27 June 2019

What chance of a Brexit renegotiation?

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In the months since the House of Commons rejected Theresa May’s Brexit deal for a third time, it’s fair to say there has been no movement whatsoever on how Britain will actually extricate itself from the bloc.

Not only is Westminster in the grip of a not especially exciting Tory leadership race, but Brussels too has been bust with its leading lights battling for the top jobs in the EU institutions – so far without any results.

So, much is in flux. But whoever ends up leading the next stage of negotiations will have to find a way through with very little time remaining – after all, the (current) extension ends on October 31 and presumably, the UK will leave then, in the words of Boris Johnson, “come what may, do or die”. Johnson also thinks there is a “million to one” chance of a No Deal Brexit, though exactly how he hopes to avoid one is less clear.

The EU’s position throughout has been that it is not ready to renegotiate the Withdrawal Agreement under any circumstances – regardless of what British politicians say. This at least has been the official stance, as the outgoing Commission President Jean-Claude Juncker has repeatedly noted.

Jeremy Hunt, on the other hand, has claimed that both Angela Merkel and Emmanuel Macron have indicated to him that they would actually be very much open to alternative suggestions to break the deadlock – something which Johnson too seems to take as a given. And well they might: after all, they both argue that a better deal than May’s is still to be preferred over no deal.

But for all the strong, implacable words from EU leaders, it’s likely they will at least consider some kind of change, especially if it comes from a new Prime Minister who had little to do with the ambiguous approaches of his predecessor. Remember too that the EU does have an interest in preventing No Deal.

That could mean reopening the debate over the Withdrawal Agreement in general or amending it through some further political declarations. Whether the latter will be enough for hard Brexiteers is a different question, considering the EU did make political concessions back in March before the second parliamentary vote, only to be rejected again.

In any case, what Brussels and European leaders will expect is a clear plan from the new Prime Minister, with concrete proposals of what needs to be changed. Hunt admits as much, saying that Merkel would consider new ideas if the new PM proposes the “right approach”.

This will pertains particularly to the infamous ‘backstop’, where the UK has been very vocal in demanding “alternative arrangements” for many months, but has come up with few actual alternatives.

It is in this sense it is surprising how little the two candidates have had to say about their plans for “alternative arrangements”. Johnson would like to get rid of the ‘backstop’ entirely, scrapping it completely from the Withdrawal Agreement – that certainly won’t fly with Brussels, but he can still demand it during the campaign. He called the current arrangement a “monstrosity” (though that didn’t keep him from voting for it in Parliament).

Meanwhile, Hunt has also been vague in setting out his proposals, beyond declaring that he would send ERG and DUP members to Brussels as part of the negotiation team. That proposal might help mollify elements of the Tory party and its Northern Irish partner, but what it would mean in concrete policy is unknown.

Instead of dwelling on the detail, the underdog in the race has put all his efforts into making it a personal matter, arguing that while Johnson’s and his own negotiation plans are almost identical, it will really be about who leads the negotiations that will decide the sympathy the UK will receive from Brussels.  “We’ve had a lot of discussion about how, but we need to have more of a discussion about who,” is the Hunt line du jour.

It is true, of course, that Johnson does not have the best reputation in Brussels, but whether this is an argument in favour of Hunt is not clear. The EU got little change from the current “common-sense” leader who didn’t really know what she wanted. How different would Hunt be to that?

So, how could the next PM instead break the impasse?

It is increasingly difficult to say – and for all the frustrations of her leadership, it is not entirely the fault of Theresa May or the British side in. The EU has contributed to the current situation by making the Irish border such a focal point so early in the negotiations.

Remember, after all, that the ultimate goal of this process is meant to be a comprehensive trade deal with the UK which would make the entire backstop discussion superfluous. As Bruno Maçães wrote earlier this year over at Politico, “It was this decision, to include the Irish border question in the first phase of negotiations, that ensured we would never reach the second.”

Boris Johnson is actually quite right then to argue that the ‘backstop’ question should just be negotiated out of existence, by ignoring it in the Withdrawal Agreement and only bringing it up again when discussing a trade deal. Sadly for Johnson, this is the last thing the EU would do – dropping the backstop now would be a monumental loss of face, effectively admitting that it had been needlessly forcing the issue for the last two years.

As it stands, the next Prime Minister has three options to break the deadlock.

If he wants to renegotiate the Withdrawal Agreement, he will need concrete proposals of how this should be done that goes beyond mere demands for “alternative arrangements.” This could be, as Open Europe’s Pieter Cleppe wrote earlier this week, a technology-based solution with a theoretically hard border which is, however, invisible in reality, as is the case between the EU and Switzerland.

It could also mean aiming for a softer Brexit with potential Customs Union membership, something that would make Brussels and Westminster happy, but no one else, including the new PM (and rightfully so, as it would be a Brexit in Name Only).

The final, probably most likely option now, is a No Deal Brexit with ensuing negotiations on a trade deal.

Whatever decision the next Prime Minister makes, he should accept the reality that if he wants a deal, he will need to find a solution to the ‘backstop’ – and as long as he doesn’t have an actual plan, the EU will not be ready to make concessions. This is the reality we are in, as most people in Europe – and indeed probably most people on the planet, just want to get Brexit over with. Even with just a few months to go, that might be easier said than done.

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Kai Weiss is a Research and Outreach Officer at the Austrian Economics Center and a board member at the Hayek Institute.