25 January 2016

EU war games: Brexit feasible but talks will be messy


The City of London destroyed. Scotland departed. The British economy in ruins. Not a party political broadcast for the Stronger In campaign, but a gimlet-eyed prophecy from Britain’s European Union partners of what could happen if Britain votes for Brexit.

On Monday, the think-tank Open Europe convened various members of the great and good to role-play two scenarios – in the morning, David Cameron’s attempts at getting a new EU deal, and in the afternoon, the negotiations that would follow the British public’s rejection of it. The first half was a debate. The second was a lynch mob.

The day began with protestations of goodwill all round. Sir Malcolm Rifkind, playing Britain, set out the main areas that Cameron hopes to make progress in. The representatives for Spain, France, Germany, Italy, Poland, Ireland, Sweden and the EU institutions (played by a variety of similarly experienced figures, including Enrico Letta, former Italian PM, and John Bruton, former Irish Taoiseach), expressed their love for the UK, and their certain belief that a deal could be done.

It soon turned out, however, that the theme of the morning would be taken from Meat Loaf: “I would do anything for love, but I won’t do that.” We were told that many of the specifics of Cameron’s deal would either have unforeseen consequences, or were simply impossible, or that our European friends couldn’t really understand what we were on about.

The symbolic commitment to ditching “ever closer union”, for example – why did Britain keep raising this ludicrous idea of a superstate? A “red card” or “emergency brake” for national parliaments – this, said Germany, was a “crazy” idea, so “please take that off the table”. Others rushed to agree: wouldn’t it dilute the power of the European Parliament? (Well, yes.) And wasn’t it more likely to be used against Britain, rather than by it – for example in blocking moves to extend the free market in services, where the UK is Europe’s dominant player? (A rather better point.) Within 20 minutes, they were practically banging on the table.

It all seemed rather rancorous – but as Sir Malcolm pointed out, this is how international diplomacy gets done. Everyone has a bit of a shout at each other, and tells each other how their ideas are impossible, and then somehow things are worked out at the end. What we in the audience were seeing, he said, was a compressed version of that.

The organisers had done their best to create a sense of drama: as the participants sat clustered around a table, spotlight amid the gloom, the effect was a hybrid of Question Time and Dr Strangelove. But it could have benefited from simultaneous translation from Eurocrat into English. During the discussion over how to change benefit rules (which seemed to boil down to Britain moving to a contributory system rather than carving out special exemptions) someone brought up the 150,000 Belgians who commute in and out of Luxembourg every day – wouldn’t a new deal need to take account of them? Sir Malcolm ventured a joke about a new “Luxembourg compromise” being needed. Mild hilarity ensued.

The abiding sense was that a wholesale, treaty-changing review of Britain’s EU membership is not on the table. But then, we knew that already. Likewise, that those in Europe can’t quite grasp that Britain has no philosophical commitment to European integration – that its relationship is primarily transactional. But in general, even if there was quarrelling over the specifics, there was a clear sense that a deal can be done – even if it ends up pretty close to the status quo.

That, however, wasn’t the box office bit. That came after lunch, when Sir Malcolm was replaced by Lord Lamont, the former Chancellor, with a mandate to negotiate the terms of Brexit.

He set out what, to many British Eurosceptics, will seem like a rather weak set of demands. Britain would ask for a simple and comprehensive free trade deal covering manufactures, goods and services – including the City of London. To simplify matters, and to ensure that a deal could be completed in the next decade or so, the acquis communautaire – the existing body of EU law and regulation – would be taken as a given. On immigration, there could be preferential access for EU citizens under whatever deal is reached. Britain would continue to cooperate on matters of defence and security – and would also chip into the EU budget, as a gesture of goodwill (something bound to infuriate those who have been told that Leave means an end to the streams of cash being sent to Brussels).

And then the bloodbath began. France said it could only offer a vanilla free trade agreement – nothing else. Germany said Britain’s “cherry-picking” approach would not be tolerated: “We are not so keen, after you showed us the torture instruments, to give you a warm welcome.” The Netherlands predicted an effort to channel investment to Scotland, in an effort to peel it off from the rest of the UK.

Lord Lamont was compared by the moderator (in the world’s least likely metaphor) to Errol Flynn, fighting his corner with flashing blade. But enough of the blows got through.

The harshest words came from John Bruton, playing Ireland. Brexit, he said, would be a “devastating decision” for Ireland – “I would regard it as an unfriendly act… a huge, self-imposed, politically generated shock to our economy.” It would undo much of the work of the peace process, and create huge questions over borders and labour market access. Out of pure self-interest, Dublin would probably try to grab whatever financial services from London hadn’t been stolen by Frankfurt. Indeed, there was unanimous agreement that the EU would do everything in its power to avoid its financial capital lying outside its borders, and regulatory reach. France, for example, would surely lean on its banks to move their operations back home.

You can argue that this was all posturing – that in reality, European countries would come round and act in their own self-interest to make sure there was a deal everyone could live with. But one thing that emerged from the talks is that European countries have electorates, too. And after Britain leaves, those electorates might not be terribly keen on immediately granting it access to the single market, carte blanche for the City of London, preferential treatment for British visitors to the Continent and so on. Also, Poland pointed out, there will be a temptation to come up with the most punitive terms possible – to avoid other countries following Britain’s lead.

What would change after a Brexit vote, in other words, is not so much the rules as the mood. It may not seem like it from the outside, but at the moment, the other players in the game feel they are doing what they can to keep Britain in the club. After a Brexit vote, they will put themselves first – informed not by a spirit of vengeance, but basic political logic.

Some of what was said was surely an exaggeration: for example, that Britain will have to take its place in the queue for trade deals behind Mexico or Indonesia. But the non-British participants – who have been around long enough to know their stuff – were clear that after a Brexit, there will be zero goodwill towards Britain, and that its needs and demands will come very low down the priority list. And no matter how much our partners try to be reasonable, there will inevitably be an irrational desire to punish us for having rejected them.

None of this is to say that Brexit is an impossibility: the argument of the Leave camp has always been that Britain could stand on its own two feet perfectly well. But what is clear is that those who want that to happen need to prepare a worst-case as well as a best-case version of that scenario. There is a vision of Brexit that is often mooted which sees us getting all of the benefits of leaving and paying none of the costs. But on this showing, untangling Britain from Europe will – at least in the short term – be like so many other divorces: messy, painful and drawn-out.

Robert Colvile was comment editor at the Telegraph and UK news director at BuzzFeed. He now writes on politics and technology.