Comment

The Brexit knife-edge

Jacques Lafitte / Dec 2020

Image: Shutterstock

The core Brexit negotiation has been in a complete deadlock for months on the three key issues – level playing field, governance and fisheries. The needle would not move a millimeter. The rest is all spinning.  

At this point, both sides have a shared interest in claiming that a deal is at hand, because the blame game is near and promises to be violent, and to a lesser extent to please President-elect Biden. Both sides just forget to tell the condition for a deal, which is that the other side capitulates.

Yes, capitulates. Just look at the way the UK described on November 27th the last EU offer on fishing quotas, admittedly the least complicated of the three key issues: “derisory, completely unacceptable and unhelpful”. On the same day, Mr Barnier told EU ambassadors that the offer was the limit of how far the EU was prepared to compromise.

I am happy to be told which side will surrender, and why.

Meanwhile the £ has almost continuously strengthened against the euro since mid-September, as if time was on the side of a deal.

It’s amazing how much today’s elites’ mindset is comparable to June 2016, especially investment bankers’ and fund managers’. Financiers, who can be damn fast in criticizing others’ lack of foresight, have got Brexit wrong for at least five years, continuously confusing desirability and likelihood. It’s no longer a mistake, it’s a fault.

Reassuring comparisons are made for instance with the Uruguay round, where an agreement was found at 5 seconds to midnight. They are not valid.

The Uruguay round was a business-like negotiation between parties sharing a genuine desire to get a deal done – France was never going to block the deal on the exception culturelle, which was a gimmick aimed at protecting agricultural interests. I was at the French Treasury at the time, and I can tell you that we “capitulated” with a huge smile.

Brexit’s stakes are considerably higher, and Brexit is also far more emotional. If the UK “won”, the dreadful prospect of EU’s slow motion dismantling would resurface. To start with, the EU would shoot itself in the foot with respect to its two main other standoffs of the day, the one with Orban/Kaczyński and the one with Erdogan.

Conversely, a “no deal” complete chaos in the UK would initially be political bonanza for a number of heads of State on the EU side. Not just Macron, also Conte, Sanchez, Rutte, Kurz, Löfven, and even Merkel, as the AfD could only suffer further losses.

“No deal” is not tenable in the long run, not even on the continental side. Macron for instance, who would initially benefit from standing up to Britain, would start to suffer some political damage as small Northern France companies living from trade with the UK start to go under, and I am convinced he knows that. He comes from Amiens / Le Touquet, which aren’t that far from Calais.

Admittedly, Johnson would suffer far more damage and far quicker, which is why it can’t be excluded that the UK would accept rather soon in 2021 the essence of the deal it has so stubbornly rejected for months. The EU itself could afford to be a bit more accommodative once Brexiters, Frexiters, Italxiters, Duxiters etc have bitten the dust (small reminder: from 11 candidates in the 2017 French Presidential election, 8 advocated Frexit…).

Clausewitz said that war is the prolongation of politics through different means. “No deal” will just be the prolongation of the negotiation in a far more motivating context.

Jacques Lafitte

Jacques Lafitte

December 2020

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