No surprise, no progress.

Theresa May travelled to the European Council meeting last week in the hope of persuading the leaders of the other 27 member states that sufficient progress had been made on the three sticking points of the Irish border, the “divorce bill” alias the EU’s exit payment and the rights of EU citizens living in the UK. Any gambler could comfortably have bet on her being disappointed. The language on both sides was very polite, but all that has been agreed is to talk about talks.

If Mrs May or other members of her government  had any hopes that a “divide and conquer” strategy would work, going over the head of Michel Barnier from the Commission, they must now be realising that it won’t work. For all the divisions within the EU, some of which we have mentioned here, when it comes to Brexit, there is unity. No trade talks until sufficient progress has been made on the three sticking points.

France’s President Macron said that there was still much work to be done on the financial commitment before trade talks can begin, adding: “We are not halfway there.” Such a statement can easily be married with the more positive tone from Council President Donald Tusk, whose denial that the talks were deadlocked contradicted a statement to this effect from Michel Barnier.

For anyone still muddled by contradictory reports in the media who is seeking final confirmation that the EU does not consider sufficient progress to have been made, this statement from the European Council says it all.

Mrs May is currently between a rock and a hard place. She may or may not decide to listen to the voices from within her own party telling her to walk away altogether, but one thing is for sure – she cannot stop the Brexit clock. Her loyalty to her own party cannot be questioned and she knows that any attempt to backpedal would result in the Tories tearing themselves to pieces.

On the other hand, she cannot ignore the concerns expressed by businesses. It’s not just government ministers and bloggers who are warning about aircraft not being able to take off after Brexit. Some UK airlines are preparing to warn their customers that flights booked after March 2019 may not take off and they will not pay compensation if planes are grounded. Meanwhile, the UK Chamber of Shipping has expressed similar concerns about the problems UK ports will face if there is no deal, calling such an outcome an “absolute catastrophe”.

EU sources continue to express their belief that eventually a deal will be struck, even though some people such as Owen Paterson, a former cabinet minister, have said that no deal is “inevitable.”

Who will be right? Unfortunately, Mrs May’s charm offensive has achieved little.  The EU is a very rules-based organisation and it is going to stick to the letter in the forthcoming negotiations. I may be wrong, and would be happy to be eating humble pie in 18 months, but I fear that unless our side really gets to grips with how the EU works, Mr Paterson may end up being correct by default.

Austria: EU hypocrisy

In the days following Austria’s General election, both Jean-Claude Juncker, the President of the EU Commission and the country’s President, Alexander van der Bellen, have had a gentle word with Sebastian Kurz, the man who will soon be sworn in as the country’s new Chancellor, about forming a coalition.

The  31-year old Kurz has been told that he must be a good boy and form a “pro-European” government – in other words, his party, the Austrian People’s Party (ÖVP). must share power with the Social Democrats (SPÖ), who came in third place, rather than the second-placed Freedom Party (FPÖ), led by Heinz-Christian Strache. Juncker has not hidden his feelings about the FPÖ. “I do not like them,” he said bluntly. “With these right-wing populists, it is neither possible to debate nor having a dialogue.”

The advice is likely to fall on deaf ears. At one point during the campaign, the €urosceptic FPÖ was in pole position. Kurz’s tactics which resulted in his party overtaking them and gaining the largest share of the vote were simple – to borrow the FPÖ’s tough language on immigration. It worked, but given the consequential blurring of the lines between the ÖVP and the FPÖ, a coalition between these two parties looks far more likely than a left-right coalition involving the SPÖ.

An ÖVP/FPÖ coalition would not be the first as the two parties governed Austria together between 2000 and 2005. At the time, the inclusion of a party like the FPÖ in a government of an EU country was greeted with horror.  “The far right is in power”, screamed the headlines at the time and the other member states imposed diplomatic sanctions upon Austria. This achieved nothing and they were quietly dropped a few months later.

However, the FPÖ’s success in last Sunday’s elections has once again cast the spotlight on its past.  According to Wikipedia (And if the article was incorrect, it would have been subject to challenge), the party’s first leader  was Anton Reinthaller, who was a former Nazi Minister of Agriculture and an SS officer. Even now, over seventy years after the end of the Second World War, anyone with connections to Hitler is regarded as highly suspect. Another €urosceptic party with a dubious figure in its past is the Sweden Democrats (Sverigedemokraterna) party whose first auditor, Gustaf Ekström, was a Waffen-SS veteran, again according to Wikipedia. The media has ensured that this fact is widely known.

So two European political parties are beyond the pale because of their Nazi connections. Fair enough, but what about Hans Josef Globke, the Chief in staff to West Germany’s Chancellor Konrad Adenauer? Adenauer  is regarded as one of the founding fathers of European unification and was even commemorated as such on a special gold Belgian coin in 2002. His Chief of staff, however,  was involved in drafting legislation on the confiscation of Jewish property and removal of their political rights during the Hitler years. The first President of the European Commission,  Walter Hallstein,  was involved with the Nazis, although the Wikipedia article about him seeks to play this down.

The EU’s recent meddling in Ukraine has been aided and abetted by militias with Nazi sympathies, but no one in Brussels seems to care. It seems that dragging up unsavoury details from the past is merely a useful tool for turning public feeling against €urosceptic groups.

For anyone seeking a more balanced commentary on Austria’s election, this blog, written by an English expat resident in that country, provides a helpful antidote to all the hysteria. No one is denying that Austria has taken a tough line on migration. Kurz, who was Foreign minister before becoming Chancellor, was instrumental in this. Furthermore, although our blogger does not expect Austria, whether or not the FPÖ ends up as part of the government, formally to join the Visegrad group, he thinks it likely that Kurz will  stand with them in refusing to accept large numbers of Moslem immigrants.  He is also reckoned to be distinctly unsympathetic to Emmanuel Macron’s blueprint for  closer integration within the €urozone.

In summary,  for all the lashing out at the “far right” by the media and pro-EU politicians, Austria’s election, like Germany’s last month, shows that a sizeable and growing body of voters across the EU are distinctly unimpressed with the federalist vision of Juncker and his fellow-travellers. No wonder Brexit is seen as being such a distraction in Brussels; keeping some members of the remaining EU-27 in order is becoming increasingly difficult and the standoff over Catalonia, the forthcoming elections in the Czech Republic later this month and in Italy next year are most likely to cause a few more headaches for the EU élite.

The complexities of Brexit

Having been opposed to to our EEC/EU membership since the early Seventies when Mr. John Selwyn Gummer (as he then was – now Lord Deben) addressed our grain trade conference and told us that the Commonwealth countries wanted nothing more to do with us, I have picked up one or two things along the way.  Our family firm bought milk powder from New Zealand and we knew that our friends there were not at all pleased to be losing one of their best customers.

From late 1971  the government consulted our trade association and gave  very full, detailed information about what our firm would have to do when we joined the EEC on January 1 1973.

Without that information, we would have been in a total mess. Please see my account in Articles 2 and 3 of “The Miller’s Tale”.

We are due to be out of the  EU by the end of March 2019, so the government will have to start giving full, detailed information to all trades quite early in 2018, if businesses  are to have any chance of being ready.  Government departments such as Customs and Excise will have to be fully informed and equipped  too. There appears to be very small chance of this because of the lackadaisical way the government has approached the negotiations, handing the initiative to M. Barnier.  It always was unrealistic to expect to complete a wholly new style of comprehensive trade agreement within two years but they appear not even to be able to agree in cabinet what they actually want.

We already have three ministers involved – David Davis, Boris Johnson and Liam Fox plus the new unit which has been set up in the cabinet office, in part by transferring staff from David Davis’s department DExEU .

Robert Peston, who  is reckoned to be a very well-informed reporter, wrote in a Facebook post that

 “(Mrs May’s) fatal weakness is that she lacks the authority to settle this argument such that the EU  would have a clear understanding of who actually represents the UK and what we want from Brexit.

In the words of a senior member of the cabinet, it is a scandal that there has never been a cabinet discussion about what kind of access we want to the EU’s market…., what kind of regulatory and supervisory regime should then be in place  to ensure a level playing field for EU and UK businesses….”

As far as I know, no significant country trades with the EU on World Trade Organisation rules alone. They all have additional agreements on things like customs co-operation, approval of manufacturers and their quality standards  etc. All our present arrangements simply cease to exist if we “just walk away”.

To give just one example – British farmers presently export 40% of their lamb to the EU. As an independent country outside the single market without an additional agreement  that would be subject to a “sheep meat” tariff of £2,689 per tonne. The price to British farmers would collapse. But the lamb would not even get as far as customs until it had satisfied the “sanitary and phytosanitary” health controls which apply to all food products. The shippers would also have to appoint official importers on the other side – firms or individuals resident in the EU – to be responsible to the authorities for conformity to EU standards and, of course, the payment of inspection charges and tariff.  This is not the EU “punishing” us but the simple effect of the rules, if there is no other agreement.

With regard to EEA/EFTA, you may recall that Mr. Cameron went on his “hug a husky” trip and gave out quite a bit of unfavourable information which was misleading and not entirely correct but still avidly accepted by many  from UKIP  to extreme Europhiles.

Very few have since taken the trouble to check it. We in CIB have been supporting our fishermen and insisting on the need to assert control over all our fisheries – including the 200 mile Exclusive Economic Zone.  Norway and Iceland reserve all their territorial waters and EEZ for their own boats under article 112 of the EEA agreement. Our government is not guaranteeing that to our own fishermen. Iceland was able to impose capital restrictions during the financial crisis and Liechtenstein imposes strict limits on immigration – all under this arrangement.

Mrs. May is proposing a  transition/implementation period which involves continued subjection to the European Court of Justice (ECJ). The EEA agreement is preferable, being subject to the EFTA court which can only rule on on “EEA-relevant”  matters and has no formal powers of enforcement. If the arrangement does not suit us, we can be out of it by simply giving a year’s notice. Under the ECJ we would be subject not just to the 20% or so of EU legislation affecting trade but to the other 80% which enforces the political project, including things like the European Arrest Warrant.

Given the weakness of the government’s performance, I cannot see it negotiating anything better than the EEA agreement as a basis.  As an interim, it has the advantage of being a known quantity and could be subject to agreed amendments  (off the peg with alterations rather than “bespoke”). It is a least worst option. I have not heard of anything equally practicable and achievable in the limited time available.

Funnily enough, when we started discussing this possibility some  years ago it was fiercely attacked by a man who said it would be enough simply to repeal the European Communities Act 1972. It turned out he was a keen Europhile! I wonder why he was so against it?  Perhaps this article Europhiles for a sovereign Parliament may give us a clue.

 

The OECD Is making the same mistake as our negotiating team

According to Angel Gurria (above) of the Organisation for Economic Co-operation and Development, we should hold  a fresh referendum to stay in the EU as this would be ‘positive’ for the UK economy.  The OECD published its report as speculation mounts that Theresa May will shortly pull the plug on the Brexit talks. She is most definitely being encouraged to do so by a number of her MPs.

In response, Philip Hammond, the Chancellor, quickly made it plain that a second referendum was not going to happen and a number of Brexit-supporting Tory MPs expressed their indignation at the OECD’s intervention, pointing out that it had consistently underestimated the UK’s economic performance since last June’s vote.  Leaving the EU without a deal, however, is a different kettle of fish. There are sharply differing opinions among Brexit supporters about the probable consequences, ranging from predictions of a decade-long recession to a conviction that leaving under so-called WTO rules would bring economic benefit.

We will find out who is right in less than 18 months, but even if the OECD’s gloom proves correct, in urging us to halt Brexit, it is guilty of making the same mistake as our negotiating team – viewing the EU as an economic project whereas it is predominantly a political project.

What swung it for the leave campaign was not money but sovereignty. The message on the red battlebus about funding the NHS was a red herring. We wanted to regain control of our country from a foreign power and to escape from a political project for which few of those who understood its true nature had any enthusiasm. This is why we voted to leave and the EU’s subsequent push towards closer union, as evidenced by Jean-Claude Juncker’s recent “State of the Union” speech, has been a vindication of that decision.

Elsewhere on this blog, I have compared Brexit to a cancer operation. It will be painful at the time and a period of convalescence  may be required afterwards, but leaving the condition untreated would be far worse – it will inevitably lead to death.

Therefore, even if we are less well off in the immediate post-Brexit period, than we might have otherwise been, it is a price worth paying. It seems that the majority of Brexit voters agree. We could draw parallels with 1939. We would have been much better off to declare our neutrality alongside Sweden and Switzerland if our relationship with Hitler’s régime had been judged in purely economic terms at that time.  That was not the course we chose to take and after all these years, most people still feel that we made the right decision to address the evil of German expansionism.

In the long term, I have little doubt that if Brexit is managed successfully, there will be economic benefit. It will be far easier from outside the EU to reorientate the focus of our trade from the sclerotic economies of Europe to more rapidly growing countries in Asia. Our fishing industry will revive and we can do more to nudge global trade away from protectionism when we regain our seat on bodies like the WTO rather than have someone from the EU speak on our behalf.

The short term is another matter, however. A short blip for which we can prepare (and from which we should recover within a year or so) – which is the most likely outcome of a smooth Brexit allowing us a reasonable degree of access to the EU’s single market – shouldn’t cause a recession nor generate any serious political ripples. A badly botched Brexit would be another matter. Substantial job losses, food shortages and a sharp spike in inflation cannot be ruled out.

To return to the cancer operation analogy, yes, we have to go through with it. The sheer complexity of the issues already discussed in the Brexit talks highlights the amount of sovereignty which has already been eaten away by the EU.  Given that this is such pioneering surgery, however, it would be good to be assured that the best possible team of surgeons are in charge. As the halfway point between the vote to leave and Brexit day looms on 9th November, some of us have yet to be convinced that this is the case.

 

 

Photo by Chatham House, London

A Brexit that will work for nobody

“Brexit means Brexit,” Theresa May famously said on a number of occasions last year, “And I intend it to work for everybody.”  With the half-way point between the referendum vote and Brexit day looming next month, current pronouncements from the Government suggest that on the contrary, we could end up with a Brexit that works for no one.

Our fishermen have good reason to be worried. Unless the Fisheries Regulation 1380/2013 is exempted from the European Union (Withdrawal) Bill – and there is no sign that this is the Government’s plan – we will end up leaving the Common Fisheries Policy only to revert to what is in effect a shadow CFP, including all the access arrangements which would continue to give away our nation’s resource to the EU. Last week, when asked about fisheries, the Prime Minister said,

“When we leave the European Union, we will be leaving the common fisheries policy. As part of the agreement that we need to enter into for the implementation period, obviously that and other issues will be part of that agreement.”.

While this “implementation period” may exist only in Mrs May’s imagination, she should instead have given an unequivocal statement that upon Brexit, we will not only immediately take full control of our Exclusive Economic Zone, but will not be running it on a quota basis.

At least as far as fisheries is concerned, there is hope that ultimately it will be Michael Gove who determines post-Brexit policy. He has shown himself sympathetic to the plight of our fishermen and his mention of John Ashworth in person during a fringe meeting at the Tory Party Conference is a recognition that the fishing community is running a well-organised campaign that not going to take no for an answer.

Another area of concern is the reluctance of this government to disentangle ourselves from the EU’s military machine. Our friends in Veterans for Britain  were understandably critical of the Government’s recent  “future partnership” paper on defence, which would limit our independence. They also do not want to see is tied in to PESCO (Permanent Structured Cooperation) a key factor in the EU’s military ambitions to create a defence union. It appears from an earlier briefing put out by VfB that many MPs are still in the dark about the very limited military autonomy with which government ministers plan to allow us. This is unacceptable. As an independent country, our political objectives will inevitably diverge from those of the EU. We will no longer be interested in its empire building in the Balkans or among the former soviet republics. Our defence policy must be disentangled from that of the EU before we leave. If Mrs May is planning a reshuffle, as is widely being rumoured, the appointment of a genuine Brexiteer to  replace the most unsatisfactory Micharl Fallon as Defence Secretary would be a very good move.

We also need to make a clean break with the EU on criminal justice matters.  Torquil Dick-Erikson has raised the issue of the European Arrest Warrant on this website before. We agree with him that it is totally unacceptable for the Government to keep us as a signatory to the EAW and to be a member of Europol. More than that, Torquil has pointed out that the Government has also declared its willingness to allow “special intervention units” from the EU to set foot on British soil, and under a smokescreen of “ensuring security.”

In these three areas – fishing, defence and criminal justice, Brexit must be as “hard” as possible and the Government’s shortcomings will be highlighted over and over again on this website until there is a change of heart. This is not the Brexit we voted for.  As last year’s Vote.Leave slogan said so graphically, it was all about “taking back control”. If our fishing grounds are shared with the EU, our defence is bound up with that of the EU and EU judges still have the power to haul us off to any one of 27 member countries on the basis of unsubstantiated allegations, we are not in control at all.

What is more, these issues must not be swept under the carpet while all the media focus being on trade talks – or rather, the lack of trade talks. Thankfully, as far as trade is concerned, a number of senior figures from industry, supported by a small but growing number of MPs are expressing their concern that the “No deal is better than a bad deal” mantra is unrealistic and dangerous. Leaving the EU without a deal would be a calamity for our economy, even though one recent opinion poll suggested that as many as 74% of voters would prefer this to a supposed “bad deal”. Do they realise that planes would be unable to fly? That the M20 in Kent would be turned into a lorry park overnight?

Of course, it is possible that the Government is engaging in brinkmanship to try to twist the EU’s arm and get it to start trade talks before the three contentious issues of the Irish border, the “divorce bill” and the rights of EU citizens have been agreed, but it is a high-risk strategy and one that looks unlikely to succeed. It is based on a long-standing failure to perceive that the EU is first and foremost a political project, not a trading bloc.

This mistaken perception of the EU’s nature suggests that the transitional arrangement mentioned recently by Mrs May (where we would be able to trade seamlessly with the EU after Brexit in return for being subject to most of the EU’s rules and policed by the European Court of Justice) is mercifully a non-starter.  It is an unsatisfactory pick-and-mix deal which violates the EU’s political integrity while being an extremely bad arrangement for the UK. It remains a mystery why the EEA/EFTA option is still being ruled out of court by all senior government figures when something far worse is being publicly advocated instead.

While no sane person would disagree with the statement by David Davis that Brexit is “the most complex peacetime operation in our history”, it is now nearly 14 months since the referendum vote and we do not yet have any indication that the Government has come up with a strategy which will deliver a satisfactory break with the EU.  Thanks to David Cameron’s ban on allowing the Civil Service to work on any Brexit plan before the  referendum, the Government and Whitehall have found themselves on a sharp learning curve, but some campaigners, such as John Ashworth have been active for 20 years or more and have considerable knowledge their specialist subjects. Why are their recommendations not being adopted? Why, after all this time, is the government still seemingly confused about the difference between the Customs Union and customs clearance agreements? Why has the defence integration continued since the Brexit vote without any consultation with the military, who actually understand the issues?

It does not help when anyone who dares to stick their heads above the parapet and suggest that we are heading for a disaster is labelled a “traitor” – as was the case with Philip Hammond last week. Of course, Mr Hammond supported remain during the referendum and some ardent Brexiteers refuse to believe that anyone who did not campaign for Brexit can possibly be genuinely committed to making it happen, in spite of our own soundings which suggested that most MPs, whatever side they took in the referendum campaign, have accepted the result and will not seek to be obstructive over Brexit. More worryingly, a veteran leave supporter like Christopher Booker, whose pro-Brexit credentials are impeccable, has been tarred with the same brush for expressing concern about the direction of Brexit talks. What is the point in saying things are looking good when there is every evidence that they are not?

There are two very big worries which force concerned Brexiteers like Mr Booker – and indeed, your author – to stick to their guns. The first is that a calamitous Brexit would be grist to the mill of the hard-core remainiacs who have never accepted the result of last year’s referendum. A spike in unemployment and inflation coupled with possible food shortages would lead to calls for us to start negotiations to re-join the EU, even though we would lose our opt-outs on the €uro and Schengen along with the Fontainebleau rebate won for us by Mrs Thatcher. This would be a disaster.

Secondly, it would lead to unprecedented political upheaval. Less than a year ago, some Conservatives were convinced not just that Jeremy Corbyn was unelectable but that the Labour Party was in its death throes. Last June’s election was a rude awakening for the Tories, proving their optimism to be very wide of the mark. The mood at the Party conference was apparently very sombre indeed.

There is good reason for this, as today’s young people in particular are far more likely to support Labour than the Tories, suggesting that far from Corbyn being unelectable, he is likely to become Prime Minister in 2022, bringing with him a team of MPs who are in the main, even more reluctant Brexiteers than the Tories. The best way  – indeed, probably the only way – of avoiding this is for the Tories to deliver a successful Brexit. Analysis of voter intentions suggest that the most popular reason why voters opted for the Conservatives last June was a conviction that they would deliver on Brexit. To betray the voters’ trust  would not just hand over the keys of No. 10 Downing Street to Jeremy Corbyn in 2022; it would produce the biggest crisis in the Conservative Party since the repeal of the Corn Laws in 1846.

As  Anthony Scholefield, a CIB Committee member, pointed out in his 2011 critique of Cameronism, “Too ‘nice’ to be Tories – how the modernisers have damaged the Conservative party“,  attempts by the Tory leadership since 2005 to reach out to urban touchy-feely politically correct types have served rather to alienate many traditional supporters. As I argued a few years ago, there are plenty of people who genuinely want to vote for what Mrs May famously called a “nasty” party. I was wrong in predicting that Cameron wouldn’t win the 2015 election, but he only won it because he was forced to give in to the mounting pressure within his party to hold a referendum on our membership of the EU. It was the EU issue which also saved Mrs May’s bacon two years later. Given that a good few Tory voters (and indeed activists) still remain most uncomfortable about this move to the supposed centre ground since Cameron became leader, I believe that nothing else can save the Conservatives from calamity in 2022 except a smooth, well-managed and complete Brexit that will enable our businesses to keep trading while at the same time revitalising our fishing industry and freeing us from the clutches of the EU’s military and the EAW.

To put it another way, the Tories have a long list of EU-related sins for which they need to repent collectively, going back to the deceit of Edward Heath in the 1970s. This is their one and only opportunity to make atonement. They created the mess; it is poetic justice that they are being saddled with the task of getting us out of it. If they succeed, the country can move on after over 40 years in our unhappy relationship with Brussels and the party need never again “bang on about Europe”.  If they fail, our country may well end up marking the centenary of the resignation in 1922 of David Lloyd George, the last ever Liberal Prime Minister,  with the resignation of the last ever Conservative Premier. It really is as serious as that