Disaster In Salzburg: Brexit Fog Lifts, Reveals More Fog

|
Posted: Sep 25, 2018 12:01 AM
Disaster In Salzburg: Brexit Fog Lifts, Reveals More Fog

Eurointelligence says the fog over the English Channel is lifting as odds of "no-deal" rise.

The Independent says After Salzburg, Theresa May's Brexit Plans are in Shreds, and that a Norway or Canada Model is her only option.

Theresa May looked shocked but should not really have been surprised by her humiliation at the EU’s summit in Salzburg. She was expecting warm words about her Chequers blueprint on future UK-EU relations, to give her political cover at home. British officials had naively talked up the prospects of going over the head of Michel Barnier, the European Commission’s chief negotiator, by appealing to the 27 EU nations’ leaders, and exploiting divisions among them.

She could have lived with the EU’s original language on Wednesday night, that the Chequers plan would have to be “reworked”. But after she addressed her counterparts, they hardened it to a declaration that Chequers “will not work”. Britain’s hope that Germany’s Angela Merkel, worried about a no-deal exit, would inject more flexibility, proved another false dawn. Emmanuel Macron’s tough approach prevailed. “France won,” said one Brussels insider.

Five Problems

  1. The problem with the Canada plan is that it dumps Northern Ireland.
  2. The problem with the Norway plan is very few want such a customs union and it also requires freedom of movement which the UK will not allow.
  3. The EU offers no solution and demands absurd breakup fees.
  4. May insists on Chequers.
  5. May's opposition is circling, both left and right.

Despite the fact that the EU humiliated May, No 10 Says Cabinet 'Fully Behind' PM's Plan.

May told ministers hers was the "only plan on the table" that secured the "frictionless trade" needed to avoid a hard border between Ireland and Northern Ireland.

Former foreign secretary Boris Johnson said proposals put forward by the Institute for Economic Affairs on Monday showed there was an alternative to ending up as a vassal state with "colony status" through the Chequers route.

The IEA, a free market think-tank, said Mrs May should change tack and pursue an advanced free trade agreement with the EU, with full reciprocal market access, no tariffs in goods including agriculture and maximum recognition of regulatory standards.

Fog is Lifting

It may not seem like it, but Eurointelligence says the fog is beginning to lift.

There is a sense of satisfaction of sorts when a hugely confusing political situation begins to clear up. The morning fog over the English Channel has not lifted yet, but is beginning to.

Salzburg could go down in history as one of the most disastrous EU summits ever, if it turns out to be the one which pushed Theresa May over the brink. May is now coming under domestic pressure to move towards the Canada option, which as we have pointed out before is not compatible either with the EU’s red line on Northern Ireland or with the British red line of avoiding a customs border inside the UK.

According to a FAZ report this morning, Salzburg constituted a massive miscalculation on Donald Tusk's part. There was genuine surprise in some quarters in Brussels about the fierceness of the UK reaction to the summit.

The single biggest diplomatic error during the summit in our view was Tusk’s wantonly aggressive Instagram posting, showing Theresa May at a cake trolley with a comment that there were no cherries to be picked. This was picked up by the Tories as an insult to the prime minister and the UK at large.

By being seen to reject the Chequers plan outright, the EU has now manoeuvred itself into a position where it is under pressure to come up with its own Brexit proposal - for which we think it is far too late.

Over the weekend, one of the newspapers carried a story that Number 10 was making preparations for a snap election if the House of Commons were to reject a withdrawal deal. We think that the more likely option today is for the talks to go well into the New Year with the UK confronting the EU with a take-it-or-leave-it option.

The Telegraph reports in its coverage this morning that the Tories are preparing to align themselves behind a proposal to be published today by the Institute of Economic Affairs, a conservative think tank. The proposal is backed both by David Davis and Boris Johnson. It will argue that May should end the discussions, which she effectively already has, and accelerate trade talks with the rest of the world.

Could the House of Commons still force a Norway option? In our view this is unlikely. There is no majority for Norway in the Tory party. The Telegraph calculates that, in the cabinet, a dozen members favour Canada and half a dozen favour Norway. That probably reflects the majority position in the party. Since neither the Tories nor Labour are committed to Norway, we see no chance for this.

Our conclusion is therefore that the probability of a no-deal Brexit has risen strongly over the last five days.

Take it or Leave It

What's not clear is whether or not the EU believes May is serious.

If the EU does believe May is serious, then they are prepared for no deal.

More likely is that the EU will come back with some tweaks at the last minute that May might not be able to accept.

Clear as Mud

None of this seems particularly clear.

May is walking a fine line. In a BBC interview, May denied being humiliated. How realistic is that?

Nonetheless, since Chequers is her only option, she has to pretend as if that option is still on the table. Attacking the EU or Tusk will not achieve that end.

Will May Even Be Around?

On September 15, I noted a Labour claim that UK Prime Minister Theresa May Will Be Gone Before Christmas.

Today we learn preparations for snap elections are underway.

If May goes, the EU will not hang around for another Brexit vote.

So, yes, some fog has lifted, but it appears to have been replaced with more fog.

Best Possible Result

The best possible result for the UK is that everyone digs in and a hard Brexit takes place.

The UK could then take control of fishing rights, halt billions in absurd payments to the EU slush fund, and negotiate treaties with other countries as it see fit.

The world will see that life will be better after Brexit. And that is precisely what the EU fears.