Brexit: "magical thinking"

26/08/2017

Gradually, with the help of sources in Brussels, the vacuity of the Government's position on the Irish border question is beginning to dawn on the media or, at least, the Guardian).

This paper has the UK Government accused of "magical thinking" over its plans, or the lack of them, on the border issue, with its call for "flexible solutions" leaving EU officials "rolling their eyes" in despair, apparently at the lack of a sensible solution being offered.

Published elsewhere, and not directly related to the Irish issue is as neat a summary of the UK position as I have seen.

Our negotiators, it says, just can't stop telling us that if we only keep on chanting "no deal is better than a bad deal" for long enough, the EU will eventually crack. Why will it crack? Because EU exporters, above all the German car-industry will, perhaps at the last minute, force the German government to require the EU to do Britain’s bidding. The narrative then continues:

Not everyone is so convinced. Analysts at Bank of America Merrill Lynch, for instance, who report: "We are often confronted with the view that Germany’s stance... will have to soften because the UK market is too important for German exporters – car makers in particular. We are sceptical". They are also logical: "If Germany had to choose between protecting a market, which absorbs 50 percent of its exports (i.e., the EUxUK) and is thereby a 6.7 times bigger export market than the UK, it seems obvious where the long-term strategic economics preferences may be".

But Liam Fox & Co. simply know, in their hearts, that the EU is a wholly-owned division of Germany and that Germany, despite being so logically mighty – no, because it is so logically mighty! – can always be outplayed by plucky Brits.

Because we British do not work on wretched Germanic logic. If the Leave narrative has changed from "there will be no Brexit downside" to "OK, so now we need the Dunkirk spirit", so much the better! Did we vote Leave out of any short-term economic calculation? No! We acted from a noble desire reclaim our ancient sovereignty, and in glorious trust that things will then naturally, somehow, start getting better, by, say 2030. The Germans, on the other hand being naturally calculating, rational, but fatally unimaginative, will go for the short-term bottom line.

There is no dispute that this is something of a pastiche, verging on the parodic, but the Government position is beyond logic, having solidified into a belief system that defies all rationality.

There can also be no dispute that the Government is in a very difficult position. Anyone who is being halfway honest knows that a hard border between the North and the Irish Republic simply cannot work. It didn't work during the Troubles, with all the military resources thrown at it, and it isn't going to work now.

Something of the prevailing sentiment in Ireland came from an Irish MP, Declan Breathnach who remarked that, "It will take four years to fix Big Ben yet Britain thinks it can have a unique Brexit in 18 months".

"Not alone do they believe in the above, and not alone do they want their cake and eat it they think that they have the only recipe for that cake, want to produce the ingredient of their own , prepare and bake it in their own bakery and expect the 27 other EU countries to consume it or take the crumbs from their table", he says.

And it isn't just a matter of customs. The sanitary and phytosanitary checks that must be carried out at the external border of the EU are not part of the customs regime, and there is not the slightest possibility that physical inspections can be avoided under any normal regime.

Then there is the matter of VAT. Assuming we keep this system in place, UK exporters will we able to recover their VAT on goods shipped to Ireland. But with a highly porous border, those same goods can slip back into the North only to become a vehicle for another tranche of VAT repayments. This is the so-called "carousel fraud" and Brexit, potentially, provides a whole new money-making opportunity.

If there cannot be a hard border in between Ireland and Northern Ireland, that only leaves two options. It be positioned either between Ireland and the rest of the EU, bringing the Republic into the UK's customs area, or the border can be moved to the Irish Sea, between Northern Ireland and Great Britain, making the island of Ireland a single administrative area, working under EU law.

That would mean that any goods produced in Great Britain would have to undergo border checks on entry anywhere on the island, and any external checks which we applied to EU traffic would have to apply when goods arrived from Northern Ireland to the mainland.

Politically, as we have already observed, either option is difficult, if not impossible, which is why the UK government had gone for the "invisible border" – something so unrealistic that it cannot possibly survive as a serious proposition. Hence do we get the charge of "magical thinking.

But, from Brussels, suspicions are emerging that this lack of realism on the part of the UK is intentional. "If you look at the Irish paper, it is very good on aspirations but it is short on workable solutions", says an EU diplomat, who then expresses the view that the British are trying to push responsibility for solving the Irish issue back on to them.

To Brussels then attaches the opprobrium when it sets out politically untenable options, leaving to UK free to criticise and, if it deems it tactically advantageous, to walk out of the talks and blame the "colleagues" for not coming up with anything better.

But, if this gamesmanship plays well with a domestic audience, it has little appeal on the other side of the Channel. "The decision to leave the EU is the UK's decision. It was not the decision of Ireland and it was not the decision of the EU, so the UK has to take responsibility for the impact of that. And in that respect the uniqueness and the creativity, that cannot be only a burden on the EU side", an official says.

And there is no doubt that Brussels can hold the line on this as Barnier holds all the cards. It is on his recommendation that the European Council will decide whether there has been "sufficient progress" for the talks to move on to trade, and without a firm, realistic proposal for Ireland on the table, the talks will be stalled.

That still leave the possibility of the UK picking up the Efta/EEA option which keeps it in the Single Market and avoids most of the border problems we would otherwise experience. And, while the experience of Norway and Sweden shows that border controls cannot be entirely eliminated, the sort of soft border arrangements they have would be tolerable.

The thing is that such an arrangement is for the UK to propose. It cannot come from the EU as Efta membership is not within the gift of the Commission to offer. The UK must itself make contact with the four Efta states and then float the suggestion of UK membership.

Failing that, we learn that the EU will publish a position paper of its own on Ireland, but that will not come until early September. Most likely, its primary purpose will be to inform the October European Council, and it will not be doing us any favours – especially if it reiterates the position that it is up to the UK to show "sufficient progress" before the talks can move on.

Nor is there any likelihood that the UK can drive a wedge between the Member States and the Commission. We are told that yesterday's report in The Sun indicating that Davis is to go on the offensive, attacking Brussels for being "stubborn and unreasonable" has gone down badly.

If anything, so transparent an attempt to split the "enemy forces" is likely to strengthen the determination of the "colleagues" to maintain a common front, leaving Davis no room to manoeuvre. Like as not, he is going to come back from Brussels as empty-handed as he arrives. With nothing credible to offer, he will get nothing credible in return.

And nor can Davis leave the issue to his minions. In the published agenda for the three-day talks, starting on the Bank Holiday Monday, "issues related to Northern Ireland … will be addressed by the Coordinators" – i.e., Barnier and Davis.

If Davis is going to charge Barnier with being "stubborn and unreasonable", he will have to do it to his face. Even then, he will still have to come up with some sensible ideas to break the logjam. And if the cupboard is bare, it isn't only the poor dog that will get none.