Five Scenarios for Brexit – With Only One Good Outcome

The European Council meets April 29, to prepare for negotiations and its stance on the United Kingdom parting ways with the European Union. “The stage is set for a dramatic – traumatic – meeting with destiny for Britain and its former 27 partners,” explains author Joergen Oerstroem Moeller. “Five scenarios appear on the horizon, four of which point to total breakdown followed by a clean cut in economic and trade links between Britain and the EU.” Negotiations to revise trade, security, immigration and other agreements will be acrimonious – influenced by geopolitics, strategic interests, domestic politics and economics. A civil breakup, one that is sensible, requires technical expertise and diplomacy. Britain’s prime minister has called for a snap election on June 8, hoping to consolidate political support at home. The country takes a risk by ending its membership in the world’s most powerful trading block, and the British may pay more for products and services while attracting less foreign investment. Only geopolitical disaster, Moeller concludes, might convince the European Union and Britain to cooperate and close ranks to defend common interests. – YaleGlobal

Five Scenarios for Brexit – With Only One Good Outcome

Negotiations on Britain’s withdrawal from the European Union will be acrimonious – yet should not overlook the need for future cooperation
Joergen Oerstroem Moeller
Thursday, April 27, 2017

Hard to exit: British Prime Minister Theresa May speaks to President of the European Council Donald Tusk; British fishermen may find it hard to eliminate EU competition

SINGAPORE: The European Council prepares to define the EU negotiating mandate after Prime Minister Theresa May triggered Article 50 of the Lisbon Treaty to fix terms for leaving the EU. The stage is set for a dramatic – traumatic – meeting with destiny for Britain and its former 27 partners. Five scenarios appear on the horizon, four of which point to total breakdown followed by a clean cut in economic and trade links between Britain and the EU. In any case, next two years promises to be bruising – something that Britain brought upon itself.

The first scenario – that wisdom prevails and a settlement emerges after rounds of acrimonious meetings, mutual accusations, marathon sessions and brinkmanship – is unfortunately the least likely. Such a scenario requires statesmanship of which Europe/Britain are in short supply these days. A high degree of technical expertise is useful only if directed by a firm hand on the tiller with statecraft. Geopolitics, strategic interests, security, domestic politics and not the least economics and trade intertwine to form a Gordian knot. Cool heads and common sense could push EU and Britain towards agreement, but opposition on both sides may well overpower such feelings and block what could be a sensible new relationship between Britain and the EU.

Large rounds of negotiations take on their own dynamics. Negotiators start to believe their tactical positioning and, at home, parliaments and the public opinion do the same. The outcome is compared with initial positions and discrepancies judged too hard to swallow.

My personal experience dates from five rounds: Denmark’s accession negotiations 47 years ago, the Single Act in 1984, the Maastricht Treaty in 1991, the Edinburg Agreement in 1992 and the Amsterdam Treaty of 1995.  These negotiations succeeded because they took place among countries regarding one another as friends and partners looking for a win-win result and sympathetic to problems raised by member states.

From the start, the British attitude on Brexit has been adversarial – “us versus them” – fueled by hard-core opponents of the EU that found echo in some politicians in the EU not wishing to be helpful.  A civil breakup requires complete support at home, something Prime Minister May cannot count on. Scotland and Northern Ireland, not surprisingly looking out for their own interests, are not supportive. May’s own party is split over the shape of future economic relations with the EU. 

A second scenario is a stone-hard Brexit – by 2019, Britain or the EU – and possibly both – concludes that no satisfactory agreement is at hand, at least not one majorities in national parliaments and the European Parliament could support. Seeking extension of the two-year deadline, which in reality requires an agreement to be in sight, becomes meaningless. Furthermore, with no end point in sight, no transitional arrangements are sought. The result would be an abrupt and unprepared rupture of links spanning over a large part of daily life and most of industrial regulations and economic conditions. Formally, Britain and the EU would fall back on terms prescribed by the World Trade Organization, but even that would require time and negotiations. Any good will that existed will have disappeared, leaving both sides disgruntled at best and fueling distrustfulness.

Politically, a decisive factor is whether Britain and the EU conclude that they share the same destiny – face analogous challenges and strive to build a similar societal model. As it becomes more apparent that this is not the case, Britain – or rather England – may move towards an American free-market model. Continental Europe heralds a social welfare system, and history may well say that this engendered Brexit after futile efforts to reconcile the two models. It also explains why Scotland may eventually leave the UK and join the EU.

Technically most major issues can be solved. Britain’s future financial contribution, the City of London, access to each other markets, and free movement of people are all difficult, but either the costs and benefits are spread over a large number of people, or both sides are interested enough to limit negative repercussions. Such negotiations are doable.

The problems arise when negotiators move to complicated issues with direct and tangible consequences for a limited number of restive people, susceptible to protest and with political influence.

Fisheries illustrates this. Fishermen from nine EU member states rely on access to British waters, and the thorny problems include fishing rights, rights to land catch in British ports, conditions for processing raw fish into what people eat, and conditions for selling to other countries. EU-fishermen will balk at anything that deviates from the status quo while those in Britain will question the point of leaving if the country allows EU-fishermen to fish as they used to.

The issue is a sensitive one – and explains why Greenland left the EU in 1985, Iceland never joined, and Norway twice, in 1972 and 1994, decided against joining.

The third scenario is defeat in the House of Commons. The hard-core Tory Brexiters can be expected to vote against just about everything bar a clean cut break, and the opposition has little reason to bail the prime minister out of trouble: Labor wants EU rules to protect workers, the Liberal Democrats are pro-EU, and the Scottish National Party sees Brexit as giving leverage for a second referendum about Scotland in the UK with a future prospect of joining the EU on its own terms.To strengthen her position, May called for a snap election on June 8 and lashed out at opponents to her Brexit policy in the parliament saying “the country is coming together but Westminster is not." Considering that 48 percent of the electorate voted for remain, such a tactic may backfire. It is by no means certain that the next parliament will be more amenable to her wishes than the current one.

A fourth scenario is that the European Parliament withhold its consent, required according to article 50. Some in the European Parliament may still be smarting from former British Prime Minister Margaret Thatcher’s assessment that it was “a Mickey Mouse parliament” – and seek to demonstrate how this powerful body in the EU’s legislative process is not ready to be steam-rolled. So far, few in Britain are taking the slightest interest in what might happen in the European Parliament – a dangerous neglect. 

The fifth scenario is that any of 27 national parliaments plus 13 local/regional parliaments stymie agreement. For many member states, Brexit is an important, but not a crucial issue. For some, it is an opportunity to seek concessions from Britain. Gibraltar and Spain’s long lasting efforts to regain sovereignty over the rock is just one example and strong political forces in Spain will not let Brexit, as an opportunity, pass without exploiting it. Earlier this year the regional parliament in Wallonia, part of Belgium, blocked a EU-Canada free trade agreement, asking for concessions.

Perhaps the only event that might tip the scale is some geopolitical earthquake – say, an abrupt and agonizing American withdrawal from Europe, transferring troops to Asia to confront North Korea combined with Russian belligerence in Central- and Eastern Europe, events in the Middle East/North Africa, or a new global financial crisis – driving home the message that the EU including Britain must close ranks to defend its common interests.

But even geopolitical disaster might not be enough.     

Joergen Oerstroem Moeller is a visiting senior fellow with ISEAS Yusof Ishak Institute in Singapore. He is also an adjunct professor with Singapore Management University and Copenhagen Business School and former state-secretary with the Royal Danish Foreign Ministry.

Copyright © 2017 YaleGlobal and the MacMillan Center