One of the images used to describe the post-Lehman phase of the financial crisis was a state change. Pump enough energy into water and it undergoes state changes, from ice to water and from water to steam. With each state change, its movement becomes more chaotic. Think of Lambert’s famed “overly dynamic situation”. A state change takes that one step further.
Perhaps the happy talk from Theresa May will be proven correct, that the Brexit talks are in an endgame and May was hopeful of securing a deal in the next 48 hours and getting her Cabinet to agree so as to be able to hold a special EU summit on November 25.
But May’s choice of metaphor may have been a subconscious tell. The endgame in chess leads to a checkmate or stalemate.
And the negotiations look as stuck on the EU-UK and intra-UK fronts as they ever have, perhaps even worse. The EU nixed the UK’s proposal for determining when a backstop was no longer needed. Fishing rights are in play. And RTE (hat tip PlutoniumKun) sounded further cautionary notes:
…a senior EU official has cast doubt on any breakthrough in the Brexit negotiations this week, despite speculation that a British cabinet meeting could approve a deal in the coming days.
Speaking to RTÉ News, the official said that the implications of a UK-wide customs arrangement is still dividing Prime Minister Theresa May’s cabinet, and that as a result an emergency EU summit in order to approve the Withdrawal Agreement was unlikely this month.
There have been fevered reports that EU and UK negotiators are within clinching distance of a deal, but those reports are often contradicted by other dispatches which are less optimistic….
The main sticking point is the UK-wide customs arrangement, which Mrs May wants as something that will supersede a Northern Ireland-specific backstop.
The EU official suggested that the so-called level playing field issues which the EU wants clarity on before offering the temporary customs union – such as EU environmental, labour and state aid rules – are causing the hold up, since the UK has to run these late-in-the-day issues through all government departments.
On top of that, the Telegraph and Buzzfeed report that at a regularly scheduled Cabinet meeting tomorrow, ministers led by Brexit secretary Dominic Raab will urge May to embrace a “no deal” Brexit. From Buzzfeed:
In a significant raising of the pressure on May from inside her own cabinet, the group of senior ministers will make clear to the prime minister that they could not support a deal that breaches their two red lines.
They are doubling down on their demands that the EU drops its Northern Ireland-only “backstop to the backstop” and that the deal must include a “break clause” mechanism that would allow the UK to unilaterally leave a UK-wide customs arrangement.
The renewed cabinet opposition to the emerging draft Brexit treaty has increased the chances of Britain leaving without a deal. EU sources told BuzzFeed News they would not give in to UK ministers’ demands. If the choice is between a unilateral break clause and no deal, then it is no deal, a senior EU government official said.
Another mini-revolt against May is that MPs of both major parties are demanding that she publish the full text of the legal advice to the Government, and not a summary as she had insisted.
Recall that the EU had asked for the UK to submit detailed documents a full week before the next EU summit so that the sherpas could study them carefully? This request seemed at odds with the repeated Michel Barnier claim that 95% of the Withdrawal Agreement had been completed. Given how UK ministers have repeatedly used “customs union” to mean something more like “membership in the internal market,” one wonders if some EU leaders recognize that the UK and EU might have been talking past each other by using expressions that mean somewhat different things to each side, and they therefore want to see full text, as opposed to deal points. to make sure there is no misunderstanding.
So as things stand, the odds favor no breakthrough this week, and the UK and EU then working to stitch something up by the December 13-14 EU Council meeting.
Now this may all seem like more of the same, in that there has never been a deal that Parliament would approve. But we are hitting the “a difference in degree is a difference in kind” threshold. More and more of the non-ideologically-minded MPs are waking up to the fact that the UK is on track to having a no-deal Brexit, and they rather late in the game trying to Do Something about it. Expect the demands and the efforts to intervene to intensify if May misses the November 15 target for getting agreement from both the EU negotiators and her own ministers to a Brexit deal so she can have her late November summit. If she missed that, the Government then has to start enacting emergency legislation for a no-deal Brexit, which includes hard expenditures right away for things like contracting for ships to carry imports into secondary ports.
As much as the UK will start moving into crisis mode, the lack of any sensible alternatives from those who’d want to avoid a Brexit, much the less the needed consensus around any alternative, means the most likely outcome is rising levels of alarm but no corresponding action. A second referendum seems like too time consuming and uncertain a process to get off the ground, even if the EU would agree to it. How do you even formulate what the question is when the flaw all along has been that what staying in the EU means is clear, while “Brexit” has many possible solutions.
For instance, we now have a squabble within Labour, with Corbyn saying Brexit can’t be reversed, while shadow Brexit secretary is stumping for that, with no coherent plan as to how to get there. It appears to be “Labour takes over, *magic step,* success!
As PlutoniumKun said by e-mail:
I think its pretty clear that the British side have been told that there are no more options for finessing or concessions. Its up to May and her people to come up with some sort of way of selling what they have been given to Parliament. And unless she can concoct some sort of deal with a few dozen non-Tories in Parliament, I don’t see how she can get a majority on anything.
I think the only question politically is whether the Tories now hate each other more than they fear a Corbyn government. I still suspect the survival instinct will stop them short of a vote of confidence, but there may be a temptation to land Corbyn with the mess. Some of the younger Tories may even relish the chance of having a clean run with clean skins in 4 years or so.
Another problem of course is the refusal of the political class in the UK to recognise that the real deadline isn’t the end of March, its much, much closer as there is no way the EU can cobble together anything after the NY to even modestly mitigate a no-deal crash. So we may still see them squabbling over a ‘deal’, long after that boat has left harbour. And every day matters when it comes to making some sort of contingency plans.
And still the financial markets aren’t panicking. I find that really weird.
On the last point, too many people still believe a no-deal Brexit is so terrible that it won’t be allowed to happen, and they’ve also seen the EU wait until the 11th hour with bank rescues and debt crises with various EU countries to put a rescue together. But with a central bank at your side, it’s possible to throw tremendous firepower at a problem in very short order. There is no one who can slice through a Gordian knot here.
Vlade presented a scenario that hadn’t occurred to me:
Parliament votes May’s deal down, pound crashes, Parliament votes May’s deal in (with cosmetic changes).
I believe it’s likely it would still mean May’s government going down. That may actually end up being “Revenge of the Tories” scenario – i.e. if May goes down, let’s say that Labour wins (which is not given, but let’s say so). Then they are saddled with the NI backstop and all. But there’s still no trade deal or anything agreed – with anyone. Just a barely 18 months transition period. In which, unless Labour changes its tack a LOT, it can’t achieve much, if anything at all.
And I doubt that Labour would be willing to change tack to say EEA or similar. So the UK might end up being in exactly the same spot, but 18 months later, and with Labour government under extreme pressure instead. Allowing Tories saying things like it’s Labour who failed to negotiate a good deal (never mind there was no good deal negotiable, especially in the timeframe available). Or that it’s Labour’s fault that the NI backstop is still operational. Etc. etc. In other words, the UK would be in the vassalage state (rules from the EU, no say in it), but Tories could happily blame Labour – and most public I dare say would likely go with them, especially if May was out (which, in case Labour would win, is given).
Vlade’s scenario parallels what happened when the initially-much-hated TARP was voted down, and then passed IIRC ten days later, with hundreds of pages of pork added. But if the government were to fall and there were elections, the EU has said it would push the Brexit drop dead date out….but it’s not at all clear it would keep the same 21 month transition period. The EU wanted it to end at the end of 2020 for good reasons, like EU budget cycles. So this scenario likely means an even shorter transition period. As we said in our New York Magazine article in passing, a transition period has the effect of phasing out the exit pain. The UK falls out of all of its agreements with other third countries and international bodies that it has through the EU on Brexit Day. It then loses its status with the EU, most important, single market membership, at the end of the transition period. It is pretty much impossible for the UK to have a new trade pact with the EU by then, so it has what amounts to a crash-out then, but it at least will have had more time to prepare.
But Richard North may have the correct call, that May never brings an agreement to Parliament:
Faced with serious cabinet opposition, and little chance of getting the current deal past the Westminster Parliament – and even less chance of getting any concessions out of Brussels – this may leave the prime minister with no option but to give way to the pressure.
In many respects, Mrs May is already halfway there, telling her audience at the Lord Mayor’s Banquet in the City that she would not push for an agreement “at any cost”. And at this stage, it would be very easy to engineer a “no deal” scenario by default.
All that has to happen is that Mrs May does exactly what she is doing at the moment – stalling. A succession of missed deadlines and inconclusive talks can bring her inexorably to the 29 March, when we drop out of the EU automatically.
The advantage for Mrs May is that the default option bypasses parliament and, to an extent, marginalises the cabinet. The automaticity means that no one has to decide anything. We just leave – something the “ultras” have always wanted.
The irony of all this is that, despite the number players in the field, all pushing their own agendas, no one is actually in control. Once Mrs May pressed the button to start the Article 50 countdown, having already closed down her options, it was almost pre-ordained that we were going to end up with a “no deal” Brexit.
And the hardliners appear to be seeking the no-vote outcome, per Buzzfeed:
But ministers decided to take a tougher line after concluding that a deal based on May’s proposals would not pass parliament.
“There is no point agreeing a deal which will be voted down by parliament, cause the PM to fall, and result in chaos,” said a cabinet source.
The Ultras aren’t quite in “I love the smell of napalm in the morning….smells like victory” mode. I think this clip may be closer to the frame of mind:
Update: North’s guess was wrong, and there have been so many false claims regarding a deal is nigh in combination with enough negative noised in the last few days to think May would be looking at a December summit at best. May has agreed terms with the EU but the noise level from MPs, including members of her own Cabinet, is fierce, and it is not clear she will get approval at an emergence Cabinet meeting tomorrow. From the Guardian:
Ministers have been summoned to an emergency cabinet meeting on Wednesday afternoon to sign off Theresa May’s final Brexit deal with Brussels, prompting hard Brexit Tories to call for senior ministers to block it.
The critical meeting will review the final text of the withdrawal agreement, which was reached on Tuesday by British and European Union negotiators as the first step in the long process of ratifying the UK’s withdrawal from the EU.
Ministers were being summoned to No 10 individually for briefings on the latest developments on Tuesday evening and to read the key documents, although they were not allowed to take any papers home.
“Cabinet will meet at 2pm tomorrow to consider the draft agreement the negotiating teams have reached in Brussels, and to decide on next steps,” a No 10 spokesman confirmed. “Cabinet ministers have been invited to read documentation ahead of that meeting.”
The UK is understood to have ceded that a joint EU-UK committee will judge when an all-UK customs union can be terminated, according to leaks from Brussels. Dominic Raab, the Brexit secretary, had been pushing for a unilateral way out of the customs arrangement.
Hard Brexiters swiftly reacted negatively to the prospective deal – and indicated they intended to vote against it if it came to parliament. Jacob Rees-Mogg, the chairman of the European Research Group, said: “I hope cabinet will block it, or if not, parliament will block it.”
Boris Johnson, who resigned as foreign secretary, said he believed the deal was “vassal state stuff”. He said the UK would be bound by laws over which it had no say, which was “utterly unacceptable”.
Iain Duncan Smith, when asked if the government’s days were numbered, said: “If this is the case, the answer is almost certainly, yes, because they’re in real trouble if they bring back something unacceptable to their party.”
However, the Financial Times indicated that the hardliners themselves thought the Cabinet revolt could fail:
Business leaders were also being invited to Downing Street on Wednesday, as Mrs May prepared to unleash an intensive lobbying operation in support of a deal.
Mrs May hopes that some nine Eurosceptic ministers, some of whom have made known their misgivings about the prime minister’s Brexit strategy, will finally accept the need to agree a deal in spite of its flaws.
Hardline Brexiters pleaded with ministers to quit but Iain Duncan Smith, the pro-Brexit former Tory leader, acknowledged that a mutiny by Eurosceptic cabinet ministers might be limited, saying that their “spines do not yet meet their brains”.
Former foreign secretary Boris Johnson said the deal, which would leave Britain following EU rules on issues including the environment, state aid and employment law, was “vassal state stuff” and that he would vote against it.
Meanwhile the DUP’s Westminster leader Nigel Dodds was furious that Mrs May had not given him advanced sight of the agreement. “If the reports are as we are hearing, then we could not possibly vote for that,” he said.
So the pressure of having to start passing emergency legislation has focused May’s mind. And the hardliners would squeal regardless. May is meeting with ministers one by one to try to persuade them, but here are some key points from a separate Guardian story:
What will the political declaration say about the post-Brexit trade relationship – or the ‘future framework’, as the UK government describes it?
This is crucial, but it has received relatively little attention because the focus in recent weeks has been on the backstop. In particular, will the EU allow the UK to remain effectively in the single market for goods, as May wants? And what will the paper say about May’s hugely complicated – and potentially unworkable – proposed “facilitated customs arrangement”?
Will the DUP support the deal?
That partly depends on the answer to the backstop question, but, on the basis of what the DUP is saying on Tuesday night, the signs do not look good.
Can May win over some of the more moderate Tory Brexiters?
The ERG hardliners have been out already rubbishing the deal, without having even seen it. Steve Baker, one of their leaders, said recently that at least 40 hardliners would vote against it come what may. The PM hopes to contain the scale of the Tory rebellion (which at one stage was expected to reach 80 or more). But the resignation of the remain-voting Jo Johnson on Friday will probably make this difficult.
Until Johnson, all Brexit resignations were “zero-sum” resignations; when a Brexiter went, at least the Tory pro-Europeans could console themselves that they were winning internal arguments, and the same logic applied when pro-European ministers (such as Phillip Lee) quit. But the Johnson resignation was a “double accelerant” resignation. His move is likely to encourage both pro-Europeans and Brexiters to reject the deal. If you are mildly Eurosceptic you would not want to be seen as caring less about UK sovereignty than a liberal Tory like Johnson.
Can May persuade Labour to vote for the deal?
On the basis of what Jeremy Corbyn is saying, it looks unlikely, but we will find out for certain over the coming weeks.