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June 05, 2017

What happens to Brexit if Labour wins?

Today is Pentecost Monday, a holiday in some parts of Europe, and many of our usual specialist news sources are not publishing. The general news is dominated by the London Bridge terror attack on Saturday night - a story to which we have nothing to add.

We would like to take this moment as an opportunity to talk about Thursday’s elections in the UK. The polls have narrowed since the elections were called on April 18. The gaps between the individual polls is astonishing. Given the experience of the 2015 elections and the Brexit referendum, it is fair to say that the error margin for UK election polls is rather large. Perhaps not quite as high as 10%, as Nate Silver speculated, but large enough to render any mid-point estimates meaningless. The fact is that Labour is within the margin of error of a victory - or least of a position where Jeremy Corbyn can form a minority government with the support of the SNP. Most commentators believe this is impossible, and most Labour candidates seem to agree as well. But, then again, most commentators did not see Labour’s resurgence coming either, having written off Jeremy Corbyn as an unreformed Trotskyist. 

We are hearing that one of the polls already has Labour one point ahead in terms of unfiltered responses. The main determinant of the election result will therefore be turnout. Labour is the overwhelming favourite among young people. They didn’t turn out in sufficient numbers at the Brexit referendum but, if they turn out now, there could be a surprise. And May has alienated some of the Tories' most loyal older voters with her policies on social care. Here is where the FT's polls of polls is now:  

In view of these changing polling numbers we are surprised that the British media are not discussing the question of what will happen to the Brexit process if Labour wins. Given that Brexit is the single most important policy issue for the country, surely a change of government at the start of an Article 50 negotiation process would be a big deal.

What makes this scenario particularly interesting is not the specific position of the Labour Party but how that might interact with the EU’s position. 

Towards the beginning of the campaign, Corbyn laid out Labour’s position with great clarity:   

“This election isn’t about Brexit itself. That issue has been settled. The question now is what sort of Brexit do we want — and what sort of country do we want Britain to be after Brexit?”

Labour’s shadow Brexit secretary, Sir Keith Starmer, was pro-Remain like Corbyn, but he, too, has come around to the view that the Brexit decision has been taken in principle, and the debate is now about details. We noted an interview with him in the BBC over a month ago in which he said that continued membership of the customs union should at least be an option though he accepted that single market membership would not be possible. If that were to become the next government’s official negotiating strategy, it would, we presume, require a new EU negotiating mandate. The present mandate was premised on May’s letter to the EU, in which she clearly set out the objective of a full departure from both customs union and single market. The EU will clearly not soften its position as a result of a UK election. The withdrawal of a large net contributor to the EU budget leaves a hole that will eventually need to be plugged.

It is conceivable that continued customs union membership may ease the Article 50 negotiating process. In exchange for customs union access, Labour will clearly have to compromise on the EU’s financial demands, the role of the ECJ, and free movement of labour. Given the fall of EU immigration since Brexit, the issue of immigration controls might become politically less acute over the next two years. 

An even more interesting question is: would a Labour victory re-open the door to a Brexit reversal? That situation could arise if the EU is not offering a soft Brexit deal. Pro-EU commentators in the UK tend to make the mistake that the choice of Brexit regime was purely national. Did they not hear hear Donald Tusk saying that the choice is between a hard Brexit or no Brexit? 

So what would Labour/SNP do when confronted with such a choice? Would they not be tempted to subject the EU’s offer of a super-hard Brexit two a referendum? And what if this referendum were to reject this offer? Would the UK parliament then not rescind the Article 50 process?

We don’t think this course of events is likely, since Labour has not campaigned in favour of a second referendum. But we cannot completely exclude it, especially if the mood in the country were to change. So one of the consequences of a Labour victory would be a resurgence of the legimate doubt about Brexit. 

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June 05, 2017

What Russia wants

Kadri Liik offers a very thoughtful and balanced view about Russia’s strategic goals, one of the most misunderstood issues in the West. We are not able to summarise all aspects of his long and detailed analysis, but his main point is that Russia is not seeking to overthrow western liberalism, let alone overthrow the EU. Nor does Russia seek to increase its territory - beyond the annexation of Crimea. Unhappy with the post-Cold War political order, Russia does not insist on being the number two power in a bipolar world but one power in a multipolar world. Russia specifically seeks a sphere of influence over its neighbourhood, specifically including Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine. 

“What Russia really wants is a new international order and new global, or at least European, rules of the game. It wants to do away with many of the basic concepts of what has been called the post-cold war liberal order: the emphasis on human rights, the possibility of regime changes and humanitarian interventions. This is not only a geopolitical Yalta-style bargain, but something much more systemic."

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