The year 2016 gave the world one of the utmost theatrical and historic divorce cases of all times which was going to be even more scandalous than Brangelina’s on and off divorce case. “Brexit!” Not only has this word been one of the most searched on Google right after its foundation but it has also been the most misunderstood. This is courtesy of the complex developments and numerous (and often, vague) statements and press releases made by UK MPs and the European Union (EU) member countries. Like any other breaks up, Brexit too is complicated as both the sides are still not very sure with what they truly desire from the negotiations. Given the fact that it is first of its kind, the rules and regulations will be made as the process would follow. This editorial will be an attempt to provide a cheat sheet to keep you up to date with all the latest updates you need to know about Brexit.
On 23rd June 2016 UK held the historical referendum which would change the face of European politics. This vote marked the demise of a 44-year long union between the UK and the EU, resulting in the UK triggering Article 50 of the Lisbon Treaty (2009) which gives any Member State a right to decide to withdraw from the Union in accordance with its own constitutional requirements.
In order to understand what UK is hoping to gain one needs to remember why it conducted the referendum in the first place?
Reason 1- Politics within the Tory Party
The Conservative Party of the UK, which has given the country its current PM Theresa May, and her predecessor, David Cameron, has for decades been split down the middle on the issue of integration with the European Union. The story begins with the Black Wednesday of 1992. On that day, the European Exchange Rate Mechanism (ERM) collapsed. The ERM was an exchange rate system designed by the then European Communities to help countries of the soon to be Eurozone (i.e. those with their currency as the Euro), transition seamlessly into the adoption of the Euro while ensuring that other members of the European Communities which did not want to use the Euro as their currency at the time (such as UK and Denmark) could trade with each other and half stable currency exchange rates (watch video).
On that Wednesday morning of 1992, under then PM John Major (successor of Margret Thatcher, who had negotiated the deal for the ERM before stepping down in 1991), the United Kingdom saw the value of its currency plummet triggering a major monetary crisis across Europe. It was attributed to the failure of the Eurozone to function effectively as a monetary union. The Treasury of the UK lost more than 3bn pounds that day trying to keep the currency above disastrous levels. What followed was a catastrophic few years for the UK as interest rates rose and the economy collapsed. John Major would go on to lose his majority and subsequently in 1997- the election to Tony Blair- beginning a Labor Party stint in the UK for the next 13 years.
David Cameron & Norman Lomant, 1992
The ERM crisis broke the back of the Conservative Party. Hitherto united under the sharp leadership of Margret Thatcher and welcoming of some engagement with the EU, the party was split right in the middle with Euro-skeptics (BREXITeers) on the one side, and Euro-philes (Remainers) on the other. Ironically enough, the man who led the Remain campaign in 2016- then PM David Cameron- had a first row seat to the ERM disaster as he was an adviser to the then Chancellor of the Exchequer- Norman Lamont. On the other hand, Boris Johnson, arguably the lead BREXITeer- if you don’t count Nigel Farage (UKIP)- was a reporter for a newspaper based at the Brussels Headquarters of the EU at the time. Aside from the ironies, post the ERM disaster, the conservative party never won an election until David Cameron came, precisely because of its internal divisions.
How did David Cameron accomplish what others could not? He was lucky, one could say. His first government 2010-2015, was a coalition with the Liberal Democratic Party, a strongly pro-EU party led by Nick Clegg and therefore, Cameron could use power as a bait for his Euroskeptic MPs to support him. After 2015, however, once he got a majority of his own, his MPs forced Cameron to go to the EU and renegotiate the Lisbon Treaty, and put the result to a referendum- what we now know as the BREXIT referendum. Pressure increased on Cameron when the UKIP of Nigel Farage, a nationalist party began driving the narrative on immigration and pulling away votes from the Conservatives.
Reason 2- Jobs, Immigration and the National Health Service
Like most Western economies, despite steady growth from 2000-07 and thereafter from 2012-present, the UK has faced job losses in traditional sectors owing to automation and cheap labour in emerging economies like China and India. Further, the National Health Service, UK’s government funded healthcare system accessible by most residents, was in shambles. Shoddy government hospitals, lack of staff, all were results of a spending squeeze initiated by the Conservatives in 2010 and the inefficiencies that crept in during the Gordon Brown Administration (Labour, 2007-10). This impacted the British population almost universally. Therefore, much like Trump did in the United States, BREXITeers were able to weave a narrative blaming the problems on easy immigration from the EU and the money sent to the organization. Both these factors were grossly overestimated. One of the most well-known claim being that of the NHS bus which claimed a wildly exaggerated figure of 350bn pounds a week being sent to the EU and said that it should instead be spent on the NHS.
Reason 3- Disorganized Labor
Jeremy Corbyn at a BREXIT rally, 2016
The Labor party under its newly elected leader Jeremy Corbyn was performing worse than the conservatives did during 1997-2010. There was severe divide in the party because the MPs loathed Corbyn’s election primarily because of his pacifist and socialist leanings. However, Corbyn commanded the support of a large mass of the labor party workers and was able to secure the leadership of his party. This however was not enough, a divided Labor party also saw MPs breaking the ranks and supporting BREXIT. Deteriorating public perception for Corbyn meant that he could be of little help to Cameron’s remain campaign.
PM Theresa May on the night of election results, 2017
So BREXIT happened, Cameron resigned, and Theresa May became Prime Minister. Finding her proposals facing headwinds in the House of Lords, and thinking she could capitalize on the dismal poll numbers of the Labor party, May reneged on her promise of no early election and in 2017, jumped into an election. To everyone’s surprise, Jeremy Corbyn built momentum around his campaign on promises of free tuition at colleges and higher taxes for the rich. He did not win the elections but was successful in making May -who before the election commanded a majority- dependent on an ultra-conservative Democratic Unionist Party of Northern Ireland for running her new government. This new dispensation, with Boris Johnson, a man who has a probably mocked almost every world leader from President Obama to Chancellor Merkel, as the Foreign Secretary and a PM in waiting.
Now to the negotiations
It is usually seen that during any divorce/breakups both sides tend to be apprehensive with what they say out in public. The UK has been no different; Prime Minister Theresa May has often dodged questions from media entirely overlooking some of the very modest straightforward questions. The UK has constantly been uncertain about what it exactly wants. Prime Minister Theresa May has often made vague statements both in Parliament and outside about a ‘Hard BREXIT’, a ‘Soft BREXIT’ and “no deal is better than a bad deal”, without explaining what any of these entailed.
The major problem is that both UK and EU are aiming for very different goals. UK wants to have a soft Brexit for itself and hopes to maintain and enjoy similar benefits to what it already has with EU but with greater autonomy over its own land and laws. This is unacceptable for the EU as it would set off a precedent where a number of countries would want to break away in hope of a deal that grants them control over flow of labour but allows free flow of trade and capital. This would undermine the very foundation of the EU which is built on the four freedoms- that is the free movement of goods, capital, services and labor. Therefore, the negotiators, Michel Barnier and his team from the EU and David Davis (Secretary of State for Exiting the EU) along with Boris Johnson (Foreign Secretary), find themselves in an impossible position.
The EU would certainly want close relationship with the UK but at the same time, it must make sure that it makes an example out of the UK for ensuring that other countries like Greece and Spain do not begin considering their own exits. In addition, the EU is worried that were the UK allowed favorable market access, it would turn itself into a tax haven with very low tax rates and gain an unfair competitive edge.
In addition, each stakeholder involved in Brexit negotiations has a different set of problems and challenges to resolve. For instance Germany, is concerned about the spillover effect of Brexit on the German economy .The reason being that British taxpayers have stopped EU funding in German projects.
For the UK, the most critical is Northern Ireland. The island that is home to the two countries of Northern Ireland and the Republic of Ireland was witness to large scale bloodshed and instability throughout the 1980s and 90s over its political relationship with the UK and associated religious undertones. The Republic of Ireland intended to be a sovereign outside the control of the UK, while the Northern tip of the island wanted to be within the UK. This inflamed into political violence that in the 1980s led to the rise of the Irish Republican Army.
This organization was considered a terrorist organization by many. It was responsible for the death of Airey Neave, a close advisor of Margret Thatcher killed in a car bomb. The IRA even attempted an attack on the life of the then PM Margret Thatcher in the famous Brighton Bombing incident where her hotel was bombed. These tensions were eased by Tony Blair who negotiated, in the late 1990s, the Good Friday Agreement between all sides to bring peace.
The signing of the Good Friday Agreement
The agreement made use of the border freedom of the EU. With BREXIT, the border between Northern Ireland and Irish Republic would have to be closed, thereby threatening a return to the conflict. There cannot be a bilateral deal between UK and the Republic of Ireland on the matter either as that would be in contravention of EU’s treaty which requires collective decision making on borders with respect to non-members. Ireland being a member of EU would have to abide by EU laws, BREXIT or no BREXIT. Therefore, a resolution of the border problem, which has not been substantially addressed till now, is a major issue.
A third issue is that of ‘The Transition Period’. It is a mechanism by which Britain would exit the EU in a phased manner over a period of time, instead of an abrupt exit in March 2019. This is critical, as it would help British companies adjust to the far-reaching changes in compliance and regulatory norms. These norms apply on everything from pillow covers to aircrafts and from cars to condoms.
What happens to British and EU citizens living legally on the other side of the border with a job and family?
There is an implicit understanding, although no agreement has been reached, that such people will get reciprocal citizen rights at their own instance. However, net migration from EU to UK (i.e. people entering UK from EU- people leaving UK to go to EU) is positive. This means more Europeans might end up settling in UK than the other way round. This would also ignite tempers of those who had centered their BREXIT campaign on immigration.
What happens if the talks fail?
The UK falls off a cliffhanger. Seriously, on the 29th of March, 2019, if the UK does not have a deal with the EU of any kind, there will be an automatic turn to WTO rules which have taxes as high as 45% in some cases. The borders would close down, people waking up on the 1st of April in Northern Ireland would not be able to cross over to Ireland to work of buy groceries. All in all, overnight, the UK would turn into an island surrounded by walls.
Donald Trump was UK’s hope for a leverage after Barack Obama in 2016 said that the UK would go at the back of the line for trade deals. The UK was hoping that it would be able to use its special relationship with America to secure, at the bare minimum, positive comments about a trade deal with the US to buttress its position vis-à-vis the EU. However, contrary to expectations PM May and President Trump have not been able to develop a good relationship, as evidenced by one of Mr. Trump’s tweets where he asked the PM to focus on ‘radical Islamic terror in UK’.
The BREXIT negotiations will probably go down as the toughest negotiations of the 21st century. Breaking a bond established over 40 years requires tedious efforts to untangle the economic, social, political and legal interlinkages. The government of UK intends to bring a Great Repeal Bill, but drafting it with complete knowledge of the post 2019 arrangements is itself difficult, one can only wonder what the process would be like without any substantial knowledge of the same. What happens in these negotiations will significantly impact the world economy. As a group, the EU (with the UK) is almost as big an economy as the United States with a size of approximately $17.9trn (GDP Nominal, 2017). The Euro is the world’s second most traded currency. The UK is a former world superpower, a member of the UN Security Council, a nuclear weapons state and commands significant cultural clout owing to the application of its system of law and the English language in a large part of the world. This alone is a cause of worry and makes the BREXIT negotiations worth following.
About the Authors
Tarana Faroqi is currently a second year Masters in International Affairs student at the Graduate Institute of International and Development Studies, Geneva. Tarana holds a graduate degree in Journalism and mass communication from Lady Shri Ram College for women, University of Delhi and a Post graduate diploma in conflict transformation and peace building.She has worked previously with MSF India, Hindustan Times, The Indian express, and The South Asian Human Rights Documentation Center.
Prashant Khurana is a student of Law at the Faculty of Law, Delhi University. He holds a Bachelor’s degree in History from Hansraj College, Delhi University. Prashant is an accomplished debater, and an active participant and organiser of Model United Nations Conferences and was recently invited as a Chairperson at the University of Kent, United Kingdom for their MUN conference. He has appeared as a guest panellist on Headlines Today (presently, India Today) News Channel and has also interviewed personalities such as Mr. Mani Shankar Aiyar, Dr. Sambit Patra, the Ambassador of Canada to India, among others.
Palakh Dutta is a Doctoral Research student at the University of Westminster. An extremely enterprising student, Palakh has been responsible for the initiation and management of several social projects in the UK and outside. She has been vocal in espousing important social causes such as women's health and literacy and is an intern at the Democratic Education Network. Palakh also holds a graduate degree in History from Hansraj College, Delhi University.