theresa may“We must be careful not to assign to this deliverance the attributes of a victoryWars are not won by evacuations.”

Winston Churchill, Speech after the evacuation of the British army at Dunkirk, 4th June, 1940

 

Article 50 of the TEU has been activated and the UK and the EU are entering the actual stage of Brexit negotiations and so preparing to write a new page in the history of international relations. Whatever happens in these negotiations, it will go into the textbooks because there is no precedent in history. For both parties, this is a huge quake and managing it properly is a matter of political survival. Theresa May is trying to get back on her feet after a weak and compromising performance at the recent election which she called to strengthen her support. Now she has appointed David Davis as chief negotiator and he has met for the second time with EC representative Michel Barnier, both of them being experienced career politicians.

 

Davis’s appointment is not accidental. It is worth noting that he and Barnier are actually well acquainted; they were both ministers of European affairs in the United Kingdom and France during the terms of John Major and Jacques Chirac, so they have met and negotiated on numerous occasions within the Council of Ministers in Brussels. Davis caused a furore by appearing without any notes and support material for the talks, and left the initial impression that the British were unprepared. Barnier arrogantly presented Davis with a walking stick (a cane), because, as he said before the meeting, “the road to Brexit will be steep and rocky”. Davis responded swiftly and gave Barnier a rare edition of a book on mountaineering, suggesting that no matter what issue Barnier used to challenge the British, they already had a textbook on it.

 

Nonetheless, beyond the exchange of bickering and courtesies, there is a serious diplomatic struggle in place. The British had one request to start negotiations for a trade agreement after Brexit in parallel with the main negotiations. This request was not met and Michel Barnier set three priorities on which sufficient progress must be made to start talks on trading – the monetary compensation the United Kingdom owes to the Union, the status of European citizens in the United Kingdom, and the status of the Northern Ireland border. Davis was forced to accept the postponement of trade talks, allowing the first point to be credited to the EU score. Each of Barnier’s three priorities, however, may become an insurmountable obstacle to the continuation of negotiations.

 

What are Brussels’ demands?

 

The speculated sum of £ 36-40 billion sparked a scandal in London where the prime minister’s press secretary denied having heard of such a figure, and Foreign Secretary Boris Johnson said Europeans might “go whistle”, because legally speaking, Britain does not owe anything. Earlier on, before the elections, Theresa May said that Britain’s previous payments to the EU should be taken into account if divisive compensation will be calculated – the balance of the English talks vis-à-vis the EU has been negative for decades.

 

The status of European citizens in the UK is not a problem of substance. London promises and has an interest in preserving all their rights. However, the problem is who will take care of the formalities, who will defend the rights in question? Barnier wants them to remain under the jurisdiction of the Court in Luxembourg, while Davis insists on leaving them in the domain of British courts. For the UK, leaving the jurisdiction of a foreign court on its territory would be against Brexit logic, while Brussels rightly notes that EU citizens have a reasonable expectation of continuing to be protected under the same conditions as when they emigrated. There is talk of setting up a joint judicial body, but as George Osborne noted, it would be just another international court and a semi-hidden failure of the government.

 

Tensions over the Irish border seem to prevail. The Irish Prime Minister Leo Varadkar stated that he would not help the British build a “border in which we do not believe”. Just as it recovering from the recent crisis, Ireland will be the EU member most heavily hit by Brexit, because Britain buys 50% of its exports. Varadkar’s proposal to put the border in the sea, with Northern Ireland remaining de facto in the EU customs union and labour market but excluded from EU funding, immediately provoked an angry reaction from the Northern Ireland Democratic Unionist Party (a current coalition partner of the Tories). Theresa May’s coalition with DUP particularly irritates the Irish government and does not help resolve the issue. If a solution that is satisfactory to the Irish is not reached, the “problems” of the 1980s and 1990s could resume, re-awakening frenzied Irish nationalism. Younger politicians like Leo Varadkar and his Foreign Minister Simon Coveney are no longer worried about using nationalistic rhetoric, and Coveney is the author of an infrastructure plan that treats the entire island as one country. Ireland is in an excellent position to block the continuation of negotiations so May could be forced to make more concessions.

 

Is Brexit dying?

 

Against the backdrop of all these apparently insoluble problems, and especially following the backlash of Theresa May’s poor election results, some people are beginning to question whether Brexit will happen. These doubts come mainly from extreme Brexiteers who see the pursuit of self-sabotage in the cumbersome and ill-equipped actions of the government, which they believe is full of former remainers, including the Prime Minister herself and on the other hand, romantic remainers who rely on the election result as a vote against Brexit. None of them are right, however.

 

Theresa May, despite the overwhelming majority of remainers in the cabinet, has put staunch Brexiteers at the forefront of the most important sectors for Brexit – foreign affairs (Boris Johnson), international trade (Liam Fox) and (naturally) leaving the EU (David Davis).

 

The elections, however, contrary to what May wanted herself, did not turn into a quasi-referendum for Brexit. The issue of leaving the EU has sunk to the bottom of heated debates on domestic policies, healthcare, social spending and education. Labour leaders have written an ambiguous manifesto and still avoid clarifying their position on the EU as Corbyn is an old-fashioned anti-globalist socialist, but half of his party and two-thirds of his electorate are pro-European. Thus, the two largest parties – Conservatives and Labour – are divided vis-a-vis Brexit not externally, but internally. Parties as the Liberal Democrats, the Scottish nationalists and UKIP who tried to participate with a clear pro- or anti-European platform, suffered defeats in the election and are now marginalized. Therefore, however weakened the Conservative Party, the consensus around Brexit is only confirmed and there is no indication that the people have changed their moods.

 

Hard or soft Brexit?

 

The more obvious it is that there will indeed be Brexit, the more uncertain it is how it will look. On the one hand, there are many factors that could thwart the negotiations. Such a factor is, for example, the previously mentioned border with Ireland. Another factor is the high expectations of people who have narrowed down the scope of compromise – it is not yet clear how the British government will pay even a penny to Brussels without causing a wave of dissatisfaction; to the average Brit, £36 billion sounds like reparations for a war that the UK has neither led nor lost. Thirdly, another spoiling factor is Theresa May’s motto – “Better no deal than a bad deal”. Since the day of the referendum the refrain has been that if the two sides do not reach agreement, Britain will choose to seek prosperity through tax and Regulatory competition with the EU. During a meeting with House of Lords representatives Michel Barnier explicitly pointed out that if the UK did such a thing, “it will be the end”.

 

Theresa May’s motto was actually ideal for negotiations, and the no-deal option was likely to be better for London. The election result, however, significantly reduced the strength of this lever. In the previous parliament, the Tories had a comfortable majority to push tax and regulatory reforms and make Britain a tax haven and a laissez-faire economy on the very threshold of the European Union. With a barely fixed coalition majority, the use of this trump card can now be far more difficult. Meanwhile, European countries and European businesses cannot afford to follow hard-line players like Barnier. A Deloitte report predicts that with a firm Brexit and a return to World Trade Organization rules, it will lead to 18,000 redundancies in the German automotive industry and will affect it worse than the crisis in 2008. The Financial Times claims that a delegation from the City of London has visited Frankfurt in mid-July, with a secret project for a private financial services deal that will defy a potential strong Brexit. Many European ministers urge the Commission to find a way to maintain relations with the UK in the pharmaceutical industry where the island is extremely advanced. The main considerations and the desire of European hardliners for Britain to be punished may face the strongest resistance from the very inside of the Union.

 

Does David Davis have a secret strategy?

 

As mentioned at the beginning of this article, Davis arrived for the first round of talks without notes and support. Combined with London’s severe government shocks, it was viewed by observers as a lack of preparation and chaos in the British ranks. An important parenthesis must be opened here:

Since the elections, although the government has been consolidated through the coalition with DUP, Theresa May has difficulty finding the ground under her feet. It seems that she has lost the respect of many MPs and has difficulties in maintaining discipline in her ministers. Almost every week there are harmful leaks of information from the cabinet meetings. The chaos at Westminster goes so far that ministers contradict themselves in the media. The Secretary of State, Amber Rudd wrote in her article for the Financial Times that Brexit would have a transitional period of implementation, and the movement of workers would not stop immediately; A little later, her own immigration deputy, Brandon Lewis, told the BBC that the free movement of people would unambiguously end in the spring of 2019. The most absurd moment came two weeks ago when May was out of the country, leaving the government in the hands of Treasure Secretary Philip Hammond. Hammond managed to produce a scandal almost immediately, saying in an interview with the French Le Monde that allegations that Britain is preparing to participate in tax and regulatory competition with Europe are not true and he sees the island as something “recognizably European”. Thus, the financial secretary came into sharp controversy … with himself. Under the “allegations” that the UK will engage in tax and regulatory competition, he actually referred to his own statements in an extensive speech in January of this year. Moreover, he compromised the country’s position in the negotiations and May’s “better no deal than a bad deal” motto. Apart from almost surreal inadequacy, many journalists close to the party attribute these events to an emerging battle for leadership, where the names of Philip Hammond, Boris Johnson, and … Brexit Secretary David Davis, are the main contenders.

 

So, Davis’s impersonal and impromptu appearance at the meeting with Barnier is interpreted as evidence of the chaos in Westminster, the lack of a plan, and potentially even of a deliberate sabotage against Teresa May. After several days, however, there was an interesting piece in Politico, which assembled the opinions of many Western European diplomats, some wishing to be anonymous, who warned that the British actually had a strategy and just simulated unpreparedness. The Prime Minister of Malta, who maintains close political contacts with the UK stated: “A non-prepared British government official simply doesn’t exist”. Some diplomats assume that much of the disarray in London is simply theatre, and if not, at least it is used as a pretext to simulate lack of readiness and gain time. Hence, David Davis’s real strategy is actually negotiating from the bottom upwards, while gradually discrediting European institutions in the eyes of their own citizens and businesses. He can reach out to the German industry, which apparently wants a soft Brexit, and say, “Look, we want to discuss trade and business interests while they just want to get their money”. And that would be a strong backup plan if Davis really took this line. A potentially hard Brexit will not be the end of England, but a brilliant and successful Brexit could cost eurocrats their jobs. As much as they insist they do not want to punish the UK, it is obvious that for the status quo in the European Union, a possible short-term success of Britain outside the EU can be deadly. And since the hearts of Eurocrats cannot be softened, and their considerations overridden, Britain’s chance will be in winning allies among the key industries of the continent and surprising Brussels in the back.

 

May’s government is probably unstable and its parliamentary majority is weakened. However, if she can keep her job and play her remaining cards correctly and on time, she has every chance of pulling the UK out of the Union. Britain has a 120 billion-euro trade deficit with the EU, and three times more European citizens work in the UK than Britons in Europe. As an economy based on retail trade and services, it is not dependent on the single market, as are the continental states. What Britain needs to do is avoid a Brexit that will tie its hands up and prevent it from making its own trade agreements and imposing competitive taxes and regulations. The realization of Brexit per se, does not offer anything to the British because Brexit is an evacuation – as in Dunkirk – where the highest achievement was to get out without sacrifices. But the war is yet to come – the battle and competition in the wider world will be fierce and Brexit only gives the chance to the UK to participate in this race without promising success.

 

By Toncho Kraevski

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