27 April 2017

Joergen Oerstroem Moeller: Five Scenarios for Brexit – With Only One Good Outcome

[...]The first scenario – that wisdom prevails and a settlement emerges after rounds of acrimonious meetings, mutual accusations, marathon sessions and brinkmanship – is unfortunately the least likely. Such a scenario requires statesmanship of which Europe/Britain are in short supply these days. A high degree of technical expertise is useful only if directed by a firm hand on the tiller with statecraft. Geopolitics, strategic interests, security, domestic politics and not the least economics and trade intertwine to form a Gordian knot. Cool heads and common sense could push EU and Britain towards agreement, but opposition on both sides may well overpower such feelings and block what could be a sensible new relationship between Britain and the EU. [...]

From the start, the British attitude on Brexit has been adversarial – “us versus them” – fueled by hard-core opponents of the EU that found echo in some politicians in the EU not wishing to be helpful.  A civil breakup requires complete support at home, something Prime Minister May cannot count on. Scotland and Northern Ireland, not surprisingly looking out for their own interests, are not supportive. May’s own party is split over the shape of future economic relations with the EU. 

A second scenario is a stone-hard Brexit – by 2019, Britain or the EU – and possibly both – concludes that no satisfactory agreement is at hand, at least not one majorities in national parliaments and the European Parliament could support. Seeking extension of the two-year deadline, which in reality requires an agreement to be in sight, becomes meaningless. Furthermore, with no end point in sight, no transitional arrangements are sought. The result would be an abrupt and unprepared rupture of links spanning over a large part of daily life and most of industrial regulations and economic conditions. Formally, Britain and the EU would fall back on terms prescribed by the World Trade Organization, but even that would require time and negotiations. Any good will that existed will have disappeared, leaving both sides disgruntled at best and fueling distrustfulness.

Politically, a decisive factor is whether Britain and the EU conclude that they share the same destiny – face analogous challenges and strive to build a similar societal model. As it becomes more apparent that this is not the case, Britain – or rather England – may move towards an American free-market model. Continental Europe heralds a social welfare system, and history may well say that this engendered Brexit after futile efforts to reconcile the two models. It also explains why Scotland may eventually leave the UK and join the EU.

Technically most major issues can be solved. Britain’s future financial contribution, the City of London, access to each other markets, and free movement of people are all difficult, but either the costs and benefits are spread over a large number of people, or both sides are interested enough to limit negative repercussions. Such negotiations are doable.

The problems arise when negotiators move to complicated issues with direct and tangible consequences for a limited number of restive people, susceptible to protest and with political influence. [...]

The third scenario is defeat in the House of Commons. The hard-core Tory Brexiters can be expected to vote against just about everything bar a clean cut break, and the opposition has little reason to bail the prime minister out of trouble: Labor wants EU rules to protect workers, the Liberal Democrats are pro-EU, and the Scottish National Party sees Brexit as giving leverage for a second referendum about Scotland in the UK with a future prospect of joining the EU on its own terms. To strengthen her position, May called for a snap election on June 8 and lashed out at opponents to her Brexit policy in the parliament saying “the country is coming together but Westminster is not." Considering that 48 percent of the electorate voted for remain, such a tactic may backfire. It is by no means certain that the next parliament will be more amenable to her wishes than the current one.

A fourth scenario is that the European Parliament withhold its consent, required according to article 50. Some in the European Parliament may still be smarting from former British Prime Minister Margaret Thatcher’s assessment that it was “a Mickey Mouse parliament” – and seek to demonstrate how this powerful body in the EU’s legislative process is not ready to be steam-rolled. So far, few in Britain are taking the slightest interest in what might happen in the European Parliament – a dangerous neglect. 

The fifth scenario is that any of 27 national parliaments plus 13 local/regional parliaments stymie agreement. For many member states, Brexit is an important, but not a crucial issue. For some, it is an opportunity to seek concessions from Britain. Gibraltar and Spain’s long lasting efforts to regain sovereignty over the rock is just one example and strong political forces in Spain will not let Brexit, as an opportunity, pass without exploiting it. Earlier this year the regional parliament in Wallonia, part of Belgium, blocked a EU-Canada free trade agreement, asking for concessions.

Perhaps the only event that might tip the scale is some geopolitical earthquake – say, an abrupt and agonizing American withdrawal from Europe, transferring troops to Asia to confront North Korea combined with Russian belligerence in Central- and Eastern Europe, events in the Middle East/North Africa, or a new global financial crisis – driving home the message that the EU including Britain must close ranks to defend its common interests.

But even geopolitical disaster might not be enough.     

Full piece

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