Brexit & UK trade, Brexit comment, Free comment, UK-EU negotiations

Comment – It’s time to face up to the prospect of Brexit Armageddon


Britain is heading straight into the ‘cliff edge’ scenario. It’s time for both Britain and the EU to significantly change tack before it’s too late and Armageddon sets in, argues Iana Dreyer.


Both the United Kingdom and the European Union are aiming for a “smooth” and “orderly” withdrawal of Britain from the EU by end March 2019. Both sides, in their documents and their leaders’ speeches, say they want a “predictable” environment for individuals and businesses to operate in as we transition from one world to another.


Yet if their approaches to the ongoing Article 50 negotiations don’t change very soon, we are quite likely to see Brexit Armageddon on 29 March 2019. Though Britain would lose most in such a scenario, it is not in the EU’s interest to let it happen.


The frequently used term “cliff edge” is too mild to describe the scenario that is gradually unfolding before us:


  • Weeks and months of lockdown at ports in Dover, Calais, Antwerp, or Rotterdam
  • Rotting food products waiting for certification or approval for exports
  • Hundreds of thousands of cross border business contracts disrupted and in limbo
  • A massive surge in unemployment as business lay off personnel – EU nationals, but also British personnel – due to the sudden business crunch
  • A resurgence of violence in Ireland and at the very least a major diplomatic spat with Dublin
  • The Home Office increasing the number of random expulsion notes to hundreds of thousands of EU nationals who have legally resided in Britain for years
  • Employers dismissing EU nationals, banks shutting down EU nationals’ accounts, landlords kicking out their EU national tenants
  • A further surge in hate crime, possibly deadly riots, and continued rise in police violence
  • More than one million British citizens across the EU subject to the generally restrictive national immigration laws of member states applying to non EU citizens
  • UK and EU courts clogged with cases brought by businesses and citizens against violations of their rights
  • Massive capital flight, a further plunge to the British pound, possibly financial crisis


The UK’s EU Withdrawal Bill under preparation in Westminster, though it aims to replicate EU law, will not solve the above problems.


It’s time to change tack: either Britain pulls itself together suddenly, or the EU must prepare for the prospect of having to handle a big neighbour – once a liberal Empire and a happy open minded nation –  descending into illiberalism and economic and social chaos.


Six precious months have been lost in the very short two-year time frame provided by EU law to secure a withdrawal arrangement for a leaving EU member state since Ms May triggered Article 50 last March. It’s all been about haggling over money and over what should be non-negotiable rights of EU citizens, and over the very principle over whether to talk about future trade relationships or not.


The EU’s position in the Article 50 process is clear, rational, and understandable. The EU wants to settle the bill for existing financial obligations and secure the rights of almost 5 million EU citizens living in the UK and the EU before going any further in the negotiations. It also wants to ensure the peace in Northern Ireland is shielded from major disruption.


On trade and business, the EU’s negotiating papers released so far on issues like trade, customs, intellectual property or public procurement, show that Brussels wants to ensure legal continuity for any type of situation existing before withdrawal.


Michel Barnier’s office, and the member states who gave him the mandate to negotiate with London, want to ensure there are legal and political coordination mechanisms to deal with issues ranging from trademark protection to VAT payments to ensuring the standard at which a car component was produced before Brexit, then used to build a car in another factory in another member state after Brexit, continues to be recognised.


The EU, as the party in the whole affair that has not asked for Britain to leave, is of the view that it is up to Britain to come up with a vision of what long term relationship it wants, setting out the standard terms it sets to neighbours who don’t want to join the EU. The integrity of the Four Freedoms is an foundational matter for the EU, and that principle was made clear to Britain.


British dysfunction


Most EU positions in the negotiations make sense. The problem is that the EU is dealing with a counterpart that cannot currently be seen as rational, but with a state that is heading towards possible implosion.


It is not true that, as is often claimed, the British government “does not know what it wants”, or that it truly “wants the cake and eat it”. Official government policy is to leave the EU customs union and single market on Brexit day, and to end free movement on that very day too, applying migration restrictions to EU citizens from day one.


The problem of the UK government is that there is reality.


First, there has long been a problem of sheer intellectual and technical competence, of grappling with the actual concrete meaning of what leaving the EU entails. That problem is gradually receding. But the process of reckoning with reality is making the radical Brexit wing of the Tory party more angry, more authoritarian, more roguish.


Second, there is a state apparatus that will clearly not be equipped to handle all the new functions of sovereignty it will need to take over in 2019.


Such capacity takes many years to build, provided there are appropriate investments into the endeavour. But these investments are not coming. The latest Institute for Government report on UK customs after Brexit is clear about that: it is probably too late to make sure the UK’s customs ecosystem will be able to cope with the end of the customs union in March 2019. Customs is only one policy area where chaos looms. One wouldn’t be surprised if there were to be no simplified working procedure in place – ICT system and all – to offer millions of EU citizens legal residency in Britain for 29 March 2019.


Third, there are deep divisions in the ruling Tory party. The radical and disruptive nature of the Brexiter project Theresa May has espoused is gradually meeting resistance – from fellow Tory members, from business, from the very fact of the government’s weakened majority after the June 2017 elections.


Prime Minister Theresa May, instead of embracing statesmanship and building bridges with the centre, is seeking to perpetuate the unity of the Tory party at any cost. This includes reaching laughable compromises reconciling the non-reconcilable. One such example is the proposal to leave the customs union of the EU, while also having a customs union with the EU for goods destined for the EU. The first proposal is to please Liam Fox’s Department for International Trade, the second to please Philipp Hammond’s Treasury.


This is ignoring a basic fact. Being in a customs union is a binary choice: one is in or one is out of a customs union. Brussels cannot change that fact. A separate track for goods destined to the EU involves mindboggling bureaucratic product surveillance that the British state would be incapable of managing anyway. The proposal is also illegal under WTO rules.


No matter. It’s the Tories uber alles. Such compromises perpetuate the Tory party in power, even if it is a zombie that undermines confidence in the rule of law for citizens and economic sentiment.


Meanwhile, the secretary of state in charge of leaving the EU, David Davis, can score political points and blame the EU for not being “flexible and imaginative”, as he did in during the last round of Article 50 negotiations in Brussels in August 2017.


In this context the EU is proving indeed neither flexible nor imaginative – but not for the reasons given by Davis.


Why the EU should think ahead


In Brussels, Brexit is far from being on the priority list. Wrongly so. This attitude is not only arrogant. It is also ignoring human and business realities on the ground.


A collapse of the Article 50 negotiations – desired in some corners of the House of Commons – a failure to secure an “orderly” process of British withdrawal from the EU will boomerang on the institutions in Brussels. The damage of such a scenario to the economies neighbouring Britain will be substantial. The EU could have a massive human rights situation to tackle as the rights of millions of citizens are potentially not upheld.


A ‘no deal’ Britain will be a Britain where the radical Brexiters on the right of the Tory party will definitively hold sway on power – they already do, but are contested. This new configuration will lead to a rogue-ish type of country, feeling free to set itself free from international human rights standards, more hand-holding with Donald Trump, and desperate to attract business by doing exactly what the EU fears: undermining it through lower taxes and standards. Such a Britain would breed more social instability. Such a Britain is not a comfortable nuclear power to have next door. With no deal in place, there will be no way to weigh on the political process in London.


The government in London is not ready to admit – at least publicly – that Brexit is about a radical restructuring and strengthening of the capacities of the British state. Doing so while upholding the rule of law and not damaging the economy too much requires time, investments, and vision.


Part of a new approach to Britain would mean agreeing to a blanket extension of the current EU arrangements  with Britain for at least five years, except London’s participation in political institutions. It would involve proposing a roadmap for withdrawal over several years under the parameters provided by Britain – no free movement, a bilateral trade agreement at the end of the road – and preparing ports and businesses across the Channel and the Irish and North Seas for the extra burden of controls and paperwork, including through adequate funding.


It is in Britain’s interest to either accept such an offer from the EU or to make the suggestion to the EU. This lifeline would help Brexiters prove they are actually capable of delivering a working Brexit.


The EU cannot just apply its usual legal mechanics to the UK. It should now harness the problem unless it comes back to haunt Brussels and leading EU capitals. And it should start doing it now.



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