Deal, No Deal: Britain’s Fearful Future

by John Feffer

It’s not in the text of Dante’s Inferno, but I suspect that those residing in the upper circles of hell regard their neighbors in the bottom circles with a mixture of pity and relief. Cleopatra, buffeted by strong winds in the second circle for her lustful behavior on earth, glances down at the traitor Judas, immobile in a frozen lake in the ninth circle, and sighs, “Ah, there but for the grace of God.”

And so it is with the Americans and the British these days. I’m reluctant to put Trump’s America in a precise location in the nine circles of hell (Violence? Fraud? Treachery?). But surely it is somewhere above the United Kingdom writhing in its current Brexit convulsions.

Surely, too, Americans are looking across the pond these days with a bit of transatlantic schadenfreude. Yes, the current situation in the United States — sociopathic president, federal government half shut down — is appalling. But the government will open again, and this president will eventually be tossed out of the Oval Office (electorally, procedurally, or physically).

The United Kingdom, on the other hand, is on the verge of screwing things up for many, many years to come. The way that Prime Minister David Cameron handled the 2016 referendum on European Union membership was bad enough. His successor, Theresa May, inherited a bad hand — and she has played it poorly. The British parliament has rejected May’s version of a deal, which she negotiated with the EU. Meanwhile, the EU has refused (so far) to make any further concessions that might make that deal more palatable to a sufficient number of British MPs to ensure passage in a revote.

So, let’s take a look at the options that are now available to the poor, benighted Britons.

The Doomsday Scenario

Some residents of the UK just want out of their marriage with Brussels, and they don’t care how it happens. Forget about trial separation. Forget about negotiated terms. Forget about joint custody agreements. They’re willing to forfeit everything in order to walk out of the relationship.

So far, Theresa May refuses to take “no deal” off the table. If she fails to persuade the British parliament to support her plan, can’t get the EU to nudge a bit on a couple key issues, or doesn’t attempt to win a stay of execution, Britain will be given the bum’s rush out of the EU on March 29.

The hardcore Leavers will rejoice: Britain will no longer have to abide by any of the EU’s laws and regulations. Britain can keep out all the foreigners it wants, since it will no longer be subject to the EU’s rules governing freedom of movement. It can make any and all budgetary decisions without meeting EU regulations on debt ceilings. Nor will Britain have to contribute its roughly $17 billion annually to the overall EU budget (much of which goes to agricultural subsidies to farmers throughout the Union).

After that, however, there’s little to rejoice about. Gone would be the nearly two-year transition period that would help Britain adjust to leaving the EU (and vice versa). Britons would face immediate sticker shock as the prices of imports immediately go up with the imposition of up to a 38 percent tariff, and many British producers would discover that they were no longer competitive in European markets. British farmers could no longer draw EU subsidies (nearly $4 billion annually).

Expect a nightmare at British airports with the cancellation of up to 5 million flights as soon as the “no deal” goes into effect. The roadways would be clogged, too, with trucks and motorists stuck in long lines at the Chunnel. And the British assembly line of products that depend on European components would be monkey-wrenched.

The overall impact on the British economy would be devastating, as the Bank of England has predicted:

In its worst-case scenario no-deal, the pound would fall by 25% and unemployment would, in time, rise to 7.5% from its current level of 4%. The International Monetary Fund predicts British households would be an average of £6,000 a year worse off as a result.

Investors have pulled out $20 billion from UK equity funds since the Brexit vote. London, which has more foreign banks than any other financial center, will be hit the hardest as these institutions relocate to the continent in anticipation of a no-deal exit. According to one estimate, London will lose nearly a trillion dollars in assets.

The human costs of this scenario are more difficult to measure. British expats living elsewhere in Europe and foreigners living in Britain will both find themselves in limbo. Handled poorly, a no-deal exit might turn into a kind of India-Pakistan population transfer, with foreigners streaming out of Britain and expats, including 200,000 pensioners, dragging their belongings back the other way.

But perhaps the greatest sticking point is Northern Ireland. Ireland would remain part of the EU, while Northern Ireland would exit along with the rest of the UK. That would create a hard border, which might well disrupt the compromise that brought the Troubles to a close in the 1990s. After all, that compromise depended in part on establishing an open border between north and south that allowed Republicans to continue to dream of a united Ireland and Unionists to maintain their links to Britain.

There have been negotiations over a “backstop” that can prevent this border from hardening. But, without going into the rather complicated details, the backstop is null and void if the EU and Britain can’t come to some kind of agreement. If that happens, things could get ugly.

Indeed, Britain is bracing for disorder all over the country in the event of a no-deal exit: riots over shortages, unrest in Northern Ireland, mayhem at the borders. The government has allocated 3,500 soldiers and spent $2.5 billion to deal with these problems should they arise. Good luck with that.

A Negotiated Exit

Since the 2016 referendum in which a very slender majority of Britons supported leaving the EU, the debate has largely been over how radical the separation should be.

A “soft exit” would transform the UK into something like Norway, a non-EU country that nevertheless has access to the EU’s single market (Norway is not, however, a member of the customs union). At the same time, Norway pays into the EU budget and accepts free movement of people.

A “hard exit,” meanwhile, would take the UK out of the single market, but according to a negotiated timetable.

The initial deal that Theresa May struck with the EU last year was something in between. It would keep the UK in the customs union and Northern Ireland in the single market, thus avoiding a hard border in Ireland. It would protect the rights of foreign nationals living in the UK and British citizens living in the EU. During the nearly two-year transition period, the UK would have to abide by EU rules but would lose the ability to have any say about those rules. It would also pay a steep divorce settlement: over $50 billion. This is the deal that the UK parliament rejected.

May came back this week with a “Plan B” that will be voted on at the end of this month. But it’s not substantially different from what the MPs have already voted against. May believes that, given the potentially dire consequences of the “no deal” scenario, the various parties involved in negotiating Brexit might decide to compromise – or, at least, be dragged kicking and screaming toward compromise.

This is probably a fool’s errand. There’s no reason for Labor to support her, particularly if she refuses to take “no deal” off the table. The members of her Conservative Party that voted against the deal seem to prefer apocalypse over what they believe to be an unacceptably soft divorce.

The EU, meanwhile, has been very clear about not budging. It believes that, after a lot of patient negotiations, it solved the Rubik’s cube of Brexit. It doesn’t want to reopen that process. And it wants to make sure that any other country contemplating a similar exit understands that Brussels is no pushover.

But after the British parliament rejected the deal on the table, German Chancellor Angela Merkel recently urged her colleagues to come up with something, anything to avoid a no-deal exit. “We have a responsibility to pursue this separation process responsibly so that in 50 years, people won’t shake their heads and say ‘Why weren’t they able to find a compromise?’” she remarked.

Such a compromise would require more time. At the end of this month, the British parliament will also vote on several amendments to May’s Plan B, including one in which the UK requests an extension until the end of this year. May has so far refused to consider an extension.

Another amendment, from Labor, proposes that Parliament vote on whether to hold a second referendum. Support within Labor for a second vote is growing, but not everyone in the party agrees.

Please, Please, We Want to Stay!

The historian Ernest Renan once wrote that the nation is a daily referendum. The notion that the British can define themselves with a single referendum seems rather foolish. At the same time, it would not be very helpful if they were forced to vote every day on whether they wanted to stay in the European Union.

But why not shoot for something in between and settle for a second referendum? Many voters confessed that they didn’t really understand the stakes when they cast their ballots. Over the last two years, they have learned a great deal more about what advantages they get from EU membership and what the consequences will be of withdrawal. If given a second bite at the apple, they would be voting for or against a very specific deal, not just an abstract concept.

May is no fan of a second referendum: “I also believe that there has not yet been enough recognition of the way that a second referendum could damage social cohesion by undermining faith in our democracy.”

She does have a certain point. The Leavers would feel justifiably angry. The divide in the country would deepen. “Many would feel that their long-desired Brexit had been stolen from them and would turn away from democracy in frustration,” writes Marcus Becker in Der Spiegel. “It would provide a significant boost to anti-European right-wing populists.”

But democracy is all about people changing their minds. You can change your vote from one election to the next. You can propose a ballot initiative that reverses the effect of an initiative that the public supported the year before. You can even amend a constitution (if, unlike Britain, you have a constitution). This shouldn’t be a partisan issue. Indeed, some Conservative MPs have put together a campaign in favor of another vote on Brexit called the Right to Vote.

The British people seem to favor another referendum. According to a Sky News poll from a few days ago, Britons overwhelmingly want to vote again on Brexit, 53 percent to 36 percent. It’s difficult to know exactly which way a second referendum would swing. The latest YouGov poll reports that Remain now outpolls Leave, 56 to 44 percent. But it might be considerably closer than that, if a “soft exit” option seems viable.

Of course, I wouldn’t blame the EU if it just wanted to be done with Britain. Before Brexit, the UK was already one of the most crotchety members of the EU. It never joined the eurozone and has kept its own currency. It’s not part of the Schengen system. It’s not a signatory of the EU’s Fundamental Charter of Human Rights. And it can choose not to follow on a case-by-case basis any of the EU’s justice and home affairs legislation. These four “opt-outs” are more than any other EU member’s.

In addition, over the years, Britain has been routinely described as a “thorn in the side” of the EU because it’s skeptical of too much integration, of Franco-German cooperation, of anything that smells too “continental” to parochial UK noses. Who needs that kind of angst? And by ridding itself of the UK, the European Parliament wouldn’t have to listen any more to wankers like Brexiteer Nigel Farage (Euro MP from South East England since 1999).

But provided Britons change their minds in a second referendum, the EU should welcome the UK back into the fold.

These are perilous days for the future of Europe, what with the rebellions of Poland and Hungary, the electoral victories of the far right in Austria and Italy, and the continued spread of the cancer of Euroskepticism throughout the continent. Even Steve Bannon doesn’t anticipate more Brexits, however. So, increasingly, the fight will not be about staying or leaving but about the shape of the European Union itself.

This future debate will be considerably richer if it includes the voices of those who came so very close to exit only to change their minds at the last minute.

Reprinted, with permission, from Foreign Policy In Focus.