international analysis and commentary

The unsustainable complexity of Brexit

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The victory of Donald Trump in the US presidential election is certainly, even if provisionally, overshadowing the Brexit issue. Yet, considering the support expressed by Trump for Brexit, the new US political leadership might well add a new level of complexity to an already intricate exit process. Defined by British euroskeptic political voices, such as former UKIP leader Nigel Farage or Foreign Minister Boris Johnson, as a clean cut from the EU’s undemocratic institutions and inefficient governance, Brexit is proving, rather, to be a much more complex process that Prime Minister Theresa May is having a hard time controlling.

On November 4th, the British High Court ruled that the UK government cannot invoke Article 50, which will formally start the EU-UK two year exit negotiations, without the British Parliament having a say on the matter.

Such a ruling will most certainly prolong the British exit process. Anyway, to overrule the High Court’s decision, the government will likely appeal to the Supreme Court by December 7th. A successful appeal would pave the way for Brexit talks to begin by the end of March 2017 and for the UK to leave the Union by the spring of 2019. Yet neither the Supreme Court ruling, nor the British Parliament’s position on Brexit is easy to determine. Meanwhile, apart from the main motto “Brexit means Brexit”, the government has not provided clear details on the Brexit strategy it plans to pursue.

 

What does “Brexit means Brexit” really signify?

Generally, in order to satisfy the demands of the “leavers”, the UK should retain access to the single market, stop the supremacy of EU directives and regulations over British law, control free movement of labor and be able to independently implement free trade agreements with other countries.

Formally, there are two macro political strategies that the UK could decide to adopt. 1) A soft Brexit, on the one hand, would entail a special deal within the European Economic Area (EEA), providing the UK with full access to the common market. However the UK will have to accept, as in case of Norway, EU directives and regulations as well as the free movement of people. This would keep Britain tied to the EU, without the power to vote on decisions made in Brussels. 2) A hard Brexit would result in an immediate exit from the single market and the termination of any other ties to the continent, resulting in Britain trading with the EU simply under the World Trade Organization rules with the reintroduction of border controls and taxes.

Nevertheless, the recent crash of the pound might prove that the UK economy is going to suffer from the latter. As recently as 2015, EU member countries accounted for half of the stock of foreign direct investment in the UK (£496 billion out of a total of £1,034 billion, 48%) and in August 2016 the EU was the most important market for British trade. Certainly, once Brexit negotiations are over, the UK is expected to open consultations for a comprehensive free trade deal, a Cross-Channel Trade and Investment Partnership (CCTIP), with the EU to lower or eliminate import-export tariffs for mutual benefit.

However, such a process will take many years, and, seeing the negotiations struggling between the EU and Canada on a Comprehensive Economic Trade Agreement (CETA), a CCTIP has no guarantee of being successful. In the meantime, considering the hostile attitude towards free trade agreements expressed by Trump during his electoral campaign, a special deal with the US does appear as a realistic option. Within this framework, London could arguably lose its attractiveness both in the financial service sector as well as in other economic areas. Yet, from a political perspective, a hard Brexit is the only option that could allow the British government to regain political control over its borders and internal decision-making process, as was asked by 52% of the British citizens who voted to leave the EU.

 

The position of the British Parliament on Brexit

If the Court ruling is upheld, the UK will need the British Parliament to vote on a Brexit bill. Both above-mentioned political strategies are likely to trigger a harsh debate. The majority of the Tories seem willing to back what appears to be May and her government’s preference for a hard Brexit. Yet, there is a number of conservative MPs who might not agree with an economically dangerous hard Brexit plan and are calling for proper scrutiny of the consequences of the exit plans. Meanwhile, holding only one parliamentary seat, the euroskeptic UKIP party has no political power to back a hard Brexit plan. Instead, the Labour party, which holds 231 seats, is not pro-Remain per se, but it is questioning the opportunity to leave the single market. Labour party leader, Jeremy Corbyn, is indeed asking for an exit plan that would work for Britain, with access to the single market and protection for British and European workers’ rights. Yet, he has also maintained that his party will not block Article 50. 

Parliamentarians from the Scottish National Party (54 seats) led by Nicola Sturgeon are also playing their cards. Since the majority of Scottish citizens voted to remain in the EU, they are asking the UK government to provide Scotland with more power in defining the exit negotiation plan. In case the Scottish view on Brexit is not respected, the country could organize another referendum on independence from the UK. To date, it is not in the interest of Scotland to leave the UK as the Scottish economy is very much dependent on England, but a hard Brexit would certainly damage Edinburgh’s economic interests. Moreover, Brexit represents a good political opportunity for obtaining more political power from London. In this respect, Scottish MPs might condition their vote on triggering Article 50 and a Scottish referendum on independence over the UK government’s decision to both rethink its Brexit negotiation strategy and provide Scotland with more room for political maneuvering.

When it comes to the four Northern Irish parliamentarians from the pro-Remain Sinn Féin party, the main concern is that a hard Brexit would result in the reintroduction of borders and tariffs to trade with Ireland, widening the gap between Belfast and Dublin and undermining the effectiveness of the Good Friday Agreement (GFA), which ended 30 years of violence between Protestant Irish unionists, who wanted to be part of the UK, and Catholic nationalists, who asked for independence. Sinn Féin has a long-held policy of not voting on bills within the British Parliament, as it does not acknowledge the sovereignty of the Queen. Yet, in such a specific case, it could reverse its traditional abstentionist policy and vote on a bill on Article 50. Along the same lines, pro-Remain Liberal Democrats (eight seats) might also play an important part in slowing down the exit process.

Within this frame, while it is unlikely that the British Parliament will stop the triggering of Article 50, parliamentarians could use their voting power to delay the exit process and ask to change the Brexit strategy as to reflect the interests of their constituencies or to simply undermine the legitimacy of the government. Indeed, to date, the only way for the UK to obtain access to the common market would be through a soft Brexit plan, which would oblige the UK to accept the free movement of workers and EU regulations without, however, having a say on the European decision making process.

 

Brexit and the UK government 

In the meantime, the British government is puzzled. Prime Minister May cannot pronounce against the decision of the High Court and she has already maintained that an independent judging system is part of a functioning democracy. May has also highlighted that the British Parliament, which backed the idea of a referendum in the first place, should now respect the will of the British citizens: it will have the opportunity to debate Brexit during the publication of the Great Repeal Bill, which will revoke all the EU regulations introduced in Britain.

The government will now appeal to the Supreme Court, which will carry the high responsibility of a final judgment on the matter. Giving the Parliament the right to vote on the government decision of triggering Article 50 could benefit the country, and the financial market has already responded positively believing that the Parliament could avoid a hard Brexit.

At that point however, new elections could be called and the campaign could be based clearly on the need for the UK to remain or not in the single market, even if it is unthinkable for the UK to overcome the result of the referendum and remain a full member of the EU. At the same time, staying in the single market throughout a soft Brexit would not be appreciated either by Leavers or by the Remainers.

Lastly, another terrifying option exists: the Supreme Court might rule that the European Court should decide on such a particular case. In this respect, Britons would see a very delicate process being decided on by a European body, the one that has been mostly accused of ruling undemocratically over Britain. This scenario would certainly cause high political pressure and diffused social malcontent.

To conclude, there are no easy solutions or way out for the UK. The majority of British citizens has indeed voted to exit the EU and it is now the duty of the government to respect this decision. The extent to what “Brexit means Brexit” actually means is, however, to be well defined. To date, the whole process appears as a zero sum game, where there are no winning sides but many political and economic losses for the UK.