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A Marriage in Chaos

November 23, 2018

 

The love between the United Kingdom and the European Union has always been a troubled love, as can be inferred for instance by the fact that France vetoed (not once, but twice) UK’s application in 1961 and 1963; yet, at last, the romance began. On 1 January 1973, an institutional marriage was celebrated between the United Kingdom and the European Economic Community (EEC), which would then become what we now know as the EU. Today, after 15 years, the romance is coming to an end. In June 2016, a referendum was held, and the UK voted to leave the EU. Brexiteers won, by a nose (51.9% against 48,1%), but they still won. As a result, since then, the government has been struggling to negotiate a “divorce” settlement and transition deal. To make things worse, after the referendum David Cameron resigned as Prime Minister and was replaced by Theresa May. The negotiations have been fraught, due to both the sensitive subject and the climate of political instability, so this article tries to untangle the matter.

 

Theresa May is fighting a battle on two fronts: one abroad, in Brussels, and one at home. On the foreign front, the bloc of EU countries demonstrated an unexpected level of cohesion, making it harder for the UK to take a strong stance in the negotiations. On the domestic front, a civil war is taking place, and May is juggling between overt hostility from the electorate and “friendly fire” within her own political party. One year after the referendum, early elections were held, and the Tories blatantly lost a consistent base of their electorate. Prime Minister Theresa May was indeed forced to form a coalition government with the Democratic Unionist Party (DUP) of Northern Ireland.

 

This has severely weakened the Prime Minister’s leadership at home. In July 2018, two crucial political figures resigned, to manifest their discontent with the soft stance that the Prime Minister was taking in negotiating the Brexit deal: David Davis, the Secretary of State for Exiting the EU, and Boris Johnson, the Foreign Minister. Davis was then replaced by Dominic Raab, notoriously Eurosceptic. More recently, on October 20th, thousands of people have joined a protest in London, calling for a referendum on the final Brexit deal. In stark contrast with the widespread climate of Euroscepticism, this human tide converged in London to protest against the fact that a fragmented and discredited government, such is that of Westminster at present, is not suited to decide on the country’s future.

 

Signing a Brexit deal is not just hard because of the climate of political instability that the UK is in, which makes it hard to agree on a common strategy, but also because of its profound political and economic consequences. In the attempt to facilitate negotiations, two separate deals are being discussed: the withdrawal agreement, known as the “divorce deal”, which will have to be ratified before Halloween 2019 (October 31, 2019) by the Council and the European Parliament (art. 50 (2) of Treaty of European Union). And the free trade agreement, or Chequers Deal, which will have to be signed before December 2020. In the divorce deal, the UK and the EU are negotiating the terms of the UK’s withdrawal from the EU; in the Chequers Deal, the UK and the EU are negotiating the relationship that the UK will have with the EU in the future. After Brexit, there will be a transition period that will last 21 months, during which the EU and the UK will negotiate the terms of their future relationship. The transition period gives the parties more time, so as to make it more likely that they negotiate a fair deal; yet, it comes at a cost. As a matter of fact, during the transition period the UK has to comply with the EU laws (meet the budgetary constraints, contribute to the EU budget, guarantee the freedom of movement, remain under the authority of the European Court of Justice, etc.) but it no longer has the right to vote. To some extent, the transition period will be a temporary limitation of the full-fledged British sovereignty.

 

According to the EU’s guidelines for the Brexit negotiations, an agreement has to be found on 3 issues of paramount importance, prior to any discussion about future trade relations:

  1. The Reste à Liquider (RAL) - The amount of money that the UK has to pay to cover the financial obligations it has signed up to as a member state. It has been estimated that London will pay around 40-50 billion euro; most of it will likely be paid before 2025, whilst the rest will be paid in smaller installments, until 2064.

  2. Citizens' Rights - The rights that EU citizens living in the UK (almost 4 million) will be entitled to after Brexit. As of now, it seems that the parties agreed on awarding the permanent residency status to all EU citizens who have been living in the UK for more than 5 years.

  3. The issue of the Irish border - This is a controversial matter for many reasons. Firstly, because of the historical and violent divide between unionists and nationalists in Northern Ireland. The former advocate for stronger ties with Great Britain, while the latter advocate for Ireland’s unification as an independent entity, separate from Great Britain. One step towards a peaceful coexistence was made when both the UK and the Republic of Ireland joined the EU in 1973. To a certain extent, both unionists and nationalists benefited from this, as it aligned the interests of the UK with those of the Republic of Ireland, thus making it seem as if the entire island was actually united. Nonetheless, a milestone in the Northern Ireland peace process was achieved in 1998, with the Good Friday Agreement, which put an end to decades of violence. In light of this, both EU and UK politicians fear that restoring a border between Northern Ireland and the Republic of Ireland would reignite, or even exacerbate, the conflicts between unionists and nationalists.

 

 

85% of the issues under analysis in the Brexit deal have been agreed upon; yet, there still are several sticking points, most notably the issues of the Irish border. This is a vexata quaestio, which is dangerously tipping the balance towards a hard Brexit scenario. The UK and the EU are trying to find a solution, which would not jeopardize the stability obtained after the Good Friday Agreement. But the impasse over the Irish border seems to endure.  

 

Let’s succinctly recapitulate the UK’s and EU’s stance on the matter, while paying attention to the similarities as well as the points of divergence between the two. Both parties agree on the importance of a “backstop solution”, which, upholding the spirit of the Good Friday Agreement, would prevent any hard border between Northern Ireland and the Republic of Ireland. Moreover, both parties agree that the backstop solution is an extrema ratio, a solution of last resort, to be adopted only if the two primary options cannot be agreed by the end of transition period.  One option is a comprehensive free trade agreement, based on existing models such as those that the EU signed with Norway or Switzerland; such option would entail UK’s membership to the European Economic Area, European Free Trade Association and a customs union, as well as averting a hard border in the island of Ireland. Another option would be a customized agreement between the EU and the UK, which would prohibit the construction of a hard border between Northern Ireland and the Republic of Ireland.

 

 

The EU categorically requires that an all-whether backstop solution is included in the divorce deal; yet, the two divorcees have different views on how such a backstop should be legally designed.

 

The EU’s backstop proposal envisages Northern Ireland in the single market and the customs union while the rest of the UK withdraws. This solution has 2 implications. For one, in order to avoid hard borders in the island of Ireland, border checks would have to be made on trade between the province and the British mainland in the British mainland. And secondly, Northern Ireland would be excluded from future trade deals signed by the British government. The Democratic Unionist Party (DUP) strongly rejected this proposal, by arguing that treating Northern Ireland differently from the rest of the UK would give too much leverage to the nationalists. As an incidental observation, let’s not forget that, in line with the Good Friday Agreements, citizens from Northern Ireland are allowed to hold a referendum to reunify with the Republic of Ireland. Given its strong reliance on the DUP for her political stability, May rejected the EU’s solution.

 

Her counter-proposal entails a common rulebook, which would keep the whole UK in the single market and the customs union, until technological progress allows to “dematerialize” physical borders by carrying out border controls electronically. However, Chief Negotiator Michel Barnier announced that the EU will not accept the notion of a time-limit on a backstop, as this defeats the very purpose of using the backstop proposal as some kind of insurance policy against hard borders on the island.

 

To conclude, these are the 3 most feasible scenarios:

  1. An agreement is found, and a deal is sent for ratification to the European and Westminster parliaments before March 2019. This is the least feasible scenario, as many issues are yet to be settled and there is not enough time to do so.

  2. An agreement is found, and a deal is sent for ratification to the European and Westminster parliaments before the end of the transition period.

  3. No deal can be reached (hard Brexit). There are two main reasons why there is a growing risk that hard Brexit will take place. Firstly, the deal may not be ratified by the UK government or the EU Parliament. Indeed, let’s not forget that both sides need parliamentary ratification for the deal, which is a lengthy process. This is due to the fact that, in the Brexit negotiations, the UK is represented by the British government but also by the devolved parliaments in Scotland, Wales, and Northern Ireland. Some of them are mostly Brexiters, whilst others are mostly unhappy with the outcome of the 2016 referendum and wish to maintain strong ties with the EU; hence, it is extremely difficult to agree on a common strategy. As for the EU, the Brexit deal must be agreed by at least 20 of the 27 member states, as well as by the European Parliament. Some parts of the deal may even require a wider consensus.

 

 

A second reason why there is a growing risk that hard Brexit will take place is that Britain may reject the backstop proposal, which, according to the EU, is a sine qua non to avoid hard Brexit.

 

Hard Brexit would imply that London would be subjected to the rules and tariffs that are agreed upon within the WTO, with unsettling consequences for the British economy.

 

In the aftermath of the referendum, Brexiters were extremely proud of the outcome, as can be inferred from their slogan “no deal is better than a bad deal”. Nonetheless, considering the scenarios outlined above, only time will tell whether Brexit will turn into a Pyrrhic victory for the UK.

 

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Some changes have been made to keep this article up to date. 

About the Author

​​Born and raised in the small island of Sardinia, Chiara holds a Bachelor in International Economics and Management from Bocconi University and an MSc in Social Policy and Development from the LSE. Her research interests and past experience revolve around migration, gender, social well being, and environmental health. A voracious reader, tenacious half-marathon runner, and with a forma mentis that is pillared on insatiable curiosity and critical thinking, she has a hankering for writing.

 

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