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December 11, 2018

The Brexit process will go down to the wire - all the way into 2019

The ultimate outcome of Brexit is uncertain, but we are now back in the scenario we had previously expected: it will go down to the wire, all the way into next year and possibly right up to the March 29 deadline.

Theresa May pulled the parliamentary vote she would have lost, and is going back to Brussels to re-negotiate, just as we predicted yesterday. The EU said immediately - and rightly - that it will not re-open the withdrawal agreement itself. When pressed on this issue, May did not comment nor say she would reopen the agreement, so we are now looking at a Council declaration to clarify the agreement's provisions. This is what the European Council did to overcome Dutch opposition to the EU-Ukraine association agreement. It drafted a separate declaration saying that this agreement was not a precursor to future membership, and that it did not entail security guarantees or lead to financial assistance. A Council declaration is binding, but it is also true that in a legal case the ECJ would give precedence to the agreement over the clarification. It is one reason why this procedure might not be enough to swing a majority of MPs behind the withdrawal agreement. And this is why we think it will go down to the wire.

The UK government is seeking a binding declaration that the backstop period cannot be permanent. This does not equate to a right by the UK to end this period unilaterally, which would constitute an abrogation of the backstop. But the language would have to include some kind of process, as well as a definition of "finite" not necessarily in terms of years but in terms of procedures. For instance, if the UK and the EU were to agree a trade agreement in 2020, but this agreement is not ratified three years later, it would be reasonable to conclude that the EU is not delivering on a trade agreement. There would have to be clarification that the UK would, under such circumstances, be able to end the backstop period. We think it is going to be hard to nail this in a document, except in very broad terms. So the issue of re-opening the withdrawal agreement will probably come up, especially if the declaration is not enough to secure a majority - which we don’t think it will be.

Another reason why we expect this process to go down to the wire is that the parliament yesterday decided that the statement given by Theresa May supersedes the requirement under the first Grieve amendment to notify parliament by January 21. The government says it wants to stick to that commitment, but this deadline is now gone. This is why we would urge readers not to rely on a superficial knowledge of parliamentary procedure, and to extrapolate future events based on possibly misleading assumptions. Another example was the frantic discussion ahead of yesterday’s official delay on whether the parliament might actually be able to stop May pulling the vote. In the end nothing happened, except for comment by the Speaker of the Commons that the decision to pull the vote was regarded as discourteous. Never underestimate the powers of the British government to control the agenda of the House.

Is it possible to make predictions? Not really, but a negotiated deal still remains the most likely Brexit outcome as the illusion of choice evaporates in the final stretch. The EU will at one point have to foreclose on the second referendum option, by refusing a Brexit extension for the purpose of holding another referendum. At the moment the pro-EU crowd is split between support for a second referendum, support for alternative Brexit deal, and support for May’s deal. Those three groups will have to unite - and the EU will have to play its part to push for this.

Wolfgang Munchau writes: I am wondering whether readers have ever noted the tendency in Brexit discussions to resort to the passive voice: a no-deal will be stopped, or variants thereof. It is worth asking: who exactly stops it? In journalism school we were taught that the passive tense either hides a lack of knowledge or signals a wilful act to hide an unpleasant truth, or both.

So now let’s try to put this statement that a no-deal Brexit will be stopped into the active voice. First there will have to be a robust parliamentary majority to stop the default option of a no-deal Brexit. Robust does not mean big, but strong enough to carry through the entire process - not just passing a parliamentary motion. Parliament can stop a no-deal Brexit through the following procedure: it passes a vote of no-confidence in the government. It could then persuade Jeremy Corbyn and the rest of the Labour Party to unite on this procedure or, alternatively, it could use the provisions of the Fixed-Term Parliaments Act to install a technical cross-party administration with the sole task to conduct the referendum. This new government would ask the European Council for a delay; the European Council would have to grant the delay unanimously; the government would introduce the legislation for the referendum and the necessary legal changes to the withdrawal act and the repeal act to extend the deadline; the referendum would be held, and the result implemented. Alternatively, it is conceivable that the robust parliamentary majority would try to drive this entire process from the backbenches and force a reluctant government, maybe with the help of the supreme court, to implement the policies against its will. Such a government would resign, or try to assemble a majority for new elections. The provisions of the Fixed Term Parliaments Act would kick in. Back to the above.

And just consider the political dynamics of such a parliamentary putsch. Do we really think the ensuing referendum would be about Europe? Is this is fertile ground for those who want to make the case for Europe?

I can see why some of the ultra-Brexiters are relishing this prospect. My conclusion is that there may well be a parliamentary majority against a no-deal Brexit, but it will not be nearly robust enough to go all the way. In other words. the only thing that will stop a no-deal Brexit is a deal.

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December 11, 2018

How a German transport strike drives home the consequences of under-investment

We would not normally take an interest in a rail strike. But in Germany, where one occurred happened yesterday, the impact is immediately dramatic because of years of underinvestment in infrastructure. The strike lasted for only four hours during yesterday morning’s rush hour, but produced one of the worst experiences of traffic chaos in recent memory. Commuter trains were severely delayed. National trains were cancelled. The train stations were unable to keep passengers informed. People tried to use their cars, but that resulted in the mother of all traffic jams. Its total length measured a total of 400km, unprecedented even by German standards. 

A union that represents rail workers said it was very happy about how big the impact of the strike was, considering the rather limited scale of the action. The experience might now encourage the rail operator to accept their pay demands.

FAZ notes that the strikes highlight the disastrous state of German transport infrastructure - the result of years of under-investment. All means of transport are affected by this, including airports. Another union is threatening further industrial action by air traffic controllers in the New Year. 

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