Another Huge Brexit Spanner in the Works: UK Faces Customs Train Wreck With Need for IT Upgrade

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The insanity on the Brexit front has become so pronounced that I’ve been finding it hard to keep up. But a story in today’s Financial Times, plus some other sightings du jour, give a window into how the Brexit boosters have not even begun to deal with practicalities.

For instance, one example of how keen the Brexiteers are to claim they have the upper hand is a new study by Civitas that claims that if the EU and the UK were to fail to reach a post-Brexit pact, the cost to the EU would be greater, at £12.9 billion a year goods sold the UK than £5.2 billion in tariff costs on UK exports to the EU.


First, this analysis assumes a default to WTO rules. As we’ve written, based on warning by the Director-General of the WTO pre-Brexit that have been reaffirmed, there is no “WTO default”. A new deal with the WTO has to be negotiated, and those take years. Even if the WTO were to waive the principle that it cannot begin negotiations with the UK until it has left the EU (and this is a matter of treaty, and the Europeans are very procedural about these matters, so making optimistic assumptions is not wise), experts have said that for the UK to conclude a deal with the WTO in as little as 5 years would be unprecedentedly fast, and the WTO is not going to prioritize the UK over other countries that also have negotiations in process.

So basically, Civitas has made clear it has no idea what it is talking about, which makes it hard to take the rest of its work seriously.

Second, the UK has a massive trade deficit with the EU. So the tariffs on the EU side would be larger ex any unusual offsets due to differences in the mix of good. So?

Third, the UK economy will be roughly one-fifth the size of the EU economy post Brexit. Thus tariffs on the UK of 2X the EU level translate into a load in economic terms for the UK that will be 2.5 times greater than what the EU will bear.

Fourth, EU leaders from the outset have made clear that they understand that they will face economic costs in the event of a Brexit. That has not deterred them from taking a hard stance for political reasons, since they clearly regard preserving the rest of the EU as paramount, and that means cutting the UK no slack. Yet remarkably, the folks at Civitas act as if the EU doesn’t understand the tradeoffs, when it is the Brexit camp that is in its own echo chamber.

On to the bigger story, which is the impending Brexit IT train wreck.

As the preceding discussion shows, if UK loses access to the single market, that means tariffs. And for US readers, the UK is now on this path with its plan for a “hard Brexit”. Theresa May and her Brexit boosters have committed themselves to restricting immigration. The EU has insisted from Merkel on down, from the very day the referendum results were in that if the UK wanted to continue to have access to the single market, it had to accept the “four freedoms,” which includes movement of EU nationals in and out of the UK and vice versa.

What has escaped the notice of many observers is that “tariffs” for manufactured goods means that the charges are levied based on the country of origin of the constituent parts. This means a very elaborate customs declaration and tariff computation for goods of real complexity. And yes, there are customs inspections too (I assume on a sampling basis; readers can clue me in).

The amount of extra hassle constitutes a non-tariff trade barrier in and of itself. And that over time will encourage manufacturers to simplify their supply chains. Auto-makers, for instance, will find it less attractive to send parts into the UK for further assembly to be re-exported to Europe; they’ll presumably over time restructure production so as to have manufacture for the rump EU market in the EU, and have parts made in the UK mainly to be included in any final assembly there.

While that is bad enough, a looming problem is far worse. All this border documentation is managed by computer systems. The UK’s present system for handling non-EU-related trade is almost 25 years old and was set for replacement. The new system, called CDS for Customs Declaration System, to be ready by 2018 and to have the capacity to handle 100 million transactions,. At double the current level of 50 million, that would have seemed to be ample headroom.

Reading between the lines of the Financial Time story, there seems to be some doubt as to whether the original spec could have been pulled off in time. But now with Brexit, the project suddenly has a major spec change: it has to handle 350 million transactions.

And what the story does not mention, but seems likely to be the case, is that there are tons of other spec changes that have yet to be identified and documented related to EU and UK tariffs on specific goods. And if the system tracks things like port of embarkation and disembarkation, more data fields need to be added for all the EU ports and air cargo locations. And of course, the Euro currency data field needs to go in too.

In addition, since the negotiations will be in progress, the levels, and potentially even some of the categories are likely to be in flux. Given that olives are a very important export good for the EU, how will olives be treated versus olive oil versus products made from olives, like olive paste? Will green olives be treated differently than ripe ones? How all this sorts out affects the coding.

Recall that Lambert broke the story of the Obamacare exchange systems disaster by noticing that spec changes were being made six months prior to launch (the reality turned out to be even worse, changes were being made weeks before the start date). He recognized how disastrous that was for a systems rollout. And these were modifications to what was presumably an otherwise largely settled development plan. If my surmise about how many things will be up for grabs in a Brexit negotiation (start with will they try to negotiate a WTO and an EU deal in parallel, since there’s no assurance the UK will get timely approval from either set of counterparties), it’s hard to see how any meaningful coding on the EU system can get rolling.

As Richard Smith said by phone, “Even if the UK government had a full team of top-drawer developers, crackerjack managers, a completed project specification, and enough budget, this wold be daunting to complete by 2018. And the reason most big IT projects founder or fail utterly is that the project parameters almost never stay static. They wind up changing as the developers turn over rocks and the client has a further think about what it needs.”

Needless to say, UK industrialists are fretting. From the Financial Times:

Industry is seriously alarmed by the administrative test of applying customs checks and separate tariffs to EU trade. Noting the danger of “major disruption at the border”, the paper to the joint committee argued it was “difficult to see” how CDS or Chief would cope by 2019 with “any substantial changes to what we do now”.

Desmond Hiscock, director-general of the UK Association for International Trade, said there was growing frustration among his members over the uncertainties and risks. “The existing system will be not be able to cope and there is not much confidence that the untested and still incomplete replacement, CDS, will fare much better.”…

Listing a range of additional administrative requirements, uncertainty over duties, databases, security checks, listings and rules of origin procedures, Mr Hiscock said his members had “a very real fear HM Revenue & Customs have neither the infrastructure nor the trained personnel to cope”.

And there do not appear to be good kludges. From the same article:

The most effective workarounds would require EU countries to establish a separate, streamlined customs system for UK trade. But most EU countries will be loath to invest in a huge overhaul of systems; EU officials expect Britain to be treated like any other non-EU country outside the customs union.

The only sort of good news is that because a replacement trade deal is very unlikely to be concluded two years after the UK pulls the Article 50 lever, the developers will have more time. But that really isn’t a solution, since much of the coding will depend on having final specifications, and a good deal will be in play as talks are underway.

The level of downright fantasy and rank incompetence in the Brexit camp is breathtaking to behold. And it’s not helpful to those who have more nuanced criticisms of globalization and want more targeted remedies to blunt its detrimental effects on jobs.

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  1. Foppe

    Hopefully the Greeks are watching this carefully, taking notes & making lists. ;) Shame this is less useful to deficit-spend on than building the highway system, and that most of the money will be going to the credentialed classes; then, at least, something good would come out of all this preparatory work.

  2. PlutoniumKun

    The best thing Europe can do now for the UK is to go very, very hard on issues like this and make it plain that it will not just refuse to co-operate, but will actively make life difficult for the UK government and each and every UK based business. Make it absolutely plain that from the moment the A.50 declaration is served it will do everything it can to ensure that exporting businesses will go through hell for at least 5 years, even if that costs the EU billions. The only route out for UK based businesses will be relocation. From my reading of the UK press, the government is already in chaos at cabinet level, with the few sensible ministers tearing their hair out at the incompetence of the Brexiteers.

    The only way out is for the UK Parliament and judiciary to call a halt to the insanity before February and over-rule the referendum. This is perfectly legal within the UK constitution (basically, it seems that everything is legal within the UK constitution so long as Parliament accepts it). It will cause a political crisis of course and probably bring down the government, but even that must surely be preferable to what will happen over the next few years – a collapse in sterling, a probable banking crisis, the breakup of the UK and a renewal of conflict in Northern Ireland. Much as I would love to see the smug idiots who drove Brexit have a few hellish years to regret it, the human cost is too high. The problem is that the UK establishment and much of the public don’t seem to have quite realised this yet. But give them time.

    1. Anonymous2


      I agree that the whole thing looks a complete shambles. A few extra thoughts

      What survey work has been done suggests that some who voted Leave are now having second thoughts. 6% of those who voted Leave, it is suggested, may now be ready to change their minds. Only 1% of those who voted Remain, on the other hand, appear to regret their vote. If these findings are accurate it suggests that by a narrow majority the UK electorate now wish to stay in the EU.

      At the same time the Conservatives.are shown to have very large leads in some opinion polls, though I think opinion is in fact very volatile. It is impossible in my view to make sense of what is going through the minds of the general public. The tabloids nevertheless remain thoroughly hostile to the EU. They would doubtless claim that this represents the views of their readers, though those who have any sense realise that the views of their proprietors and/or editors matter far more.

      So the UK government may be planning to take the UK out of the EU against the majority wishes of its population.

      The country really does appear to have gone down the rabbit hole.

      I went to a play in London recently. The script required the question to be asked ‘when did this period of insanity begin?’.

      The answer given by the relevant actor, presumably rewritten specially – ‘the 24th June this summer’.

      Another run on the pound might bring sanity to the situation. Parity with the euro would be a real wake-up call for some.

      1. jabawocky

        This is nail on, it is not going to be possible to leave the customs union. I can be largely self sufficient in food if necessary but nevertheless I am going to stockpile if we try. Especially wine and olive oil.

        Just go to google maps and check out major UK ports. Phyically, where is all the customs checking going to take place and who is going to do it? The volumes are large. 4 million freight vehicles through Dover alone each year according to Dover ports. That’s more than 11000 per day! How long does it take to check a truck? How many people will it take at what cost? We will need to draft in some foriegn workers to do the job!

        A eurotunnel train has room for >30 trucks, and services leave every 20 minutes.1.5 million trucks per year.

        Now we have dealt only with the trucks…..

    2. M Quinlan

      The British have fought countless wars, several at existential risk, due to, in large part, stubborn xenophobia. Several of my English and Scottish Brexit friends and acquaintances are becoming more and not less rabid as the the months since the vote have passed. Tough talk from the “krauts” and “Frogs” will only enrage them further.
      These Deplorables are still a significant minority and more politically engaged then most. They are what May fears, in my opinion.
      Also they are of the view that the EU is a disaster which will inevitably collapse under the weigh of it own contradictions, with all the resultant human suffering anyway, so why not get the pain over and done with.
      The suffering of a few “Micks” probably won’t bother them either, though they’ve not said this to my face. They have no real feeling of fellowship with Northern Ireland, something the Unionists need to realise.

      1. vlade

        As someone else said, it’s easier to forgive for being wrong than for being right. I expect the idiocy if hard-core brexiters to escalate.

    3. vlade

      The problem would then turn A50 back – while UK parliament may be able to put paid to the UK part, it would require EU cooperation to turn back A50 (there’s the “constituionality” part, but it would require at least some cooperation from EU).

      TBH, this is why I voted to remain – not because I love EU (I don’t), and think it’s perfect (it’s far far from) – but the problems it will bring back are larger IMO than Greece leaving EU, and that was a super-shambles.

      1. PlutoniumKun

        I’m assuming that it could happen before the A.50 declaration is made. Ultimately, if the Parliament votes not to ratify an A-50 Declaration until after the next election, it is effectively dead (unless of course this results in the UKIP sweeping the next election). Given that Parliament has almost certainly a ‘Remainder’ majority if Labour votes that way, this seems quite likely. But I think it would take a series of very nasty economic events to take place in the next 3 months for this to happen. Essentially, they need to be scared into it.

        BTW, I’m not usually so flippant about a democratic vote, and a part of me was quite gleeful at how the English establishment fell on its face over this, but the potential damage Brexit is causing is enormous, its why I think every reasonable attempt should be made to stop it, and I think the only thing that can do it now is to ensure that the horrifying potential is rubbed in the English ruling classes face.

    4. Cry Shop

      So much dirty political money is washed in London, so perhaps they dare not press to hard — Merkel pulled in her horns pretty quick after speaking tough in the first week.

      1. Andrew Baker

        I agree profoundly, it is a mess, a shambles in fact. Despite this, if we talk about uncertainty, yes things are uncertain for the UK, but isn’t anywhere in the world?

        As a UK citizen, I voted to remain, simply because I didn’t want an economic bloodbath which I suspect is unravelling right before us. Though I have to say it was a difficult decision, the EU is the biggest form of smoke and mirrors the world has ever seen, and I could see both sides of the argument.

        Looking back at history I suspect the Conservative government will take this approach. To put simply, the UK is simply looking less and less investable, due to May dithering on A50, in-party disputes and talk of constitutional breakdown etc. I suspect the Tories will take a further neoliberal stance, perhaps we’ll see a loosening of regulation in the financial sector (here we go again). Remember they do have ammo, that is, London the financial district of the world. Remember the EU was taking a much harder stance on banking sectors in the EU. Now with the EU gone, and once we’ve ‘actually’ left I fear the Tories will take a stronger approach to this, which yes of course will help the wealthy, but ironically this will lead to further socio-economic issues and increased inequality for many. (Also bear in the mind that the ‘many’ that will be impacted by this if it were to happen are the ‘idiots’ that decided to leave for a ‘better Britain’. If there’s one thing I’ve learned from Brexit, most of the electorate are idiots.

  3. vlade

    Well, the Brexiters called it Project Fear. I called their project “The blind Hope”.

    Anyways, more to the point. Yep, it’s a nightmare. And I will still claim that tariffs are the easy bit. The hard bit (and your customs IT system needs to deal with that, and a lot of complexity comes from that) is the NTBs. I keep saying Mutual Recognition Agreements (MRA) over and over – but it really is important, and even a number of Brexiters (the ones not blinded by power, history, or whatever) even reconigsed it and were saying as easly as Feb this year WTO is not an option (even assuming can opener – i.e. full and proper WTO membership on day one).

    The country of origin rules are massively complex, and what Yves describe (tarrifs based on that) is one potential. What happens is that the tarifs are based on the “last substantial value add”. So if you import chinese stuff, and just package it and sell to EU, the tariffs will be the same as if it come straight from China.

    On the other hand, if you incorporate a part into a whole that is substantially more valuable (and how do you decided that is part of the fun) than the other parts, the tariffs are now based on the country where that last ad-valorem happened.

    There are other rules, but I’m not going to turn this into a specialist post (especially since I haven’t read the WTO rules in full yet) – but you get the idea.

    Now though, it get even more complicated. On the top of being able to determine whether or not a tariffs applies, any goods imported must meet the standards of the importing country. And EU has lots of them (even if it DOES NOT have a standard for how curved bananas shoud be, as the british press told us).

    This can be fundamentally met only in two ways. Either via MRA (where you recongise each others standards setting bodies, standards, rules and regulations etc.. Remember – this is not just a snapshot in time, but also takes into account that the bodies/standards etc. evolve with time, so extra layer of complexity there).

    Or, that you take a sample from each shippment, and test it. Of course, the owner of the samples (importer) pays the cost of the testing, and it also pays the cost of storing the freight while it’s being tested. So it costs the importer time and money.

    TBH, I can’t see how could you possibly trade something complex like cars or plane parts (where safety is involved) w/o an MRA.

    And your customs IT system has to support all of that!

    Oh, but you say “well, let’s set tariffs to zero for everything!”. Well, that may sort out your customs IT problems – around the tariffs. Unless you want to throw out of the window all YOUR standards, that means you still need to establish the compliance. And I can assure you that if you do throw out all your standards, getting an MRA with somoene else is going to be a nightmare.

    So your exporters rather get going on implementing the MRA-less trading processes right now, and hope to get there in time. A friend of mine runs a small caliber ammo manufacturer (very highly policed stuff), and based on what I heard, I doubt he would be able to get their processes and systems in place in two years, and that’s knowing what needs to be done and how.

  4. dw

    some how the developers wont have more time if the UK delays their exit, cause that also delays the specs, as no one will know what they are until negotiations are complete, and those take 2 years, then time will run out. and trade will come to a halt, and businesses will flee

  5. daniel

    The risk aversion is strong with the remainers. They are almost afraid to live and face the future by themselves, they need brusel to help them, to tell them what to do next.

  6. Jack

    A start might be taking a look at how Hong Kong handles their trade and the systems they use. HK is basically a duty free port, but they do have electronic systems in place to track everything that apparently works quite well. Their yearly trade is somewhat smaller than the UK, but it is still quite sizable.

  7. Pavel

    Great piece, Yves, and yet another example of how poorly thought-out [Not at all — Ed.] Brexit was by its proponents.

    It would be nice to be able to say that the UK has a great record of producing government IT systems. However, just the opposite is true — virtually every IT project in the last decade or two has been a monumental (and expensive) disaster — NHS (multiple), police, customs, social & welfare payments… every one of them delivered either late or cancelled, and always costing the earth.

    Brexit is such a shambles on so many fronts (as documented here in NC and elsewhere), and the EU is playing tough. Ultimately the UK may have to stay in the EU but with more restrictions or loss of its prized “rebates”. Meanwhile, one of the chief boosters (one can’t call them “architects” as there was no blueprint), one Boris Johnson, is now Britain’s Foreign Secretary! Talk about “failing forward”…

  8. Synoia

    Putting IT on the critical path is stupid. Use people to do the work, and then implement IT slowly (IT is always implemented slowly).

    First a manual process
    Second use IT on the easiest or most used manual processes
    Third slowly expand the IT coverage
    Fourth never expect to cover 100% of the activities.

    The key is incremental implementation. A big all encompassing system is how projects fail.

    All successful large projects are based on simple small projects.

    1. dw

      so implement a manual process for work that will end up being millions of operations a day, i guess they just about hire the entire population of the UK. and get nothing done but process the imports and exports (IF any). now they all work HMG. course maybe imports just stop, and exports too.

      1. St Jacques

        I tried to delete my poorly thought enthusiastic comment soon after posting but wasn’t able to. But staying with Synoia’s point, to a degree, would it be necessary to do all processing manually in the transitional period?

  9. Anna Zimmerman

    I’m a huge fan of NC, so what I’m about to write should not be taken as a lack of appreciation for the interesting and sophisticated analyses that are provided on this site. However this article is a prime example of the kind of bizarre double-think that is typical of so much journalistic/academic analysis of our modern world.

    On the one hand, there is a broad consensus amongst right-thinking folk that our consumer driven economy is polluting in every possible sense – environmentally, yes, but also spiritually, emotionally and socially, and that it is based on the systematic plunder of global resources in the interests of the wealthy. There are plenty of articles on NC about the problem of environmental stresses and strains, and of poor nations being stuffed by the wealthy, and most readers probably nod piously and agree that yes, it is all terrible and Something Must Be Done.

    On the other hand, whenever any policy threatens to impair the turbo-charged insanity of the global economy, it is castigated as a Thoroughly Terrible Thing. This profound contradiction between cheerleading and denunciating is skated over without comment. But how exactly are we ever going to stop the general over-consumption unless there are shocks to the system that stop people in their tracks? In this respect, Brexit will be a gentle knock indeed when compared to the kind of environmental shocks that less fortunate countries in non-temperate zones are likely to experience in the years to come.

    This article is a classic example. Nowhere is it pointed out that the UK has been consuming beyond its means for decades now, producing a reliably massive trade deficit, fuelled by a ridiculous throw-away culture, that it is only able to finance because of its disproportionate financial sector which facilitates access to cheap credit. This financial sector is well known as a major beneficiary of the massive capital flows that not only move between wealthy countries but also into wealthy countries from the world’s poorest nations. Those who doubt the dependence of the City on its historic role as a facilitator of theft should read the extensive literature on tax havens. Those who doubt the role the City plays in mitigating the considerable imbalances in the UK economy should read Tony Norfield’s 2015 book: ‘The City’. Is this really the kind of system that we should be looking to prop up? Speaking as a British person, and a Londoner, the nation needs a serious wake-up call.

    I say this not because I am unaware or impervious to the kind of suffering that a slump in the pound, inflation and a serious recession is bound to cause, but because it is more important in the long run that the double unsustainability – both in the global economy as a whole, and in Britain’s specific role in it – is dented. This is in everyone’s interests ultimately, as the global economy cannot carry on in the way that it is, without bringing a much greater degree of suffering to many more people.

    Let me declare my hand here – yes, I did vote for Brexit, but I did so in the full knowledge that it was likely to impair the economy to some degree if not considerably. But unlike most people who rarely think much beyond the next 5 years, I was thinking about the next 50 years, and the 100 years beyond that, and the 100 years beyond that. About humanity, in its widest sense.

    The entire raison d’etre of the EU was to propel the consumer into ever more excessive amounts of consumption, and simply, this is not a viable way of life for humanity as we move into the twenty-first century. Sooner or later, we need to bite that particular bullet. What we need is DEgrowth and DEglobalisation, and a return to a simpler way of living, based on fewer hours worked, more self-sufficiency and a greater integration between town and countryside. In the same way that the failures of the modern mass media are turning people towards alternative sources of news, and the failures of mass consumerism are stimulating an interest in alternative lifestyles and downsizing, so the failures of the old growth models will stimulate an interest in greater self-sufficiency, which can only be a good thing. We need to embrace this as a potentially positive and life-affirming development, not make hysterical and ultimately deeply conservative predictions of imminent disaster. Are we genuine progressives or just smiling for the cameras?

    1. Yves Smith Post author

      *Sigh*. No, the raison d’etre of the EU was not about consumption. It was about preventing the rise of another Hitler by 1. trying to create a “Europe” than would transcend or at least weaken national interests and 2. giving technocrats more power since democracies (per the thinking of the time) can too easily be taken over by demagogues.

      1. VietnamVet

        This was the “moral” argument for the foundation of the EU. But it is not the reality of the “free movement of goods, capital, services, and people” in a top down technocrat autocracy. The EU may have worked with a democratic fiscal union but it is not one. Brexit and Donald Trump’s nomination are revolts against the status quo by globalization’s losers. We who live in cities and the suburbs do so at the mercy of outsiders. We’d better make sure things work for good of all or nothing will work at all. Cleveland and Columbus Ohio have the same population (2 million) as Aleppo and Mosul had before the West’s regime change campaigns there.

        1. Anna Zimmerman

          Absolutely, VietnamVet. The great difficulty with the argument that the EU was designed to promote peace is that gives rather too much credence to the official rhetoric. Even if we did not know (by default) that public pronouncements are always at best only partially accurate, and at worst put an anodyne spin on entirely sinister motivations, it is well documented that various European nations had to be bullied and blackmailed into participating with what was essentially a US sponsored and funded project from the start. If it was merely about the promotion of peace than one would have thought that the French would have been keen, given that they had been invaded on three times by the Germans in the previous century. The pretty fiction of European nations coming together willingly to fight the threat of fascism under the benign guardianship of the US was a post hoc justification. One must remember that the US was actively involved in funding fascist groups at this time, for example in Ukraine.

      2. Oregoncharles

        An important justification (sales pitch) at the time was to gain the economic advantages of a larger market – that is, higher levels of consumption. Hence “Common Market.”

        This is also a reason for the EU not to just cut Britain off, though annoyance and the political project might drown it out.

        Doesn’t the logic of the above article apply on the other side of the Channel, too? I assume there are no customs offices at the ends of the Chunnel: they’ll have to set up facilities and policies where there are none now.

        1. Yves Smith Post author

          That is a fair point but it was a secondary justification. The idea was that trading partners who had economic interdependencies were less likely to fight with each other.

          It is hard for Americans who never have had war on their soil, to understand how important the imperative of promoting durable peace was. Due to the success of the Congress of Vienna in 1815, Europe had enjoyed an unprecedented century of peace. The two World Wars were traumatic as well as devastating. Fascism was a new development and European intellectuals as well as citizens didn’t want to see that again. Go see Bertolucci’s 1900 and the chilling circularity of the movie. It opens with middle aged man and woman running across fields, terrified, with a crowd with pitchforks in hot pursuit. The viewer is sorry for the desperate pair.

          The same clip is part of an extended scene late in the movie. You realize the same now dirty and ragged couple are the fascists who have been terrorizing an Italian town. At that point, you are rooting for the peasants to tear them apart. The point was that the horror of fascism wasn’t just the war, but the debauched norms that went with it.

          And you are projecting neoliberal values on a period long before they existed. In those days, the policy focus was on increasing worker wages. And as William Greider has pointed out repeatedly, the system we live in is not one of “free trade” but of managed trade, and every country but the US cut trade deals with an eye to protecting workers while helping their export industries.

          1. Norb

            But the question remains, how can the concerns of ordinary citizens be addressed if the political establishment continues to enact policies that undermine their very existence?

            While the rational arguments for the EU are sound, and connections through robust trade agreements in principle should guarantee an incentive to insure nonviolent confrontation, it seems the opposite is taking effect. In one way, this seems obvious when the efficiencies and benefits of economic cooperation are hoarded by that same economic elite making the rules.

            It seems the only guarantee willfully engaged by the wealthy classes is the military option. All the uniforms,gear, job training, and three square meals a day as long as you do our bidding.

            The social programs that were born out of the massive destruction wrought from the world wars are the very things most at risk. By all accounts, are actively targeted for dismantling.

            In a sick, twisted way this is all very logical. You can provide for people in a peaceful manner, which has a proven real life track record. Or you can impose austerity measures which sets in motion a whole series of perverse incentives society wide. Austerity only works if you believe the negatives can be controlled. Once again, time will tell whom is right.

            In the meantime, we are left to watch political opportunists scramble and the disenfranchised raise their middle finger in ignorant disgust. The cycle needs to be broken- a way out needs to be found.

            The technical arguments concerning confrontation are all important and valid. However, Austerity and solidarity are incompatible and increasing numbers are joining the ranks of the disenfranchised.

            Managed for whom is what is being worked out, and once again, violence seems to be taking center stage to decide the answer.

            1. Yves Smith Post author

              Look, I am not disagreeing that the EU today is far less than ideal by virtue of the same neoliberal thinking that has wrecked the US social contract being institutionalized there too. But that was not what I was discussing. We were discussing the original design plan for the Eurozone. It had a strong anti-democratic element due to having as a primary objective preventing the rise of demagogues. And the economic integration was deliberately incomplete on the bad assumption that the inevitable crises would lead to greater integration.

              And if you think the UK in a post Brexit incarnation is going to be any less neoliberal than it is in the EU, you are smoking something strong. One of the big objectives of the Tories and UKIP in promoting it was to escape EU regulations….above all, labor and environmental regulations. The aim is to squeeze workers even harder in the name of the need for competitiveness.

              1. vlade

                TBH, the Athenian “democracy” was, if we look at it from todays perspective, hugely antidemocratic too. Although Athenians would say that in fact what we have is an oligarchy, not democracy (one of the points of not having any large directly elected bodies was the recognition that vote buying is the rational act then). Sortition! :)

      3. Anna Zimmerman

        Of course the EU was not purely about consumption – it was at least as much about cementing US control of Europe, as well as the reasons you cite. I would be the last person to argue that a single argument is ever appropriate in this over-determined world. But Yves, you are missing my point entirely…which only confirms it.

    2. Oregoncharles

      Time to study up on Cuba’s response to the embargo – another island. No, it wasn’t easy.

      A real danger of ending the embargo and opening travel and trade is that their unique solutions – especially in agriculture – will be lost.

      1. Anna Zimmerman

        Good point, Oregoncharles. In truth we all need to take a leaf out of Cuba’s book, if any kind of social sanity is to be restored.

    3. animalogic

      I would like to agree with Anna Z, but from a slightly different perspective.
      How many times has the EU been criticized on this forum ? Criticised quite justly, imo. The EU is largely a negative institution. Merely looking at Greece should be sufficient to indicate what a vicious institution the EU has become.It requires radical reform. Withdrawal from the zEU must be considered a basic response to such a need. Will anything less impel reform ?
      Yes, Brexit has been /is handled in a ham-fisted way, but that is no argument against it’s absolute necessity.
      In the long term I suspect Brexit will be celebrated. Now if only we could get withdrawals from that even greater evil – NATO.

  10. flora

    The tragedy is this “push comes to shove” situation could have been avoided. Of course, that would have meant listening to the people saying Brussels anti-democratic edits were hurting too many “little” people. Austerity was crushing people. News flash: Ignoring your populace never ends well.

    About the IT. Large govt and banking IT systems are usually created over time by adding on functions, bit by bit, to an early created system – which may still be serving as the core function/switching system. Trying to unwind the whole IT ball of yarn at once, and in in a short time frame replace with an entire new system built from scratch, is asking for trouble.

  11. Synoia

    The UK will leave. Due to the adventures of the empire of chaos there were 30 Million refugees in the MENA (Middle East/North Africa) in 2015.

    There is believed to be a 50 Million hoard of refugees in the MENA, just begging for a leader.

    The next step is to fill the Chunnel with concrete, or flood it, and wish Europe the best with the foot traffic over the land bridge to the ME.

    Europe has some experience with hordes, none of it good. Ask the Romans how that went with the Hun, or the Russians at the hands of the Mongols.

    TINA applies.

  12. Anonymous2

    Worth remembering it is not just the UK customs that would need to be upgraded but also the bordering member states, especially France. Will the French be able to do that or even want to try?

    It would be entirely possible to bring Cross-Channel trade to a standstill if the French so wished. It could even happen without them so wishing. The UK economy would collapse.

  13. Oregoncharles

    Maybe (I think, certainly) they should just hire a lot of people and start training them in Customs procedures NOW. Training bureaucrats isn’t real easy, but they’re a lot more flexible about spec changes than computers.

    As a bonus, it would help with their unemployment problems.

    I was thinking of Britain, but I just read Anonymous 2’s post just above, and the same applies to the EU (which I presume would operate as a unit?) A collapse in Cross-Channel trade would have serious repercussions in France, too – maybe not AS serious, but worth avoiding, especially given their own political problems..

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