Brexit: Too Late for Fudge?

I’m normally not keen about having a post consist largely of a tweetstorm, but this Brexit offering by Jon Worth is a showstopper…including his clever use of icons.

As you’ll see, Worth looks at all the ways the EU and UK might buy themselves more time to get something done. He finds that pretty much all the paths are dead ends and/or require tons of trust, when trust has been in scarce supply.

Note that he also assumes that the EU wants a deal and would be willing to participate in fudge-making. I’m not certain this follows. The EU has decided, for reasons I cannot fathom, to indulge the UK and negotiate down to the very last minute. Taking this approach is a tremendous disservice to its businesses, since they don’t know if they will be contending with a crash-out or a thin deal, presumably no tariffs and no quotas. The latter would still create a tremendous amount of friction at borders. I am surprised that multinationals and large domestic players haven’t made a huge stink about the neverending negotiations adding unnecessarily to Brexit damage. Given that the EU seems to be allowing the UK all the time it could possibly use to continue to dither, contrary to the EU’s own interests, one would also think they’d make this a talking point.

So the other question is where the EU wants things to go. Their pointed permissiveness may be a way to let the UK hoist itself on its own petard. I am sure that Barnier and his team would very much like to get any deal done; it’s frustrating to invest so much effort in a project and have it go splat. But his principals may have concluded that if the UK still doesn’t appreciate how bad not having a deal would be, then let them drive off the cliff and find out how hard the landing will be. The EU will have vastly more negotiating leverage once the UK has left and EU businesses have made adaptations to work around the abrupt change.

Put it another way: since the two sides have been thrashing around for months, why should we expect negotiations over a fudge to go better?

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  1. PlutoniumKun

    I think the only real conclusion is that the talks are no longer about a ‘deal’ to manage the post 2020 transition, but are already in the post no-deal phase, its just that nobody wants to formally declare this. It is far to late now to create a proper water tight deal to operate from January 1st. Whatever happens now will be a series of quasi legal fudges.

    I think the primary reason why the EU has not pulled the plug, is that the EU as an institution is simply incapable of that type of decision. When you need consensus from so many national governments and parliaments, and in some cases regional governments, its simply easier to keep on working away and push the other side into making the decision. I think there was an operating assumption that at some stage the UK would walk away, and the EU was quite happy with that. It was simply not worth the political energy to put together an internal consensus on when to walk out the door.

    The other question is why the UK has refused to walk away, while constantly undermining any possibility of a deal by putting in place senseless red lines that aren’t real red lines. It could be down to No.10 and internal battles, but that writer may have a point that this is part of the strategy. Its clear that some among the Ultras have always seen the best means of achieving their aims as being to cut the brake cables in the governmental system – to allow it to drive over the cliff in the hope that, like James Bonds Lotus, there is a magical apparatus that will allow it to change into a plane, or submarine, or… well, something.

    I think we are now in arguably the worst possible case scenario. Not a bad deal, not a no-deal, not a good deal for one side or another. But a ‘do we have a deal or not and if so, what the hell does it mean? situation, which is bound to cause utter chaos.

    1. Halcyon

      The amount we hear about it, you would think that the reason we’re delaying is just that the UK has internalized the Brexit Ultra mantra of “talks go down to the wire, and then the EU will concede at the last second” as if it’s actually real and meaningful and not obvious junk. And that’s why this is all happening now.

      1. PlutoniumKun

        I think there is a lot going on, but I do think from some of Johnsons behaviour, in particular his stupid and counterproductive direct talks with Von Der Leyen, that he genuinely believes that this will happen.

        1. fajensen

          I think “Boris” has handlers. Whenever there is a glitch in his C3 link, he reverts to being himself, then a few hours later, news reaches his masters, control integrity is reestablished, handlers yank his chain and then he blubbers and tries to wind it back (perhaps concerned that “dead in a ditch” may be a possiblity rather than just a joke someone told him at a function!)

          1. PlutoniumKun

            I think an interesting point which I’ve seen raised is that at various points the EU has made quite significant concessions which Johnson could, had he been so minded, paraded as a great victory and signed off a deal which could have won him plaudits in the right wing press. The fact that he missed those opportunities is, I think significant – it suggests either chronic indecision or (I think more likely), continual backroom sabotage.

            1. Massinissa

              “continual backroom sabotage.”

              If I may ask, sabotage by who? I don’t doubt you, I’m just not sure who might be purposefully sabotaging him. Well, at least I’m not sure who now that Dominic Cummings was sent home to Durham.

              1. Yves Smith Post author

                The Ultras are still powerful and loud. Fleet Street keeps amplifying their nutterdom. So they have clout out of proportion to their numbers.

              2. Anonymous2l

                Murdoch at the very least is always seeking to impose his views on the UK government. A recent freedom of information request revealed that the UK government had met News International people 100 times in the previous 12 months. Gove is very clearly Murdoch’s creature. Gove is said to be in favour of a deal but of course that could be disinformation. Cummings is still on the Government payroll so although he has left the building he is only a phone call away.

                As for others who knows? Read Catherine Belton and form your own views about possible Russian influence. I hear on the grapevine that there is a lot going on behind the scenes which is being kept from the public. Well, there’s a surprise!

    2. c_heale

      Couldn’t agree more. I think the chaos is already starting (lines of trucks) and it won’t be possible to stop it. Just hoping my family and friends there come through it okay (I live outside the UK).

      1. PlutoniumKun

        As George Monbiot pointed out this morning on Twitter, the maximum damage is likely to occur just as the latest wave of Covid peaks in the UK. Plus he says there is a long term forecast for very heavy floods in early January. It could be the perfect storm.

        Its canned goods all round.

  2. vlade

    The EU is the master of fudge. I believe that if a deal will be struck (and it’s still a massive IF IMO), both parties could fudge it by effectively extending a transition period (as long as the extension was short – max couple of months and with firm date). Johnson could sell it at home as “we need the business to prepare” (doh, they always did, you left them in lurch. As did the EU its side.. ), and I don’t think the EU would mind at all either.

    But, it would have to be pretty sure that there’s going to be quick and painless ratification on both sides. Which is far from given.

    1. PlutoniumKun

      I think there is a mentality within the EU that this is an option, and they wouldn’t really mind putting the UK through the endless cycle of pain that would be never-ending negotiations on every tiny detail that would have to follow an incomplete, fudged deal. They wouldn’t be human if they didn’t enjoy seeing the Tory Brexiters squirm as they have to battle with the EU over every single item of domestic policy.

      But I hope they don’t go this way – if ever a situation needed a reset, this is it, and right now a no-deal on January 1st is the only way this will happen. I really do believe at this stage that a bad fudge could be a lot worse for everyone than a no-deal.

      1. vlade

        I do not disagree, but there are two players that both, for different reasons, aren’t capable of firm decision. Which screams fudges all the way.

    2. fajensen

      That would be a huge strategic mistake from the EU. Every extension will be taken by the swivels that the EU is weakening, setting off both more UK-EU and UK-UK bickering and demands for more concsession made by the EU, while of course “the firm date” being seen as not a firm date at all because None of the others turned out to be!

      This negotiation needs to be taken over to the bathtub and shot firmly in the head!

  3. jabberwocky

    Interestingly I had interpreted the current state of affairs very differently. From Barnier’s comments I took that the deal is largely written (and maybe also translated etc). And I took this to mean that it is also therefore already largely agreed. Mr Market also seems to have gone ‘All In’ on a deal. Whenever the things have got tight the UK has backed away from the precipice, both sides have made compromises on fish and the UK has backed down on the treaty governance side, as well as dropping the internal markets bill just hours after the Commons had wasted time arguing and voting over it. So everyone in the UK now expects a deal and it will be a big shock if it doesn’t arrive.

    1. Yves Smith Post author

      “Largely written” means that the 85% of the issues that are settled have been papered up.

      But as Barnier has said, “Nothing is agreed until everything is agreed.” And the EU is not capitulating to the UK its remaining issues. It might move at the margin, but the UK is the one that has to make significant concessions.

      On top of that, the deal that is expected to result even if the remaining large gaps can be bridged will be minimal. It won’t prevent serious border disruption. Traders will still have to fill out tons of documentation and haulers will need new licenses. The City isn’t part of the deal either.

      The biggest practical effects of a deal would be tariffs and quotas, data, and security.

      1. Harry

        I think its worth thinking through the PR aspects. Neither side has any incentive to announce that no deal was reached. I think its perfectly possibly to reach that the incentives ensure an agreement which is basically no agreement, and for both sides to trumpet it as a success. Reality will intrude, but slowly and in an uneven manner. It will take a lot of time to really understand that this was a failure not a success.

    2. PlutoniumKun

      Aided by an appalling media, I think the markets in the UK at least have been seriously delusional. They have far overestimated the chances of a reasonably good deal being signed off. The last 5% of any deal is always the hardest part.

      A major confusion I think has come about because of the ingrained notion that the ‘EU always does a deal in the end’. Yes, the EU always agrees with itself in the end (i.e. it always achieves an internal compromise). But this is a deal between the EU and a third country, and there are plenty of examples of that type of deal going nowhere.

      1. larry

        Appalling media is right, PK. Let me quote Alasdair Campbell in today’s New European.

        “Gerhard Schroeder, once made a very interesting observation, which has come to mind many times in recent years, watching papers like the Express, the Mail, the Sun and the Telegraph twist and turn every step of the Brexit road as though it were one long seamless ‘Boris’ triumph.

        “Your country is very weird,” said Schroeder. “What do you mean?” I said, my patriotic hackles rising somewhat. “A country with newspapers like yours is weird, really weird,” he said. Hard to disagree. And anyone who compares Bild Zeitung to our tabloids has never read it. My friend in Berlin did have the good grace to say of the Mail on Sunday splash “don’t worry, most Germans do know that most Brits are a lot better than this””.

        That doesn’t seem to have been recent, and Campbell indicates that this conversation took place some time ago. But have the said papers gotten any better since Schroeder made his comment? Not as far as I can see.

  4. The Rev Kev

    Back in the 70s you had some pretty good negotiators who were not afraid to try something different like stopping the clock as a deadline approached. Seriously, they would cut the power to a clock in that room and keep on negotiating until a deal was finished whereupon that clock was restarted with a deal ready to go. Nothing like that can happen here it it would require stopping an actual calendar. I think that the most exasperating part of the Brexit story is the literal years that have been wasted since the Brexit vote when all that time could have been put to good use – to any use. It has been four and a half years since that 2016 Brexit vote but how much real progress been made in all that years or time spent on preparations.

    1. John A

      David Cameron’s self-proclaimed trick when negotiating was to not go to the toilet. But then again, his track record is not exactly stunning, to say the least.

  5. Ignacio

    One thing that I have been thinking lately, and makes me mad about all the domestic/international soap opera that is Brexit, is the stupidity of linking Brexit negotiations with fishing quotas and licenses that have nothing to do with a Withdrawal Agreement on trade. So, as it is the case with Norway or Iceland, agreements on fisheries (capturing, not trading) is a different body of agreements that has nothing to do with general Trade Agreements and there is not a necessity to link both or use one to bother with the other (a big strategic mistake IMO because negotiations in Fisheries or lack thereof will end with everybody loosing) but I believe that linking both negotiations is just nationalistic theatre for the masses.

    EU agreements in the NE Atlantic, including the North Sea, Baltic Sea and the exclusive exploitation zones (EEZs) of Norway, Iceland, Feroe, Greenland and Russia and International waters in the region go either through what are called the ‘Northern Agreements’ that can be bilateral, trilateral or multilateral and basically consist on a legal framework that permits the exchange of allowable fishing quotas on the basis of the different interests and capabilities of the national fishing fleets or through existing Regional Fisheries Management Organisations (RMFOs). A lack of agreement usually means a loss for all parts. Such agreements have nothing to do with the commercial agreements, that themselves affect trade of fishing products but this is a different question, I am talking about fishing rights and quotas. It is on the interest of all a good coordination of the activities as the stocks of cods, mackerels, herrings etc. cover areas bigger than the EEZ of a single coastal country. In the case of the UK, much of the preparations for brexit (which means she is out of UE’s CFP) have already been done. UK is already a contracting party in all RMFOs that matter to English fishermen (NEAFC, ICCAT…) and already has a bilateral agreement with Norway (kind of ‘Northern agreement’) and so, regarding the North sea what is needed is a ‘trilateral agreement’ (UE, Norway, EU) plus, a bilateral agreement (UK-EU) if interested a Feroe Islands agreement plus, an agreement with Iceland in which everybody keeps full sovereignity of their ZEEs while exchanging fishing quotas on behalf of all intervening fishing fleets and in full coordination of fisheries management, surveillance and control. Such agreements are as easy as a copy paste from existing similars. Once in place, then can start the more difficult negotiations in quotas. There is no need to link this with the complexities of a Withdrawal Agreement as this has its own complexities, IMO.

    Yet, we have the spectacle of gunships being pictured and shown in the media as to demonstrate in the most stupid way how hard are we negotiating. Posturing, simple and stupid posturing.

    1. PlutoniumKun

      European fisheries policy has always been a disgrace (I mean ‘European’ in the broadest sense, since of course it includes quite a few non EU countries). But I think it was always impossible to separate this from the Withdrawal Agreement, both for strategic reasons, and the practical reason that its always been so intertwined with EU regulations.

      1. Ignacio

        I really don’t think it is a disgrace. Bear in mind that agreements and quotas have to be arranged and negotiated every year, or at least every two years, depending on how the stocks evolve. The disgrace is that there is still illegal, undeclared and/or unreported fishing (IUU) that makes management very difficult. So, fishing negotiations are never ending and from time to time problems arise with this or that fishery. How the UK withdrawal, including the mechanisms of fish certification for commerce will affect IUU-fishing is something to watch in the sector.

      1. vlade

        There’s only one real pilsner! :) (mind you, I had beers that called themselves pilsners that were much better. And a lot that were much worse). At least it’s not the Bud vs Budweiser argument (where the funny thing is, the Bud was named before the Czech Budweiser was, although of course beer was brewed in Ceske Budejovice, of which the name is germanised form, centuries before anyone in the America (north or south) had an inkling what beer is).

  6. topcat

    If you were in the UK in the 70’s you will remember the “cod war” when the Navy was sailing about all over the place trying to look big and scary.
    Fish has always been a stupid political game in the UK.

    1. Ignacio

      The world has changed a lot from the 70s regarding everything including Fisheries. Cod stocks are currently in critical state in the North Sea. If we haven’t learnt anything in the process we deserve the worst of outcomes. Living in the past, a famous Jethro Tull theme…

  7. David

    To make sense of where we are, you have to consider the possible alternatives. It was never realistic to suppose that at some point last week the EU, the UK or both would put their papers away and head for the exit, saying “too late now, technical reasons, Christmas, no deal, blah blah.” They would have been slaughtered by the media and their political opponents, and by the same business interests who are complaining about lack of clarity now. “Get back to work!” As long as the date of 31 December is in play, that is the operative date politically, irrespective of practical constraints, so the two sides are condemned to keep talking.

    That doesn’t mean they’ll find a solution by the end of the year. “Something” will be signed, but I’m inclined to agree with PK that we are now in the effective “post-no-deal-negotiation” phase. Politically, though, it won’t be called that, because no deal is a defeat for both sides and nobody wants that, after all this effort. I think what you’ll get is a complicated and messy mixture of a few things actually signed off before 31 December, a whole series of interim fixes to keep planes flying etc. and a long and complex process of further negotiations extending over years, to settle lots of other points. There may never, in fact, be a “deal” as advertised, but politically this can be finessed to avoid it looking like “no deal.” This will, of course, produce years of chaos, but that’s inevitable anyway, now.

    Paradoxically, perhaps, it’s the Commission that will come out of this in the strongest position. They have the collective expertise and the stamina, as well as the mastery of detail. The UK is descending further into a complete shambles, and the 27 are much more worried about Covid, with lockdowns now in Belgium and Germany and a crisis in Sweden. I suspect that the 27 will delegate a lot of the detail to the Commission, and the Commission will have the UK for breakfast. Sigh.

    1. Ignacio

      This is, IMO, the clearest explanation I have read about the most probable outcome before 31st of December. We will have ‘Something’ disguised as a political success. We can call it the (never ending) Withdrawing Agreement.

    2. PlutoniumKun

      I think this is the situation we are going into, but I can see two things stopping it:

      1. Johnson being persuaded that if he allows things to float over, the Brexiters will make his political life hell as they don’t get their dreamed for pure exit. He needs something he can use to declare victory, and the EU might not give it to him. Hence he may opt for the dramatic walk out.

      2. Real world events. The problem with an endless series of technical fixes, is that courts (in London or Brussels, or any EU capital) might not co-operate. There will be many irate traders, manufacturers, fishermen, farmers, who will be running to their politicians and the courts if they feel that one or other fix is disadvantaging them. One major adverse judgement (or one or other Parliament refusing to sign things off, or a clash in disputed waters, or any number of other possible event) could throw the whole thing into even more chaos.

    3. fajensen

      Maybe a Brexit agreement is already dead and what they are actually negotiating is the implementation of the “Emergency Protocols”?

  8. john jones

    History suggests that , despite everything, the EU is, at its heart, a political animal and that fudge and kludge is a key component of its DNA.

    Richard North has talked of the “stop the clock” measures and possible other safeguard measures including some , so far, non identified but arcane administrative procedures that will enable the EU to keep the show ie. Transition on the road or until such time ratification happens. . Call me cynical after 45 years of membership but bodging and kludging have been turned into an artform by the EU clerisy/technocrats.

    Another issue to deal with is the way the EU uses words in an Alice Through the Looking Glass optic – Dr North calls it humpty-dumptyism – essentially we see the EU (and its institutions pace the ECB/Draghi) use words and phrases to mean whatever they want the words/phrases to mean (this only becomes problematic when national courts, specifically The German Consititutional Court pulls them up, but this happens much later, after the illegal/bodged/fudged event.

    The key with the EU is to drop the pretence that it is a consistent rules based organisation – it is a rules based organisation that provides itself with interim rules based evidence whenever it deems itself fit – meanwhile , back in the real world, it’s no way to ‘run a railway’ as the saying goes.

    1. jeremyg

      Golf Club Rules.
      Expulsion for breaches. Fixed in stone.
      Until the committee decides otherwise.

      I think I saw that here.

    2. David

      It is a rules-based organisation (all international structures have to be) and in particular it’s bound by a system of administrative law rules (based on French and German systems) that Anglo-Saxons have never been able to understand. This was, and is, Johnson’s main problem, as it was that of his predecessors. So political fixes are always possible, as in any system, BUT they have to be justified in terms of administrative law concepts. You have, in other words, to find some ambiguity or some special provision somewhere that can be used to justify your decision, and later defend it to outside authorities , such as courts and the EP, who are not under the same political constraints.

      1. John Jones

        Many understand the concept of what is called ‘constructive ambiguity’ ( CA)- the key issue is that specifically within the NI Protocol of the WA the concept of CA gets a caning because the flexible interpretation doesn’t then suit one or other partners.

        Suspect that the new treaty between UK and EU will necessarily have less CA in it given that the sanctity of the Single Market is in play . Be interesting to see what governance procedures wrap around Level Playing Field procedure and dispute resolution.

        Brexit at the end of the day really is about divergence – hard to plan for .

    3. Yves Smith Post author

      The fudges have always been on internal matters, not external. Analogizing from that is a mistake, particularly since the EU has repeatedly made clear that it regards the integrity of the Single Market as an existential matter.

      And they did not fudge on Greece in 2015 which as I said from the outset was the strongest parallel to this negotiation: two sides with no apparent overlap in bargaining position, where the weaker decided to play a game of chicken, mistakening that the other side was not cowed by the prospect of No Deal.

    4. eg

      The EU’s skill in this regard puts me in mind of the former Canadian Prime Minister, Mackenzie King, who famously said “conscription if necessary, but not necessarily conscription …”

      Mind you, the crafty old goat was PM 3 times for a total of over 21 years!

  9. GlassHammer

    From an outsiders view it looks like creating the crisis point was the immediate goal, a consolidation of political power during the crisis was the medium-term goal, and a massive restructuring of the country as the crisis extends was the long-term goal. The rest of it was just a propaganda package for the masses.

    No one should expect a post crisis environment because the crisis is designed to last a very long time. (Nothing but years of new trade agreements, new domestic laws, new problems, etc…)

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