Brexit Phase 2 Negotiations Far Easier Than Most Think

Mish

With a majority of 80, Johnson can go for a hard deal or a soft deal. Either way, the EU has to agree. Will it be easy?

Brexit Exit - What's Ahead?

The Conversation asks What kind of Brexit Will Britain Now ‘Get Done’.

Beyond his signature policy on Brexit, it is difficult to say with certainty what Johnson will offer. More than any other recent politician, Johnson’s rise to the top of British politics was fuelled by personal ambition, not ideology. His gaffes, his colourful (sometimes insensitive) language and his chaotic personal life have all drawn attention.

Johnson’s surfeit of ambition has also led to him being seen as untrustworthy and unprincipled, and regularly denounced by opponents as a liar.

Now that he is back in office with a majority, Johnson will have the numbers in parliament to pursue his own policy direction. The details of that direction are unclear, with few clues available in the Conservatives’ safety-first manifesto.

“Get Brexit done” gave Johnson a mission, a goal to achieve, a rallying cry to mobilise supporters to win first the Tory leadership and then the general election. But with the premiership secured and Brexit done, what does Johnson want to happen next?

Die in a Ditch, Yet Again

The New York Times says "Few expect the negotiations on the country’s future trade and security relationship with the bloc to be quick or easy."

Will this be the Mr. Johnson who vowed once “to die in a ditch” or the Mr. Johnson who reached his draft Brexit deal with Brussels last October by abandoning his red lines over Northern Ireland?

Mr. Johnson may favor a hard deadline, but that will put Britain, which will soon be negotiating from outside rather than inside the European Union, into a weaker position, argued Fabian Zuleeg, head of the European Policy Center, a research institution based in Brussels. The risk is that a quick trade negotiation, considered almost a contradiction in terms by trade experts, could fail, bringing Britain and Brussels back to the prospect of a “no deal” Brexit.

Consensus Nonsense

Those articles represent the overwhelming consensus nonsense.

Nigel Farage, and others in the Brexit Party also fear the worst.

The Brexit party expects Johnson will give up fishing rights and keep the UK in a customs Union for a decade.

I suggest there are two governing political rules that negate both of those ideas.

Mish's Two Rules of Politics

  1. Politicians are liars and cannot be trusted.
  2. Politicians will actually do what they say if they believe it is in their best interest to do so.

Those two rules seem contradictory, but the key idea is rule two trumps rule one.

Let's apply those rules in a number of areas.

Fishing Policy

No doubt the EU will want to include fishing rights in the negotiations. Farage knows this and he is suspicious. He shouldn't be.

Why? It's clear rule two applies.

Why does rule two apply? Scotland

The SNP wants to break the UK and join the EU. But Scotland also wants control over fishing policy, something the EU would never grant.

As long as Johnson does not give up fishing rights, he can drive a huge wedge right through Nicola Sturgeon's platform.

Conclusion: There is no way in hell Johnson will give up fishing rights.

Customs Union Extension

Johnson said he will reach a deal with the EU in a year. That's ambitious but possible.

The Brexit Party and others will point to Johnson throwing DUP under the bus and "die in a ditch".

Ho. Hum.

It was to Johnson's advantage to lie on those. So he did. Rule 1 applied.

But now rule 2 applies.

Perhaps Johnson goes for some small 3- to 6-month extension, but outside of that it would be politically damaging to reverse course.

So, he won't.

Trade Deal

Fabian Zuleeg, head of the European Policy Center, fears a “no deal” Brexit.

That's absurd because we are 100% guaranteed to have a deal. But let's assume he means that further negotiations collapse and there is not even a basic WTO agreement.

That is what Farage wants but no one else.

In this case, rule 2 applies. Expect both the UK and EU to act in their best interests. There will be red lines, but it is in the interests of both sides to reach a deal.

Ironically, it is likely to be the EU, not Johnson breaking the most positions.

Johnson may have to give in on some freedom of movement issues, but if so, I suspect whatever he negotiates to be in the UK's best interests.

Deal In 12 Months?

Yes, or 16, or 18. What does it matter?

The WTO allows for "temporary" deals with up to 10 years to finalize them.

So, no, there will not be a final deal in 18 months. So what? There will be a basic deal in that time frame, and possibly within a year.

And as long as Johnson does not extend the customs union beyond 3 months, he will have fulfilled his mission even if some nitpickers call him a liar for it.

There may be a couple of small points Farage will moan about but it won't be anything major on fishing policy, the European Court of Justice (ECJ), or a long-term customs union extension.

What About Ireland?

Johnson was asked in one of the debates if the union was more important than Brexit.

I was surprised by the speed of his lie. He instantaneously replied something along the lines of "absolutely".

What a lie.

Political forces are now in play for the unification of Ireland. The deal that Johnson worked out with Leo Varadkar, Ireland's Taoiseach (Prime Minister), guaranteed further pressure in Irish unification.

What happened?

  1. Johnson made Varadkar happy enough for the Taoiseach to back Johnson's deal.
  2. In turn, the EU did not want to throw Ireland under the bus.

Rule one applied. It was in Johnson's best interest to lie. So he did. The key point however, is point number two.

July 10 Flashback

I made a statement many times regarding "the bus", and most people thought I was nuts.

For one key example, please recall my July 10 post Today's Brexit Non-News: The “Precious” Irish Backstop Must be Defended.

"Ursula von der Leyen, the European Commission President candidate, says she will not reopen Brexit talks."

I commented "The Guardian story is either non-news or fake news."

Simply put, I accurately called the headline story a lie. I was proven correct.

Here were the reasons I listed the EU would negotiate (emphasis now added).

  1. Ireland will be in a world of hurt. The estimated first-year to Irish GDP is 4.1%. It would be unlike the EU to purposely throw another EU member under the bus.
  2. European exports to the UK will crash.
  3. Germany is already smarting from a global slowdown. Merkel is no longer call the shots, but she is open to talks.
  4. If the EU will not budge at all, Johnson may apply more pressure by saying he will not even pay the breakup fee. That extra money the EU desperately needs for its budget or it will have to raise taxes or cut expense.

Saying vs Doing (What I said then)

We know what politicians say they will do, but we do not know what they will really do when the time comes. The EU never believed May would walk. In about one month the EU is likely to find out Johnson really intends to walk. At that point, the ballgame changes.

Ballgame Changed

Despite enormous pressure from UK parliament Remainers, Johnson managed to change the ballgame.

Very few believed he would succeed. I was one of those few.

It came down to one thing: It would be unlike the EU to purposely throw another EU member under the bus.

Once Johnson was willing to throw DUP under the bus, the ballgame changed for the EU as well.

Lies Exposed

  1. EU will not reopen the Withdrawal Agreement.
  2. EU will no reopen the Political Declaration.
  3. Johnson: The Union is more important than Brexit.

Proper Application of the Rules

To figure out what is most likely from here, just apply my rules.

  1. Politicians are liars and cannot be trusted.
  2. Politicians will actually do what they say if they believe it is in their best interest to do so.

The first step in figuring out what politicians are most likely to do, is to figure out if they really believe what they say is in their best interest.

If you conclude otherwise, then by all means, fall back on rule number one.

Sometimes such analysis is difficult. In this case, I believe it's pretty easy, especially regarding fishing rights.

Another Simple Rule

We are where we a based on another simple rule: "The EU will not purposely throw another EU member under the bus."

The EU has many rules, but it will bend or break them as necessary to accommodate that rule if possible.

With that in mind, note that Germany will suffer the most if the UK decides to walk.

Thus, I fully expect the EU to accommodate Germany in the trade discussions. The most likely way is a basic agreement within a year or so that all sides can live with.

Both sides want to put Brexit aside as quickly as possible. So, they will.

It cannot be totally one-sided so Johnson will have to give in on some minor face-saving points.

See how easy this is? Just apply the rules.

The hard part, of course, is figuring out what the rules are. Hopefully, this post helps.

Mike "Mish" Shedlock

Comments (67)
Greggg
Greggg

Brexit has been made into a narrative. Brexit will never happen in any meaningful way.

No. 1-19
themonosynaptic
themonosynaptic

"Once Johnson was willing to throw DUP under the bus, the ballgame changed for the EU as well."

Johnson: I'll give you $100 EU: No Johnson: OK, I'll give you $150 then EU: OK

Johnson capitulating and the EU accepting a giveaway does not make the EU inconsistent, it makes then pragmatic.

Brexit means different things to an anti-globalist motivated voter in the North of England than a home county loudmouth in the 19th hole. Johnson has to deliver one Brexit that pleases both of them. Should be interesting to watch. The EU is expecting him to discover reality, but it will take time, especially as he is confusing a 1% increase in voter share and a win over the most unelectable opposition leader since Michael Foot (and I think Foot would have given Johnson a better run than Corbyn) with a "mandate". Thus the EU are already talking about asking the U.K. for an extension beyond December 2020.

To win the election Johnson swung sharply to the left, promising a $13.20 minimum wage (at PPP this is well over the U.S. $15/hour that the right wing here is claiming will be the EOTWAWKI). He also promised to spend $50B on the NHS and another $100B on infrastructure, eliminating austerity and exploding the deficit and national debt. More Johnson promises include net zero carbon by 2050 and no tax cuts.

Mish has decided that Johnson is just lying to the electorate, and he is right - Johnson lies with the same recklessness as Trump. This may not work as well in the U.K. as it does with the conspiracy theory riddled electorate in the U.S.

Farage is rightfully concerned with the size of the Conservative win. It not only means that the DUP have no veto, but also the most extreme cadre of Brexiteers in the Tory party. Johnson came to the Brexit side late in the game when he concluded that it was the best vehicle for his ambition. His ambition is to be not only Prime Minister, but the next Winston Churchill. This type of ambition will allow him to justify just about any action he deems expedient.

Anybody still think we can understand Johnson, British Politics, and the future using two simple rules?

Brexitologist
Brexitologist

The spanking new Brexit negotiation process that has just started now finds the UK with huge leverage it didn´t have before the Dec. 12. election.

" Get Brexit Done " may mean the UK gets to keep EU gold vaulted at the BoE.

Push will get to shove and Brexit negotiations will soon turn aggressive with a real-life possibility of No Deal.

So many EU countries could / should want to repatriate their BoE vaulted gold… just in case.

But the UK will surely ´weaponize´ the BoE gold in custody and the BoE´s gold repatriation policy.

FloydVanPeter
FloydVanPeter

Delays is a valid tactic to accomplish remain.

wootendw
wootendw

"It cannot be totally one-sided so Johnson will have to give in on some minor face-saving points."

Money to bail out Deutsche Bank.

HenryV
HenryV

BoJo is now in power for five, and very likely ten years as its doubtful Labour can make an effective comeback from such a point of weakness. He can do just what the hell he likes and take as long (or as short) as he wants. This will all be history by the time it really matters. Nobody knows his agenda at the moment, but if he wants to be seen as the great mover and shaker of the 21st Century, then he will want to get a resolution to the Brexit dilemma sorted pdq and then move on to juicier worldly matters that he can present to the electorate as the new Churchill. As I have said elsewhere, its a great pity that there was no scrutiny of ‘let’s get Brexit done’ during the election campaign, but I cannot believe that a quick solution, or indeed ANY solution which embraces the machinations of the EU, will be to his or indeed Britains benefit. Unless BoJo has the INTENT to fail the talks and tell the EU to go to hell by this time next year, then Britain will end up being sold down the river. And that might well cloud his greater ambitions.

HenryV
HenryV

In other words, my guess is that he will present a bare bones deal that the back room boys can work on over time with a ‘take it or leave it’ attitude, basically because he’s got bigger fish to fry. And if they (the EU) don’t like it, then mesdames et messieurs, they can lump it.

Casual_Observer
Casual_Observer

Still a non-story Mish. UK never joined the currency union. Good for hits on your blog I guess but the UK is less relevant economically in the era of globalization.

Herkie
Herkie

Regarding Prime Minister Johnson's personal stakes going forward, and I think it is time to stop looking back with the Get Brexit Done pre-election mindset because that is over, Johnson is now PM in his own right and no longer a caretaker of the May government, everything changed on the 12th, CNBC actually has a pretty good opinion piece about him:

Boris Johnson will make history if he can save the UK from division and achieve these 5 goals by Fredrick Kempe

I cannot add to this as opinion, but it has many seeds of thought in it that are when taken as a whole an admission that the EU is in a trap. That Johnson really holds all the cards when it comes to negotiations, and I see that as true because the EU would have to hurt itself in order to hurt him and the UK.

I think that Johnson would like to see the Union held together but that he sees that as secondary to transforming England which is his number one priority, if the Union were to break up then the blame for that would squarely land on the Scots not on Johnson. It will be seen as their disloyalty to the crown in favor of the "free stuff" membership of the EU, rather than as Johnson sacrificing the UK for his own fame and goals.

Ireland has always been underestimated as the linchpin to all that is going on here. On the 12th we saw a vote in Ulster that once and for all shows that the Unionists are no longer the majority there. It is now, like it or not, inevitable that the island of Ireland will be unified under the Irish flag for the first time in 900 years. Both Varadkar and Johnson see this inevitability and Varadkar in particular wants to have his name on that historic event, without the reopening of old wounds and sectarian violence. So, he is willing to let that process take it's time and for the reality to sink in for the Ulster Unionists.

If Ireland reunifies then the entire issue of the border goes away. Indeed it also means a breakup of the UK in losing Ulster, but there are many in Whitehall that would see it as letting go of an ancient albatross around their necks. The remaking of the UK, (really England, and really REALLY London) into the new Singapore with London as the center of world finance, will necessarily mean the shedding of Ulster, and if need be Scotland as well.

I was watching some Youtube vids done in NI over the last few days, there are a few in Ulster that are crying in pain and defiance about what they see as Britain's dumping of the province, but they also see the inevitability of it. And the senselessness of rekindled violence because they are outnumbered and have been ditched by their own parent nation that they now realize has clearly decided to sacrifice them.

Many of those Unionists in Ulster want to remain part of the UK, but they also want to be part of the EU and now they cannot have both. Most of those Unionists also say they do not want to be part of Ireland officially but do consider themselves Irish, and again they cannot have both. Demographically the Catholic vote now outnumbers the Protestant. And absolutely everyone in NI wants no hard border.

To those who commented at Youtube their inconsistent and mutually exclusive desires and who fear reunification with Ireland I pointed out a couple of things, one being that Ireland is no longer the Pope kissing Catholic nation stuck in the past but a modern secular state that would do as much or more to recognize and protect the rights of the minority in the north as the UK would ever do. Also, that there are 1.4 million voters in Ulster and that is a small minority of the vote in the UK with it's 67 million people, but, it would be well over one third of the vote total of a newly unified Ireland and they are missing a huge opportunity to remake Ireland in the image they want to see. They are projecting their current powerlessness inside the UK onto a unified Ireland where they fear they would lose their identity and protection when exactly the opposite is true, they have no voice in Britain but would be a huge influence inside Ireland, even rule it with the right coalition.

All those that think Johnson is playing a weak hand and is bluffing, December 12 proved you wrong. It is the EU with a weak hand and who will inevitably be seen as bluffing. The EU is cracking and faced with huge geopolitical stresses it just is not equipped to deal with, their approach to Russia for example is one of appeasement and accommodation in order to keep resources being fed to the German industrial maw. France is reeling and with Britain gone is the next government within the bloc to say forcefully that things in the EU must change. And Macron will also not be bluffing. Frankly I am surprised they did not go first.

BaronAsh
BaronAsh

Really insightful thinking. Clarity with heft and scope. Thanks. Great blog.

FloydVanPeter
FloydVanPeter

I'll believe Brexit when I see it. Those delays are also a method to postpone, potentially to oblivion.

JustASimpleMan
JustASimpleMan

Only one rule is necessary - who carries the can for negative economic effects ?

Despite all the naysayers the UK won't be badly hit and even if there is a little bit of pain, it will coincide with a global economic wobble that will act as good cover.

Meanwhile, German and Dutch economic performance will take a massive hit and the entire EU will be convulsed by the loss of revenue from it's second biggest net contributor. Varadker will also be found naked if there is any realistic prospect of a WTO settlement hitting Eire and the ball-ache of integrating Northern Island (increasing the paltry 5M population by a third) is the last thing he can handle.

Even if it was all paid at once (it won't be) the "divorce settlement" is only 3 years of contributions. Before the French farmers, plus the Poles, Spaniards and Irish start to feel the cold of funds drying up the Eurocrats will be paying us to do a trade deal.

.

billso
billso

This is the best Brexit coverage anywhere. And the comments are substantive too. Thanks Mish...

msurkan
msurkan

There is really just one rule: Politicians will do whatever they think is in the best interests of their career (which may or may not align with the interests of their nations). If telling the truth is the best way for politicians to help their careers, they will do that. If lying is a more effective means to this end they will do that.

Simple.

Deep Purple
Deep Purple

The Tory majority is spectacular but it does not mean that Johnson can do anything he wants. Actually, he is in a similar situation to the earlier May government. Trapped in the middle. If he goes for a soft trade deal, then Farage will try to come back again. If he goes for hard divergence, that can reanimate the Lab-Lib opposition. And none of these are really good against the SNP.

My hunch is that Johnson will soften his EU trade position. Farage is not an immediate threat now. Meanwhile, Boris can be really hard against Scottish and Irish separatists. It won't actually work against them but it can be a good sideshow for a while.

djwebb1969
djwebb1969

The NI-only backstop doesn't count as a "reopening of the WA". The reason for this is simply - that this variant was available all along, and rejected in London as clearly preparing Northern Ireland for ejection from the Union. Johnson didn't have to do anything to "persuade" Varadkar of this version of the deal, because annexing Northern Ireland was in Dublin's plans all along. This article is just plain wrong.


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