Brexit was never an economic proposition

If there is one universal truth about we eurosceptics it is that, aside from hating the EU, we cannot agree on anything. Over the last three years I have had more arguments with Brexiteers than I have remainers – and made more enemies on the Brexit side than remain.

The crucial bone of contention is the mode of leaving the EU. Anything that it not “hard Brexit” is denounced. There are many who believe that Brexit is simple and that there is no cause for delay. I wish that were true. Worse than that, though, are those who know it not to be simple but maintain the pretence that it is. I have no time for intellectual dishonesty.

I am also less enthused by Brexiteers who insist that Brexit is an economic miracle waiting to happen. It isn’t. Trade is a fiendishly complex endeavour and we will doubtlessly have to march double time just to get back to where we are. All of our present trade relations are via the EU and restoring and optimising those links will take time.

Personally I see no reason to make an economic argument for Brexit. It is not an economic proposition – and if there is one thing we can all agree on it is that Brexit is ultimately in the interests of democracy. The economy is entirely secondary.

At one point I might have made the case that Brexit will bring about cheaper food, clothing and much else – but I now have serious doubts about this. Trade in the modern global system is a lot like whack-a-mole and not every thread is one you necessarily want to pull on. There are no sweeping unilateral measures we can take and and every measure we do take will have consequences. Everything we do must be done carefully and with due consideration as to the potential fallout.

If Britain is to make a success of Brexit we will need to seek out sector specific alliances and work through the multilateral system and use collective pressure to bring about the changes we want to see. There is only so much we can do unilaterally.

This is why I believe an Efta EEA Brexit would be the more intelligent path in that Efta with the UK would make the fifth largest bloc in the world and one which could bring to bear considerable pressure on the EU to drop some of its protectionist measures. In some circumstances we are more likely to achieve EU reform from the outside. Failing that, Britain is going to find it difficult going it alone.

There are some who still believe we can pick up where we left off with old allies but the old rule is still the same; twice the distance means half the trade. To an extent the internet and trade in services breaks this rule but New Zealand and Australia are in a different sphere of regulatory influence. We on the, other hand, will still be in the EU’s gravitational pull come what may.

More to the point, any alliances we make must be toward addressing particular problems – and our most pressing being that of the migration crisis where all our efforts must be focussed on those trade measures which best eliminate the push factors in Africa. We are going to have to coordinate our efforts with the EU and we will still need close cooperation in order to make an impact. We may leave the EU but we cannot turn our backs on Europe.

I take the view that Article 50 talks and any subsequent trade talks must not be viewed as a chance to get one over on the the EU. If we play that game we will lose. We have to take a more collaborative approach and for the time being we are in a mode of damage limitation. We should leave the radicalism until we have left the EU. Brexit is radical enough for the moment.

The short of it is that we need to be more honest and realistic about what Brexit will achieve economically. We are certain to take a hit and it is insulting to pretend that we won’t. We all knew Brexit would have economic consequences – and if we are honest, none of us cared. We would have voted to leave regardless.

Primarily our future prosperity depends on fixing our politics here at home. That is what Brexit is about. Our politicians continue to abdicate from their responsibilities, handing to Brussels enormous areas of policy while they tinker on the sidelines. We continue to kick the can down the road on serious economic reform and and we have only really dabbled in “austerity”. Since our politicians have been incapable of making the hard choices, we have forced their hand. Vanity spending will have to be cut, electoral bribes will have to be slashed and white elephants will have to go on the barbecue.

In this we will have a reckoning with the wastrels, posers and charlatans of Westminster. We will have some almighty rows and we will tear the status quo apart. That is primarily what I voted for. I am under no illusions that it will come at great cost, I am as worried as any remainer about what it holds for the immediate future, and I am troubled by the wrong-headed approach to Brexit. All I know for certain is that this is a thing we must do and there can be no turning back.

At heart I am a libertarian. I take the view that every entitlement from government comes as a moral cost – and everything we get from government comes at the expense of certain liberties. There is no greater means of controlling a population than to make them dependent on government.

This is the paradigm we have had ever since World War Two. It has crushed our self-reliance, it has weakened our entrepreneurial flair and it has corroded society in all manner of pernicious ways. It has made Britain a spoiled, selfish and lazy country. It has made us a command and control economy with a cosseted middle class propped up by state spending and our whole economy is a house of cards. A Ponzi scheme. And Ponzi schemes always fail.

This is why Brexit is a revolution. It is the economic and moral revival we have been unable to secure by other means. We will prosper from Brexit not because of any direct consequence of leaving the EU but by tearing down the ossified structures of yore and rediscovering ourselves.

Shortly before the referendum I was out talking to people about Brexit. I asked a lady why she was voting to leave. I told her that we probably would take an economic hit but her reply was quite simple. “Something has to change”. And that is what gives me confidence.

We were not hoodwinked by the Boris bus, we were not fooled by Russian interference or computer algorithms. We went into this with our eyes wide open. Let us not patronise or pretend. Let us say it out loud that this is not an economic venture. This is purely political and the economy must be subordinate to political concerns – otherwise we might as well go the whole hog and abolish elections.

I did not vote for Brexit to spend £350m on the NHS. I don’t think Brexit is a free trade miracle. I just know that our politics is spent and if our politics is spent then so is our economy. We cannot fix the economy until we fix our politics. Let no man or woman interfere with that. If we do not see this through then we are not deserving of prosperity.

And they’re off!

Today, our formal negotiations to leave the EU begin in Brussels. David Davis is meeting with Michel Barnier, the EU’s chief negotiator. Mr Davis said he is beginning his task “in a positive frame of mind“.

So there is finally something concrete to report after a ten days of confusion and speculation since the inconclusive General Election result. This. however, is where the certainty ends. It is almost a year since the Brexit vote and we do not know the shape of the planned Brexit deal. Of course, it is quite possible that this is a deliberate strategy to “keep our power dry”. Daniel Hannan, writing in the Daily Mail, claims that the Civil Servants have “had a year to prepare for these talks, and have put it to good effect.

We must hope so, but detail is thin on the ground. Although Philip Hammond, the Chancellor. has been widely reported as supporting ongoing membership of the Customs Union, he recently insisted that this was not the case. Speaking on the Andrew Marr Show, he said, “And by the way, we’ll be leaving the customs union. The question is not whether we’re leaving the customs union, the question is what do we put in its place.” The subject of the customs union was barely mentioned in the referendum campaign last year. It has always been a red herring. For all the otherwise mixed messages of last year’s assorted leave campaigns, virtually everyone was agreed that freedom to determine our trading arrangements would be one of the principal benefits of Brexit and that remaining in the Customs Union would place unacceptable restrictions on any such future arrangements.

The Single Market is another matter, however. Mr Hammond also insisted that we would be leaving this too. Fair enough, but it would be good to know what sort of relationship exactly he and the Civil Servants have agreed to seek if they are to avoid what he called “those cliff edges.”

He also hinted that some transitional arrangement would be sought. “We will need some kind of transitional structures and the European Union needs to understand that as well. This is not a British ask or a British demand, it’s a statement of common sense, that if we’re going to radically change the way we work together we need to get there via a slope, not via a cliff edge. That’s good for business on both sides of the English Channel.” He appeared to rule out remaining in the customs union, even as part of a transitional arrangement, but was vaguer about the Single Market – deliberately so? We will no doubt know more in due course.

This does pose the question about how much influence say he, or even Mrs May, will have. The loss of the Tories’ overall majority leaves the government more beholden to Parliament  – including Tory backbenchers – than before. Some have gone on record – anonymously – that any backpedalling on, or dilution of Brexit by the Prime Minister will result in a leadership challenge.

Mrs May will therefore have her work cut out to appease some more hard line Brexiteers, but on the other hand, she will need to keep on board those MPs are less enthusiastic about leaving the EU, who will doubtless seek to exploit any features of the end deal which would negatively affect the economy in general and jobs in particular.

Labour, however, says it will not seek to derail Brexit. During the election campaign, Jeremy Corbyn was campaigning for a different sort of Brexit but never offered any hint that he would try to undermine it.  There are two issues at play here. First, personally, Mr Corbyn has never been a supporter of the EU project. As we have pointed out, his contribution to the remain campaign was at best lukewarm and in reality, a negative one.  More to the point, outside the big cities, support for Brexit was strong in Labour-voting constituencies and Corbyn and his team rightly realised that unless he emphasised his commitment to Brexit, votes – and potentially seats – could be lost in the constituencies which historically have been Labour’s heartland. This tactic succeeded and consequentially, those Labour MPs who dislike both Corbyn and Brexit must realise that their room for manoevre is rather limited given that their party did much better than was widely predicted two months ago.

Emmanuel Macron, the seemingly all conquering French President, insisted that “the door remains open” to the UK abandoning Brexit and remaining in the EU. Dan Hannan strongly rebutted this offer. “The idea that Britain might crawl back to Brussels, apologising for its mistake, shows an extraordinary misreading of our character, our history – and public opinion,” he wrote.

It’s not just our history and character. One does not often find oneself in agreement with John Major, but during a recent interview on BBC’s Radio 4, he made the point  that the EU has never really been a big priority for most UK voters. Ask any veteran UKIP candidate or even the Lib Dems, whose pitch to the supposed “48%” in the recent General Election campaign fell rather flat, and they would concur 100%. A vocal minority notwithstanding, most people, whichever way they voted in June last year, just want the government to get on with it.

And this is what it is finally doing. We can but hope that everyone will be satisfied with the result.

 

Photo by rogerblake2

Rejection of Theresa May’s little Englander ‘Brexit’ is splendid news

By Ambrose Evans-Pritchard. This article first appeared in the Daily Telegraph.

For liberal, free-market Brexiteers, the election shock is a gift from Mount Olympus. We are dancing cartwheels and quaffing our sparkling Kentish wines.

Theresa May’s plummeting star is an entirely unexpected chance to refashion British withdrawal from the European Union along different lines. It re-opens the possibility of a ‘Norwegian’ solution or close variant, an option that she shut down prematurely without debate because it limits her ability to control inflows of EU workers.

Mrs May sees Brexit through the fatal prism of migration, borders, and criminal justice – the déformation professionnelle of the Home Office – strangely oblivious to the immense economic risks of pursuing a narrow strategy to the detriment of all else.

Her vision is irksome to those of us who backed Brexit chiefly in order to restore the law-making prerogatives of Parliament, and to keep a safe distance from an EU that must evolve into a unitary political state if the euro is to survive. Such a destiny is self-evidently incompatible with British democracy and self-rule.

Mrs May is a Remainer who tries too hard to compensate. She has misunderstood the subtleties of Brexit, hijacked the Referendum for the better part of a year, twisted its contours, and seems unaware how her strategy is playing into a corrosive and false narrative taking hold in the world: that the British people are turning nasty and nationalist. So let us begin again.

The shrunken Tories will have to rely on the Ulster Unionists (DUP), who will not brook a hard economic border with the Republic of Ireland.

They will also have to listen more attentively to the Scottish Conservative leader Ruth Davidson and with her triumphant vanguard of Westminster MPs. She is pressing for the “largest amount of access” to the EU single market.

The balance of political power has changed. To the extent that this safeguards the unity of these Isles – the foremost priority – it is a blessing.

The election was not a rejection of Brexit, as Europe’s press seems to suppose. Some 84% of votes went to Brexit parties. But it was certainly a rejection of Mrs May’s particular variant of Brexit. Call it ‘hard’ if you wish. I prefer to call it insular, pedantic, and illiberal.

The natural fit at this stage is the European Economic Area (EEA), the Norwegian option that was once held out as the Holy Grail by Brexiteers of gradualist philosophy, but was subsequently rubbished by the tub-thumpers and Burka banners. The party of this ideology secured 1.8pc of the vote on Thursday, nota bene. It has no legitimate veto over anything.

The EEA would in principle allow Britain to preserve open trade with the EU single market and retain passporting rights for the City of London, the goose that lays the golden egg for a very vulnerable British economy.

“We should use the EEA as a vehicle to lengthen the transition time,” said Lord (David) Owen, one-time Labour foreign secretary and doyen of the EEA camp.

“Theresa May’s massive mistake has been to allow talk of a hard Brexit to run and run, and to refuse to frame a deal in a way that makes sense for the Europeans. The logic of the EEA is irrefutable,” he said.

Lord Owen said the EU’s withdrawal clause, ‘Article 50’, is designed as a deterrent to stop any country leaving. It leads to a cliff-edge, facing Britain with a take-it or leave-it choice when the clock stops ticking. “This puts us in a dangerous position,” he said. The EEA is a way to overleap this Article 50 trap.

Meredith Crowley, a trade expert at Cambridge University, says the great worry is that tariff barriers into the EU will jump to 12pc or 15pc overnight on UK exports of cars, engines, auto parts, and a range of machinery, setting off an exodus of foreign investment. “Joining the EEA would shut that threat down,” she said.

Critics argue that the Norwegian route is tantamount to remaining in the EU, but on worse terms, with no vote over policy: “While they pay, they don’t have a say,” said David Cameron before the Referendum.

This is a canard. EEA states are exempt from the EU’s farming and fisheries policies, as well as from foreign affairs, defence, and justice. They are free from great swathes of EU dominion established by the Amsterdam, Nice, and Lisbon Treaties.

Above all, EEA states are not subject to the European Court’s (ECJ) limitless writ over almost all areas of law through elastic invocation of the EU Charter of Fundamental Rights. The ECJ would no longer be able to exploit the Charter – in breach of Britain’s opt-out under Protocol 30 – whenever it feels like it. We would no longer be under an EU supreme court asserting effective sovereignty. These are not small matters. They are elemental.

Yes, the Norwegian option is a compromise. We would continue paying into the EU budget. This would do much to defuse the escalating showdown over the €100bn bill for EU reparations, poisonous because of the way it is presented. The transfers would become an access fee instead. Norway’s net payments in 2014 were £106 a head. Let us not die in a ditch over such trivia.

Britain would have to tolerate relatively open flows of migrant workers. But contrary to widespread belief, the EEA does not entail full acceptance of the EU’s “four freedoms” – movement of goods, services, capital, and people. Nor does it give the European Court full sway on these issues.

The arrangement allows “a lesser degree” of free movement than within the EU. The language covers the issue of residence, an entirely different matter from the rights of EU citizenship created by the Maastricht Treaty. The EEA permits the sort of emergency brake on migrant flows that was denied to Mr Cameron in his last-ditch talks with the EU before the Referendum.

The point in any case is that the EEA would be a temporary way-station for ten years or so, giving us time to negotiate 80 trade deals with the US, China, Japan, India, Mercorsur, and others without a gun held to our head.

Britain is a contracting party to the EEA. The agreement is binding on all members, and entails rights under the Vienna Convention on the Law of Treaties. Yes, we would need the goodwill of the EEA-trio of Norway, Iceland, and Liechtenstein, and the EU itself.

It is possible that some in the EU are now so intent on punishing Britain – or carving up post-Brexit spoils – that they would stop us pursuing this course. But that would be a hostile act. It would certainly clarify the issue. We would then know exactly what the real agenda was in Brussels. It is better to know this sooner rather than later.

There is no such thing as a soft Brexit. Wise statecraft can nevertheless work through this thicket. The EEA option is the best political solution on offer given the new circumstances. It is a graceful way out of the impasse for all parties, not least for a divided EU with a looming budget crunch and a mountain of other problems to deal with.

Tory ultras might balk at a settlement so far short of total liberation. I balk myself whenever I have to listen to the insolence of Jean-Claude Juncker. Yet Tory ultras did not win a mandate in this election for their hair-raising adventure into uncharted waters.

The vote changed the dynamics of Brexit. Compromise is now ineluctable. Jeremy Corbyn and his army of the young may have done this nation a favour.

Mayday, Mayday! Brexit Mayday!

Be not intimidated…nor suffer yourselves to be wheedled out of your liberties by any pretense of politeness, delicacy, or decency. These, as they are often used, are but three different names for hypocrisy, chicanery and cowardice. ― John Adams, 1765, British Citizen, Founding Father and 2nd President of The United States of America

It’s over! It’s over, bar the ridiculous charade of ‘tough negotiations’. The thoroughly nasty and vindictive European Union (EU) has won. And gallant, heroic and duped Mrs May and her negotiating team have already lost. We can forget a fair deal on Article 50 of the Lisbon Treaty and a free trade agreement.  And, unlike in normal divorce proceedings, there is no independent arbitrator to ensure something approaching ‘fair play’ where differences are irreconcilable.

In any negotiation the parties have to progress in good faith because each knows things the other cannot know; privileged information that could be used by the unscrupulous to exploit the situation.  Our contract law consequently places obligations on the parties and means of redress through the courts when one party abuses its position.  Unfortunately the EU, so far, appears to be negotiating in bad faith, not telling the full truth about what can and cannot be negotiated, and the UK is buying the deceptions considerably weakening our position; the EU are effectively ‘laying down the law’ and simultaneously getting us ‘over a barrel’.

Ambassador (rtd) Leonidas Chrysanthopoulos (Former Secretary General of the Black Sea Economic Cooperation Organization) was on the inside of the Article 50 negotiations when it was included it in the Lisbon Treaty. He has revealed that Article 50 was only intended to cover financial arrangements for a Member State leaving the EU. The remaining conditions now being set out by the EU are outside its scope and can only have been included to pressurise us, exact a far heavier price and coerce others into not leaving the EU.  It is one thing freely to negotiate issues that are outside the scope of Article 50 but quite another dishonestly to hold a sword of Damocles over Mrs May’s head that ‘everything must be agreed before anything is agreed’.   Obviously Europhiles on the inside are not going to own up to this subterfuge; they haven’t up to now have they?

Then there is the misinformation about the Single Market, free movement of people, costs of Single Market membership and the jurisdiction of the EU’s European Court of Justice (ECJ) etc. Different arrangements are open to members of EFTA; the European Free Trade Association who are also members of the Single Market, (the European Economic Area (EEA)) but not Member States of the EU and its Customs Union. They can and do negotiate free trade agreements with other countries. Free movement can be unilaterally suspended by any member of EFTA by invoking Article 112 (the Safeguard Provisions) in the EEA Agreement. The UK as a member of EFTA would be able to do the same, if we chose to leave the EU and join this trading association of independent European countries to remain in the EEA.  Also, it costs the EFTA countries little financially to be members of the EEA although Norway does separately contribute towards EU facilities or services used and to development funds.  The ECJ only has jurisdiction over the EU Member States and hence over part of the EEA, but not over EFTA (i.e., non-EU) countries.

There is also increasing evidence that the EU is out to punish us for the temerity of Brexit. Their ‘negotiating position’ is hardening and the language becoming ever more strident.  For example, see Britain needs fighting ‘Plan B’ for trade as EU turns screws on Brexit by Ambrose Evans-Pritchard first published in the Daily Telegraph 26th April 2017. They can also be very obstructionist. For example, see The six Brexit traps that will defeat Theresa May by Yanis Varoufakis, former finance minister of Greece, published in The Guardian 3rd May 2017. Perhaps worse, the EU knows how to inflict real damage on our economy in the event of us leaving the Single Market (EEA) and becoming a ‘third country’ with or without a trade deal.  On the outside, we would face external tariffs, non-tariff barriers (such as special rules, standards, certifications, approvals and inspections) and a massive expansion of Customs Clearances both here and in the protectionist EU (which they might want us to pay for as well).

What we are seeing is a well-established modus operandi for the EU which can be explained in a few quotes from Jean-Claude Juncker, President of the European Commission:

When it becomes serious, you have to lie.

We decide on something, leave it lying around and wait and see what happens. If no one kicks up a fuss, because most people don’t understand what has been decided, we continue step by step until there is no turning back.

There can be no democratic choice against the European treaties.

Article 50 negotiations as they now appear can’t achieve a reasonable outcome in our interests (we are being misled) and who would actually choose to touch these EU people  – gangsters more like – with the proverbial barge pole?  We need a plan to out-manoeuvre them, a strategy to ensure they cannot hurt us and to avoid any negotiating except where we are the visibly stronger party; money and concessions invariably flow from the weak to the strong.  These are high stakes and if we get it wrong the EU will likely exact a price worse than they’ve inflicted elsewhere, notably upon Greece.

We could ‘weaponize’ our ingenuity, industry and research to redress the balance of negotiating power, for example, by investigating background facts, intelligence gathering and analysis; something akin to the backroom work of Bletchley Park. There are obvious skeletons in the EU cupboard and some that need digging much deeper, such as the sinister origins of the EU and long-standing anti-British sentiments.  The earliest predecessor of the EU (the European Coal and Steel Community) was profoundly anti-British and had an aim to damage our then industrial power. We were saved by the then Prime Minister Clement Attlee from this calamity, only to have later Prime Ministers and British civil servants collude in the EU’s ‘management of our decline’.  Former EU insiders ‘coming clean’ could be goldmines of information.

We could cultivate allies and build alliances with those we can do business with to mutual benefit.  The obvious ones are EFTA, probably by becoming a (temporary) member. The media here and overseas, up till now mainly Europhile could be another ally. Communications to influence public opinion are essential, otherwise the EU’s propaganda arm and fellow travellers will use it against us.

There are other things that can also be done to defend our national interests once it is recognised that the EU’s actions relating to Article 50 are part of a major scam.

England has saved herself by her exertions, and will, as I trust, save Europe by her example. William Pitt the Younger 1805

Brexit – no U-turns

We are still only in the preliminary stages of the Brexit negotiations. It has taken a long time to get to this point and Mrs May has already faced a tough battle to reach the point where Article 50 could be triggered. Still, so far, she has delivered. She promised that this would happen before March 2017 and in spite of the legal challenges and the opposition of some MPs along with considerably more Lords, she has been as good as her word.

The battles which lie ahead will be harder still. Even if there is a desire for an amicable agreement on both sides, a seamless exit from the EU with our trade virtually unaffected was always going to be a tall order within the two-year timescale of Article 50.

In calling a General Election, Mrs May had made life somewhat easier for herself at home. By March 2019, campaigning would already have begun if the most recent parliament had run its full term and the UK electorate would have been preparing to head to the polls in May 2020. Assuming the polls are correct and she wins a further mandate, she will have a couple of extra years’ breathing space if a transitional deal becomes an essential part of the exit route or else both her government and the EU agree on an extension to the negotiating period.

Failure, however, is not an option. Her party still has a massive uphill struggle to regain the trust of many Eurosceptic voters, some of whose memories go back to Edward Heath’s betrayals in the early 1970s and the bully-boy tactics used by John Major to railroad the Maastricht Treaty through Parliament in 1992. When Mrs Thatcher’s eyes were opened to the true nature of the European project, it was not Labour or Lib Dems but Tory grandees like Michael Heseltine and Geoffrey Howe who stabbed her in the back and engineered her downfall.

Thankfully, the recent Tory intakes of 2010 and 2015 have tipped the balance and while withdrawalists were still a minority among the party’s MPs in last year’s referendum campaign, there are plenty of Conservative anti-EU voices in Parliament whose commitment to withdrawal is every bit as strong as that of the most ardent “kipper”. Any back-tracking by Mrs May would rip her party apart – and she knows it.

On a more positive note, wrapping up the EU issue once and for all, laying to rest a running sore within her party which has festered for decades. It would be hugely beneficial electorally, rendering the Lib Dems totally irrelevant while causing many former UKIP voters to ask what the party they once supported now stands for.

So what is Mrs May up against in Brussels? The European Council met at the end of last month and its guidelines are published here. Agreement must be completed on three initial areas – the Irish border, the UKs contribution to the EU budget and the rights of EU citizens living in the UK – before discussions on the framework for a future EU-UK relationship.

The divorce talks will take place between the UK and an organisation whose reputation for bureaucracy is rooted in the top-down approach to law and government which characterises many of the member states. Our history is very different. We have been far less likely to legislate to the same degree or in the same sort of detail as our continental neighbours. This dislike of pages of small print has been something of a handicap throughout our sad 44 years as an EU member state. During his time as Prime Minister, John Major was once told by Germany’s former Chancellor Helmut Kohl to “go and read the treaties.” UK politicians, even Prime Ministers, have historically had little idea about what they are signing up to. Unlike their Continental counterparts, they don’t do detail when it comes to the EU.

Mrs May has a reputation for being good at detail, so while Jean-Claude Juncker, the Commission President, may be right in general terms when he said that “I have the impression sometimes that our British friends do underestimate the technical difficulties we have to face,” we can but hope that in the period since becoming Prime Minister, Mrs May has assembled a team around her who, we hope, are preparing to get to grips with the complexities of the negotiations which lie ahead.

On the face of it, the EU is merely requesting the UK to work through a number of technical issues which need to be addressed to ensure a smooth divorce and can therefore claim that it has no wish to punish the UK – just merely to conduct a separation according to a set of rules to which everyone, including the UK, has agreed.

But is this really an accurate picture? Or will the EU set out to make us as miserable as possible while still claiming to be acting according to the rules?

Yanis Varoufakis, the former Greek Finance minister who resigned when his party leader caved in to demands for more austerity, says that Mrs May should avoid negotiating with the EU at all cost. “If she doesn’t do that she will fall into the trap of Alexis Tsipras {Greece’s Prime Minister}, and it will end in capitulation,” he told the Daily Telegraph.

“They will give you the EU run-around. You won’t always know exactly who to talk to and that is deliberate. When you make a moderate proposal they will react with blank stares and look at you as if you were reciting the Swedish National Anthem. It is their way of stonewalling.” Professor Varoufakis has suggested that the UK should adopt the EEA/EFTA route, or “Norway Option”, as a transitional arrangement as “they could not refuse this. They wouldn’t have a leg to stand on.”

Mrs May has ruled this out in her utterances so far, although she has not ruled out a transitional arrangement nor given away much detail as to what this might mean.

Varoufakis’ unhappy experience with the EU is not unique. One country has left the European project – Greenland. The EEC (as it then was) was distinctly uncooperative and only when the Greenland government threatened to prevent all EEC boats from fishing in its waters on independence that a deal was finally agreed.

Some economists, notably Professor Patrick Minford of Cardiff University Business School, said that Mrs May and her government need to have a fall-back option if negotiations fail. His proposal is truly radical – unilateral free trade with no tariffs whatsoever. Ambrose Evans-Pritchard called it a “heady Cobdenite manifesto” – and a world apart from Varoufakis’ suggestion.

Mrs May, who was accused by one EU diplomat of living in a “different galaxy”, has indicated that she is not going to be cowed by the EU. On last Sunday’s Andrew Marr show, she said “I am not in a different galaxy. I think what this shows, and what some of the other comments we’ve seen coming from European leaders shows, is that there are going to be times when these negotiations are going to be tough.”  She is unquestionably correct in this assertion.

She has, nonetheless, a strong hand in a few areas, notably fishing, where lack of a deal would hurt the EU more than our fishermen. Security too is not an area the EU would want to leave unresolved, We have the most proficient counter-terrorism operational capability of any state in Europe, according to Veterans for Britain. Indeed, it is the five Anglophone nations or “Five Eyes” – the UK, the USA, Canada, Australia and New Zealand, whose intelligence sharing does more than anything else to keep the Western nations safe. The EU would not want to lose out on that link with our security services.

But one other important point is that it is not in the EU’s interests to be seen as punishing us. If it really plays rough, we can let the whole world know. It cannot bully us as it did with Greenland and expect that such behaviour will be ignored by the world’s media. Such behaviour, after all, would lump the EU in the company of the former Soviet Union, the Inquisition and North Korea as being insanely hostile to dissent. At the same time it would send a message to the citizens of the other EU-27 that they are trapped and there is no way out – a recipe for a violent implosion at some point in the future. It would also cause accession states like Serbia and Albania to draw back while snuffing out the residual support for EU membership in countries like Norway and Iceland.  In this country, any heavy-handed tactics by a German-led EU is likely to unite all but the most diehard remainiacs in a determination to  support the Government in toughing it out in order to regain our freedom.

Some prominent withdrawalists have long claimed that Article 50 is a trap, although this has been refuted by other supporters of Brexit.  We are about to find out who is right.

The big EU-UK question

Does the BREXIT negotiating strategy being adopted by our Government stand much chance of success?

The government is exuding a great deal of confidence about the future outcome of its negotiations to leave the European Union (EU). It would be nice to think we can believe its claims, but we need to ask whether they are realistic or whether we should instead be adopting a different, less ambitious, less complex, novel and consequently less risky, approach.

Whilst predicting the future is always guesswork, we should at least attempt to identify the major ‘showstoppers’ and risks to a successful outcome. To put it another way, we must consider some really important underlying assumptions which will need to be right or we could face a potential disaster. We can but hope that this has already been done by the government already as a preliminary to setting negotiating goals and working out our Prime Minister’s winning strategy.

This list is not necessarily exhaustive but includes some significant underlying assumptions upon which is predicated the success or failure of our BREXIT negotiations:-

  1. That pragmatic enlightened flexible mutual self-interest will prevail in the EU hierarchy;
  2. That rational economic considerations override EU political priorities or malice;
  3. That UK’s loss through failure to reach a trading agreement is EU’s loss as well;
  4. That Mrs May can set the EU’s negotiation strategy;
  5. That The World Trade Organisation (WTO) option for trading with the EU is viable;
  6. That negotiating team and administrative arrangements can be adequately resourced.

Let us consider these assumptions in order:-

(1) – The EU hierarchy does not have a great history of actions based on pragmatic enlightened flexible mutual self-interest, but rather the opposite. It has its ideological goals (e.g. increasing Superstate centralisation) which are unremittingly pursued whatever the undesirable consequences. It has inflexible, slow bureaucratic processes and procedures; it is somewhat dominated by the German – French duopoly.  The final deal will be further complicated by the Byzantine high level process involving the vote of the (presently somewhat posturing and hostile) European Parliament and unanimous agreement of all the 27 remaining Member States (presumably pursuing their own self-interests, such as Spain over sovereignty of Gibraltar).

(2) – The EU’s political priorities and ideology have traditionally overridden economic considerations.  Consequently, for example, the relentless economic hardship imposed on the southern European member states, Greece in particular, by the Euro. It is claimed that the austerity imposed on Portugal was a signal to larger economies like Italy that they must tow the German line.  Usually the EU takes years to negotiate free trade agreements (FTAs) largely because their scope extends far beyond purely trade considerations to include ideological and political features.

(3) – The EU could actually profit at the UK’s expense from a failure to agree a free trade agreement. Over the years, the EU has encouraged the transfer of economic activity from the more advanced Member States to the less developed, often through financial inducements. The EU’s Customs Union is also inherently protectionist, erecting barriers to imports from third countries.  Whilst there are likely to be some business losers, overall EU economic activity could remain the same, and there would be some winners, even in the UK, such as firms able profitably to expand in their protected EU home market.

(4) – There is limited scope to influence the EU’s negotiation strategy or priorities in favour of the UK’s interests. Commonly in contractual arrangements, money and concessions flow from the weakest – or more desperate – party to the strongest or more indifferent. Over the years the UK has not had that much influence in the corridors of EU power to protect its interests.  Leaving must inevitably reduce influence rather than strengthen it especially where any malevolence, greedy envy or dishonesty towards the UK is to be found.

(5) – Trading with the EU under WTO rules is more problematic than closely integrated trading as part of the Single Market – and in some instances, impractical or uncompetitive. The EU’s Customs Union operates tariffs and effectively non-tariff barriers (rules, regulations, inspections, approvals, standards, etc.) to outside imports from third countries, which the UK would become.  WTO rules do not change this situation, and even a free trade agreement may not help much where EU-imposed conditions are impractical to follow.

(6) – The resources needed to negotiate  – and in particular to protect our interests and not be ‘taken for an EU ride’ – have to be built up quickly and without in-fighting. Also, after leaving the EU, its Customs Union and the Single Market, the additional administrative arrangements here and in the EU, such as customs clearance or inspections, have to be in place and running smoothly. Unfortunately, over the years the UK has lost much expertise and knowledge of administrative systems thanks to the transfer of competences to the EU or the operation of the Single Market, whilst the world of intra-EU Member State trade has moved on with increasing volume and complexity.  Additionally, the UK Government has a poor record with large, complex projects – especially relating to information technology.

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In summary, consideration of these assumptions gives some indication of how risky Mrs May’s planned BREXIT strategy is if we are to take it at face value. There exists a significant likelihood of it being ‘derailed’, or at least not turning out as expected.  These six points are obvious areas for concern. Assumptions, if incorrect, cannot be changed, but we can however change our response before and hopefully well before, the worst happens.

There is more than one path for leaving the EU, whilst retaining a satisfactory trading relationship; perhaps our prime minister has something up her sleeve.  It is not impossible that as an interim solution, she may be considering temporary membership of the European Free Trade Association (EFTA) which would give us continued access to the European Economic Area (EEA) while still allowing us to leave the political clutches of the EU. This route would allow the UK to control levels of EU migration through unilaterally enacting the Safeguard Provisions in Article 112 of the EEA Agreement.  Remaining within the EEA (UK is currently a member through being in the EU) would retain trading continuity with the EU with the least disruption. Given a choice negotiating with future friendly EFTA partners is more attractive than negotiating with somewhat disgruntled soon to be ex-EU partners.