Brexit: Yet More Chicken

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While you were busy paying attention to Covid-19, the Brexit negotiations, such as they are, have been predictably going not well. Sir Ivan Rogers warned last year that it was possible that talks could break down entirely in the post March period as the Government came to grips with what would be required to complete a trade agreement. Mind you, that hasn’t happened, but EU negotiator Michel Barnier warned he didn’t expect last week’s talks, the third round this year, to go well. Both sides harrumphed last Friday that the other side had to yield for a deal to get done.

The Financial Times’ recap:

The time for a political intervention in the EU and UK’s future relationship talks is fast approaching.

After publicly knocking lumps out of each other on Friday, the two sides will spend this week separately trying to work out where to go from here. In effect, the EU and UK have handed each other ultimatums saying they need to shift position or the talks will rapidly reach stalemate….

“The round that we have just had is disappointing, very disappointing,” EU chief negotiator Michel Barnier said on Friday, after a week of video talks between his team and UK officials. “I hope the next round in June and the one after in July will be more positive.” 

Um, I’d like to know where this deus ex machina of a “political intervention” is supposed to come from. That assumes that Barnier and his UK interlocutor, David Frost, aren’t representing the views of their principals accurately. But Boris Johnson and his Brexiteer allies seem to believe genuinely that if they just hold firm, the EU will blink, and if not, they don’t need them that much anyhow.

On the EU side, Barnier staked out an extreme position on fisheries, which far more important politically than economically, and has gotten testy more often than in earlier stages of the negotiations. But again, he may simply be reflecting the views on his side of the table.

Remember some boundary conditions. The UK leaves the EU at the end of this year unless it asks for a single one or two year extension by June 30 and the EU approves it (the EU would of course approve it). Boris Johnson and his senior ministers have painted themselves into a “there will be no extension” corner. As Politico put it:

The Brexit timetable now looks more difficult than ever.

The EU seems to have accepted that the U.K. won’t seek an extension of the transition period, which ends December 31. That means June — the original deadline for an extension request — is no longer an important cut-off date, and leaves just a couple of months to negotiate a deal which has to be ready by October in order for both sides to ratify it in time.

Admittedly, this is the same Johnson who said he’d sooner die in a ditch than miss his Halloween Brexit, and then wound up having it go until January 31. So some are trying to dream up another UK face saving fudge, since concluding a deal by October seems exceedingly unlikely, and that’s another limit given the need to work and and agree on detailed language (there’s a reason that trade deals take a bare minimum of five years unless one side dictates terms, and services deals take even longer). From an op ed in Politico by Raoul Ruparel, the prime minister’s special adviser on Europe who worked on Brexit for three years under Theresa May:

Thanks to this impasse and massive disruption caused by COVID-19, those arguing for an extension to the transition have been vocal about why one is needed. Similarly, the U.K. government has publicly set out some of the reasons why it doesn’t want one….

I believe there is a way to tread this fine line — namely a conditional extension, which creates time to allow everyone to prepare for any deal reached. If it needs a Whitehall acronym, as these things generally do, I’d suggest Preparation, Ratification and Engagement Period (PREP).

This time would be used for U.K. and EU governments to engage with business on how to implement the deal, for all involved to prepare for the coming changes and for the final ratification steps to be taken. Such time to prepare is common for big legal changes, from new financial regulations to free-trade agreements, often via a phase-in period.

The PREP would see the U.K. and the EU agree, before June 30, 2020, that the transition period will be extended for a set period — say six or nine months (though that would still be up for negotiation) — if an initial agreement has been reached by a certain point later this year. Crucially, this PREP time wouldn’t create more time for negotiating, simply more time to implement whatever had been agreed in the existing negotiating period.

This is all very sensible-sounding, but I don’t see how this gets mooted. The EU has set it up that the UK is to request any extension and the options have already been defined. With both sides in “who blinks first” mode, for either side to float a trial balloon would be seen as a sign of weakness. And I don’t see Ruparel acting as a plausibly-deniable Friend of Whitehall; there’s way too much antipathy in the current government for anything from the Theresa May regime.

But having said that, I could see a fudge like this being worked out if a deal in principle had been struck say by October when both sides could depict a mini-extension as necessary to tidy loose ends up.

The two sides have been squabbling about process as well as substance, never a good sign. For instance, the EU has complained that the UK has refused to publish draft positions, but those are finally coming this week.

And while the EU is arguably unduly formal due to its 27 nation structure, the flip side is the UK hasn’t had to negotiate a trade deal for decades. So although I can’t prove it, I suspect some of the EU’s frustration is that the UK wants to deviate from well-esablished practices for how to handle these talks, and this “wanting it our way” comes off (and perhaps often is) as high handed to seasoned trade negotiators. A different manifestation of this syndrome: the UK also believed it was so special that it would be able to stitch up agreements quickly with other countries. With the exception of South Korea and Switzerland, its agreements so far are not with any significant economies. And since distance matters in trade pacts (and likely even more so post Covid-19), the South Korea agreement won’t produce much lift.

The Sticking Points

There are no doubt other bones of contention but I’m not sure it even makes sense to go down a long list, since the “level playing field” issue is fundamental and it’s hard to see how to square this circle.

The EU wants the UK to uphold EU standards in order to be able to trade with it on a privileged basis. That’s not crazy; most countries are sensitive about having importers adhere to food and product safety standards, for instance. And this Government even agreed to the idea when it signed the Political Declaration and the Conservative Party reaffirmed it in Parliament this January.

Johnson as is his wont, shortly reversed himself. The new UK position is that all that the UK wants is a deal like other countries have, you know, like Canada, which doesn’t have those meanie level playing field provisions. Oddly, the EU didn’t dispute that point even though it is false. Perhaps they don’t think it’s worth arguing with Government talking point aimed at a domestic audience, or perhaps they simply wanted to hammer their point, that the UK is in a unique position so don’t try cherry-picking other people’s deals. As we wrote in February:

The EU predictably rejected the UK demands and neither side has budged. The UK insists all it wants is a “Canada” style deal. In fact, CETA, the Canada-EU trade pact, does require a lot of harmonization, plus the UK agreed to what amounts to level playing field provisions with the US in its draft framework.

But in a sign of the EU not being willing to say more than it needs to, Ireland’s then Prime Minister, Leo Varadkar, said the UK couldn’t expect to get Canada provisions because smuggling because the UK was too close to and too enmeshed with the EU. Michel Barnier made more or less the same point, with an uncharacteristic lack of finesse. One might conclude that the EU is tiring of the ritual of explaining its red lines.

As an aside, Richard North’s son Pete North pointed out that “Canada” doesn’t even mean what the UK seems to think it means. Specifically, the two sides left some parts fuzzy. This is a manifestation of a point Sir Ivan Rogers has made repeatedly: all past trade deal presuppose the two parties want to get closer. Among other things, that helps increase the likelihood of good faith dealing. The fact that the UK was an obstreperous member of the EU and is taking an even more high-handed posture means the EU isn’t going to be keen about going fudgy on anything important (Irish border matters being a potential exception because no one had a good idea about what to do). From North the younger:

Were we to secure a CETA style deal, it is likely to be only the scaffolding without much of the brickwork. (CETA) is a living agreement. In more specific terms, as the Ecologic report has it;

CETA is a living agreement. This means that CETA is designed as a dynamic agreement that allows the Parties to respond to changing circumstances and needs. To fulfil these objectives, CETA establishes a new and comprehensive institutional framework for cooperation between Canada and the EU and sets primarily procedural obligations. In many cases, CETA does not set detailed and hard obligations that predetermine a specific outcome. This also applies to regulatory cooperation, where CETA introduces various procedural obligations (e.g. obligation to exchange information and to consult) but no hard obligations on substance. CETA also establishes a new institutional framework for regulatory cooperation which consists of the Joint Committee (JC) and the Regulatory Cooperation Forum (RCF).

Personally I don’t think a direct copy out of the institutional framework, done in a hurry, is a particularly good idea, and in all likelihood, not doable in time. But to make it more than a mixture of trade facilitation instruments and vague aspirations, there would need to be a far longer transition with more detailed talks.

Back to the current post. Chris Grey sees the UK position as not the result of a reasoned project, but hijacking by ideologues due to the lack of planning:

David Frost, the UK’s Chief Negotiator, has reportedly briefed the cabinet to the effect that the EU are still refusing to grant the same deals that it has done with other independent countries. In other words, the flawed logic of ‘sovereign equals’ discussed in my recent post continues to guide the UK’s approach. As noted there, it is an approach that almost guarantees that the negotiations will fail..

As always it’s worth recalling, as the 2016 Referendum retreats into history, that the current situation grows organically out of the fact that the Brexiters never had an agreed plan for how Brexit should be done, despite the fact that they had spent years scheming and dreaming for it to happen. Since then, at every stage, the hardest of Brexiters have driven the meaning of Brexit in an ever-harder direction. Thus we have arrived at the present point when virtually any kind of deal is ruled out by red lines that have now turned the deepest crimson.

Yet this does not mean, as unworldly cynics often claim, that no deal was ‘the plan all along’. It’s far worse than that: the central truth about Brexit is that there was no plan all along. It’s true, no doubt, that there are some Brexiters who have always wanted a no deal outcome. But there are plenty of others who genuinely harbour the fantasy that it should be quick and easy to do a deal, and that Britain ‘holds all the cards’. They didn’t for the most part cynically deceive the voters, they naively deceived themselves. And, moreover, the current UK negotiators are almost certainly fully and genuinely in sway to the theology of the Brexit Ultras that, if met with sufficiently firm resolve, the EU will break its own red lines.

This is not inconsistent with having no plan for Brexit. On the contrary, it is one of the reasons for having no plan, since the assumption is that all that is needed is sufficient determination and, no doubt, ‘bulldog spirit’ for all obstacles to disappear. Such reasoning ought to have been discredited by May’s government’s initial attempt – led by David Davis – to negotiate in just that spirit.

But in the circular logic of Brexiters, the failure of their claims invariably proves that they were right all along. For example, this week Douglas Carswell argued that the EU “constantly failed to make the concessions they ought to have made” (my emphasis) and so “administered to Theresa May the equivalent of a punishment beating”. On this analysis, all would have been well had May not – with the Chequers Proposal that saw the resignations of Davis and Johnson – blinked in the face of EU pressure (rather than belatedly, and partially, recognized the economic damage of the original approach).

Johnson maintains that if they two sides aren’t well along to an agreement by the June EU summit, the UK will go its own way and prepare to deal on a WTO basis. This is the functional equivalent of a crash out. Admittedly, the last time it looked like that was a real possibility, the EU identified a series of key areas in which it would allow the UK a limited continuation of EU privileges (they were time limited as well as in some case being substantively less permissive than current arrangements). In other words, the EU would set up some waivers to cushion the impact for its benefit. Those would presumably help the UK but that’s an unintended consequence.

And yes, sports fans, no deal Brexit is baack! From RTE:

Tánaiste Simon Coveney has said that a no-deal Brexit is now a real risk because the UK is looking for something different to what was committed in the Political Declaration….

“Until the UK changes its approach in the context of giving the EU assurance that they are not going to effectively deregulate their economy while expecting free access in the EU single market, I think we’re going to continue to be in real difficulty in these talks,” he added.

And Politico:

Brussels is not budging, and sees this as key to avoiding a race-to-the bottom competitor on the EU’s doorstep. “We are not going to bargain away our European values to the benefit of the British economy,” the EU’s chief negotiator Michel Barnier said. “Economic and trade fair play is not for sale. It is not a ‘nice to have,’ it is a ‘must have.’”

The EU27 also underlined its intention to follow what Brussels sees as the letter of the law by on Thursday launching disciplinary proceedings against the U.K. for violating the EU’s freedom of movement requirements….

But if neither side is willing to move, the chicken game risks leading to a car crash — a no-deal exit from the Brexit transition period.

London has always stressed it’s willing to take that risk…

More and more this looks like a risk the EU is also more willing to take than to give in on its core issues. …

The bloc even seems ready to move to the side of the road and watch the U.K. drive itself off the cliff.

This same Politico piece did highlight a bit of movement on some issues and rhetoric, but it’s awfully modest. An impressively detailed RTE story earlier this month described more constructive talks on the Northern Ireland Withdrawal Agreement issues, but even so, the UK seems unwilling to take measures to their logical conclusion. For instance, it’s planning to hire more vets for live animal inspections, but isn’t willing to build the needed infrastructure at ports that need it, with the reluctance apparently being bad optics.

So here we are, almost full circle. If coronavirus retreats far enough over the summer, we may get what will feel like a Brexit rerun.

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  1. vlade

    There are additional considerations:

    COVID means that at least some of the economic disruption, if not all, can be blamed on it.
    While Johnson and co popularity gained a lot in mid March, it has now turned and is tanking. For the first time since the CV-affaire start there’s more doubters than supporters – and not a small amount of them is amongst the Conservatives.

    Johnson may well hope to bridge this by stronger Brexit case, but I’m not sure whether that would help, as well, for a lot of people “brexit was done, right?”. Which also means being painted into a corner where any extension would seem to undo the Brexit to the believers.

    No deal it is. Later than I expected, and likely less visible to the normal populace, but still..

    1. Clive

      Plus, from the Leave perspective, there’s something almost surreal about the FTA talks being conducted (still) along the same lines as they were when the world looked like it looked in January. As if this whole pesky COVID-19 thing was happening to some other people in some other places.

      But the steady-state EU which existed then doesn’t exist in any recognisable form now. Just as a few high-level summaries in a quick list:

      Freedom of Movement — Ha! What freedom of movement? I can’t even get on the ferry to France. Even if rates of infection are reduced and an agreed international set of control measures and their invocation criteria established allowing some sort of non-visa travel (a big if) we’ll still be looking at 2 weeks of quarantine at the start of the point of entry and another 2 weeks on return most likely. Only long-term changes of residence are going to be worth that hassle, tourism is going to be very patchy for a year, probably two, so anything to assist with that in an FTA isn’t going to be worth much.

      State Aid: Forget any notions of a sane state aid level playing field. “whatever it takes” will be the order of the day. Even if the UK was to sign up to this, it could well be the worst possible thing to do in practice — the UK government would have to jump through whatever hoops the Commission thought it still wanted to see (“letter of the rules” approach), meanwhile, Germany, France and everyone else would be running a defacto policy of propping up whoever those governments wanted to prop up first, sort out the paperwork second. (“state aid level playing field for thee, no-holds-barred-business-support for me“)

      Frictionless Access to the Single Market: As has been proved, not worth the paper it’s written on in a crunch. Supply chain mis-matches will be solved by national interests grabbling what they can and what they need first, then letting anything else which isn’t essential for the particular nation state’s domestic priorities second. Don’t like, say, Germany hoarding PPE? Or France lopping the HVDC electricity supply interconnector’s off switch in a winter demand crunch? Or Spain keeping fresh fruit and vegetables to one side for their consumption in a bad harvest and / or transportation issues caused by border restrictions? The UK can file a claim in the CJEU if they think they’ve been treated unfairly. The UK might get a ruling in, oh, I don’t know, 2022 or something.

      Speaking of which, the CJEU. Germany of course just torpedoed its claim to legal primacy having reasserted the superiority of the German Constitutional Court. Why should the UK not take a similar stance in other matters pertaining to the Withdrawal Agreement? Or other EU Member States not want a bit of the same hot German jurisprudential action? Sure, it might all get fixed with some EU fudge or another treaty to stitch it back together again. Might. And I might be able to resist eating this slice of cake I have here in front of me. Would anyone be willing to put money on it? And I’m just trying (but failing, I have to confess) to get my head around the wailing and gnashing of teeth that would have happened if the UK had had the temerity to do what Germany did there. Can you imagine if the UK had decided that it would send the CJEU off packing with a flea in its ear and told it that UK sovereignty has legal superiority over it in order to — as Germany is doing — introduce a policy of “hard money”, internal devaluations and austerity? Remain’ers, certainly in the UK seem to be just looking on at this like a deer in the headlights — completely silent, fixed rigidly to the spot and completed unmoved and unmoving. This kind of UK Derangement Syndrome is getting harder to ignore in the political sphere of Leave vs. Remain.

      The Irish Protocol: No hard border on the Island of Ireland? Oh, well, look-ee here, what’s all this then? Looks like the police are closing and policing the unclose-able and unpoliceable border. Now, of course, in the North, the Assembly has acted in commendable cross-party co-operation (up to a point but this is not a time to be churlish, this is a big accomplishment; its amazing what people can do when they think their political butts are in for a kicking by the voters if they don’t get their act together). With COVID-19, even if Stormont tries to cobble something together, don’t underestimate the ability of London and Dublin (or Dublin and Brussels or Dublin and Paris) to be “forced” to impose unilateral — or maybe better put, bilateral — agreements which unravel that DUP/Sinn Féin temporary love-in). Regardless, COVID-19 has let the border controls genie out the bottle.

      That’s just for starters. I’ve not even got to the need, recently exposed by COVID-19 for a reengineering of supply chains to re-shore critical supply chains, production facilities and components availability. Renault-Nissan seems to be reading the writing on the wall for that one, having much more localised products for concentrated markets. The case for a do-or-die FTA was weak before. It’s pretty much non-existent now.

      1. Yves Smith Post author

        I don’t see an easy analogy to the ECB/German Constitutional Court issue. Crudely speaking, the national CBs are liable for any default by the ECB. The EU treaties don’t accept the notion of MMT, that a central bank makes money and so can’t default, and that any central bank negative net worth is only at most an inflation risk.

        Wolfgang Munchau doesn’t unpack this well but does get at the key issue in the ruling:

        Earlier it argues that the €2tn stock of assets on the ECB’s balance sheet constitutes a risk that encroaches on the competences of national parliaments. I think the ECB will struggle to answer all, or even most, of the court’s concerns…..

        The ECB is, of course, not subject to German law. As an EU institution it answers to the European Court of Justice. But this ruling is binding on the Bundesbank.

        The Bundesbank barred from taking up its share of ECB liabilities is a big problem…..that is a monster spanner in preventing the worst outcomes in the EU. Germany is na ga tolerate any meaningful EU fiscal spending. The ECB faking it was not great at all but still better than nothing.

        1. vlade

          Unless there’s a new treaty. Which right now would be probably a very hard sell not just to Germans, but many others.

          I think the best the EU could do now is hit a pause button and start a massive re-think. I believe it very unlikely, as there’s no pol in the EU that could do it.

        2. Clive

          It wasn’t so much that the German Constitutional Court wasn’t that keen on shared fiat currency issuance by euro-adopting Member States (monetary union) where that created obligations on a particular Member State to assume the joint public finance liabilities (fiscal union) — although of course the Constitutional Court was dead set against that idea.

          It was, rather, that the Constitutional Court rejected the entire notion that the CJEU could assume, as it had done, that it (the CJEU) could determine where it has jurisdiction bestowed on it by an EU treaty and, basically, decide when and where it could hand down judgment and on what cases.

          Oh no you don’t, said the Constitutional Court. National governments and their courts have — and always had done — retained this competence.

          The Irish Times, no friend of euroskeptics, covered this point

          It said that key elements of the European Court’s decision were incomprehensible, and that parts of the bond-buying scheme were beyond the powers granted to the ECB by the treaties, and therefore illegal.

          In other words the German court substituted its judgement for that of the European Court in relation to the limits of the powers of an EU institution.

          As the European Court noted in a terse press statement this week, it has always held that the legality of the acts of EU bodies can only be by the European Court, not national courts in order to prevent the chaotic situation where EU acts are legal in one state and not another.

          The Constitutional Court was able to strike out the CJEU’s claim to superiority because its judgement on the original matter (the bond buying programme) was, so the Constitutional Court held, so flaky and crappily drafted (they used slightly more polite terms than that, but not that much nicer by the standards of court language) that the CJEU has apparently thought that to even be questioned on the decision was derisory and beneath their contempt so as to not even disdain to rouse themselves to make a better job of it.

          It was this arrogance on behalf of the CJEU that caused the Constitutional Court’s patience to finally snap.

          There is nothing to stop, now, the U.K. government from advancing similar rebuttals should the CJEU be (in its view) acting in such a dilatory fashion. Of course, the U.K. government couldn’t just be deliberately obstructive and uncooperative with a legally defensible and tightly argued CJEU opinion. But the German Constitutional Court’s ruling has made it a whole lot easier for the U.K. government to challenge its (the CJEU’s) previous-sacrosanct and unimpeachable immunity from interference by a national government. If you were the U.K. government, you’d have to be tempted to give it a try, emboldened as you would be by the German Constitutional Court’s same actions.

          1. John Jones

            Everything you’ve written kind of gives credence to the little Dutch boy with the finger in the dyke; a combination of Covid 19, Brexit and, let’s face it, German populism by its constitutional court is making the life of the European Commission /Union very uncomfortable.

            If the German population really do clock let alone accept that it is their savings and pensions that will be used to underwrite /pay for the profligate south it’s a game changer for the EZ/EU.

            So the EU/EZ of January 2020 doesn’t exist is a good one – it will not likely exist in 2022 either – I suspect even the technocrats likely know that the dyke ( dam ) is breached hence the resignation /acceptance that UK will not ask for a transition extension.

            1. John Jones

              The killer is the emotional argument – if the EU elite/technocracy /clerisey intellectually accept the decay of legal entity that is the EU, it’s a relatively short step to making the emotional case for the demise of the EU legal order – once you’ve got both the intellectual/emotional decisions made it really is just a matter of time for events to unfold .

          2. Yves Smith Post author

            No, I think Munchau has this right. What the German Constitutional Court said (which id what the Irish Times stated at greater length). and what it means are two different things,

            The ECB and EU could still treat the German Constitutional court as having exceeded its authority in trying to nix an CJEU ruling. and ignore it. However, it is unquestionably binding on the Bundesbank, and with the Bundesbank sharing in ECB bond buying liabilities, the German Constitutional Court has limited the Bundesbank participation, which is deadly for any ECB emergency operation.

            1. Clive

              Munchau is entirely correct to say that the EU institutions could — definitely 100% will, in fact, what else can they do? — say that the German Constitutional Court’s ruling was invalid and the EU institutions (including the CJEU) have / retain supremacy over national bodies where their competencies are delegated to the EU.

              But as the German Constitutional Court has already heard that argument and rejected it — on the basis that the CJEU failed to discharge its obligations to act with due propriety. The Constitutional Court’s ruling (that the CJEU’s ruling was “incomprehensible”) said the CJEU failed to discharge its basic duty, the duty of any court, to provide a coherent, intelligible opinion. This principle, the principle that the German Constitutional court has just established (or reaffirmed) can — and the fear is will — be applied again by the national courts of other Member States to any other CJEU opinion. Member States get to determine if the CJEU has done it’s job “properly” and if they think it hasn’t, they can substitute their own national courts’ rulings instead of the CJEU’s.

              The nitty-gritty of the Bundesbank and the ECB’s bond buying (which was of course the subject of the case) is interesting, but it’s really only a side show to the much larger and more far-reaching drama the Constitutional Court has set in motion for the EU.

  2. The Rev Kev

    So the year is 2098 and Brexit has not quite happened yet. But on a holographic stage are gathered the surviving Centenarians who voted either Leave or Remain in the nearly forgotten Referendum of 2016. The Presidents of England, United Ireland and the Celtic Confederation all holographically shake their hands as the annual bout of Coronavirus season has kept these people stuck inside their retirement pods for their own safety. it could happen like this.

    Seriously, who could have imagined that so little progress would have been made after nearly four years? If the EU was not going to give countries like Italy a break in the middle of a pandemic, what makes the UK think that the EU will cut them any slack? And how can you negotiate supply chains when they are in chaos at the moment? Clive’s comment certainly brings up a lot of these issues. For the highlights of this never-ending drama, here is a timeline of Brexit events-

    1. James

      I could have imagined that so little progress would have been made after nearly four years. I have said from the beginning that the Establishment does not want Brexit to happen because US (aka Anglo/American) hegemony depends on Europe having a single foreign policy. If Europe fragments politically such that different parts of Europe have sovereignty over their own foreign policy, then the US will not be able to impose no fly zones on countries like Libya and won’t be able to implement effective sanctions on countries like Iran and Russia. Western intelligence agencies and their fellow travellers want to stop Brexit at all costs.

      1. JBird4049

        So the wizards behind the curtains are doing what they can do to make everyone mad at each other? This includes the voters who get to see the various parties, governments, and supranational agencies make a complete mess of it both that, the economy, and the pandemic. With this leadership why would anyone want to vote for or encourage reconciliation or continued negotiations.

        As an American, I really cannot get too superior as shown by the even greater failure, even the partial collapse, of the government at all levels. Add that too many people still think that the stupid racists and the Russians are the reason for President Orange rather than see that, like in Brexit, it was a kick to a sensitive area by the electorate to get them to listen. The leadership and the nomenklatura still refuse to listen.

        I am wondering what the next attempt to get TPTB to pay attention will be? Brexit and President Trump failed. What would be the bat?

    2. John Jones

      Covid 19 looks to have killed JIT for the foreseeable future – can’t imagine international air or sea transport or leisure sectors ever going back to pre Jan 2020 times – given half the RoRos are entering the UK and half the World’s fleet of freight tankers are not where they are supposed to be – the issues of Dover become less intractable and more manageable.

      Hard brexit whilst not inevitable is survivable.

      1. d

        Maybe survivable. But not without lots of pain.seems that lots auto plants in the UK get their parts from the EU. So with JIT dead, those plants either get shutdown or moved elsewhere,probably the EU. And that ends the UKs auto industry. Then there is all that food the UK I ports, a lot of which will spoil just trying to get I to the UK. Course a lot of that might get blamed on so much showing, and the UK not being to clear before it spoils, course the food that the UK sells to the EU will a harder time clearing the ports, since the EU will have to inspect every thing coming in. So lots of that could or will spoil. There was an agreement that was going to allow the UK to use the EU’s open skies agreements with others, that might done in, course there won’t be much in the way of air travel any way,but would require lots of more negotiations with others. Is there more than this? Of course

        1. JBird4049

          Factories and businesses used to warehouse some days, weeks, or months of supplies. If JIT is dead wouldn’t going back to that be feasible? I am sure that I am missing all sorts of problems, but JIT was done because it was ostensibly more efficient and cheaper to order supplies at the the last moment from a company on a different continent. It certainly more expensive in energy use.

    1. Donn

      “ The company listed a number of oil and gas sites which it claimed to have a current asset value of roughly $89 million, but which it said would be worth $666 million in 12 months’ time.”

      Gasp! The DUP caught using a long spoon to sup with the Devil..?

  3. David

    I think the key point here is Chris Grey’s observation that the Brexiters had no plan. In turn, this was because for them, getting out of the EU, in some way or other, was an end in itself. How it happened, and what happened after, were secondary considerations if they were considerations at all.

    This explains a lot of the EU’s puzzlement and hostility, both earlier and now. The UK was what is called in negotiating language a “demandeur”, which is to say the party that’s asking for something. The UK wanted, at least formally, to leave the EU under the most favourable circumstances and then to establish a new relationship in which its interests were protected. So normally, it’s the demandeur that makes the proposals and is ready to compromise. But because the Brexiters didn’t really care very much how things turned out, they had no proposals (or none they could agree on) which made negotiations almost impossible. By stuffing his Cabinet with ideological Brexiters, Johnson has effectively ensured that this state of affairs will continue.

    But seen from here, things aren’t all that well among the 27 either. There’s a lot of pearl-clutching about “sovereignism” and of course “populism” derailing the European dream , and the public utterances of people like Von de Leyen and Hogan seem to an increasing number of people in Europe devoid of any contact with reality. Macron is supposed to be talking to Merkel this afternoon by video to see what can be rescued. Quite Serious Articles are now appearing asking if the Euro will survive. The likely result is two exhausted, crisis-ridden and divided systems trying to negotiate with each other towards the end of the year, with the outcome impossible to foresee. Somewhere in all this is a Groucho Marxist joke that can’t quite formulate: something about being wary of any club that would take you as a member?

    1. vlade

      What it’s showing is that putting in a non-entity like VdL was a crucisal mistake Merkel did in trying to take out the teeth out of the Comission.

      Or rather, I’d say, that the EU constitutional issues are still mostly unsolved and ambiguous, and in a real crisis the EU failed to even try to work together (as far as most of the EU citizens are concerned)

      1. John Jones

        Samual Brittan had a nice quip about the Euro and the grander European project – when push came to shove , it’s very hard to sustain the unsustainable – I’ve been amused that the euro monetary system ( EMS) house of Jenga has survived as long as it has to be honest. Thank god for the Germans ,when you need them.

      2. Marlin

        VdL was really not Merkel’s idea. Manfred Weber was the candidate, which was run in EU parliament elections. The liberals, e.g. Macron, didn’t like him. Heads of gov’t wanted someone with executive experience. For proportionality reasons a German had to become head of the commission this time. VdL was the compromise candidate.

        Now Weber is even less well known, but he was in the EU parliament for a long time and probably would have at least a better understanding of the different currents present in the various EU countries.

        1. vlade

          VdL was Merkel’s compromise. Her executive record is, well, poor (yes, she was he first German female defence minister, but her tenure there wasn’t exactly confidence inspiring).

          I don’t know German politics well enough,but I’m pretty sure that there were people with executive experience that were better choice, because VdL set the bar pretty low (and she continued to do so during the crisis, being very tone deaf, which a politician can afford only if she is very competent otherwise).

          You’d argue that no-one expected her to deal with CV crisis, but that’s part and parcel of it, crisis are unexpected. Selecting an incompetent non-entity (and I say that as someone who actually would like the EU to work well) means that either the post is considered not important, or that you want to make it non-important (which IMO is the case, as it was a part of the constitutional fight between the comission and the council, which the council won. But the cost of the council winning is what we have now.

  4. lyman alpha blob

    It’s been what, four years now since the vote and people still come and go in the UK, things are bought and sold, all with no official agreement.

    The way governments work these days, or pretend to, why not simply hold a meeting once in a while so pols on both sides of the issue can make it look like they’re doing something and then just stick with the status quo? That’s what they’ve been doing so far and the UK is still on the map.

    This whole thing is a colossal farce – sound and fury signifying nothing.

    1. Yves Smith Post author

      Huh? This reads as if you have not been paying attention at all.

      The reason things still are normal is the UK is still for all intents and purposes in the EU by virtue of the transition period not having ended.

      1. lyman alpha blob

        That’s what I was getting at, albeit in not the most articulate manner. The transition period wasn’t originally intended to be nearly this long, but the UK can’t get it together and the EU is so far unwilling to put its foot down.

  5. Jack Foulds

    The biggest dunce in all of this fiasco is David Cameron, who should never be let off the hook. Thought the whole political process was a card game in which he held the best hand (but didn’t) and not even occurring to him that the backdrop of peoples’ lives, livelihoods and prosperity was of any relevance. Let’s not forget Osborne either. I hope history is harsh on them

  6. Jake

    Guys guys guys… What about the immigrants?? You all talk as if supply chains and treaties and foreign policy and research grants matter to the average Brexit voter. NO! it’s all.about the immigrants. So what’s happening with those?

    1. Yves Smith Post author

      With all due respect, you do not get it.

      The Brexit voter is not at the negotiating table. Barring very unusual events, this Government is in office until May 2024.

      We are focusing on the negotiating dynamics because that is what will determine if their is a “no deal Brexit” which now looks likely.

      And honestly it is comical for you to act as if the current Government has squat to do with democracy. Johnson is in his seat due to the votes of about 100,000 Tory party members, in an insider process where only 160,000 Tory party members were eligible to vote:

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