monster’ Selmayr, the German brain behind Juncker, had offered to turn December’s suggested letter of assurance over the Irish backstop (“it won’t be for ever”) into a legal text – only to be turned down by pro-Brexit MPs like Andrea Jenkyns and John Whittingdale.
The Times made much the same point, but made it clearer that the EU’s loud ‘non’ is subject to tweaking.
What seems to have happened during the 90 minute session is that Selmayr, secretary-general of the European Commission, signalled a willingness to firm up the temporary status of the backstop and – not unreasonably – asked the Brexit MPs if they might support it if the EU27 did. A “I’ll show you mine, if you show me yours” moment. Jenkyns is not the sort of MP to whom such a question should be put.
The FT had already gone further last week – a week is a long time in BrexitLand – in reporting EU officials were willing to replace the backstop with a pledge to find those “alternative arrangements” in the May text, one which might well involve promising to unearth those as yet nonexistent technologies which would prevent a return to the Irish hard border they all say they don’t want.
After all, assorted WTO experts, customs experts (in Ireland as well as Britain) and others are routinely quoted as saying such remedies could be achieved if the political will is marshalled.
Confused? So you should be, and I haven’t even got to the ‘Malthouse Compromise’ yet. Basically what we are looking at is our old friend, the political fudge, which allows everyone to walk away with their dignity intact and their trousers on.
Ireland is still pretty solid and blames the Brits for intransigence over a problem of their own arrogant making. Some Brits blame the change of Taoiseach – from emollient Enda Kenny to pushy Leo Varadkar – for torpedoing the pragmatic approach via ‘trusted trader’ schemes and high tech.
As an EU official involved in the Good Friday process, Michel Barnier, Europe’s chief Brexit negotiator, is knowledgeable about that 300-mile border and its 208 crossings, more so, for example, than Jake O’Mogg, the Dublin asset manager.
But the EU27 aren’t as locked into Anglo-Irish history as we all are, let alone tolerant of Sinn Fein’s willingness to complain from the sidelines, but not to drop its 100-year boycott of Westminster (though not its benefit payments) to help break the deadlock.
Team Barnier have probably not been watching Resistance either, RTE’s centenary series on the 1919-21 Anglo-Irish guerrilla war, by all accounts a more nuanced rendering of history than Republican hardliners like.
So the EU26 may eventually persuade Dublin to fudge too, or outvote Varadkar – “push Ireland under the bus” in current jargon. He would be able to say he’d done his best.
What with the Brits, the Catholic Church and the European Central Bank, all pushing them under buses for centuries, the Irish are hardly without experience.
Realistically, no one knows. Chancellor Merkel made what the Daily Mail interpreted as encouraging noises during a visit to Japan (what on earth was she doing there, I wonder?) when she spoke of the need to “be creative, listen to each other….to perhaps remove the obstacles that have so far stood in the way”.
Alas, the Mail declared that she was later “contradicted” by Selmayr, which I rather doubt. But the FT interpreted Merkel’s refusal formally to reopen the Withdrawal Agreement as a “rebuff”.
The EU27 are doing what rival factions at Westminster are also doing, which is waiting for the most opportune moment to make the move that may stave off the hard Brexit which all but Brexit’s ayatollahs fear.
Is that too harsh on the Mogg faction? It’s hard to tell, as we are obliged to grapple with the finer points of the (Kit) Malthouse Compromise, or at least to pretend to take it seriously.
Apparently the housing minister and former Johnson deputy at London’s City Hall has drafted two variants which both offer an extension of the Brexit transition by one year, 2019-21, at the cost of an extra £10 billion in fees (“a price worth paying,” says £5-a-word Boris), to allow time to negotiate a proper future trade partnership not tied to May’s Withdrawal Agreement terms. Have I got that right, Kit?
Never mind if I haven’t, because it’s all going to be blended in the diplomatic Magimix, so I doubt if The Malthouse Compromise will ever feature up there with immortal thrillers like The Ipcress File or The Big Sleep, let alone The Malthouse Falcon.
Reading wholesome Amber Rudd’s jolly hockey sticks account in the Sunday Tel of why she is cooperating on Malthouse’s draft with the Beasts of Brexit, it occurred to me that she and Damian Green may be stringing along the hard Brexit Moggsters – not the other way around.
All the same, some Mogg fans at Westminster, committed to Hard Brexit since day one, are privately claiming that clever Jacob (surely dishonest Jacob?) knows the EU27 will reject a revised Irish border deal – he only backed May on Crunch Tuesday to waste two more weeks!
Playing for time, eh? Brinkmanship. If Rudd, not Mogg, is right parliament’s next Crunch Tuesday on February 14 – it’s actually a Thursday this time – may see a St Valentine’s Day Massacre of hard Brexit hopes as harsh economic realities close in and the fix comes in for a majority to delay March 29, pending further detailed talks.
That would be much as Phil Hammond and – this week – Jeremy Hunt have suggested, in contradiction of the boss.
It would anger conspiracy theorists keen to be angry and upset ordinary voters who just want it over, but not as much as silly weekend talk about No.10 officials preparing for a general election that would almost certainly solve nothing.
Nor would the other hilarious suggestion, floated by the Sunday Times in a slow news week, the Queen and Duke of Edinburgh might have to be whisked away to safety in the event of Brexit riots, presumably off the public highways.
That won’t happen either – the royals sat out the Blitz – but the old lady might be forgiven if she decided to go home to Hanover until it’s all sorted out.
Someone once said Brexit is a mistake that may first have to be experienced to be understood. In which case Her Maj may decide to stay there. Prince Philip can get her a passport.
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