Sunday 18 November 2018

Hard Brexiteers look wounded but Irish firms can't take soft Brexit for granted

Leaked tapes show British Secretary of State Boris Johnson is deeply frustrated with the direction of the Brexit process
Leaked tapes show British Secretary of State Boris Johnson is deeply frustrated with the direction of the Brexit process
Richard Curran

Richard Curran

From Boris Johnson's taped ramblings and UK government resignations to House of Commons votes on House of Lords amendments, Brexit has become messy and utterly confusing for many.

The British government won the early votes on the Brexit Withdrawal Bill, but only after agreeing to something of a last-minute climb down on Tuesday.

If its Brexit deal is voted down by the House of Commons in November, the British government will agree to a parliamentary motion, which will determine where it goes from there.

This further weakens the British government's negotiating hand with the EU, and could be seen as helping a softer Brexit. However, it might also show how even in November (nearly two-and-a-half years after the referendum) this process could still be thrown into complete uncertainty.

Predictions about the future and what will happen are now devalued to the level of sheer speculation. Nobody knows what will happen, not even the main protagonists.

In an attempt to pick through the confusion and read the tea leaves, here are the reasons for optimism and the reasons for pessimism from an Irish point of view.

I hasten to add there is no one "Irish point of view" or single positive outcome for this country. Additional FDI jobs to Dublin might do little for small firms along the border. The maintenance of an open Border with the North might be good for those who cross it regularly, but the cost of winning that could be a tariff and customs regime between Ireland and Britain, which is detrimental to Irish businesses that export across the Irish Sea.

The best way of articulating an outcome that is good from an "Irish point of view" is to measure the final Brexit outcome against the current status quo. Put in very broad terms, the greater the change from the current Ireland/UK position, the worse the outcome.

Reasons to be cheerful

1. Mr Johnson's outburst last week, which was caught on tape, clearly depicted a hard Brexiteer who is not happy with the way things are going. His dismissal of the importance of the Irish Border question and the weakness with which Brexit is being pursued, all suggested he is frustrated because he believes his government is heading towards a much softer Brexit than he would have liked.

Throw into the mix the fact David Davis didn't get what he wanted on the date attached to the backstop proposal, and the fact that other Brexiteer ministers, like Michael Gove, are being more realistic about what kind of Brexit can be achieved, shows the hard Brexiteers are losing.

2. The British government did finally come up with a backstop proposal, which received a cautious welcome from the Irish government. It showed some progress in their thinking on the customs aspects of Brexit and how an open border could be achieved.

It also acknowledged how aligning regulations is also necessary in resolving the Border issue. The fact all of the UK has been included in the backstop proposal could indicate that all of the UK would remain within some kind of customs union and regulatory alignment with the EU indefinitely.

3. Theresa May appears to be getting the upper hand at Cabinet, despite having a Brexit sub-committee with a small majority of hard Brexiteers on it. Dominic Cummings, the man who designed and led the Leave referendum campaign, recently wrote a lengthy blog on how the Brexit delivered through the referendum was not now going to happen because it was getting bogged down in complexity, lack of momentum and political mismanagement by Mrs May and her government.

Seeing Mr Cummings so frustrated might give many people in Ireland a warm feeling that Brexit is getting softer and, therefore, will end up much closer to the status quo.

Mrs May's early rhetoric around "Brexit means Brexit" and "no deal is better than a bad deal" is not being repeated much these days. Instead, she is talking about making "unpalatable" compromises. Previously bullish hard Brexiteers are talking about Brexit as a process not an event. They believe they will get to their Brexit destination, but it will take longer. This is a long way from bragging about signing up a new trade relationship in a matter of months.

4. The British government has had to back-track on everything so far. It began with the exit bill and has gone through the need for a transition period, a backstop on the Border, staying with EU standards and acknowledging that a new trading relationship will take longer to negotiate than originally thought.

So, Brexit won't be that much different to what we have now? It may even be the so-called 'Bino': Brexit in name only. If only we could be that sure.

Here is the other side of the Brexit coin

1. The backstop proposal is still a fudge. The fact the British government wants to keep all of the UK and not just Northern Ireland in a regulatory alignment has made Brussels jumpy. The EU's chief negotiator for Brexit, Michel Barnier, doesn't like the idea. We in Ireland don't care so much, but it could serve to drive a wedge between Dublin and Brussels in the months ahead.

With the June summit deadline missed, we are heading for some late-night horse-trading in the run-up to an October deadline. Leaving so much to the last minute could be bad for Ireland.

2. The backstop proposal is still well short of guaranteeing an open Border and, in truth, unless the British decide to stay in a customs and regulatory union and not negotiate separate trade deals, they cannot guarantee a fully open Border. This unfixable problem stands in the way of an EU/UK Brexit deal and, therefore, could trigger a collapse of the talks and a very hard Brexit with no deal at all.

3. Mr Johnson was saying what he really felt on tape last week. As a Brexiteer, he is deeply frustrated with the direction of the process. As things are shaping up, Britain could end up with a €40bn bill to leave the EU and be tied to a customs union indefinitely, while not having a seat at the EU table to negotiate rules and deals in Brussels. It would be a rule-taker and not a rule-maker in terms of regulation. It could not negotiate significant new trade deals and would, as Mr Johnson put it, be permanently in the "EU's orbit" - not in the EU, but not circling around and unable to escape it.

Because this is such a bad outcome for Brexiteers, they will be reluctant to accept it. So too might many of the more moderate backers of Brexit who will wonder why they were bothering to leave at all. This could encourage a more chaotic end to the process.

4. What did Mr Johnson mean when he predicted a "meltdown" was coming? He may have meant a meltdown from a Brexiteer's perspective, as they continue to be denied the kind of Brexit they want. Or he may have meant a collapse in the process, which will be difficult but (in his view) will work out all right in the end. Perhaps he knows there has to be a collapse in talks and sees that as inevitable.

The EU will drive a very hard bargain between now and October, knowing no British government will want to have parliament running the process from November onwards. This could further soften up the Brexiteers for a more modest EU exit.

Don't be surprised if by January 2019, many of these questions have still not been fully answered. All we know is the uncertainty will continue and this divisive issue could go on and on and on.

Indo Business

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