Britain needs to choose its dominant Brexit strategy – The Telegraph

28/02/2019 by

Imagine that we knew the day of our death. Our lives would change drastically. Though we know we shall surely die, not knowing precisely when the mortal coil will be shuffled off makes all the difference, allowing us to live life productively on a day-by-day basis. For exactly the same reason, the fixed deadline embedded in Article 50 of the Lisbon Treaty guaranteed that nothing good would come out of the Brexit negotiations.

A bad Brexit deal, and even more so a no-deal Brexit, will be detrimental to the UK and to the EU. Mrs Merkel, Mr Macron and Mr Juncker are just as aware of this as Mrs May. If Article 50 had not stipulated a fixed deadline, the EU’s leadership would have no option but to negotiate in good faith until they struck a mutually advantageous deal with the British government.

Nevertheless, the fixed deadline meant that, despite the large costs to continental manufacturers from a tumultuous Brexit, the EU lacked any strategic incentive to negotiate in good faith. Given that the negotiation’s last possible moment was common knowledge, and a no deal would impose higher costs on the UK than the EU, no authentic negotiations were ever on the cards – an obvious deduction which was the reason why, since the summer of 2016, I have been warning the UK against participating in Brussels’ phoney negotiation ritual.

When Brussels and London know that N days are left and that, on day N, London is facing a costlier default, Brussels has no incentive whatsoever to make meaningful concessions until day N. Whatever concessions Brussels makes before day N, London will expect more concessions on day N – which prohibits Brussels from making concessions before day N! Meanwhile, as day N approaches, the British side is beset by increasing divisions that give Brussels even greater cause to toughen its stance. Moreover, the above holds independently of whether N is 30 days, 300 days or 3,000 days.

Four conclusions follow from the above. First, the British Government erred in imagining that the EU’s considerable economic losses from a no deal translated into a strategic incentive to negotiate in good faith. Secondly, Mrs May committed an elementary mistake in accepting Mr Barnier’s two-phase negotiation process which committed Britain to giving the EU everything it demanded before discussing Britain’s demands.

Thirdly, an extension of Article 50 for the purposes of extracting a better deal from the EU is delusional – since a reset day N will not give Brussels reason to change its stance before the new day N arrives. Fourthly, Mrs May’s withdrawal deal deserves to be ditched courtesy of another fixed deadline that is embedded in it which, effectively, extends the current phoney negotiation, and standstill, until the final day of the fixed transition period.

What should the UK Government be doing instead? When faced with a fixed deadline and a disadvantageous default outcome, there is only one thing to do: select your dominant strategy; the strategy that you consider your best response to everything the other side may throw at you; a strategy whose appeal does not rely on the success of bluffs, threats or enticement.

Cajoling Mr Barnier, appealing to Mr Juncker’s sensibilities, or threatening Mrs Merkel with losses to the German car industry are not dominant strategies since their appeal depends on the kindness, ruthlessness or gullibility of strangers who lack an incentive to respond positively. Passing Mrs May’s Withdrawal Agreement is not a dominant strategy either because the result would be to enable Brussels to extend its recalcitrance until the last day of the transition period.

There are two dominant strategies a UK government must choose between: the no-deal strategy favoured by the European Research Group that leaves no room to Brussels to respond, except by making unilateral concessions; and an indefinite customs union deal favoured by Jeremy Corbyn’s Labour Party, which the EU negotiators cannot reject even if they wanted to.

That these two are both dominant strategies does not mean that they are equally attractive. But at the very least, focusing on them clears the fog caused by defections from the two main parties, and from Mrs May’s confused obstinacy, and concentrates the mind on the only two options that can annul the fixed deadline effect which has so unnecessarily toxified British, and European, politics.

Published on 25th February 2019. For the site of the Telegraph, click here.

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