Ireland has taken its cues from Remainers, totally misreading UK politics. In turn, Michel Barnier, the EU's chief Brexit negotiator is taking cues from Ireland.
No Deal is now the the single most likely event, and it could get even worse according to Eurointelligence, and I agree.
Iron Curtain Brexit
We noted some of the most chilling comments we have yet heard from Number 10 Downing Street yesterday, as reported by James Forsyth from the Spectator. We believe that the unnamed source is either Dominic Cummings himself, or someone authorised directly by him. The source said that the talks were breaking down because Leo Varadkar and Michel Barnier were betting on a Brexit reversal through a second referendum. The source said the deal offered by Boris Johnson would not be revived. The government would accept its narrow duties under the Benn extension bill, but would seek to frustrate its intent. The aim is to go for an election with a promise to deliver a no-deal Brexit by a certain date.
And then this - a chilling reference of hostile interference by EU member states in British politics. The square brackets are an indirect quote and the rest in italics a direct quote.
"We will make clear privately and publicly that countries which oppose delay will go the front of the queue for future cooperation — cooperation on things both within and outside EU competences. Those who support delay will go to the bottom of the queue. [This source also made clear that defence and security cooperation will inevitably be affected if the EU tries to keep Britain in against the will of its government]. Supporting delay will be seen by this government as hostile interference in domestic politics, and over half of the public will agree with us."
Our main scenario remains an early election, and an absolute majorities for the Tories or at least a Brexit-supporting majority in the House of Commons. We have always warned that a no-deal Brexit has a higher likelihood than widely assumed. But we are now ready to call a no-deal Brexit the single most probable outcome.
One possible action for the EU to take is to offer a long extension, say two or three years, which the present parliament might accept if confronted with the alternative of a no-deal Brexit on October 31. A long extension would give time for a second referendum. This is the scenario we fear the most because it would be construed by Brexiters as an outright hostile act. If such a decision were followed by an election, and a pro-Brexit majority in the House of Commons resulted, we would expect the UK to declare a unilateral withdrawal from the EU bypassing Article 50. That would be the Iron Curtain version of a no-deal Brexit.
State of the Negotiations
Please consider How Number 10 View the State of the Negotiations by James Forsyth from the Spectator.
Forsyth sent a message to a contact in Number 10 asking them how the Brexit talks were going. Here is a snip of the reply.
‘The negotiations will probably end this week. Varadkar doesn’t want to negotiate. Varadkar was keen on talking before the Benn Act when he thought that the choice would be ‘new deal or no deal’. Since the Benn Act passed he has gone very cold and in the last week the official channels and the backchannels have also gone cold. Varadkar has also gone back on his commitments — he said if we moved on manufactured goods then he would also move but instead he just attacked us publicly. It’s clear he wants to gamble on a second referendum and that he’s encouraging Barnier to stick to the line that the UK cannot leave the EU without leaving Northern Ireland behind. There are quite a few people in Paris and Berlin who would like to discuss our offer but Merkel and Macron won’t push Barnier unless Ireland says it wants to negotiate.
So, if talks go nowhere this week, the next phase will require us to set out our view on the Surrender Act. The Act imposes narrow duties. Our legal advice is clear that we can do all sorts of things to scupper delay which for obvious reasons we aren’t going into details about. Different lawyers see the “frustration principle” very differently especially on a case like this where there is no precedent for primary legislation directing how the PM conducts international discussions.
Those who pushed the Benn Act intended to sabotage a deal and they’ve probably succeeded. So the main effect of it will probably be to help us win an election by uniting the leave vote and then a no deal Brexit. History is full of such ironies and tragedies.’
Assuming that source is accurate, Johnson believes they can "scupper a delay". But let's assume that assumption is false.
Either way, there is going to be elections.
This is where the Eurointelligence Iron Curtain option comes in.
If Remainers push for a long extension (likelihood unknown), and the Tories unite with the Brexit Party (major sweep) or simply win outright (significant majority), expect a sudden hard, Iron Curtain Brexit.
UK General Election Polls
It's difficult to know which set of polls to believe but most of them suggest an outright Tory victory not even requiring the Brexit Party.
Eurointelligence reads these polls the same as I do.
Moreover, I rather doubt Johnson wants to tip his hand, but if forced, he will unite with the Brexit Party. There is far less chance the Liberal Democrats unite with Labour.
Labour leader Jeremy Corbyn insists on a Referendum while Liberal Democrat leader Jo Swinson wants outright Remain. It's also clear Swinson cannot stand Corbyn, but politics can at time make strange bedfellows.
Goldman Sachs View
Zerohedge commented today Goldman Believes Johnson Can Still Pull Off Last-Minute Brexit Deal.
Goldman's team of analysts still believe that the most likely outcome (60%) is for the UK and EU to agree on a deal before Oct. 31. Next up? Another delay - the 'no Brexit at all' option - to which the analysts assigned odds of 25%.
It's important to understand that Eurointelligence is a pro-Europe organization.
Eurointelligence co-founder, Wolfgang Münchau, actually believes the deal Theresa May negotiated was a reasonable deal for the UK.
So, it's very difficult to accuse them of bias when they come out with a report like this.
Last week, I expected a deal. However, things seem to have changed quickly to the downside after a lot of optimistic talk.
This could be last minute jitters or a negotiation ploy, but I accept the Eurointelligence take flat out.
Sometimes I buck them. They expected Theresa May's deal to pass, but I didn't. Eurointelligence also wavers day-to-day more than I do. Today, we align.
I reserve the right to change my opinion and do.
I thought a deal was likely, now I don't. That can change again or not, but there is not much time left.
Regardless, one thing is clear: "Stop No Deal" is an exposed lie. This is not about stopping "no deal" it's about reversing the vote.
Mike "Mish" Shedlock