Hardliners block path to Brexit deal

British Conservative Member of Parliament and Brexit hard liner Jacob Rees Mogg delivers a speech on Brexit in London, Britain, 27 March 2018. EPA-EFE/ANDY RAIN

Hardliners block path to Brexit deal

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While businesses and unions seek an amiable Brexit deal – or continued negotiations and a transition period – the leading Conservative party in the UK is bracing for a “clean break.”

The UK is about to Leave the EU on March 29, 2018. However, the two parties have yet to settle the terms of this departure. For instance, it is unclear whether the UK will be leaving on London time or Brussels time. The only thing London and Brussels seem to agree upon is that the “clock is ticking.”

In a speech at the London School of Economics on Thursday, the President of the Eurogroup Mario Centeno reiterated a call for a Brexit deal. The “conditions” for that to be achieved are in place, Centeno said, expressing concerns for a failure to do so, especially for the financial sector.

Talks of Leadership and a clean break

Few kilometres away, a member of the UK House of Commons, Mr George Freeman, presented himself as a candidate for the leadership of the Conservative Party. He said that “if people want me to in Parliament,” he said, he would not refuse the challenge.

In effect, he was saying that Theresa May is a leader on borrowed time and should set a date for her departure. Mr Freeman’s candidacy is interesting, first of all, because no one is likely to ask him and, secondly because in 2016 he was a Remain campaigner. Clearly, for the Conservative Party, the urge to make a Brexit deal is not overwhelming.

There are different priorities.

The British government is preparing for a “no deal” scenario as a matter of negotiating course, as everyone knows that “no deal is better than a bad deal.” On Thursday the government released a second batch of papers advising businesses on how to prepare.

For a big part of the Conservative Party, this is not a pertinent discussion. The government is negotiating on the basis of a rejected blueprint that would be easily dismissed in parliament. The question, therefore, is to appoint a leader who will lead the UK towards a “clean break.”

Any deal based on Theresa May’s roadmap would be a bad deal and, therefore, an unwelcome deal. Besides, as the “Economists For Free Trade” think tanks argue, the UK has “nothing to fear” from a “clean break” from the EU. To the contrary, the economists project the UK will “save” £80bn in contributions to the EU budget and will be able to cut prices by 8%.

So, the question is who will replace Theresa May to negotiate this clean break. True, Mr Freeman’s speculation on Theresa May’s succession was condemned by the Brexiteer big-wigs such as Ian Duncan Smith and Michael Gove.

It is too late for declarations of loyalty. On Tuesday, 50 Conservative Members of Parliament that have joined the vehemently Eurosceptic European Research Group (ERG) met to discuss the need for “a clean break” and Theresa May’s successor.

The number 50 is significant. Under Conservative rules, 15% of the parliamentary group can trigger a leadership vote. There are 315 Conservative MPs, 15% of whom is equal to 48.

Something will happen after Salzburg  

That was a “private” discussion with extensive media coverage, full of “she has to leave” quotes that could not be attributed to individuals. The leader of ERG Jacob Rees-Mogg keeps saying that “the policy needs to be changed, but I am supporting the person.”

The big names of the ERG group – Rees Mogg, Owen Paterson, Iain Duncan Smith, Bernard Jenkin, David Davis, Boris Johnson – were absent from the meeting of the 50 for reasons of plausible deniability. They are not undermining Theresa May, but they are limiting her scope for negotiations.

Brexiteers will not assume policy responsibility for anything worth mentioning.

On Monday, Rees-Mogg admitted that the ERG would not present an alternative proposal for Brexit.

The government reiterates that it is focused on the so-called Chequers proposals, which Theresa May has put forward as the government’s negotiating proposal. At the moment, that is the cabinet’s plan, but not the parliaments’ or the Conservative party’s.

Theresa May may well succumb to pressure.

If that is the case, Theresa May will abandon her plan following the informal meeting between EU heads of state or government in Salzburg (19-20 September), hosted by Sebastian Kurz.

The only proposal the group puts forward is that of former Brexit Secretary David Davis, who has reheated his so-called maximum-facilitation plan for Northern Ireland. The idea is that Ireland will have a technology-intensive border mechanism.

The plan has yet to convince anyone in Brussels, Dublin, or indeed British industry. If all else fails, the position of Leave campaigners is that the onus is on Brussels and Dublin to keep the borders open in Ireland.

Davies expressed his confidence that time is on the UK’s side and there will be a reset in negotiations after Saltsburg. That is the school of thought that time is working for London.

Brussels keeps calm, London carries on

While Davies expressed certainty in the EU’s imminent policy turn, the President of the European Commission Jean-Claude Juncker pledged to work for close trade ties. However, Juncker made clear there will be no compromise on the structure of the Single Market.

The Commissions’ chief negotiator, Michel Barnier, said on Monday that a Brexit deal was possible “within six or eight weeks” if negotiators were “pragmatic.” But, if there is an appetite for pragmatism, dramatic policy shifts or compromise, it is well hidden. This is either a chicken game or a poker game but does not look like a negotiation.

Barnier is ready to offer a “Canada dry,” modelled after the CETA agreement. Such an agreement would not have the additional “plus, plus” elements desired by Brexiteers, allowing for selective “associate memberships” of EU bodies and a borderless Ireland.

There is also one voice in the UK that has undermined the confidence in a “clean break,” namely the Governor of the Bank of England Mark Carney. Carney warned on Thursday that under a no deal scenario house prices would fall by as much as 35% over three years, the BBC reports.

Tory Eurosceptics have repeatedly denounced Carney as “the high priest of Project Fear,” but he his projections for the pound’s devaluation have been fulfilled. Carney also makes the case that the banking system can take it, as stress tests indicate. But, this is something to fear and does not look clean.

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