international analysis and commentary

Britain’s new relationship with the EU: politics of resentment

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The UK and the EU are so invested in mutually incompatible projects – assertion of national sovereignty and supranational integration – that they keep measuring their own success against the other’s failure.

The legal framework agreed by the EU and the UK to manage their post-Brexit relationship entered in full force on 1 January, bringing to a close a process that left the two parties resentful, short of trust, and overly sensitive about their pride. Since then, Britain and the EU have dealt with each other under the assumption that “a civilized divorce is a contradiction in terms,” as Danny DeVito put it in The War of the Roses. In a matter of months, London and Brussels have in fact collected an impressive portfolio of disputes and grudges, ranging from the trivial – EU border agents seizing British truck drivers’ sandwiches under new food import rules – to the brink of a diplomatic crisis.

The opening salvo was arguably Downing Street’s decision to deny full diplomatic status to the EU envoy to London, on the grounds that he represents an international organization and therefore is not a “real” ambassador. While mostly a symbolic move, the worry in EU circles is that Johnson’s posturing might serve as a precedent for other countries to delegitimize the bloc’s foreign service officials and revoke their diplomatic privileges.

The most dramatic brawl concerned Covid-19 vaccine procurement: a sore spot for the EU and a point of pride for the British government, which has been at pains to point out at any opportunity that Britain’s successful rollout reflects the edge of an agile nation state over an unwieldy bloc. Blindsided by AstraZeneca’s announcement that the company would deliver fewer doses to the EU than agreed while meeting the UK’s demand in full, the EU lashed out and attempted to ban exports of EU-manufactured vaccines to the UK. At the height of the dispute, the President of the European Commission (EC) Ursula von der Leyen went so far as to publicly consider tearing up the sensitive protocol on Northern Ireland. She ultimately backed down under pressure from Ireland and apologized.

Boris Johnson holds up the AstraZeneca-Oxford coronavirus vaccine on a visit to pharmaceutical and biotech company Wockhardt in Wales.

 

But the clumsy move opened a Pandora’s box for Brexit supporters, who paradoxically also wish to override a protocol that – they would argue – binds one of Britain’s constituent nations to the EU customs union in all but name. Last week, legislators of the influential pro-Brexit European Research Group have explicitly come out in favor of abolishing the protocol altogether. For its part, the UK government – faced with friction and delays at the UK-Northern Ireland customs border – has also started prying with the agreement, floating ideas of longer grace periods and “light touch” border checks that had been deemed unworkable during the negotiation phase.

The EU responded to these calls with a letter accusing the UK of failing to comply with existing border check obligations and denying the EU access to import clearance monitoring systems. The EU’s blunders and the UK’s bluster around the protocol are particularly unwelcome given the tense politics of Northern Ireland, where custom checks at the Protestant port town of Larne had to be suspended due to alleged intimidation and threats to staff.

An anti-Irish Sea border graffiti in Belfast

 

On a raft of other issues – British shellfish exports, phytosanitary checks on the Irish border, French fishing rights – it is increasingly clear that the terms of the new relationship are constantly under strain from competing political pressures. “The frameworks are settled; the way those frameworks are implemented is far from settled,” said Anand Menon, Director of the UK in a Changing Europe think tank.

More worryingly, according to Menon, these skirmishes point to deeper, structural motives behind the poor state of cross-Channel relations. “For some in the EU, Brexit not seeming to work would be not only a vindication of European integration, but would serve also political purposes: show[ing] that the populist adventure that is Brexit actually hurts the population,” explained Menon. The incentive structures are similarly geared towards confrontation on the British side. According to Menon, “politically it remains handy for the government to touch on social identity issues, of which Brexit is one. It’s good politics to pick a fight with the European Union.”

On the European side, the temptation is therefore to wield the EU’s economic leverage and lawfare capabilities to bully and chasten Britain. Consider for instance Brussels’ stance on financial services, which account for 7% of Britain’s GDP. It is clear that Brussels sees economic and political opportunities in playing regulatory hardball with London: indeed, this month Amsterdam has overtaken London as Europe’s largest share trading hub for the first time in decades. Specifically, the EU is refusing to grant British firms equivalence with EU-based institutions unless Britain agrees to give up control of regulation in the future, even though UK-based firms still operate under the very same rules that were in place before Brexit. Even on services where temporary equivalence was agreed between the two parties, such as the clearing of euro-denominated derivatives, the EU is reportedly continuing to pressure City firms to move their operations to the continent.

The Square Mile, in the City of London

 

The stance has not gone down well in Britain. “This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself,” argued the Governor of Bank of England Andrew Bailey in a speech that signaled London’s intention to hold firm on regulatory autonomy. Senior Conservatives have gone a step further, launching a lobby group whose explicit aim is “to combat and negate the EU’s actions” in matters concerning financial regulations.

The pressure from the right of the Conservative Party to insist on regulatory divergence may have even become counterproductive for Downing Street, who ultimately would not mind an equivalence deal. According to Menon, “it certainly gives the government pause for thought that if they keep talking about deregulating or re-regulating to make the City more attractive than Paris or Frankfurt, you can expect the EU to be thinking ‘if that’s the game you’re playing, why should we ease your access to our market?’”

If on financial services Britain is on the defensive, on other issues it is the UK government that has started poking and prodding at any aspect of the relationship with the EU, which may be construed as interference in British affairs. There are indications, for instance, that the Brexiteers’ pet project around freeports risks setting Britain on a course of collision with the EU. Depending on how extensively deregulated and lightly taxed these special economic zones are going to be, the policy may in fact breach the provisions of the “Trade and Cooperation Agreement” (TCA) on the “level playing field”, which restrict state aid and aggressive deregulatory practices.

While the aggregate economic benefits of freeports are likely limited, there is once again a political motive in seeking confrontation: If the EU were to raise objections, the government would be seen as being on the side of Brexit-voting, economically “left behind” coastal towns. If there is anything the Conservatives have learnt from the past four years, it is that this is exactly the type of brawl that gets their new core voters to the polls.

Brexit was neither the beginning nor was it ever going to be the end of animosity between Britain and the EU: The two have a time-honored tradition of misunderstanding and cordially despising each other. But that animus cannot become so integral to the UK and the EU’s sense of self that it overrides objective common interests.

Whether it is about normalizing trade at a critical economic conjuncture for businesses, or re-converging on a common position on China, or even avoiding a Scotland-related foreign policy crisis further down the line, level-headed leaders in London and Brussels must stop giving in to the politics of resentment. The earlier, the better.