We’ve seen how state changes play out in finance. Pump too much energy into a system and the structure comes apart. Ice melts into water. Water turns into steam. The 2008 version was financial markets going chaotic, with all sorts of previously uncorrelated markets moving together and with a velocity that had previously seemed inconceivable.
It is over my pay grade to know what the analogue might look like in British politics. But the surface spectacle of Groundhog Day every day, as the Tories refuse to abandon their utterly unworkable Brexit fantasies, has persisted even as more and more energy has been building up in the system. The Ultras issue what has become bi-monthly threats to turf out Theresa May, yet always retreat because they can’t defenestrate her, they have no credible leadership candidate. Various members of Government make ridiculous Brexit pronouncements, which EU officials point out, sometimes not bothering to feign politeness, have already been rejected.
But the clock keeps ticking. Brexit Day is barely over 13 months away, and the UK is as unclear about what it wants and unable to deal with the consequences as it was the day after the referendum. You’d think that business leaders would be demanding heads over the lack of preparation.
So one would think that Jeremy Corbyn opening up the Brexit debate by giving a speech about a customs union rather than a hard Brexit would be a sign that reality is finally dawning in the UK, and that the many parties that would like to avoid a train wreck would jump on the bandwagon. And in one sense, they have. In a historical marriage of convenience, the biggest UK business lobbying group, the Confederation for British Industry, is stumping for Corbyn’s scheme, along with manufacturing group EEF and the technology organization TechUK.
So what’s not to like?
The wee problem is that the debate opening up does not look like a step towards progress and resolution. It looks instead like another flavor of incomprehension about how the EU and trade regimes work, and yet another set of incoherent and unworkable plans. Nicola Sturgeon nailed it:
I welcome any Labour movement in right direction but, tbh, it still sounds very similar to the ‘have cake and eat it’ approach of PM. Why Labour doesn’t just embrace a single market/CU outcome in full is beyond me. https://t.co/pzIK24HIIT
— Nicola Sturgeon (@NicolaSturgeon) February 26, 2018
In other words, the system is moving in a chaotic direction.
Mind you, some sort of serious change could not be held off much longer. The EU had allowed Theresa May the remarkable face-save of an unworkable fudge on Ireland. The European Council politely (as in cunningly) said in its December statement that the UK would need to reduce its draft document to a proper legally implementable form by the March round of negotiations. As we said back in November, there is no way to square that circle.
But Corbyn, with his anticipated pro-customs-union speech on Monday, acted before the Ireland impasse came to the fore. But even then, we have incoherence. The Government opposes a customs union because, they claim it would prevent the UK from doing independent deals with third countries Some Tory backbenchers favor the scheme because they think it would remedy the Irish border mess. Both ideas are flat out false. Richard North tears his hair:
Surely to God by now, we should have politicians who are sufficiently knowledgeable about the basics? Surely they must know that a customs union will have no effect on freeing up trade on the Irish border once we leave the EU (and end the transition period).
And from his post today:
He [Corbyn] doesn’t understand that customs union doesn’t actually prevent a member doing deals with third countries.
Similarly, even though Norway is a member of one customs union, the EEA, it negotiates its trade deals with third countries through the EFTA
As much as one would sorely wish for Labour, or frankly anyone with a public microphone and some backing in Parliament, to put forward a viable alternative, Corbyn’s wish list isn’t even close. In a bizarre mirror image of the Government’s insistence on a “special, close, bespoke relationship” that is not in the cards, Corbyn has asked for his own “bespoke, negotiated relationship,” meaning all sorts of special goodies that Brussels will never accept. For instance:
The UK could nix provisions of EU trade deals (specifically, related to public services, but the details don’t really matter). This in and of itself is nuttier than anything the Tories have proposed. The UK can’t do that even now as a member of the EU.
The UK would “negotiate protections, clarifications or exemptions…n relation to privatisation and public service competition directives state aid and procurement rules and the posted workers directive.” Politico translates why that is a non-starter:
To the EU, Corbyn’s approach amounts to granting the power for a state subsidized industry in the U.K. to flood the bloc’s market unfairly with cheap goods. Those watching his speech in Brussels will have raised their eyebrows at such requests.
“If there is one thing the Commission has been banging on most uncompromisingly about for the future U.K.-EU relationship, it has been in regards to a level playing field as regards competition policy,” said Allie Renison, head of Europe and trade policy at the Institute of Directors, adding that it represents a “huge cornerstone” of the single market.
In other words, this is still cherry-picking, just different cherries than the Government has chosen. Mind you, my recap is measured compared to Richard North’s.
We mentioned at the outset that the Labour attempt at an intervention was coming just before the Irish border matter looked to be coming to a head. There is probably enough delusion in the UK that the press will buy the bogus Corbyn claim that a customs union is a magical solution.
Recall that we also said that in December, the EU Council had tasked the UK with coming up with a properly codified description of what it was going to do about Ireland. Apparently no UK draft was in the offing. This is remarkable because it amounts to handing control of the situation back to the EU. Recall that one of the rules of negotiating is “he who controls the document controls the deal.”
The Financial Times reported that the EU produced a draft, which happens to embody the best of the choices on offer, an Irish sea border, which is far less politically and economically disruptive than a border between Northern Ireland and the Republic of Ireland. That also happens to be the solution that best suits the EU. In the Financial Times’ write-up, you need to read carefully to discern that the UK’s foot-dragging allowed the EU to put its proposal forward:
The political truce over Northern Ireland’s post-Brexit status threatens to be shattered this week, as the EU publishes a draft withdrawal agreement that leaves out crucial compromise language secured by Theresa May, British prime minister.
The European Commission will on Wednesday reveal its full legal text of Britain’s exit treaty, explicitly outlining a last-resort option for Northern Ireland to remain under the EU’s regulatory regime so a hard border on the island can be avoided.
Significantly the draft to “operationalise” an UK-EU divorce agreement from December omits wording inserted by Britain promising that “no new regulatory barriers” would develop between the UK mainland and Northern Ireland….
To the annoyance of London, alternative options to avoid a border are not elaborated; the EU side said it was waiting for workable UK proposals that negated the need for a “full alignment” fallback plan.
This would all be a nothingburger if the UK had its ducks in a row and could unveil its own text on Ireland this week. Don’t hold your breath.
The bigger issue is what the destabilization of the UK playing board means. As you can infer, yours truly does not see the Labour gambit as progress. Even though the Tories were doing their best to dig in their heels and resist, the clock running meant the EU would be able to propel them to a minimal deal, most importantly, with the extension beyond the formal Brexit date.
The Labour gambit opens up very real odds of chaotic outcomes. For instance, we already had the possibility of destabilization if Tories got a thumping in the local elections in May. With business now behind Corbyn, or more accurately, behind any hope of something other than a hard Brexit, it will take even less in the way of political realignment to undermine the Government. The Tories clearly want to avoid new elections at all costs, and elections would throw a fatal spanner in Brexit talks. Remember, a deal, both for Brexit and the transition, needs to be final by October so as to be approved by the EU27. No agreement means the worst of all possible outcomes, a crash-out. Would a newly elected government, or say a new coalition government that was seeking a different deal than the one May was pursuing be willing to do the only thing it could to stop the clock, which would be to go to the EU and ask for them to allow it to rescind Article 50? The EU is clearly willing to do that up to the very last minute if it were a permanent reversal, but it’s almost inconceivable that they’d allow the UK to back out of Article 50 if they expected them to relaunch in a few months.
No doubt, readers who know the ins and outs of UK politics can game this out better than I can. But I don’t see the odds of unhappy outcomes having fallen.