Sunday 19 May 2019

defeated by brexit • part iii

Brussels takes control

  • Invoking Article 50 put all power in the Brexit negotiations into the EU’s hands
  • It raised the threat that Britain might be forced to leave without a deal
  • Many Brexiters were unworried by that – but the prime minister was not

By Chris Cook

At the start of the process, the EU had the easiest task of all. It was prepared.

Brexit has suffered from too much talk of fighting, but forgive one dive into military strategy. Armed forces are sometimes described as “defensively” or “positionally” strong. The strength of archers inside a fortress, for example, comes from having prepared the battleground. Forests are cleared to make clear sight-lines. They are protected by height and by walls. Anyone who wishes them harm must walk in front of them, into range of their weapons.

The EU is a fortress institution. It is defined by a set of interlocking treaty obligations but also has written rules for negotiations and these maximise its strength. They act as a set of high walls.

From the battlements, a statement was released on the morning of 24 June, as the referendum result was coming in, in the name of the EU’s political leaders: “We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty. We have rules to deal with this in an orderly way.”

A few days later the European Council, the committee of EU member state leaders, reaffirmed this position: “We reconfirmed that Britain’s withdrawal from the European Union must be orderly and there will be no negotiations of any kind until the UK formally notifies its intention to withdraw.”

The European Parliament in Strasbourg. The EU is a fortress institution

Those responses invoked one rule from the EU treaty: Article 50, which governs how states may leave the union.

The departing state should give formal notice of its desire to leave. That starts a ticking clock – giving them and the EU two years to negotiate the separation. At the end, if there is no deal, the departing state is either ejected from the union or the two-year horizon can be extended, if all sides agree. This illustrates an important truth about the EU: it speaks a language of laws.

But its legalism is strategic, designed to maximise its negotiating strength. Article 50 stacks the deck against the departing state.

You can see that strategic legalism at work when the EU added a new rule: there would be no talks before the formal Article 50 notification. This was a political ruling presented as a legal truth, to force the whole process into that two-year horizon with a ticking clock.

The two-year process creates a power dynamic tilted in the EU’s favour. If that time limit were to expire and a state were to exit the EU with “no deal”, it would mean the EU being forced to accord the departing state the trading status of a stranger.

Under World Trade Organisation rules, that means exporters in the departing state would be treated the same as those in any other country with which the EU does not have a trade agreement. It would mean hitting the EU’s external tariff wall. Goods made in the leaving country would no longer be assumed to automatically comply with EU rules, meaning checks and compliance.

Without a trade deal British exports from Dover will hit the EU's tariff wall

If the EU can force the departing state into the Article 50 process, it can dawdle and waste time, knowing that every day brings closer an outcome that would be much worse for the leaver. This gives it great power.

During the referendum campaign, Vote Leave, the official campaign to leave the EU, recognised this. It said “no rational government” would immediately invoke Article 50, so there was no prospect of doing so.

The UK could have held back and created uncertainty, making its membership awkward for the EU. There was some effort by officials, in the words of one negotiator, “to stop [the UK] surrendering a huge piece of negotiating leverage”. Theresa May could have forced pre-discussions of exactly how Article 50 would work. “But she chose not to. Or did not understand why not doing so was a fatal error.”

Senior officials including Sir Ivan Rogers, Britain’s top diplomat in Brussels, and Olly Robbins, permanent secretary at DexEU, recognised the problem. May set the Article 50 clock ticking against their advice.

In October 2016, speaking to the Conservative party conference, the prime minister announced she would trigger Article 50 by March 2017. One UK diplomat told me this was a “champagne corks moment in Berlaymont”, the European Commission’s headquarters. It relieved pressure on the EU, making it easy to bat away further attempts at pre-negotiation.

Theresa May announces she will trigger Article 50 at the 2016 Conservative conference

Two months later, in December, May tried to start negotiations on EU and UK citizens’ rights with Angela Merkel, the German chancellor. She was forcefully told that they should wait until notification had taken place.

A close ally of May said: “It’s easy to say, in hindsight, that we should have held off. But I think you under-estimate the pressure of the moment. Theresa wasn’t one of them [the Brexiters] and she didn’t feel she could hold them off. We all felt ‘we have to get on with this thing’.”

A cabinet critic of the decision supported it at the time: “It was completely inevitable in March 2017.” They wanted, for one thing, to avoid being entangled in the 2019 European elections.

At the time May’s Article 50 plan was broadly welcomed.

There was a wrinkle here, though; lots of Leavers dispute how far  Article 50 strengthens the EU. Many simply did not believe that the prospect of No Deal should hold any terror for Britain.

Officials in London believed that No Deal would certainly be damaging. At a stroke, the port at Calais would be required to treat goods from the UK as though they were coming from some unknown third country. There would be pressure and legal action to raise tariffs on cross-channel traffic, a border on the island of Ireland and checks, checks, checks.

A former customs post on the Irish border. Brexit could mean renewed customs checks

As a country that relies on just-in-time distribution for its supermarkets and manufacturing, the UK is vulnerable to the humble traffic jam. David Henig, a former British trade official, says: “We also discovered that many businesses had grown without in fact knowing their supply chains. They just took the EU for granted.”

The legal basis on which contracts and regulatory sign-off for some things had been drawn would disintegrate: nuclear material, say, or even simple medicines.

The prime minister’s answer to this conundrum, having triggered the countdown clock, was to argue – repeatedly, in public – that “No Deal is better than a bad deal”.

Steve Baker, the minister with responsibility for “No Deal” planning from mid-2017 to mid-2018, said: “If you were to leave with strictly no contingencies in place, there are things you couldn’t mitigate. So if literally nothing was done to prepare for going to third-country rules on cross-channel ferries, you would get big queues. Or [no] power going to and fro. Or the single energy market on the island of Ireland. But the contingency planning has been delivered… ”

What about tailbacks and customs checks? “There’s so much crap being talked about this stuff… Some factories might have had some problems with just-in-time [processes]… The relevant people from France have been on our media and said it won’t be a problem. Why are we still talking about it?”

Trade officials say producers take their supply chains, such as in agricultural products, for granted

A number of cabinet ministers were deeply sceptical about these preparations – the chancellor, chief among them. They did not want the state to spend significant sums of money to prepare for an outcome which they regarded as certain to be an economic disaster.

The truth, though, appears to be that the prime minister did not agree with Baker’s cool assessment of the risks of No Deal because of her deep attachment to unionism.

Taking office, on the steps of Downing Street, she had declared: “Not everybody knows this, but the full title of my party is the Conservative and Unionist Party, and that word ‘unionist’ is very important to me. It means we believe in the Union: the precious, precious bond between England, Scotland, Wales and Northern Ireland.”

Since the referendum Northern Ireland has seen a modest rise in Irish nationalist sentiment. There was talk, in the months after the vote, of a “border poll” – a vote on Irish unification in Northern Ireland. Brexit also gave comfort to Scottish nationalists, who want to use it as a pretext to rerun the 2014 independence referendum, which they lost.

So a No Deal exit might threaten the fabric of the union. Some English Brexiters would not mind. Carwyn Jones, the former Labour first minister of Wales, says: “You can see a situation where some of the Conservative Party said ‘Well you know, Scotland’s going their way. We’re stuck with these subsidy junkies – Wales and Northern Ireland. Let’s just cast them adrift and be England’.”

For May, this is heresy. Three people from her closest inner circle told me that in private the prime minister’s unionism is a secret red line that she would guard before all else. No prime minister would want to preside over the break-up of the country, but this one feels the union in her bones.

Theresa May fears No Deal will prompt renewed calls for Scottish independence

She feared that No Deal would cause problems in Northern Ireland along Britain’s only land border with the EU, and disruption that could provide the prompt for Scottish independence.

It is not clear when the analysis crystallised for her that the union might be imperilled by No Deal – certainly, not at the start, but probably by mid-2017. But, once it had, she found herself forced to engage with the EU not only on its timetable, but also on its terms.

This illustrates a thread running through the whole negotiation, however: May did not tell anyone she had decided No Deal was impossible. She continued to use the “no deal is better than a bad deal” rhetoric. Other ministers, those involved in the negotiation, were left to guess at her intentions.

To be a member of the EU is to accept its “four freedoms”: of movement of people, of goods, of services and of capital. Membership is about allowing and enforcing those rights. Members must also contribute to the cost of the machinery that makes and guards the rules.

Freedom of movement for migrant workers, such as these flower pickers in Lincolnshire, is part of EU theology

This is part of the EU’s official theology, which makes clear that these freedoms cannot be split. If you want complete freedom to sell goods into the EU you need to accept the other parts of the formula.

The EU’s initial response to the referendum result said: “Any agreement, which will be concluded with the United Kingdom as a third country, will have to reflect the interests of both sides and be balanced in terms of rights and obligations.”

A few days on, it added: “Access to the single market requires acceptance of all four freedoms.”

This reflects a belief in what the EU is actually for. Those who know her have learned that when Merkel, who grew up on the far side of the Iron Curtain, says freedom of movement of people is a fundamental principle, it pays to take her seriously.

Theresa May and Angela Merkel Freedom of movement is fundamental for the German leader

The statement was also intended to ram home the basic principle that the EU insists rights be balanced by obligations. There is a logic to this: if the EU elects to cut carbon emissions or have more stringent employment regulation, it does not want to give countries free access to its market that will undercut it on those standards.

This has created fixed grooves that third countries must fall into. In return for unfettered access to its internal markets, they have to tick certain boxes. When the UK Treasury modelled possible outcomes of the Brexit negotiations before the referendum, it presented a discreet menu of options.

Broadly speaking, there were several options for an agreed relationship. A deal like Norway’s, one like Switzerland’s, one like Turkey’s or one like Canada’s. DExEU, analysing the same question later, found the same likely range of options.

This formula – “no cherry-picking” – was most clearly set out in a diagram released to modest fanfare in late 2017 by Michel Barnier, the EU’s chief Brexit negotiator. It became known as the “staircase” diagram.

It makes clear that if the Swiss or Norwegians want a deal with less oversight or without financial contributions, they have to move to a more distant step on the stairs.

If you want full freedom to sell services, in particular, you need to pay in money, accept freedom of movement of people and take in the oversight of the European Court of Justice.

There is a legal logic to this position, but this is strategic legalism, too. It helps the EU to present itself as bound in its options. It makes it more difficult to wring concessions out of it – and makes it easier for it to guard its own interests. The lawyerliness helps in talks.

May was sceptical about how firm the EU would be on this. Chris Wilkins, her strategy director in her first year, told me that “she talked a lot in private meetings about the sense that, you know what, we are not seeking to replicate any other model.”

It was echoed in the Vote Leave position: Andrea Leadsom’s formulation of this during the referendum had been: “the UK will have a UK solution”.

May still believes this. She never wanted to take a step on the staircase. The trouble is, she has never been able to build one of her own.

Photographs by Getty Images

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