Brexit: The Kindness of Strangers

The UK is rudderless as Brexit looms. Theresa May was never in control; her fundamentally wrongheaded approach to the negotiations of thinking the UK had the advantage, compounded by the massive own goal of calling snap elections, led to the EU steering the negotiations at key junctures. But May was still able to exert influence even as her authority kept eroding. She still has perhaps one play left, but even if she prevails, the UK will need to petition the EU for an extension. Ian Dunt, in a despairing post, Britain pleads to extend Article 50: This is one of our darkest hours, summed up where things stand:

We are no longer in control of our own destiny….We are now at the mercy of others. This is what Brexit has done to what was, just a few years ago, one of the most powerful countries in the world….

The debate in the Commons was typically contradictory, scheming and chaotic. Remainers collapsed into an internecine battle over when to table an amendment on a People’s Vote. That was embarrassing and self-harming, with no-one coming out of it looking good. Hilary Benn and others tried to table an amendment wrestling back control of Brexit from the government, but it fell by just two votes. Chris Bryant toyed with an amendment blocking the prime minister from bringing her deal back, but didn’t put it forward to a vote.

When all was said and done, it was a straight vote on the government’s motion saying it would ask for an extension of Article 50. It passed easily, by 412 votes to 202.

Immediately afterwards, many commentators insisted that that was it: Britain was now officially not leaving the EU on March 29th. But they were wrong.

As most readers already know, one of the amendments Dunt mentioned above, on a second referendum, failed by 334 to 85, with a remarkable 223 abstentions. Recall that whenever the EU has discussed the possibility of the UK getting an extension, officials have consistently stressed that the UK needs to give a reason, and a second referendum was often an example. Even though Jeremy Corbyn said he was all for another referendum after whipping against it, EU leaders are likely to regard the vote as dispositive until they have an awfully good reason to thin otherwise.

As Politico’s morning European newsletter put it:

GOOD FRIDAY MORNING. This was the week the U.K. parliament took all the workable options for Brexit off the table — deal as well as no deal. It was also the week MPs deprived the country and the rest of the EU of the one certainty they thought they had: That the divorce would happen at a specific point in time. So much for our updates on how many days until Brexit.

What we do know: Prime Minister Theresa May isn’t in control any more, if she ever was. Labour leader Jeremy Corbyn hasn’t ever been able to change the course of Brexit. The impact of Speaker of the House John Bercow’s handling of procedures on the real world is yet to be seen. And the queen is not supposed to say or do anything.

On the European end of things, the decision on what’s next is neither in the hands of Commission President Jean-Claude Juncker nor Council President Donald Tusk (who on Thursday expressed his preference for a long Brexit delay, to the surprise of two EU diplomats who expected Tusk to just purdah, as everybody else does). The EU’s chief negotiator, Michel Barnier, said any decision was beyond his control.

Collective bargaining: “It seems as if the EU27 leaders really do hold all the cards,” write David Herszenhorn, Jacopo Barigazzi and Diego Torres.

May said that her game plan was to hold yet another vote on her deal next week, assuming Speaker John Bercow does not block her from submitting the same matter yet again. That means she will spring whatever version of extension she is asking for on the EU 27 right before or even at the meeting. This is not going to improve their mood.

Government working on bribing the DUP to secure a Withdrawal Agreement win. It helps that the DUP is signaling that it wants to be bought. However, with a 140 vote gulf last time, the Ultras as rabid as ever, and the widespread UK assumption that the EU will agree to an extension, the odds that so many votes will change looks very remote even if the DUP switches sides. May seemed to be pinning her hopes on getting ERG defections after Attorney General Geoffrey Cox gave an additional opinion on the Irish backstop which found nee grounds why it might not wind up being a roach motel. The lawyers for the Ultras have rejected it.

Ultras are still trying to blow things up. Clive flagged a new story at the Telegraph:

Theresa May has faced renewed pressure to resign as Tory MPs warned they could support a vote of no confidence in the Government.

George Freeman, a Tory former minister, suggested a pledge from the Prime Minister to quit could persuade Brexiteers to support her deal.

But Sir Christopher Chope, the veteran Eurosceptic Tory MP, said Mrs May’s handling of Brexit meant he would now “seriously consider” voting to bring down the Government.

He added:

Sir Christopher Chope is my mother in law’s MP. The local association there are mad as loons. They had to out-UKIP UKIP such was the euroskeptic theocracy that is the electorate there. Which they did without breaking into a sweat.

However, even if the Ultras do table a vote of no confidence, aside from the fact that enough MPs are likely to have worked out that triggering a general election now would almost guarantee a crash out, it’s also not a good time for Labour. From a John Authers piece at Bloomberg:

It isn’t a given that the EU will give a long extension if May fails to win approval of her Withdrawal Agreement. It’s not that UKIP and other right wingers trying to get “no” votes from Italy, Poland, or Hungary is likely to do the trick. The EU has been loath to have the UK seat members in the next European parliament.

But the immediate issue is that the EU has said every time that the idea of an extension has come up, the UK needs to give a reason why (aside from a short “technical” extension), the EU can have reasonable odds of believing that the UK can sort itself out and agree on a different type of Brexit that still sits on Barnier’s ladder, his now-notorious chart of Brexit options given various red lines.

But now we have the UK having shown itself to be in a degree of disarray unthinkable in any country, or even large organization. And May seems to be going about seeking an extension in a way designed to lower the odds of her getting one. It doesn’t seem likely she’ll offer a reason, since the UK is fundamentally divided and there’s no ready way to change that. She can’t say a new referendum and she won’t say a general election. And she might not even say how long “long” is.

Key EU leaders were already not well disposed towards the lengthy extension idea. From CNN:

French President Emmanuel Macron said on Thursday any extension to Brexit could only be “a technical delay to allow more time to put their departure in place.”

Macron, who is currently in Kenya, added that the UK would need a purpose for the EU to grant any extension, so as “to ensure something will come out of it.”

Attitudes have hardened in Germany too. From Reuters:

Only delaying Britain’s departure from the European Union does not bring a solution, Germany’s Justice Minister Katarina Barley on Friday said.

“I think the EU would be ready to delay Brexit, but one has to have a plan on what is supposed to happen during this period,” Barley told rbb broadcaster.

In the Spectator, Robert Peston confirmed this view is well shared:

So the stakes for the UK could not be higher when the PM launches Meaningful Vote 3 after the weekend. Now if I am right, and the PM loses that vote again, how would the EU react? Well my sources in EU capitals are clear and agreed on only one point. It depends utterly on whether the PM asks for something specific. For the avoidance of doubt, if she turns up and simple says “gimme a delay, but I’m not sure what I’ll do with it”, they’ll “ask her for clarity” – according to one well-placed source – and “would not take any decision at all”. She would be sent home, and invited to re-submit her request for extra time at an emergency council of EU leaders the following week. Yes, I am not making this up.

Consistent with our earlier observations, May springing whatever her plan winds up being on the EU at the 11th hour is going to hurt her. Even though professional diplomats wind up in those roles for their ability to maintain their composure, the UK has run roughshod over them too many times. From the Telegraph:

Brussels has reacted furiously after Theresa May announced plans to hold a third meaningful vote on her Brexit deal just one day before an EU summit to approve an extension to the Article 50 negotiations.

While EU-27 leaders are divided over the length and conditions for the extension beyond the March 29 deadline, they are united in their irritation that the prime minister will give the bloc very little time to consider their response and prepare a joint position.

Last night Mrs May said that MPs would hold a third vote on her deal on March 20. Officials and diplomats have told Britain to set out its extension plans as early as possible, preferably on Thursday, ahead of the summit in Brussels on March 21.

“There is frustration and anger among the ambassadors of the EU-27 in Brussels at Mrs May’s plan. This is not how things are done before EU summits. We need to plan. A lack of planning leads to another Salzburg,” the diplomat added, in a reference to one of Mrs May’s humiliations at the hands of EU leaders at a summit last year.”

As Ian Dunt put it:

Other voices in Europe are strongly opposed to an extension – some in all circumstances, others only in certain circumstances. With no deal in place, they might view an extension as an ability to allow Britain to prepare for the aftermath, which they feel they are better protected against. That would open up the possibility of further extensions and erode the EU’s strength in talks.

There are even some figures in Europe, including in France, who quite welcome no-deal from a self-interested medium-term strategic perspective. Others are simply fed-up with Brexit and believe it’s time to cut the UK off.

This is not the most likely outcome. Chances are, they’ll offer a extension on the condition that it is quite long and contains a set idea of what will take place to change the situation. But let’s be clear what this means. We are no longer the ones who decide what happens to our country.

Normally I would expect the EU to ask the UK to make a hefty financial payment to get an extension, particularly a long one when the odds favor that the UK will just faff about, but The Times suggests the EU will force a plan on May if she doesn’t present one (recall that the Times has a particularly poor record with rumors, but even a blind pig sometimes finds a truffle):

The European Union is poised to tell Theresa May that she must hold a second referendum or soften Brexit in return for them granting a lengthy delay to Britain’s departure date.

The Times understands that the prime minister has been told by senior EU officials and other European leaders that conditions for an extension to the Article 50 exit process would include the option of a second vote on EU membership.

Mrs May is expected to ask a summit of EU leaders next week for a delay to Brexit. Unless the House of Commons has ratified the withdrawal agreement by then momentum is growing across the EU for a lengthy postponement to give Britain a “long reflection period”.

This view seems at least in part based on Donald Tusk’s remarks, but as Politico indicated above, the locus of decision-making has shifted away from Brussels to the individual EU leaders, so Tusk has less sway than he did before.

Finally, I wonder how Barnier feels about all of this. He’s 67. Admittedly, he has a very able deputy in Sabine Weyand, but he’s done a remarkable job in the face of May’s thickheadedness and repeated self-sabotage, and the revolving door of idiotic Brexit ministers. How much more of this does he want to put up with? And what happens when he decides to retire? In some ways, Brexit has only begun. As some experts have pointed out, the talks on a trade deal will be even more taxing.

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129 comments

  1. Christopher Herbert

    Britain should just leave. This report, along with those attacking the rise of MMT macroeconomics, is all part of the blowback to prevent a justified cashiering of neoliberal garbage.

    Reply
    1. Sanxi

      Interesting post would be nice if thing s stated as facts were facts but ok let’s play. Remember we’re talking about politics. I just can’t stop think about Obama and Mitch McConnell and his ability to flat out prevent a Supreme Court seat from bein filled. All the while McConnell saying he wasn’t doing that and Obama saying everything was going to plan. So what was true? And why? This is politics, the gaming starts with the ‘no’ word.

      The U.K. right now is still a full member of the E.U. The pound is doing well. The economy is doing well , relatively speaking – still the G5 nation. Still has its nukes. And Theresa May just won four motions in a row, in one with 40 labor votes and the other with minus -170 Tory votes. An aside, if you don’t know, gvt ministers are required by party rules to vote according to the stated party position as stated by the whip – there are three levels of intensity. It goes with the job, you get fired if you don’t vote the governments position. It’s not a reflection of things going haywire. Anyway how’s that working out for Trump?

      As far as leaving the E.U. goes no one has any experience in doing that and calling people stupid and lacking in ability doesn’t really help. Certainly by historical standards this actually is going pretty well. One problem with the U.K. is that unlike the US it is very hard for a majority to advance an agenda and protect the minority at the same time. It tends to be an all or nothing process, thus actually what is going on between parliament and government is remarkable and good and necessary, especially for helping to create the future relationship with the E.U.

      Ah, the E.U. First on voting. The E.U. only yesterday said existing E.U. MPs could stay as in: extend their terms, be substituted, or like whatever we the E.U. want, don’t worry we have all sorts of rules that allow for all sorts of things. But this begs the question, the McConnell Rule as in, ‘we will do whatever, we got all sorts of rules, for all sorts of things’. More McConnell, Peak McConnell, What people are saying and what they mean are not the same thing. First, in the HoC the speaker will allow the vote because the house wants the vote. It could have stopped it but didn’t. A loss of 140 means you need only change 71 to win. When the loss of 140 included 85 of your coalition, I’d say rewatch Lincoln and passing the 13th amendment. But it’s better, Labor (Labour if you must), on the ‘let’s have a second referendum’ was whipped not to vote, but 40 voted against it. I’ve been a whip, I like those odds. I like everyone threatening bad outcomes and being iffy on extensions because I’m not going to get all the ERG but I only need 1/2 of them. No one really wants No Deal, or an extension to the edge of forever. The E.U. wants the U.K. in the E.U. in some shape, manner, and form so it’s in their interest to put as much pressure on U.K. MPs to vote for the deal simple as that. This has been the game plan from the beginning. Just ask McConnell or A. Lincoln.

      Reply
      1. Yves Smith Post author

        Help me. “This is going pretty well”? What are you smoking?

        The UK has had many major financial companies shift major operations out of London. London is permanently diminished as a financial center. And this isn’t over: the EU will succeed in getting euro derivatives clearing moved to the EU. And as someone who has worked with major derivatives firms, the cash trading will move too. Not having derivatives and cash trading on the same trading floor puts you at a competitive disadvantage.

        Honda is closing its Swindon plant due to Brexit. As multiple articles pointed out, Honda’s denial of that isn’t even remotely credible, they are just saying that because the Japanese see no point in ruffling feathers. UK auto investment is down 50% as a result of Brexit. Investment by UK companies generally has dropped in the last three quarters. The OBR has reported that the UK economy is between 2% and 2.5% smaller than it would have been as a result of Brexit…..and it hasn’t even happened yet!

        The pound is where it is only by virtue of the terrible reporting of the UK press, plus as vlade pointed out long ago, companies not making a stink out of fear of alienating the Government. The fact that it’s the Japanese that

        This has been the worst performance of a government in the modern era. Go read the Ian Dunt piece I linked to, for starters, or read Richard North.

        Reply
        1. Sanxi

          Watch this space, I respect where your coming from but not sure why your so intense. I’m too tired to respond right now but I will. Amên. Sealed in trust, faith and truth. (I confirm with my entire being) Frank ~☆゚.*・。゚

          Reply
        2. Which is worse - bankers or terrorists

          I’m not really sure I see Germany as a financial center on par with London or New York. Finance is fundamentally about deception, and the Germans just aren’t as good at that as the British.

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        3. Fazal Majid

          Perhaps the Brits should do for the European Parliament what Irish nationalists used to do for Westminster: elect candidates that then refuse to participate. They certainly won’t be missed.

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        4. Sanxi

          Yves, my promised reply.

          I’m not smoking anything, actually I’m quite unhappy having lost the hearing in one ear. Anyway…

          Many major financial companies shifting operations out of London. I think you mean by that the U.K.

          Many, doesn’t mean the majority and it certainly doesn’t mean all. More importantly it doesn’t mean ownership has changed, which may or may not have been in the U.K. in the first place. I run a sovereign hedge fund (I have my fingers in many pies), we have operations in Dubai, Frankfurt, & London, Brexit is neither here nor there to our setup. To others perhaps. I doubt ownership has changed in many firms if any. From What I know, The UK before Brexit was the worlds fifth largest economy and will be after.

          As to the autos, as you know there is a world-wide reconfiguration. First there is there is the problem of excess capacity, second the problem of global supply chains in era of anti-globalization, third customer preference for crossovers v. Sedans, fourth electrics v. carbon engines, and fifth the existential issue of individual ownership of an auto at all in a world out of climate balance. Brexit May be blamed for whatever regarding autos, but it is largely not true.

          The pound is doing fine. The U.K. press like the US press is terrible but traders know this. Money to be made either way.

          Richard North and I are well acquainted and he prefers that I keep my observation about him private. We do like each other.

          I do believe I can say this, I almost always argue with him factually. I think he is brilliant and knows exactly- Flexcit, how to leave the EU. He has been treated extremely, exceptionally, poorly by government, parliament, and the press. As is often the case with genius. Pete his son is also exceptional in explaining why there is the need to leave the EU. And the need to reform government in the U.K. And the need to do things locally. Both have been nice enough to give me space to discuss the Long Emergence 8 ҉. My version of it not Kunstler’s.

          Reply
    2. Don Smits

      Britain should just leave and continue to be neoliberal? You don’t think well, do you? You still don’t get it do you. The Nation State was always just a economic unit, that practiced internationalism.

      Reply
      1. Yves Smith Post author

        That is not what his comment said and your tone is utterly out of line, even independent of the fact that you demonstrated that you have a reading comprehension problem. One more like this and you will be blacklisted.

        You can question his view that just leaving would be anti-neoliberal, given that the most rabid Brexit fans think they can turn the UK into Singapore. But abjectly misrepresenting what he said and getting nasty to boot is not on.

        Reply
        1. Which is worse - bankers or terrorists

          Yves, I have to be honest, I didn’t like the tone either but his last sentence was worth inclusion in the comments I thought. Would hate to see him blacklisted.

          Reply
  2. Winston Smith

    In an effort to lighten up the mood (it is Friday) and given NC’s distaste for links, may I suggest searching for “I demand to have some booze” and let the resulting 50 second video clip featuring the brilliant Richard E Grant portray what might be a likely post Brexit scenario

    Reply
      1. Eustache de Saint Pierre

        Demanding cake & the finest wine in the Penrith tea rooms, is also I believe very applicable to the situation, with the latter part perhaps becoming much harder to secure. It will however not likely to become a problem for the likes of Rees-Mogg, Davies & Redwood as this article illustrates from Prem Sikka :

        https://leftfootforward.org/2019/03/prem-sikka-the-brexiteers-are-getting-rich-off-brexit/

        BTW – thank you Yves & all for providing a haven of sanity, outside of Brexit Bedlam.

        Reply
        1. Colonel Smithers

          Merci.

          This information formed the basis for a Channel 4 documentary earlier this week. Not for the first time, the information was nothing new and too little, too late.

          It was mentioned how much money Rees-Mogg makes from the City. Oh, dear. Perhaps, the long suffering UK taxpayer would care to learn how much the Mogg makes from his family’s 100,000 plus acres in Somerset, Kent, Nottinghamshire and Yorkshire, including EU farm subsidies that will continue after Brexit.

          The Wall Street guy interviewed mentioned the three UK banks he has shorted, but not the names. The firms are Lloyds, RBS and Barclays.

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          1. Eustache de Saint Pierre

            Thank you for the further information Colonel.

            I have not had TV for about 8 years, which strikes me now when I occasionally come across it as yet another form of Bedlam – but good to know that these shenanigans are at least getting some public airing.

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          2. Mirdif

            I heard a quite salacious story about Mogg’s peccadilloes. I tend not to believe it but it amused me enough to start referring to him as Somerset Lloyd-James Jr. Somerset Lloyd-James of course was a character in the novels of Simon Raven based on Raven’s old school chum, a certain William Rees-Mogg. Lloyd-James in the novels had a tendency to a particular peccadillo and it was the same one that Jacob was supposed to like in the aforementioned story.

            Reply
  3. Marc

    I’ve tended to agree with much of your analysis but have to say (I’m based in the UK) that to me that she has created a situation where her deal may very well pass next week. Mohamed el-Erian has written something on bloomberg along these lines also pointing to the critical importance of the EU wanting to avoid dealing with the UK/EU elections. I do think that even the ERG types recognise what it might mean to “own” a crash out. So, at this stage, they need a strong excuse to accept her deal and pointing to the prospect of Brexit never happening may be what they needed. The argument may likely also carry some labour MPs. At that point, the extension will just serve to help in preparations. The one thing I don’t get is the DUPs commitment to Brexit but they may get enough out of the conservatives to live with it.

    Reply
    1. Yves Smith Post author

      The English language press is full of articles saying that now “no deal” is off the table due to Parliament tasking May to go get an extension. This is why I highlighted the articles by Dunt and Peston since the media is close to united in not understanding that the risk is still on.

      I don’t see ERG defections being significant. Their “Star chamber” lawyers nixed Cox’s latest opinion, which was seen as the device for getting them on board. Go read BrexitCentral. Those guys really believe the discussion of crash out damage is more “Project Fear,” that trading on WTO terms would be to the UK’s advantage, and that any disruption will be short lived and outweighed by long-term gains.

      Reply
      1. Jim A.

        “Of course they’ll give us an extension under terms acceptable to us,” rhymes rather well with “Of course they’ll agree to all of our red lines.” And they both seem to spring from a deeply seated belief that the UK matters more to the rest of EU than seems to be the case.

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        1. Sanxi

          No Germany, the UK, France…. Red lines is the wrong way to frame it from either side, to ‘leave’ means something compared to staying’. I don’t think starting with moral issues rather then pragmatic ones was the way to go but that was the E.U. with some virtue signaling to the rest of the E.U.. The U.K. hasnt had to do a trade deal in what a thousand years (seems like),? There is no experience. Even The Good Friday Deal was done with ‘assistance’, if you will by the US. It’s going to take time for the U.K. to get up to speed.

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      2. Marc

        If, as I think you have correctly analysed all along, the EU is not going to do the UK any “favours” and given that the MPs have abrogated their ability in yesterday’s vote to vote on anything other than May’s deal, it just seems to me that the clear view (based on the MP votes) that a crash out is unacceptable means there will be the votes for May’s deal before March 29th. It may take a 3rd rejection, the EU putting in demands to provide a longer extension that will never be accepted by Parliament to lead to it.

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      3. Sanxi

        Better, call them up and talk to them. I did, some of them, enough of them. Their pretty split. But that’s good. The E.U. is playing to as intended so if Brexit is ever going to happen it’s the E.U. deal that May represents (I’m putting it this way deliberately) or nothing as in the unknown. It be nice if everyone learned from the experience and acted rationally (like us in US), but that just isn’t how humans roll.

        Reply
  4. Yves Smith Post author

    I am hoisting this comment that David just left at the end of yesterday’s Brexit thread, where it might not get noticed:

    David
    March 15, 2019 at 6:37 am

    Ok, but politics nerd alert for the readership as a whole.

    France’s international posture since WW2 has been based on permanent membership of the UNSC, and subsequently an independent nuclear capability. The two are now effectively intertwined, and no serious French politician would give up either.

    The EC (as was) was originally a deal between French agriculture and German industry. It was also a means (like NATO) of political rehabilitation for Germany after WW2. The latter point enabled France to be the dominant partner politically, even if Germany quickly became a stronger economic force. The Franco-German “couple” was widely recognised to be the key building block of peace in Europe, and the French put enormous effort into retaining it.

    In the 90s, this system started to fray. German dominance of the financial system became more pronounced, other nations with very different values to the French began to enter the EU, and the balance of power began to shift against France. As the post Cold War world started to define itself and people talked about a new international order, and the EU became a political unit, France’s UNSC seat came under scrutiny, either directly (replaced by the EU) or indirectly (supplemented by one for by Germany). With the tact and delicacy for which German diplomacy has been famous since, oh, about 1870, German leaders raised the idea from time to time.

    Relations between the two countries have been strained since Merkel took over: she and Sarkozy famously did not get on, and relations with Hollande were not great either. Macron, fervent European, not only wanted to do something about this, but also wanted to launch an ambitious programme of European reform which would, among other things, rein in German influence in economics a bit. His proposals, as I’ve said, were published everywhere. The German reaction from AKK (assumed to be the next Chancellor) was clumsy and more or less guaranteed to annoy the French by raising, yet again, the idea of them giving up their UNSC seat, for an EU one where Germany would have a great deal of influence.

    Where do the gilets jaunes come in, I hear you ask? Well, there was a relatively routine Franco-German summit about a month ago which discussed ideas for future cooperation and for Europe. Jupiter (as Macron is called here) couldn’t resist playing it up to resemble something like the De Gaulle-Adenauer summits that united Europe. Quite quickly, the social media was full of allegations that Macron had given way on the question of a UNSC seat. This was not in fact true, but widely believed, and appeared on some of the Facebook pages used by the GJ. At that point, the Establishment piled in, mocking and dismissing the GJ, as well as various right-wing politicians including Le Pen for having believed “fake news”. Technically, the Establishment was right, but this reply from AKK makes it clear that the subject is not dead and the Germans will pursue it.

    All this is very embarrassing, and dangerous for the Franco-German unity which is still the motor of Europe (if anything is). My point – in passing really – was that if complex and sensitive decisions have to be taken about how to deal with Brext, then the two most important countries in Europe really have to be on the same page, not sneering at each other and making rude gestures. Otherwise, unity for the 27, never easy, would be much more difficult. There you are.

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    1. Frenchguy

      I might be reading things wrong but I wouldn’t overemphasize the dispute between France and Germany. What David doesn’t mention is that European elections are coming, that they are quite important to decide to who will go the juicy portfolios and that Macron, as a liberal, is not on the same side as AKK, a conservative. The sniping between the twos has without surprise taken a bit of a nationalistic turn but absolutely no one in Germany thinks that the idea of France giving up its seat is credible, it’s a good line, nothing more. I really see nothing out of the ordinary here…

      Reply
      1. David

        Fair point – this was originally just a passing reference in a longer comment I left yesterday, but one of our Down Under readers wanted a longer version so I posted this mini-essay. I think the essential point is that all progress within Europe and all successful avoidance of crisis, has required a strong Franco-German agreement, and that such agreement has been more difficult recently. By itself this episode is not particularly serious, but it’s illustrative of bilateral tensions, and Macron is sufficiently inexperienced and egotistical that he may make it worse.

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    2. Sanxi

      Mmm… maybe, but as I sit here in Necker with my German friends, I don’t think so. Your talking about 1%. types. My friends feel pretty strong and tight about the French. Yes they became very rich in the 1990s but there was no financial system aka the euro until 1999 which sadly favored the Germans. The middle class everywhere suffers but most Germans are determined to get it right. Europe to them is France, Russia, the U.K. not so much.

      Reply
  5. Tom

    I read an idea in the Guardian that if the EU declines an extension then they will be seen as responsible for the UK crashing out and that they don’t like such optics. Many in the UK believe the EU will give the extension so it might indeed look bad for the EU.

    Does this idea add up to much?

    Reply
    1. Yves Smith Post author

      That is conventional wisdom, but very little has gone according to script. And May pushing things to the wire is her fault, not the EU’s fault. Plus the EU could set conditions that May would find it extremely difficult to accept….like a big financial penalty.

      Plus it takes a unanimous vote of all EU members so a “Nein” would not be an EU no (unless all voted no) but of specific states. Even though Dunt discounts any of the right wing governments (Italy, Poland, Hungary) who have bucked the EU on various issues spending chips to help UKIP and the Ultras by nixing an extension, it might be very convenient in the eyes of some members of the EU if one of its established bad actors were to play the heavy.

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      1. PlutoniumKun

        I think I should add to this that while in theory any country in Europe can use its veto in situations like this, there is a convention that there is almost always a political price to pay for going against the tide. In other words, countries as a matter of convention do not use their veto powers unless there is a very clear national interest at stake. Even the most awkward of East European leaders would know its better not to use their veto on a whim.

        Counter to this of course is that this really is a unique situation and its entirely possible that the Germans and French might not be terribly upset if, say, Hungary decided to be awkward. They would wash their hands of it and say ‘we did our best, its not our fault’ then quietly forget about the Hungarian vote and move on.

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        1. David

          It’s the moving on bit that could be complicated. I completely agree that the French and Germans, at least, will want the UK to suffer, and I can’t say I blame them. But in the end they will do what they think is in their national interest, and to a degree the interest of Europe. They have the ability in the next few weeks to force virtually any concession on the UK that they like, and that’s an opportunity that only occurs once. They will control the situation in a way that they would not if there were a crash-out Brexit.

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          1. PlutoniumKun

            That’s a very fair point – the only caveat is I think that its not clear at all that there is any consensus within or between Germany and France as to what the best option might be. While they can demand pretty much what they want from May when she comes begging next time, I assume they are aware that if they push too far she may not be able to get a humiliating deal past her own cabinet, let alone Parliament.

            Reply
            1. David

              This was the point Frenchguy and I were just discussing. It’s hard to judge, because I don’t think there has been a recent case where there was a need for close Franco-German political coordination to deal with a crisis. And don’t forget that it will be a crisis whatever happens: it won’t be just a yes-no vote, but the resolution of a whole series of difficult questions which may not affect the two countries the same way.
              And you raise an important point. I’d assumed that Parliament would not be involved because we are talking about negotiations between states. The reference to “constitutional requirements” only occurs in the first alinea. There’s no mention of it under extension. I can see that politically May would at least have to report to Parliament, and could theoretically face a confidence vote: in which case goodbye everything. But I would hope we are not going to see a repeat of the WA chaos.

              Reply
              1. PlutoniumKun

                I’m pretty sure that for any time extension to be legal the main Brexit Act would have to be amended.

                Reply
                1. David

                  Oh, agreed, but I think that would be true whatever the conditions imposed on the UK. What would worry me would be if May comes back and has to get the conditions themselves through Parliament.

                  Reply
        2. Frenchguy

          I’m pretty sure the UK is not owed a vote on its request. If it doesn’t look likely to be accepted, there won’t be a vote and nobody will have its sole fingerprint on the gun. They might reply like Peston suggests with a “yes in principle but could you be clearer about what you want this extension for ?”.

          Reply
          1. David

            This is what I was getting at further down the page. There’s nothing in Art 50 about a formal vote, although the use of the word “unanimity” implies some form of consultation, perhaps under a silence procedure. But one scenario is that the “agreement” referred to in Art 50 gets nowhere in negotiation, and on 29 March they are still talking, in which case Brexit happens automatically. There’s nothing to say that the 27 actually have to grant any kind of extension at all, and the time will be very limited. That’s why I think that the concessions demanded of May could made the Treaty of Brest-Litovsk look like an example of charitable concern by comparison.

            Reply
            1. Olivier

              Leonine treaties have a history of backfiring badly. I think in Europe especially there is enough awareness of that that the EU27 will not try to maul the UK.

              Reply
    1. Yves Smith Post author

      Yes, but that’s the cliche. I gather that the same saying is also used with “acorn” instead of “truffle” so I’ll switch to that.

      Reply
      1. vlade

        I thought it was a (blind) squirrel and a nut, but then.. Maybe we can can change to it “Even May gets a deal” in a few weeks time ;)

        Reply
  6. Inert_Bert

    Thank you Yves,

    An interesting sample of continental business-attitudes on the timing of no deal here, from Rem Korteweg (a researcher/think-tanker with a fopo/brexit focus):

    I just chaired a #Brexit event with 100+ representatives from the Dutch logistics sector, public & private.

    NL does logistics pretty well.

    50% of participants said they would prefer the certainty of No Deal on 29/3 than the uncertainty of a #Brexit extension.

    […]

    In all fairness, Im pretty sure the Dutch government would back an extension. But results are surprising: NL logistics firms are fed up, or as well-prepared as they expect to be.

    And a thread from a few weeks ago here, one other interesting consideration I hadn’t heard before:

    Again others worried abt the impact of a long – 21-month – extension on the level playing field inside the EU27: companies that spent money to prepare for Brexit (at governments’ request) would be at a short-term disadvantage to those that failed to heed government advice. /4

    The effects of uncertainty on businesses has sort of disappeared from the brexit discourse over the past few months but it is still a factor that any extension will need to address. It is not just about the EP elections. This further reinforces the importance of the conditions that will come with any extension: May will need to be able to offer some kind of certainty, mere assurances won’t do.

    Reply
    1. PlutoniumKun

      That is interesting – I think its increasingly likely that a no-deal could occur simply because multiple parties simply give up and think its the best of a bad lot of options. Businesses crave certainty above all other things.

      Reply
  7. Tim Smyth

    Also one thing that I don’t think has been mentioned yet is that the Speaker John Bercow could block a so called “third” meaningful vote from being brought before Parliament again on the basis on the basis there was no difference in content from the “second” meaningful vote earlier this week.

    Reply
  8. Colonel Smithers

    Thank you, Yves.

    With regard to your title and from the play, Mark Carney has used the phrase at a Bank of England press conference and a Treasury committee hearing. He had to explain what he meant. His reasoning for the phrase was not just alarming, but the lack of knowledge displayed by the hacks and MPs was equally alarming. In summary, the Iceland upon Thames.

    Further to Clive’s comment yesterday about rising delinquencies in consumer credit, contacts at UK regulators confirm. As I am in Paris, let me summarise in French, “Le Royaume-Uni est foutu.” Time to further short the three big UK banks exposed to home.

    Reply
  9. DT Mongan

    Free and unsolicited advice for EU: Announce now, prior to MV3, that extension will be granted subject to holding referendum on leave with May’s deal or remain, with kicker that extension may be withdrawn at any time if EU concludes UK is not proceeding in good faith.

    Result: May’s deal, extension for technicalities, Brexit before July, and then EU commences (along with US and everybody else) picking the UK’s pockets for years to come.

    Reply
  10. none

    May unsurprisingly looks like an idiot but I hadn’t expected Corbyn to also look like an idiot. He does, doesn’t he?

    Is May’s deal objectively that bad? Could something better have resulted from non-idiocy? Or did the UK simply forget that it has a land border with the EU? And I can’t resist asking: will Ireland build a wall and make the English pay for it? Actually I heard it was the other way: it’s the DUP that wants the wall, i.e. hard NI/ROI border reinstated, since without it, things will keep slipping towards Irish unification and the end of the DUP dream.

    Reply
  11. David

    I think you (we?) can take a certain perverse comfort in the fact that the situation is now so clear and unambiguous. Until now, it has been possible to see Brexit as a negotiation. Admittedly, one side played a weak hand disastrously, under the impression that it had much more influence than it did, but still there was a degree of back and forth and exchange of ideas. That’s over now. Art 50 is quite clear that the UK has to ask formally for an extension, and that the 27 have to formally agree to it. There’s no doubt about who is the supplicant and who makes the decision. In addition, Art 50 talks about the extension happening “in agreement with the member state concerned ” (“en accord” in the French). I hadn’t really thought about it before, but that extra phrase (the text could have just said that the extension would happen if the 27 agreed to it) suggests that everything except the actual request is for negotiation – except that there won’t be any negotiation. Whatever May arrives with by way of timetable, justification, road-map, proposals for the EU elections etc. will have no effective force. She will be obliged to accept whatever timetable and whatever conditions the 27 impose on her, or no extension. Brexit is bad for the 27 but much worse for the UK, and May knows this. She will have little choice but to surrender on every point.
    NC readers should not be surprised by the above, but I really wonder if the UK political system is actually able to take it without buckling under the strain. Unicorn breeders everywhere will be suddenly confronted with the need for unconditional massacres of their creations. May will have to tell the Commons that she had no choice but to accept the conditions. I’m beginning to wonder whether even revocation of Art 50 would be more destructive.
    There are some faint glimmers of hope. No matter how badly and stupidly the UK has behaved, it remains an important partner. Whilst quite a lot of posturing is going on, major EU nations will not block and extension or dictate conditions just to be awkward. Britain is a partner in many other institutions – the French don’t want to lose the bilateral link in the Security Council, for example. But it is a faint glimmer, and the UK will have to work awfully hard, under new management, to repair the damage.

    Reply
  12. Paul Jonker-Hoffrén

    I thought of one thing that complicates things on the EU side: Finland now has a caretaker government and that means that any stance it wants to take has to be approved by the Grand Committee of the Finnish parliament:
    “The Grand Committee expresses Parliament’s stance on legislative, budget and treaty issues being decided by the EU. Unlike the other committees, the Grand Committee is thus an organ that makes decisions instead of preparing them. It usually deliberates on EU matters on the basis of statements provided by the sector committees of Parliament. This ensures that EU matters are prepared on a comprehensively democratic basis. In addition, the Grand Committee deliberates the Bills that are referred to it after their first reading at a plenary session. ” (https://www.eduskunta.fi/EN/lakiensaataminen/valiokunnat/suuri_valiokunta/Pages/default.aspx)

    This in a sense means that for Finland to be able to vote on anything during the summit, the issuer to be decided on has to be known to the Grand Committee beforehand. I don’t know if this is possible if Theresa May dumps a request last minute on the EU’s desk.

    Reply
  13. Hayek's Heelbiter

    One thing, and it is a very crucial thing, in which the UK differs from the US (and which most Americans would probably find unbelievable) is that Members of Parliament do not have to, and often do not, live in the constituencies that elect them.

    Many MPs from more rural districts rarely leave the London Echo Chamber Bubble and a majority who have voted against May in recent Parliamentary votes have voted AGAINST the wishes of those who voted them into office.

    In America, this would not have been issue, as they would be out of office in a heartbeat. In the UK, it’s not quite that simple.

    I know this is from The Daily Mail, but this particular newspaper is far more in touch with the people who voted against Brexit than The Times, The Guardian or The Independent.

    https://www.dailymail.co.uk/news/article-4181134/MPs-DEFIED-constituents-voting-against-Brexit.html

    [Link html button blanks out URL]

    Reply
    1. vlade

      And this is the level of the UK discourse. Blindly triggering A50 w/o any plan is considered Brexit-ok, while objecting to it (on grounds like “any idea what we’re going to do”) is a treason.

      Oh, and a vast majority of the MPs from the remain constituencies voted for A50. Traitors!

      Reply
    2. Hayek's Heelbiter

      Oops, should have read “for Brexit” mea culpa, mea culpa, maxima mea culpa. Please revise and delete this comment. Sorry.

      Reply
  14. Jim A.

    What are the chances that the EU will allow a few days to a week of “no deal” before allowing an extension* of article 50? Seeing the actual chaos of “no deal” might just be the only way to get parliament to actually deal with some sort of approximation of the reality that the rest of the EU are not bend over backwards to give the UK a magic unicorn. Because regardless of the questionable legal niceties, it seems to me that would serve to improve the EUs bargaining position.

    *not really an extension at that point, more of a suspension.

    Reply
    1. larry

      No chance at all. Once the 29th of March has passed without anything else being put in its place, no deal is legally in force. The crash out has then become reality, and once it has taken place, the EU can not do anything but accept it. This is one instance where the EU can’t really afford to bend its own legal framework or try to break it.

      Reply
    2. vlade

      nil. You can’t go from no-deal to extension. It’s like saying a few days after the divorce papers have been served “so now you see how it is, so let’s talk some more”. Tough luch, the papers are served, and you’d have to re-marry.

      After the UK exists the EU, it would have to apply to get back. Technically, it may get in very quickly (as clearly all the pre-reqs would be met), but it would still take some time.

      Reply
      1. Fazal Majid

        At the very least the UK would lose all its opt-outs, including from the Euro, as all new members are required to join the Eurobond as well (although Sweden manages to postpone this by technically flunking on purpose the convergence criteria).

        Reply
    3. Jim A.

      Or even say “Oops looks like we missed the deadline to give you an extension. Nothing we can do about it now. We can, however re characterize the Withdrawal Agreement as a trade deal, would you like to sign it now?”

      Reply
      1. PlutoniumKun

        The EU is a rules based organisation – while in the past (most notably the swallowing up of East Germany) they’ve shown an ability to turn a blind eye – the legal and constitutional situation on the first of April will be absolutely unambiguous – without a formal extension the UK is out, and if it wants back in, it needs to join the queue again. I don’t think there is any conceivable legal fudge that can get around that.

        Reply
        1. David

          This is an international law treaty issue. If you start bending the rules here then no-one can ever have confidence in what a treaty says again. There are probably clever wheezes for getting round some of the problems, but this isn’t one of them I’m afraid.

          Reply
        2. Detlef

          Are you sure about East Germany?

          I am a German and as far as I remember the official position of West Germany was always that East Germany wasn´t a ” real foreign country”.

          That´s why West Germany never had an “embassy” in East Berlin, it was called a “permanent representation”. Every East German citizen had a right to a West German passport.
          (There were also no tariffs on exports from East Germany to West Germany.)
          Legally the right to peaceful re-unification was never renounced. And I seem to remember that this was also always stated in EU negotiations by West Germany.

          Now nobody took that seriously any longer in the 1980s (or even earlier). But it had been stated for decades so the EU really couldn´t take a different stand.
          Not sure if how that amounts to a blind eye?

          Reply
          1. David

            Yes that was the official position of West Germany, as I remember, although it didn’t stop them sitting across from the DDR at some of the talks at the end of the Cold War. The way in which the old DDR territories were brought into the EC and into NATO was pretty irregular and raised a lot of hackles at the time, but the situation was very special. That said, this was the EC rather than the EU (the Treaty didn’t enter into force until several years after unification) and I don’t think you could pull a similar trick now.

            Reply
          2. PlutoniumKun

            West Germany never accepted it as a separate country, but East Germany had a separate seat in the UN and was recognised as a separate state by the US, UK and France.

            Reply
            1. Jim A.

              Although the three Western powers DID maintain that West Berlin was still under their occupation, and NOT part of West Germany. A friend of mine got the “Army of Occupation” ribbon for serving there in the late 80s.

              Reply
            2. Irrational

              Ah, and the East Germans had a clause in their constitution permitting West Germany to join…. which, ironically, I learned in history in 1989-90.

              Reply
      2. disillusionized

        No, the WA would constitute a mixed trade treaty if it were to be agreed under article 218 of the TEU, and thus require ratification by all constituent legislatures, as well as a few regional ones.
        Article 50 has special powers, not replicable in other articles.

        Reply
  15. John A

    May gave her usual, head back, shoulders rocking ‘laughing’ fit in parliament again yesterday as she keeps losing vote after vote. Her one card seems to be to push for a final vote as close to 29th as possible on her deal that has been rejected time after time by parliament and been described as final, time after time by Brussels.

    Mind you, she also does that when Corbyn mentions things like food banks, homeless people etc.

    Reply
  16. Brick

    The ramp in social media hype has gone into over drive in the UK. Britain’s future and the Brexit defence force are swamping discussion with tales of immigrant transgressions and EU armies. Any referendum on brexit would now be for hard brexit.Tracking the money behind the social media campaign is tricky, and evidence so far seems to point to arms dealers , US neo nazi groups, prominent US industrialist, and financial gamblers (not russia). So maybe the techniques are being honed for the next US elections.

    In my view the real problem is the disagreement about what trade relationships look like after Brexit and it seems to be bypassing the general public. Of the three elements of trade dicusiions (Tariffs,subsidies/barriers and freedom of movement) there is no consensus of opinion in parliament. We have the ERG group who don’t want any trade deals just zero tariffs and believe in British sovereignty, reduced regulation and reducing government footprint(privatisation, off shore banking, curtailing worker rights and welfare). Their economic model harks back to the 1970’s and has been described as Britain alone.Professor Minton of Cardiff has done some modelling for the ERG (Cambridge,Oxford and LSE Universities have pointed out some key problems with it) and it shows unskilled workers wages dropping by 14 percent and an increase in inequality( Best case scenario without fixing key issues).

    Mrs Mays problem is she cannot deal with the ERG without destroying her party.Mr Corbyns problem is that his base support now wants Brexit at any cost and is ignoring risks. My best guess is that there is no extension and it will be a hard brexit. Legally that will mean a shutdown for most businesses due to shared IT infrastructure but realistically business will just ignore dictates from Brussels and London and carry on as before. The implication of that is that politicians are becoming irrelevant.

    I did hear one upper crust type at a long business lunch saying something along the following lines “Those workers will just have to jolly well work harder and more efficiently after Brexit”. Since many of those workers are working three jobs with odd hours it just highlighted to me the disconnect between people. Whatever the outcome it probably means upheaval and stress for many and there will be no support or transition plan.It all feels a bit like playing Russian roulette with people’s lives.For me personally it might open up possibilities but I cannot help feeling empathy for the potential losers and who cares if in a chair reshuffle you have the highest chair on the titanic.

    Reply
  17. Jon Cloke

    Ah me. If I had a penny for every time Labour’s electoral chances had been written off by our know-nothing ‘poll experts’, I’d be a very rich man… case in point being the last election.

    As a newly-joined member who used to be one some 23 years ago, my suggestion would be that the more desperate the polls, the more desperate the commentariat.

    It’s been a long, long time since any poll in the UK reflected anything other than propaganda.

    Reply
    1. David

      I’m not sure the polls are wrong, but polls taken in times of national crisis are extremely fickle and should be treated with caution. There’s a tendency to rally to the established leader out of fear and uncertainty as much as anything else.
      More importantly, and unlike many other countries, elections in the UK are traditionally fought between disciplined political parties on predominantly national issues. When that doesn’t happen (the classic example is Labour’s disastrously disunited 1983 election campaign) the result is a massacre. I have been trying, and failing, to imagine on what platform and with what Manifesto, the Tory Party could actually go to the country and expect to win. Accepting that there are constituencies where Stalin or Assad would romp it as Tory candidate, there are lots of others where this group of clowns knifing each other in the back would come badly to grief. You may say that Labour isn’t in wonderful shape either, and I’d agree, but traditionally in the UK it’s governments that lose elections, not oppositions that win them.

      Reply
      1. PlutoniumKun

        My guess is that the ideal scenario within the Brexiteer part of the Party (which of course is almost all the grassroots), is that they can blame all the no-deal chaos on May, the internal leavers, Corbyn, and the EU, then dump May (and those seen as waverers and go for a quick election as a newly reunited party offering to pick up the pieces, while hoping that Labour fails to get its act together. We should not forget that Labour is, if anything, even more riven by internal schisms over Brexit and Corbyn has simply not managed to persuade the ‘soft a-political middle’ to come over to Labour.

        I really would not underestimate the ability of the Tories to use a chaotic no-deal Brexit to their advantage. As you say, in times of crisis people often cling to nurse for fear of something worse. I genuinely believe that the Tories could win a election without May in 6 to 12 months, even in the depths of a post Brexit recession.

        Reply
        1. David

          Yes, I made slightly the same point at the end of yesterday’s comments. The Tories would have to dump May for it to have any chance of working but that’s going to happen anyway. The absolute key would be unity, and I really don’t know whether the famed Tory instinct for unity at all costs is going to survive the next few weeks and months. More important though is how the ultras in the Tory Party see these things, and to what extent they are thinking clearly, if at all. I wouldn’t put it past some of them to destroy the party with Churchillian delusions of grandeur.

          Reply
        2. FergusD

          Grass roots of which party? Members or voters? The great majority of Labour members are remainers and 60% of Labour voters voted remain apparently, according to the Ashcroft survey. Tories, both members (do they have many?) and voters were leavers. What Labour voters think now I don’t know. I am an LP member.

          Reply
  18. Panurge

    Thank you Yves and everybody contributing to the debate over Brexit.

    I am just curious: is there any one (or any resource on the interwebz) who’s keeping the tally regarding the companies that are actually relocating outside the UK? So far I came across sparse news only, nothing systematic.

    Please forget my jaded naivete, but until I see some sizeable corporate movement, I believe this is all fiction and the political circus on both sides will keep muddling through until people stop paying attention. For what is worth I would be really surprised if Brexit went through.

    Reply
    1. PlutoniumKun

      There is no official tally of companies relocating for the simple reason that few if any companies wish to go public on their plans for fear of being seen as too political. Primark, for example, has moved its HQ to Dublin, but denied it was due to Brexit (but nobody really believes that, just as nobody believes that Dyson moving to Singapore wasn’t due to it either). The Institute of Directors in the UK estimates that 29% of companies are either moving or are planning a move. Its not online so far as I can find, but EY did a survey a few weeks ago that found that the companies planning moves were the big ones – smaller financial companies simply don’t have the resources or knowhow to do it. In the last few months I’ve received two letters from insurance companies I use telling me that they’ve shifted their ‘nameplate’ HQ’s out of the UK (one even changed the ‘.co.uk’ part of their website to ‘.com’).

      As CS has posted before, certainly in finance the moves will be very gradual – at first just nameplates, but there will be increasing pressure over time from the EU for full moves. Once Brexit is finalised, then the EU has no incentive whatever not to play dirty over this – they will insist on fill staff moves if UK companies wish to maintain full access to European markets.

      Reply
  19. Frenchguy

    For my two cents, I think Peston is reading the mood correctly and that other UK journos are back to full on delusion mode if they think the EU will give any extension the UK asks for.

    In a thread today, Peter Foster of the Telegraph actually mused that the way to deal with the EU elections problem would be to suspend the EU parliament till the end of the year. Because they won’t do much work before the new Commission is sworn in. Yeah right, let’s just stop everything we’re doing till the English are nice enough to decide what they want, come on…

    “But the EU will be blamed if there is no-deal !” Yeah, no. Once again, Europeans have noticed what is going on in UK politics, I’m pretty sure the vast majority knows where the blame lays.

    Reply
    1. PlutoniumKun

      When it comes down to it, every European politician knows that however much the UK media screams, they will not lose a single domestic vote over this, whatever decision they make. And that is the ultimate calculation all politicians make.

      Reply
      1. Frenchguy

        Indeed ! Though in France, even if it’s low on our list of priorities, on balance I’d say there are more votes to gain by screwing the English than by helping them. I don’t think they realize that the antipathy towards them runs deeper than the one against the Germans. We do notice the jokes and general condescension… (big fan of british comedy but I’m always struck by the fact that they always have to make a joke about the French at some point but it’s possible I’m over sensitive about that)

        Reply
          1. PlutoniumKun

            Thanks – I think that the ‘lets just get this over and done with’ mood isn’t just infecting the UK.

            Reply
          2. Fazal Majid

            And that’s despite the fact Le Figaro has a sizable “sovereignist” contingent that is sympathetic to the nationalist urges behind brexit.

            The French government itself doesn’t want to, because cooperation on military procurement is the only way to achieve sustainable military spending. Talking tough to the British, as President Macron has been doing recently, always plays well in the ratings, and the brexiteer chaos helps discredit the equally loony Le Pen followers.

            Reply
        1. Joe Well

          Frenchguy, I notice that too about US and UK “humor” and all I can say is, sorry. The English-speaking world was colonized by some French people a thousand years ago and now it’s in our cultural DNA. When I was a teenager and saw pictures of factories and apartment buildings in France, I was shocked. I seriously had thought it was all vineyards, sidewalk cafes, chateaux, and mirror-walled palaces.

          Reply
  20. Jeff N

    if anything goes wrong with getting the multi-year extension from EU, is there a chance UK would revoke Article 50 to avoid crashout? and then re-file Article 50 again later?

    Reply
    1. Inert_Bert

      Theoretically yes, they can. However, there will be severe practical and political problems to contend with in practice.

      The ECJ ruled (Case C‑621/1, Wightman v. Secretary Of State For Exiting The European Union, ECLI:EU:C:2018:999) that unilateral revocation is possible if, at the moment of revocation:

      – the WA has not been concluded and the two-year period (possibly extended), has not expired
      – the WA has been concluded, but has not entered into force

      if the UK does so:

      – in an unequivocal and unconditional manner
      – by a notice addressed to the European Council in writing
      – after it has taken the revocation decision in accordance with its own constitutional requirements
      – for the purpose of confirming the EU membership of the UK under unchanged terms
      – for the purpose of bringing the withdrawal procedure to an end.

      (para 75 of the judgement)

      Those final two requirements mean, in my opinion, that the Council’s role is not merely passively receiving and making note of the revocation. It has some room in making a decision on whether or not it recognises a notice of revocation as being such.

      If, at any point during the process of fulfilling its own constitutional requirements to enable the revocation (ic passing the national legislation needed to, among other things revoke the EU(withdrawal)Act) any reference is made to a renewed effort to restart the process the Council will have a cause, if not a responsibility, to not accept that revocation. So the government cannot openly tell MPs and the UK public that Brexit isn’t over (this alone nixes the possibility imo).

      In practice this will all be made very clear to the UK before the formal revocation is actually made. The proces likely won’t be allowed to come to the point of the Council formally rejecting the revocation (if it somehow does though, there’ll be a pretty big legal mess).

      And if the UK does revoke and then re-notifies within (say) 5 years, we’ll also see some serious legal action (breach of sincere cooperation principle for one). Plus the UK’ll be met with a closed door with the current WA stapled to it.

      Reply
      1. David

        I’d add that politically, some in Europe are worried that the UK might pull exactly this trick, come back into Europe and then invoke Art 50 again, all in search of more concessions. (“You wouldn’t’ want to go through that again would you?”). I don’t think this is likely, especially given the chaos and destruction of the last few weeks, but then we’re dealing with a pretty unbalanced group of people here.

        Reply
        1. Inert_Bert

          I agree.

          I do assume this very scenario has been gamed out by the Commission. Remember in the early days of the negotiations, when it was reported (by bloomberg iirc) that EU-officials assumed that the obliviousness and arrogance was a ruse by “seasoned, respected, wily” civil service. Ahhh good times…

          Come the next Treaty-change, article 50 is going to need a lot of attention (for a lot of reasons).

          Reply
    2. PlutoniumKun

      It is a fall back option, but it is impossible to see May taking that option – it is far too radical a step for the current government. Frankly, she probably be lynched by much of her party if she did it.

      Reply
  21. PlutoniumKun

    Just to add an extra element into the mix, this is St. Patricks Weekend, where by tradition every single Irish government member travels to any country with an Irish diaspora, and Irish embassies go into overdrive to ply people of influence with oceans of alcohol and smoked salmon. Every Irish embassy in the world hosts a major party this weekend, and they are famously popular with other ambassadors and domestic politicians. Even Trump and Pence have found themselves hosting Varadkar and his partner, much, no doubt, to the embarrassment of Pence.

    My contact in the Irish foreign affairs department has said pretty much every minister and politician has been locked up this week until they are sure they are all 100% briefed and singing off the same hymn sheet on Brexit. I wouldn’t underestimate the ability of the Irish foreign service to use this weekend to push hard for support for what seems to be the favoured approach now – a 21 month extension to Brexit (I think on the basis that the longer the extension, the greater the chance of a new government in London giving an ability to reset things).

    There are also indications that the Irish government sees a glimmer of hope that somehow they can resurrect the Irish Sea border option. The DUP are visibly beginning to panic over their own supporters reluctance to face a no-deal Brexit. Foster met both Trump and Pelosi yesterday – one wonders if she was leaned on (or bribed).

    Reply
    1. Joe Well

      Unfortunately I find myself in Boston, USA, where March 17th is Evacuation Day, mourning (I’m sure) the departure of the British from the city in 1776, so I have not heard of this St. Patton’s Day of which you speak. I will have to look it up on Wikipedia…/s

      It would be an amazing capstone to the history of the British Isles if Dublin manages to take the reigns of UK politics from Westminster and in the process manages to prevent reunification. I would love to go around the pubs here on the 17th and have that conversation with some of the old timers (just kidding, no, I absolutely would not).

      Reply
      1. Avidremainer

        Somebody has to write a book on how the Irish influence in America destroyed the British Empire. It would be an eyeopener.

        Reply
  22. Mirdif

    MV3 is unlikely to pass but May will be there or thereabouts. The EU will likely offer a long extension and this is the threat that will finally force the ERG to capitulate in MV4 in the final week of March. May will then request a technical extension and the UK will have left the EU some weeks later.

    If she’s unable to get her deal through in MV4 she may well request a longer extension with the possibility to end it at the end of June. This would give the ERG a carrot and they would likely push her deal through in MV5 at the start of April.

    The EU would prefer a longer extension but this is also a threat to the ERG that their Brexit maybe taken away from them. To this end the rumours are circulating of even a 4 year extension as mentioned by Patrick O’Flynn MEP (one of the ex-UKIP lunatics), and he was told this by somebody who he said was very reliable.

    What we should not forget about May’s deal is that contrary to its portrayal it is a very very hard Brexit. The country will have prioritised goods over services which form the overwhelming part of the economy and there will be another cliff-edge within 2 years.

    Reply
  23. rusti

    Finally, I wonder how Barnier feels about all of this. He’s 67. Admittedly, he has a very able deputy in Sabine Weyand, but he’s done a remarkable job in the face of May’s thickheadedness and repeated self-sabotage, and the revolving door of idiotic Brexit ministers.

    If the UK crashes out in two weeks, won’t that show that Barnier letting the Northern Ireland issue be fudged to try and move the negotiations along was a bad mistake? I seem to remember NC being more critical of him on this point at the time.

    One of the most interesting aspects of following this whole debacle has been reading Yves’ inside-baseball analyses of negotiating. Thanks, Yves :)

    Reply
    1. Yves Smith Post author

      IMHO managing to stay professional in the face of UK nastiness and its parade of unicorns is a big achievement in and of itself.

      I still think it was a mistake but not a well recognized one and I suspect the press and history will be kind to him. At that point (Dec 2017), the EU worried that if May was forced to swallow an Irish sea border, she’d lose an intra-party no confidence motion and one of the nutters like Johnson or Gove would become PM.

      We’ve now seen May survive worse because the party is so split and it’s now more clear that neither a hard core Brexiteer nor a soft Brexiteer like Hammond could get the votes.

      The other think (which Clive has stressed) is that it isn’t sufficiently well recognized that the EU stretched very far on the backstop. The status of NI on good is pretty fudgey, to the point that EU27 businesses saw it as verging on giving the UK an advantage. So that is an accomplishment for which Barnier has not been given credit, particularly in the UK.

      Reply
      1. flora

        Way out of my depth here, but about the GFA and the Irish border/backstop: seems a lot of people, myself included until very recently, assume that because everyone has been getting along more-or-less since the GFA then everyone will continue to get along and muddle through an iffy patch of border uncertainty. However, a few things I’ve read on NC recently and heard in passing on the ‘other’ side of the Atlantic have cause a shiver of fear in me. I remember assuming the old Yugoslavia, having apparently overcome its old, internal multinational divisions under Tito and the old Soviet external rule, would go on harmoniously once the external rule of the Soviet was lifted. How wrong my assumption was…

        Reply
  24. Joe Well

    Chapo Traphouse podcast just came out with a special Brexit interview with utlra-pro-Brexit economist Costas Lapavitsas who assures everyone that WTO rules will ensure that Britain is still able to maintain its economy (with some damage from tariffs) even absent a deal and so no-deal is an invention of the Remoaners to scare the people.

    If Britain does crash out with no deal, will any of these people ever admit they were wrong? Or will this be like the Iraq War all over again?

    Edited to add: serious question for UK leftists: do people there really not realize the unbelievably disproportionate influence (relative to population) UK wields both in the EU and the world, culturally (above all), politically, economically, legally? And that any left influence on the government might then do enormous good for the world? Every discussion of Britain by British leftists seems to start from the premise that it’s a colony of the US or the EU or else a slightly bigger version of Norway.

    Reply
    1. FergusD

      There are ‘Lexiteers’ of course, some groups who call themselves Trotskyist, but left Trotsky’s thinking way behind. Ergo they aren’t Marxist either. There are some older left Labour types, Bennites you might call them, who are leavers, Corbyn May be one, who are what Lenin called ‘parliamentary cretins’, but most left Labour members are younger and remainers.

      I was tempted to abstain in the referendum, neither choice was edifying, but I voted remain as there is absolutely nothing to be gained for the U.K. working class by Brexit. We will face the bad economic effects of Brexit coinciding with another global recession. We can’t build ‘socialism in one country’, we need an Internationalist perspective and Brexit delusions don’t help that one bit.

      Reply
      1. Gary Gray

        Internationalist perspective? Lenin sure didn’t have one considering what a Russian patriot he was. Leftism is tribalist by nature or your not a leftist. You may want to battle the “global capitalism” on non-nation state grounds, but that makes sense for the tribe. Nazism was internationalism in that regard.

        Maybe you need to understand that word is misused.

        Reply
      2. Robert

        In fairness to the Bennites and even Trotsky, I don’t think you know what “internationalism” is and why socialism or Leninism was never that. Nationalism is really internationalism because its all connected to the global capital markets and always have been. The difference today is the nation state is being replaced by the market state, or market driven rules. The United States frankly put this in motion and created a huge market oligarchy by the late 1800’s, which would change the world. One socialist country is going to struggle, especially if they have issues with certain resources. The global capitalists can surround them and choke them to death. That is why you need “internationalism”, though that doesn’t mean every “socialist republic” will get along. Tribal is tribal.

        Liberalism and the Liberal creed are what the internationalists come from. Most “Brexiters” in England are pro-international, but like any capitalistic order, do not agree with their fellow capitalists. Thus, the trade syndicate is breaking apart as desires don’t always match need. The EU itself is a attempt at nationalism. I think if the EU practiced a orthodox version of neo-liberalism, you would not hear so much quabble. But they run with 3rd way type of neo-liberalism and that makes the “conservatives” mad. I think they are stabbing themselves through the neck in total though, but that is just me. Capitalist liquidation is needed to get peoples minds away from how great it is. Since 1950, debt has been surging. Since 1980 public debt has been surging. Its simply the capitalists trying to keep a shitty economic system from dying as it did in 1929.

        Reply
        1. Yves Smith Post author

          *Sigh*

          The level of international capital flows varies hugely over time. And in the old days (before ~30 years ago), no one would have considered capital markets to be “global”. I can tell you as someone who worked at Goldman back then.

          Reply
    2. Trueleftist

      Sorry, but all capitalist liquidations are bad for the ‘workers’. Nationalism doesn’t mean what you think or “internationalism” doesn’t either.

      If you want to get rid of capitalism, you have to get rid of the debt schemes that prop it up. After enough time, shortages, famine and such, capitalism will die.

      I am sorry, you don’t get it. Your really bourgeois in the end and following the liberal creed.

      Reply
      1. Tony Wright

        Sorry, Your Holiness, obviously none of us are up to scratch here.
        More broadly, rancourous divisions within the left and the widespread inclination to dismiss progress in favour of dogmatic adherence to notions of perfection are going a long way towards retaining the corrupted, self serving, hypercapitalistic system that we grudgingly tolerate now.
        The inclination to point shotguns at your own feet and pull the trigger is obviously not confined to those involved in the Brexit circus.

        Reply
    3. Yves Smith Post author

      Help me. Go read Richard North, who is very much pro-Leave and is also a heavyweight expert on trade, and you’ll learn how loopy this “WTO rules” idea is. No advanced economy trades on “WTO rules”.

      The short version is this would subject the UK to massive informal trade barriers. WTO rules are only about tariffs. They don’t cover things like phyiosanitary inspections and regulatory compliance.

      Reply
      1. Joe Well

        I meant, will the “Lexiteers” and anyone who predicted a rosy Brexit admit they were wrong after (if) the UK leaves?

        Reply
    1. David

      I can’t find the complete text of Cox’s advice anywhere: it’s behind a Torygraph paywall. Anybody got the key? It may simply be that Cox is saying that Art 62 of the Vienna Convention applies if it applies, which is neither new nor scandalous.

      Reply
  25. Ape

    So Christopher Chope is reading NC comments for ideas now?

    Brexit would be guaranteed if Ape sees 10M€ worth of bananas in it’s zoo account by tomorrow at 10:30.

    Reply
  26. ljones

    May trying to buy support for her disasterous deal from the DUP is bad enough and in any sane country surely may would be out of office rather swiftly. But beyond money I wonder what she’s offering — could any offers beyond money damage the GFA (Good friday agreement)? Or maybe that has been the backup plan all along — can’t get your deal through so hang ireland out to dry.

    Isn’t it intresting how we in the UK have apparently “No money” for anything and have to have austerity while the tories can seemingly magic up money for the DUP. The magic money tree stikes again!

    Random thought: I do not know but is there a case for the EU eventually just getting so fed up and frustrated at the UK and may that it eventually just turns round and says “you’re out”. Can the EU eject the UK from the EU by itself?

    And maybe it is now time to start to think about what happens beyond brexit day (whenever that will be). Maybe may’s terrible deal is worse than everyone thinks? Do the long knives come out for may after brexit is over as the ultras try to gain control of the tory party? Bojo for PM? Is may’s so-called deal just crash-out but in slow motion?

    ljones

    Reply
    1. Yves Smith Post author

      The EU does not have to eject. Brexit = self ejection by the UK.

      The only way to prevent Brexit is for the UK to withdraw its Article 50 notice. The extension just buys time.

      The EU could propose extension terms that are designed to be unacceptable and let the UK not accept them and crash out. Or it could run the clock out by demanding more info from May. Or any one state could refuse to approve the extension.

      Reply
  27. Mirdif

    The probability of MV3 passing May’s deal has just increased with the “leaking” of a “Room Document” apparently circulated to EU27 ambassadors.

    It takes a very hard line – there must be elections, if an extension beyond May is granted, for the European Parliament and failure to do so will activate a termination clause which will lead to the termination of the UK’s membership effective 2 July 2019 which is when the new Parliament sits for the first time. This is a very big stick to scare the ERG because it means a long extension obliges holding elections which would be very damaging to the Tories from a PR persepective. It is absolutely adamant that a holding elections is a must and the only way around it is by treaty change…how does Yves say it, Nah Gah Happen?

    It also kills the idea of extending and negotiating a trade deal in the extension. Also, kills any extra conditions that the EU27 can put on the UK to extend such as special provisions for Gibraltar etc.

    All in all, May will be pleased with this as it will focus minds to get Brexit over the line sooner rather than later and just in case you missed it May’s deal is a very hard Brexit.

    Reply
  28. flora

    very much an aside: a neoliberal ‘creation story’….

    and the world presented untapped riches to the neoliberals. and the neoliberals said, verily, the world creates these riches of itself, and it our reason for being to harvest these riches. let us declare an ‘efficiency’ of harvesting these riches the greatest good. let us declare the expense of funding a well-educated-in-world-diplomacy-and-economics an inefficient expense. let us declare a competent civil service unnecessary to our given purpose. We exist to harvest the crop we have not sown, sure in the knowledge the crop will regenerate itself to the end of time.

    ok. not a great take down of neoliberalism as a religo-economo-nonsense doctrine. Still….

    What happened to the once brilliant UK civil service, the once great UK govt understanding of all the moving parts… etc.

    Reply
  29. rd

    “It seems as if the EU27 leaders really do hold all the cards” – this comment in the piece baffled me. At what point since the Brexit referendum did the EU not hold at least a straight flush?

    I think the EU would have liked to have had a reasonable exit deal with a trade agreement ready to move in place but Britain appears to have been living in some fantasy land where they could have all the economic benefits of the EU without free movement of people into Britain and Britain could elect not to follow EU rules. There is no way the EU was ever going to agree to this. Britain does not appear to have paid any attention to the agreements with the EU that Norway and Switzerland have.

    Reply
    1. Yves Smith Post author

      This is not my text. I stressed from early on that the EU was in a much stronger bargaining position.

      The reason Dunt wrote that is there has been tons of braying in the UK press that the UK had the advantage. Even yesterday, we got comments that presupposed that the EU needed the UK more than the UK needs the EU and readers had to explain why they were wrongheaded.

      Reply
  30. NIx

    Thank you, Yves, et al, for your superb Brexit coverage. You and John Crace are two of the few voices of clarity in this unholy mess.

    Even in a week (or several) of supreme irony, two things stand out:

    that taking back control now depends 100% on the decision of the EU26,

    and that May brings wishes to bring back an identical MV to the HoP, but will not extend to the populace the same courtesy.

    Reply
  31. VietnamVet

    This discussion is outstanding. We are in the same position as just before the Iraq Invasion. It was know to be crazy except to the ideologues. A July 2002 memo by William Burns titled “Iraq: The Perfect Storm” predicted exactly what came to pass.
    https://carnegieendowment.org/pdf/back-channel/2002MemotoPowell6.pdf

    Brexit is the next one in an increasing number of catastrophes. What’s up? The WP reported “a social media storm erupted over the erosion of American credibility. “Smart friends of mine have pointed out the reactions to 737 MAX might be inflection point for US hegemony,” tweeted Canadian scholar Stephen Saideman. “China says no to MAX, FAA says don’t worry, EU closes airspace. So much for US leadership.”

    This is the triumph of neoliberal oligarchs. Chaos Profiteers are pushing for leaving the EU. Jimmy Carter pointing out the USA is a plutocracy. The ruling elite simply don’t give a damn for the little people. Democracy is dying. If the 1930s are a guide, autocracy and war will spread. The world is going full speed ahead over the cliff. No matter, plutocrats will get wealthier. Until there no habitual earth left. The only way out is resource redistribution and the rebirth of cooperation that benefits everyone.

    Reply

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