Friday, 16 August 2019

The No Deal Argument

One of Nick Robinson's 10 things that stopped Brexit happening was "No deal was an empty threat". I wrote about that article here, but I am extracting the No Deal argument from that blog here.

The idea prominent among Brexiteers is that unless the UK shows the EU that it is serious about leaving without any deal at all then the UK's negotiation position would be weakened in some way. But, my thinking goes, if this is correct then the argument applies to the EU's negotiating position, but more so.

The Leave argument goes something like this:

P1) To effectively push one's demands in a negotiation, one needs to demonstrate that the consequences for the proponent of not getting those demands are worse than the consequences for the proponent of walking away from the deal.

P2) Not getting the backstop removed from the Withdrawal agreement is worse for the proponent than No Deal.*

C) No Deal must remain a credible consequence to effectively push the proponent's demands.

There are at least three problems with this.

P2 is clearly false from the economic point of view for both sides. Leavers would probably argue that the politics trumps the economics here, with the principle of freedom overriding the economics, but I doubt a majority of the country would agree.

P2 also contradicts another, connected, Leaver narrative: that No Deal is overridingly bad for the EU.  This leads to Leavers claiming that No Deal will be great for the UK, whilst simultaneously bad for the EU. But the economic effect of No Deal is smaller on the EU than the UK (proportionately, and maybe in toto) while the politics of the situation do seem to overwhelm the economic consequences from the EU point of view.

This leads to a more important objection, to my mind, and one that I've not seen raised explicitly (although I may have missed it). It is that this argument (if accurate and sound) would apply to the EU side too. To effectively push their demands, they could threaten a No Deal. And it seems to me, this is a much more credible threat coming from the EU. A No Deal will cause much less disruption to the EU than to the UK, so their P2* (Getting the backstop removed from the WA is worse than No Deal)  has a much lower bar to pass than the UK's P2. Removing the backstop threatens the integrity of the Single Market and the Good Friday agreement. True, No Deal threatens the Good Friday agreement too, but it doesn't threaten the integrity of the Single Market.

The Single Market is the cornerstone of the EU, so it's hard to see any consequence outweighing a threat to that, so of course the EU would prefer a No Deal to dropping the Backstop. And see also the point made by Frans Timmermans:
If the only goal of the EU is this market obviously you could think that the German car industry could force the German government to comply with the demands coming out of London, but for Germany the EU is much, much more than a market. It's their destiny, it's not revisiting the horrors of history so even the car industry itself understands that this is fundamentally more important than selling cars to the United Kingdom.
So, in fact, according to Leaver logic, the EU should threaten the UK with a No Deal!

I think it's a measure of how well the EU has treated the UK during Brexit negotiations that it has not seriously done this yet (maybe Macron has floated it?), but it may just be a matter of time. I'm sure they are worried about the political consequences of 'inflicting' No Deal on the UK.

*There are other problems with the WA, but let's assume for simplicity that the backstop is the only one.

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