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Brexit Phase 2 Negotiations Far Easier Than Most Think

Courtesy of ZeroHedge View original post here.

Authored by Mike Shedlock via MishTalk,

With a majority of 80, Johnson can go for a hard deal or a soft deal. Either way, the EU has to agree. Will it be easy?

Brexit Exit – What’s Ahead?

The Conversation asks What kind of Brexit Will Britain Now ‘Get Done’.

Beyond his signature policy on Brexit, it is difficult to say with certainty what Johnson will offer. More than any other recent politician, Johnson’s rise to the top of British politics was fuelled by personal ambition, not ideology. His gaffes, his colourful (sometimes insensitive) language and his chaotic personal life have all drawn attention.

Johnson’s surfeit of ambition has also led to him being seen as untrustworthy and unprincipled, and regularly denounced by opponents as a liar.

Now that he is back in office with a majority, Johnson will have the numbers in parliament to pursue his own policy direction. The details of that direction are unclear, with few clues available in the Conservatives’ safety-first manifesto.

“Get Brexit done” gave Johnson a mission, a goal to achieve, a rallying cry to mobilise supporters to win first the Tory leadership and then the general election. But with the premiership secured and Brexit done, what does Johnson want to happen next?

Die in a Ditch, Yet Again

The New York Times says “Few expect the negotiations on the country’s future trade and security relationship with the bloc to be quick or easy.”

Will this be the Mr. Johnson who vowed once “to die in a ditch” or the Mr. Johnson who reached his draft Brexit deal with Brussels last October by abandoning his red lines over Northern Ireland?

Mr. Johnson may favor a hard deadline, but that will put Britain, which will soon be negotiating from outside rather than inside the European Union, into a weaker position, argued Fabian Zuleeg, head of the European Policy Center, a research institution based in Brussels. The risk is that a quick trade negotiation, considered almost a contradiction in terms by trade experts, could fail, bringing Britain and Brussels back to the prospect of a “no deal” Brexit.

Consensus Nonsense

Those articles represent the overwhelming consensus nonsense.

Nigel Farage, and others in the Brexit Party also fear the worst.

The Brexit party expects Johnson will give up fishing rights and keep the UK in a customs Union for a decade.

I suggest there are two governing political rules that negate both of those ideas.

Mish’s Two Rules of Politics

  1. Politicians are liars and cannot be trusted.

  2. Politicians will actually do what they say if they believe it is in their best interest to do so.

Those two rules seem contradictory, but the key idea is rule two trumps rule one.

Let’s apply those rules in a number of areas.

Fishing Policy

No doubt the EU will want to include fishing rights in the negotiations. Farage knows this and he is suspicious. He shouldn’t be.

Why? It’s clear rule two applies.

Why does rule two apply? Scotland

The SNP wants to break the UK and join the EU. But Scotland also wants control over fishing policy, something the EU would never grant.

As long as Johnson does not give up fishing rights, he can drive a huge wedge right through Nicola Sturgeon’s platform.

Conclusion: There is no way in hell Johnson will give up fishing rights.

Customs Union Extension

Johnson said he will reach a deal with the EU in a year. That’s ambitious but possible.

The Brexit Party and others will point to Johnson throwing DUP under the bus and “die in a ditch”.

Ho. Hum.

It was to Johnson’s advantage to lie on those. So he did. Rule 1 applied.

But now rule 2 applies.

Perhaps Johnson goes for some small 3- to 6-month extension, but outside of that it would be politically damaging to reverse course.

So, he won’t.

Trade Deal

Fabian Zuleeg, head of the European Policy Center, fears a “no deal” Brexit.

That’s absurd because we are 100% guaranteed to have a deal. But let’s assume he means that further negotiations collapse and there is not even a basic WTO agreement.

That is what Farage wants but no one else.

In this case, rule 2 applies. Expect both the UK and EU to act in their best interests. There will be red lines, but it is in the interests of both sides to reach a deal.

Ironically, it is likely to be the EU, not Johnson breaking the most positions.

Johnson may have to give in on some freedom of movement issues, but if so, I suspect whatever he negotiates to be in the UK’s best interests.

Deal In 12 Months?

Yes, or 16, or 18. What does it matter?

The WTO allows for “temporary” deals with up to 10 years to finalize them.

So, no, there will not be a final deal in 18 months. So what? There will be a basic deal in that time frame, and possibly within a year.

And as long as Johnson does not extend the customs union beyond 3 months, he will have fulfilled his mission even if some nitpickers call him a liar for it.

There may be a couple of small points Farage will moan about but it won’t be anything major on fishing policy, the European Court of Justice (ECJ), or a long-term customs union extension.

What About Ireland?

Johnson was asked in one of the debates if the union was more important than Brexit.

I was surprised by the speed of his lie. He instantaneously replied something along the lines of “absolutely”.

What a lie.

Political forces are now in play for the unification of Ireland. The deal that Johnson worked out with Leo Varadkar, Ireland’s Taoiseach (Prime Minister), guaranteed further pressure in Irish unification.

What happened?

  1. Johnson made Varadkar happy enough for the Taoiseach to back Johnson’s deal.

  2. In turn, the EU did not want to throw Ireland under the bus.

Rule one applied. It was in Johnson’s best interest to lie. So he did. The key point however, is point number two.

July 10 Flashback

I made a statement many times regarding “the bus”, and most people thought I was nuts.

For one key example, please recall my July 10 post Today’s Brexit Non-News: The “Precious” Irish Backstop Must be Defended.

Ursula von der Leyen, the European Commission President candidate, says she will not reopen Brexit talks.

I commented “The Guardian story is either non-news or fake news.”

Simply put, I accurately called the headline story a lie. I was proven correct.

Here were the reasons I listed the EU would negotiate (emphasis now added).

  1. Ireland will be in a world of hurt. The estimated first-year to Irish GDP is 4.1%. It would be unlike the EU to purposely throw another EU member under the bus.

  2. European exports to the UK will crash.

  3. Germany is already smarting from a global slowdown. Merkel is no longer call the shots, but she is open to talks.

  4. If the EU will not budge at all, Johnson may apply more pressure by saying he will not even pay the breakup fee. That extra money the EU desperately needs for its budget or it will have to raise taxes or cut expense.

Saying vs Doing (What I said then)

We know what politicians say they will do, but we do not know what they will really do when the time comes. The EU never believed May would walk. In about one month the EU is likely to find out Johnson really intends to walk. At that point, the ballgame changes.

Ballgame Changed

Despite enormous pressure from UK parliament Remainers, Johnson managed to change the ballgame.

Very few believed he would succeed. I was one of those few.

It came down to one thing: It would be unlike the EU to purposely throw another EU member under the bus.

Once Johnson was willing to throw DUP under the bus, the ballgame changed for the EU as well.

Lies Exposed

  1. EU will not reopen the Withdrawal Agreement.

  2. EU will no reopen the Political Declaration.

  3. Johnson: The Union is more important than Brexit.

Proper Application of the Rules

To figure out what is most likely from here, just apply my rules.

  1. Politicians are liars and cannot be trusted.

  2. Politicians will actually do what they say if they believe it is in their best interest to do so.

The first step in figuring out what politicians are most likely to do, is to figure out if they really believe what they say is in their best interest.

If you conclude otherwise, then by all means, fall back on rule number one.

Sometimes such analysis is difficult. In this case, I believe it’s pretty easy, especially regarding fishing rights.

Another Simple Rule

We are where we a based on another simple rule: “The EU will not purposely throw another EU member under the bus.”

The EU has many rules, but it will bend or break them as necessary to accommodate that rule if possible.

With that in mind, note that Germany will suffer the most if the UK decides to walk.

Thus, I fully expect the EU to accommodate Germany in the trade discussions. The most likely way is a basic agreement within a year or so that all sides can live with.

Both sides want to put Brexit aside as quickly as possible. So, they will.

It cannot be totally one-sided so Johnson will have to give in on some minor face-saving points.

See how easy this is? Just apply the rules.

The hard part, of course, is figuring out what the rules are. Hopefully, this post helps.


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