Brexit of Champions, Part Deux

By any sensible political calculation, British Prime Minister Theresa May should have been tossed out of office months ago but two important facts keep her there.

First, Mrs. May is the Conservative Party’s sacrificial lamb on the altar of Brexit, the process by which the United Kingdom is divorcing the European Union and — it hopes — regaining its sovereignty. None of the smarter, more capable Tories — Boris Johnson, May’s rebellious foreign minister, or John Redwood, the Conservatives’ lean, mean thinking machine — want the job as long as they can leave May there absorbing the Brexit arrows that they would have to if they were PM.

Second is the Labour Party’s leader Jeremy Corbyn, a radical who is so far out that he could only see Marxism in the rearview mirror while driving his party farther and farther left. At least as of last June’s snap election — which we’ll get to in a moment — more than forty percent of British voters were sane enough to reject Corbyn.

Let’s remember that British Conservatives have been skittish about leaving the EU all along. Despite former PM David Cameron promising a referendum in his final election campaign, and scheduling it for June 2016, Cameron campaigned strongly against Brexit, putting him at odds with his party and the UK Independence Party of Nigel Farage. The result was 52%-48% in favor of leaving, causing Cameron’s resignation and May’s becoming prime minister despite her opposition to Brexit. Majorities in Northern Ireland and Scotland both voted against Brexit.

The French who, with the Germans, are the two strongest powers in the EU, immediately placed ridiculous demands on the British, all the while saying that the Brits could ignore the referendum and just stay in the EU. Among their demands were continued British financial support for the EU budget and EU bureaucrats’ pensions (amounting to more than 100 billion), and continued obedience to EU courts’ decisions, laws and regulations. In short, Britain would surrender its vote in EU decisions but it wouldn’t regain its sovereignty.

Mrs. May and her cabinet have made it easier for the European Union to make the Brexit negotiations much harder. Though May kept saying “Brexit means Brexit,” implying a hard deal would be negotiated, she refrained from giving anyone any specific ideas of what her goals were.

May waited until the last possible minute — March 2017 — to invoke Article 50 of the EU Treaty, the provision that enables a nation to leave the EU. It provides a two-year time line for negotiations to finalize the terms of the divorce.

And then May called a snap election for June 2017. The Conservatives had a slim but solid majority in Parliament and May sought to strengthen it by calling a snap election. She blew it with a lackluster campaign that failed to counter much of Corbyn’s wild ideas. The Conservatives lost their majority and held onto power by making a coalition with the Democratic Unionists’ Party of Northern Ireland.

Brexit negotiations continued through the year. The EU chief negotiator, Michel Barnier of France, and David Davis for the UK went back and forth endlessly without agreement. Barnier insisted that the “divorce bill” — the UK’s continued payments to the EU — had to be settled before anything else was decided.

Last week, a deal was made on the preliminary issues. For the UK, it was a really lousy deal. And then it got worse.

Before the deal could be made Arlene Forster, leader of the Northern Ireland DUP, wouldn’t agree without preserving the uncontrolled border between the Irish Republic to the south. An uncontrolled border meant that people and goods could flow without restriction, essentially leaving Northern Ireland in the EU.

May scrambled to deal with Forster’s demand, leading to a last minute amendment to the agreement which provides that:

  • The UK will pay its original share of the EU budget in 2019 and 2020 as well as an undefined contribution to the pensions of Eurocrats, an amount that is around 50-60 billion (which the EU says could be as much as 100 billion);
  • EU citizens can claim permanent residency in the UK with their future rights determined by EU courts. UK citizens living in the EU will have to remain in the EU nation they currently reside unless they return to the UK or go through a regular emigration process to live in another part of the EU. UK citizens living abroad will also have their rights determined by EU courts; and
  • Northern Ireland will continue in “full alignment with EU laws and regulations to maintain the “all island economy” provided by the 1998 Good Friday agreement that ended “the troubles,” the period of Irish terrorism and unrest that continued for decades. The deal essentially leaves Northern Ireland within the EU.

As now former UKIP leader Nigel Farage tweeted, “A deal in Brussels is good news for Mrs. May as we can now move on to the next stage of humiliation.”

David Davis, the UK negotiator, said that unless the rest of the deal is made, the agreement of last week will not bind the UK. Michel Barnier, his EU counterpart, said that the UK will have to participate in all EU programs through 2020.

From here, the negotiations are supposed to go on to determine the rest of the Brexit divorce. A UK-EU trade deal is the main goal, but many factors play in the equation.

Perhaps the biggest is the way in which Brexit will affect the financial markets. London has, for centuries, been the center of banking and stock market transactions. Many EU financial institutions are leaving London, as are many US financial houses. Barriers to UK-based transactions are almost certainly to be subjected to some form of EU tax.

Silent, so far, is Scotland. It sees that Northern Ireland is being given different treatment under the first-stage Brexit deal, ignoring the Scottish vote against Brexit. Scotland will make it much harder for May to make a final deal, as will France and Germany.

The EU is, by a considerable margin, the UK’s biggest trading partner followed by the US and China. About forty-three percent of British goods and services are now traded with other EU nations. If trade with the EU is burdened by significant tariffs and non-tariff barriers (such as regulations on how goods are produced, quotas and the like) the UK economy will suffer a major blow.

Time is running out. Article 50 requires that a deal be made before March 2018, and there is no guarantee one can be done by then. The weakness of the May government makes it much more likely that any final deal will be worse than the preliminary deal made last week.

For the UK, a result that brings no final deal is still better than a bad deal. President Trump, in a September meeting with Mrs. May, said that we’d do a lot more trade with the UK after Brexit is finalized, indicating that he would agree to some sort of a free-trade deal with the UK. The two nations shouldn’t wait for March of 2019 to negotiate such a deal.

Similarly, the UK won’t be bound to China’s trade agreements with the EU. Davis has said that the UK wants a free trade agreement with Canada, which it should pursue immediately. May, even from her weakened position, should begin negotiations with China on another deal like the one that can be made with the U.S.

Most importantly, the UK’s sovereignty has to be regained — completely — or the idea of Brexit will fail. That means UK law shouldn’t in any way require that its courts or regulatory agencies obey the decisions of their EU counterparts.

That can be done, but will it? Not with Theresa May at the helm.

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