The Brexit choices, Brexodus and rocky road ahead
It occurs to me that there is fundamental disconnect between reality and the expectations of English people.
It looks like the tories expect to crash out of the EU without a deal, but attempt to pin it on the EU. This could backfire spectacularly if the Brits are not as naive as the tories seem to think they are.
There are any number of British delusions one can encounter daily.
Or perhaps, servitude at the mercy of whomever wants to do a deal?
This is about the belief that the EU should kowtow to mighty Britain.
Yes, because it is best if you threaten your potential future trading partners.
“The person in charge of negotiations promises easy trade deals”
“EU cannot go on, if the UK leaves.”
What does a no deal mean (among other things)?
– Opting out of the clear skies agreement, meaning that the planes will not be able to fly until some sort of deal is reached.
– UK Driver’s licenses will not work on the continent, which means UK trucks will not have the permission to be driven on the continent by their British drivers.
– Opting out of EURATOM (the European Nuclear Agency), which means radioactive isotopes used in curing cancer will not sourced until some sort of agreement will be reached.
– European Medicines Agency will not have a foothold in the UK, which means no UK medicines export, lengthy checks on EU imports and complete loss of EU research funding in this area.
– No access to EU research grants, unless you are one of the few Universities, like for example Oxford, who announced that they are opening a research campus in Paris.
– No subsidies for UK farmers. Oh, I hear you say, no EU subsidies, but the government has promised to keep up subsidies for farmers. Well, WTO (an imaginary post Brexit option) expressly forbids any governmental subsides to framers, if you want to trade under their auspices. So, no subsidies.
– Extensive customs checks for all imports (if not on the UK side, then on EU side). This will hit car manufacturers who depend on just in time supply chains and all the British cars almost exclusively use German automatic transmissions. We should also mention that produce that spoils will not be imported into the UK anymore, because it would rot while waiting for customs clearance.
– Loss of financial passport. According to reports between 60-80% of UK exports are financial services. The companies / banks that will move to EU will retain them, but UK will have no part in those trades. WTO does not regulate trade in services, so even if the UK falls back on WTO trading rules, this will require separate deals, with whomever is still interested in them, once they do not provide access to the single market anymore. In connection to that the euro clearing house is moving to Frankfurt.
– Data retention rights will be scuppered. EU will not keep any citizens information in a Country that is not in the EU. This means server farms and big, say, email providers, like google and Microsoft, will need to move Europeans’ data to Europe.
– The UK academic degrees will not be automatically recognized in the EU any more.
– The universal EU health insurance will lapse for UK citizens. Want to travel to Europe? Best hope nothing happens to you, or get insured in advance.
– Losing a connection to EUROPOL. No more seamless colaboration between police agancies. Think about British family having a kid kidnapped in Rome and not being informed about their child unless they are physically present at the police station. In addition they lose any protections accorded to the EU citizens.
– Import tarifs on everything. As has been repeatedly pointed out, this does not overly hurt German manufacturers, as a Brit who wants to buy a BMW will still be able to, it will just be more expensive.
– Foreign companies moving to the continent or Ireland. Why would, for example, Nissan stay in the UK, when they do not have access to the single market, but they could have it if they move to France (and still sell cars to UK too)? That means loss of jobs and tax revenue.
– Collapse or privatisation of the NHS. Britatin depends on the foreign medical staff. Influx of nurses from the EU has dropped from 4000+ to 47 in the preceeding year.
– Brexodus – more than million Brits are planning to move or have already moved to the EU. Many of these top researchers, doctors, academics…
– Collapse of the British pound. Before the referendum the rate was 1.3EUR to 1GBP, now the official rate is 1.07EUR to the pound and on the airports it is 0.87EUR to the pound.
– Loss of mobile roaming agreements. No more 50p uncapped data per day when roaming with o2 in Europe.
What are the options England seems to be facing?
– Threaten the EU, until England gets all the benefits of the membership but none of the responsibilities (and here). Let’s be clear that even before Brexit, UK for example did not contribute to the Greek bailout, even though everybody else did. So, they expect even more concessions now. They had the power of veto. They opted out of Schengen and out of the Euro. It is not like England was particularly hard done by the EU. There is no need for me to assess how likely this is to happen. There seems to be a certain amount of magical thinking and the expectation of reciprocity (which it emphatically isn’t that) on the UK side. There are any number of comments in the British press along the lines of: “Once the EU grasps how badly they are going to get hurt by us leaving, they will come crawling back”, and “it is in the best interest of the EU to keep the borders with us open unless they do not want to face calamity”. There are also calls for fair or reciprocal treatment, where the definition of reciprocal and fair seems to be: “We can screw you, cause financial difficulties for you, attempt to extort concessions without a second thought for anybody else, but if you expect us to honour our obligations and stick to the agreements we co-wrote and insisted on while we were still members, you are totally unfair”. I suppose true reciprocity would be for the EU to burn the UK to the ground, destroy any possible trade deals it could try to make (in order to maximize profits) and isolate them. That would seem to following the modus operandi of the UK to a t. Remember the UK being really economically weak in the fifties and joining the precursor the EU, leaving all the other commonwealth countries by the way side in order to save themselves? That is the kind of reciprocity I am talking about.
– Join the EFTA/EEA, like Norway, Iceland and Switzerland. This does not require ratification by the EU27, but it does require the unaninmous agreement from the other EFTA states. They have access to the single market, but are still paying contributions, have freedom of movement and are beholden to the European Court of Justice. They have no seat at the table and are ruled by the EU through faxes. It is true that freedom of movement is not a strict requirement, but feel free to check how well it worked for the Swiss when there was a referendum where they courtailed it. It took no more than few days of EU cutting any funding to them for the XX president to norify the parliament that he is aware of the referendum vote, but it would not be upheld, because it is not possible to do so. Also, Iceland is all for UK joining the EFTA as that does not include fishing quotas and that would really work for them. At the same time, Norway has clearly stated that they will veto any attempts of the UK to join EFTA, as that would introduce imbalance into what is a fairly small trading bloc in the first place. They also said that EFTA is meant for Countries that are on the way to full membership and is at best transitory, not for Countries who want to leave EU.
– Join the WTO. Contrary to the popular belief, membership is not automatic. Any member could still veto it. For example, Argentina already said something along the lines of: “We would be very happy for you to join, however, do you remember the Falklands? Yeah, we need to talk about them, before we can endorse you”. There is absolutely no reason to think that Spain would be overly accommodating, considering how very badly they are getting screwed over Gibraltar. In addition, as it was already mentioned, WTO is very strict about governmental subsidies. One can imagine who popular the British farmers would be in India when they would get large cash injections enabling them to grow cheaper produce and attempt to undercut other farmers operating inside the WTO.
– Go it completely alone. Considering that most trade deals take decades to hammer out this is not an optimal solution. The UK government says that this will be very quick as they won’t impose any import tariffs or any quality control. If we leave to one side how badly this would destroy the British economy (through cheap Chinese junk steel and cheap throwaway consumer items), and decimate the population (through becoming a dumping ground for foodstuff no one else would buy), there is also an expectation that “since we will abolish tariffs and customs checks it would be only fair that our trading partners did it too”. This is not how trading negotiations generally work – it is not the best strategy to say: “We are totally exposed and have no leverage whatsoever, so why don’t you take pity on me?”.
– Have a lengthy transition period where everything stays as it was and at some point in time just forget about this brexit thing, or do lots of deals under the table with the world in order to give the middle finger to the EU and tell them they are not needed anymore. The EU has not even started discussing a transition deal. This is not on the table at all at the moment. It might have been if the UK did not do anything it could possibly can to anger the EU27, who need to unanimously approve that extension. the foreign minister telling EU to “go whistle” on the financial obligations and the prime minister threatening the EU with nukes is not the best strategy. Neither is attempting to go behind the EU negotiators back to strike individual deals with Germany and France. Even if the EU decided that they would like to be shafted by the UK in the long run and overlook the childish bullying attempts (like tweeting provocations to the EU negotiators and then claiming a twitter account has been hacked), they have not even started talking trade. Because once they do, this might be an option, but it is far mor likely for the EU to say: you want the benfits of a single market? This is jow much it would cost you. You want customs union? This much. You want back into EURATOM? X millions a year. You want back on the clear skies agreement? This much. etc.
– Do another referendum (and here)where hopefully the Remainers win and we can forget about Brexit. However, article 50 has been triggered. Come hell or high water, deal or no deal, the UK is out in March 2019. This is a fact. Unless all the other EU countries (that have unanimously accepted the art 50 notification) now agree to disregard it. Why would they do that? The UK was always a reluctant partner, clearly signalling and without wriggle room repeatedly showing that they do not believe in the European ideals of peace and prosperity for all their members.
Why would you want a person like that back? Oh, because of the economic damage caused to the EU and the UK otherwise, I hear you say. Well first of all, when the UK told the EU that they can go and get stuffed (publicly calling Merkel a nazi, Junckers a drunk, etc) this did not go down well. While Europeans might care about others suffering, no matter how self-inflicted that was, there is no reason to forego one’s own interests in order to fulfill somebody else’s. The economic damage to the UK does not take precedence over the economic damage caused to the EU. This latter, can be recuperated by moving the financial centres to Frankfurt, by imposing tarifs on the UK, by taking over everything the UK produces and exporting that, by destroying any chance of a trade deal between the UK and anyone else in order to maximize profits (it would be enough for an EU negotiator to go to, say, Japan and say something along the lines of: “It is brilliant news that you are going to be trading with the UK. Congratulations! I am really happy for you. <brief pause> You know, I hear that Belgium is considering a veto on our trade deal. I am sure we will be able to sort all of this out, don’t worry about it.”). The UK market is getting poorer by the minute, with 60 million people. The EU economy is blooming, with 450 million people. It would not be too hard to choose which trade deal to pursue if one is facing a choice. Therefore, for the EU, whose members take precedence over non-members, it would make sense to bolster its economy by plundering the UK and only then invite it to become a prospective member. They would be granted a membership at some later date, when its assets have been stripped and it is completely broken to a point where it has no other choice, because the people on the streets are literally starving to death and all the bright people have moved out years ago. Of course this new membership would strip out all concessions granted to the UK over the years, it would include Schengen, the euro, freedom of movement, parity on laws and social protection, fiscal rule, ECJ etc.
The only way this can be slightly better for England is if the EU27 would be willing to accept its prospective membership request immediately. In that way, the UK would lose all its concessions but would not have to be economically obliterated for this to end. The pain would still continue throught the prospective phase, but it would be significantly shorter. Look, often in life, we are forced to chose between two bad alternatives. Not every choice in life is between a good and a bad thing. There are no clearly good options for England here and the sooner it faces that, the better. It is not realistic to expect the return to the previous state of things. But on the other hand, England does not have to lose much more industry to the continent (remember, easyjet has already left, for example), it does not have to face hunger on the streets, because the food is not grown, and even if it is grown, there is no one to pick it. It does not have to endure the dismantling of the NHS for much longer and it does not have to experience first hand how many enemies they have made through the years of imperialistic expansion and walking over corpses to reach its own prosperity.
What I am saying is that this is the only choice the UK has in the long run. There is no silver lining, no prospect of a distant bright future if it goes it alone. The only choice is when to stop the bleeding. The longer it takes, the worse it will be in the end.