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February 28, 2018

Watch out, the Brexit debate could take a nasty turn

The Brexit talks are on the verge of taking a nasty turn. If a much-quoted passage on Northern Ireland in the European Commission's draft withdrawal agreement is correct, we would not be surprised if UK politicians begin to talk about it as an act of war. We noted an otherwise pro-EU BBC presenter on Newsnight last night losing his cool in an interview with an Irish politician, when he realised that the EU is essentially forcing an external border between Northern Ireland and the UK. The Daily Telegraph reports this morning that Theresa May will today warn Brussels not to "threaten the constitutional integrity of the UK". We are still in the realm of polite diplomatic language. But statements like Guy Verhofstadt's insistence that Northern Ireland will remain subject to EU law are beginning to hit a raw nerve in the UK.

Of course, a decision by the UK to remain in the customs union would neatly solve the problem. But be aware that a customs union, while necessary, would not be technically sufficient. There are policy issues of animal welfare and food safety that would need to be addressed separately. And there would have to be some form of agreed and controlled regulatory convergence. But if a customs union were agreed, the main obstacle to solving the Northern Ireland problem would be taken care of. The trouble is that a customs union should not be taken for granted at this point. As James Blitz reports in the Financial Times, it is far from clear whether the opposition can inflict a defeat on the government on the issue. He did the numbers, and it looks extremely tight. Theresa May cannot link the vote to a censure motion as a device to discipline rebel Tory MPs, But she could exert pressure on many of them by announcing that a defeat on this issue would trigger her resignation, and with this an immediate election unless the Tories muster a majority to replace her - which they may not be able to do, given their internal divisions.

Another possibility to avert a crisis is for May herself to put her weight behind a customs union. Contrary to widespread belief, she has not ruled that out. She only said the UK would leave the EU's customs union and the single market, which it has to do anyway on leaving the EU. At her Lancaster House speech last year, she said:

"Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends."

We now see a hard Brexit - rather than a Canada deal - as the main alternative to a customs union. While everybody yesterday got upset about Boris Johnson's comparison of the Irish border with the border of two London boroughs, they missed the more important news - that the foreign office is now preparing for a hard border. Sky News published extracts from an 18-page letter from Johnson to May, written before last week's senior ministerial meeting in Chequers. He said that, even if a hard border were reintroduced, it would not affect 95% of goods which would still be able to pass the border without checks. The letter is essentially telling us that the foreign office is preparing for a no-deal Brexit. 

Die Welt writes that German industry is also gearing up for the possibility of a no-deal Brexit. According to the German chambers of industry and commerce, a hard Brexit would require 14.6m annual customs declarations for German companies alone, and would affect 30,000 exporters and 40,000 importers. There will also need to be 300m country-of-origin certificates. 

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February 28, 2018

Welcome back to the European Council, Silvio!

La Repubblica and other Italian newspapers report, in passing, that Silvio Berlusconi is not ruling out becoming prime minister in 2019, when his judicial ban on holding political office will end. The political scenario that such an event requires is not completely unrealistic. If Sunday's elections produce a stalemate - as the polls have been predicting - and if there are new elections in 2019, the situation may well come about. "I'm available, ready to run for the next year", he is quoted as saying.

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