Mises Wire

Sorting Out the Brexit Chaos

“Everything is happening, nothing has changed,” Alex Massie wrote over at CapX last week, perhaps summing up best the political situation in the UK right now. What has happened in the Brexit debate in the last few months, but in the last week in particular, has caused much astonishment around the globe — indeed, it has left almost everyone with the question of what in the world is going on in Britain.

Just looking back at the at the beginning of last week, Parliament was still debating on Theresa May’s Withdrawal Agreement from the EU. Should the House of Commons accept the Prime Minister’s deal in the so-called “meaningful vote” on Tuesday, or rebuke what May sees as the best she can get from Brussels? Instead, the Prime Minister, having been cornered from all sides, called off the vote, which subsequently led to the threshold of 48 Conservative Members of Parliament needed for a no-confidence vote being reached. May won her party’s confidence, but a shocking 117 MPs turned against her. In the end, May’s position has mostly stayed the same, though, having neither been particularly strengthened nor weakened, since her leadership can’t be challenged again for the next year.

The same might be true for her deal with the EU, which will now be voted on in the Commons in January. By some described as the best compromise that was possible, by (most) others however described as a disaster which would, say the critics, chain the UK to Brussels as a vassal state, it has undoubtedly been a controversial agreement.

Critics have mostly pointed to the so-called “backstop.” That the border between Ireland and Northern Ireland stays undeterred for movement and trade has been essential for all parties involved — risking a hard border could lead to conflict at a border which has often been wrecked by strife. At the same time, though, one of the major goals of Brexiteering has been to leave the EU’s customs union, which would enable Britain to decide on its own trade policy (and thus, make its own trade agreements). This vision has often been called one of a “Global Britain.”

With the current agreement, the UK would stay in the customs union for the remainder of the transition period, which currently is set to end in December 2020. Not only that this deems it impossible for Britain to pursue its own course until then, the backstop could cause havoc in the Kingdom afterwards. The concept is as follows: When Britain finally leaves in 2020, there will hopefully be in place a comprehensive trade agreement with the EU. But if not, there would once more be border controls between Britain and mainland Europe (and, importantly, Ireland). To prevent a hard border between Northern Ireland and Ireland, through the backstop, Northern Ireland would stay both in the common market as well as the customs union, while island Britain merely leaves the common market, while staying in the customs union.

There are two major consequences from this: while the backstop is in place, the UK could still not do anything on its own as of trade policy. In addition, Northern Ireland and the rest of the UK would be separated, and there would then be border controls between Northern Ireland and Britain, splitting apart the union (in return for there not being any controls on the Irish island). Worse, for many pro-Brexit voices, the Withdrawal Agreement does not say whether the backstop is only temporary or indefinite. Indeed, they fear, the EU could trap the UK in this middle-of-the-road state in which Britain is sort of outside the EU, but in many respects still part of it (like trade policy). The EU has played a rather precarious role in all of this: while ensuring in public again and again that the backstop is temporary, it has also refused (so far) to revise the agreement to include this little detail.

For Theresa May, this has created a complicated situation to say the least: the agreement cannot be passed in Parliament — that is also why she cancelled the vote, hoping that the EU will give her a little more leeway. For one, so-called “hard Brexiteers,” mostly Tory backbenchers, want to leave the customs union once and for all — and as soon as possible. They argue that a good deal with the EU would be beneficial — but if they can’t get one, then Britain should just leave. This is the “no deal” scenario, where Britain would fall back on WTO rules. The backstop then is the reason why they are completely opposed to May’s deal.

Then there is the Democratic Unionist Party (DUP) from Northern Ireland. The Tories are only in government at the moment because they are supported by the DUP. And for the DUP, as its party name already says, the further existence of the union has first priority. For them, the backstop is a grave danger for Northern Ireland staying in the union. This is why they are completely opposed (to put it mildly) to May’s deal (and May needs them stay in power).

Finally, even Labour, the Scottish Nationalist Party (SNP), as well as the Liberal Democrats are opposed to the deal. There are different reasons here. Many are hoping that by the agreement being blocked, the exit on March 29, 2019, would have to be postponed, thus opening up the possibility for a second referendum – a “People’s Vote,” as they call it (regardless of how undemocratic it would be). But especially Labour is of course also hoping that if the deal falters, the current government would, too; potentially triggering new elections – elections, they hope, which would put Chavismo Jeremy Corbyn in power.

What is a possible way out? Free-marketeers have often pointed out that simple unilateral free trade from the UK’s side could be the solution (I have argued this, too, on several occasions). But regardless of whether this is the best idea in theory, one also needs to realize that it is detached from political reality at the moment: next to the major disruptions it would cause at first and that it could possibly completely destroy any relationship the UK still has with Europe (which is still, yes, important for its economy), this vision also simply has nowhere close to a majority in the population. Pulling this off could easily lead to a Corbyn administration, leading the UK down the dumpster.

The same is true for those arguing for a “People’s Vote:” there is simply no majority for this, and it would put the final nail in the coffin for the British political class by ignoring the momentous vote of 52 percent of the country in 2016. Meanwhile, for those wanting the “Norway option” — i.e., a membership in the EEA or EFTA like Norway or Switzerland, time is running out (and once again, it is not clear whether there is a majority in Parliament for this either).

Thus, all opponents of May’s deal have one more thing in common other than thinking her deal is a disaster: namely, that none of them has a majority and for now, a realistic chance to implement their own vision (and subsequently still win elections for a while). Could May’s deal not be the worst of all worlds, but maybe the only world which could realistically lead the UK out of the EU then (which it does)?

At this point, no one seems to know anymore – I certainly don’t. What I know is that the Brexit vote shows one thing ever clearer: that simple ‘yes’ or ‘no’ votes veiled as supposedly democratic referendums have some major problems. In 2016, there was a vote asking the people of the UK whether they, ‘yes,’ want to leave the European Union, or, ‘no,’ want to remain. But as the aftermath of this vote shows ever more clearly by the day, it is much more difficult than that: there are a thousand ways to Brexit. Which one Britain will ultimately take, still no one knows yet – and the vote in 2016 doesn’t give an answer to that.

To repeat Massie’s quote from the start, in the last few months “everything has happened, nothing has changed.” In 2019, everything will continue to happen. Just how much will actually change at some point will determine the future relationship between Britain and the EU.

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