EU is to Blame for the Latest Brexit Crisis

Mish

The UK is threatening to ignore the Brexit Withdrawal Agreement. How did we get here?

"No Miserable Squabbling" 

Boris Johnson has urged Conservative MPs to back his Plan to Override Part of the Brexit Withdrawal Agreement.

In a Zoom call with about 250 of them, he said the party must not return to "miserable squabbling" over Europe.  

The EU has warned the UK it could face legal action if it does not ditch controversial elements of the Internal Market Bill by the end of the month. 

And a Tory MP has proposed an amendment to the bill, which would affect trade between Britain and Northern Ireland. 

Meanwhile, the European Parliament has threatened to scupper any UK-EU trade deal if the bill becomes UK law.

Another EU Bluff Underway

German Finance Minister Olaf Scholz was out with another EU bluff on Saturday: No-Deal Brexit Would Hurt Britain More Than EU.

“My assessment is that an unregulated situation would have very significant consequences for the British economy,” Scholz told a news conference after a meeting of EU finance ministers in Berlin.

“Europe would be able to deal with it and there would be no particularly serious consequences after the preparations we have already made,” he added.

Prime Minister Boris Johnson said on Saturday that a planned bill, which would breach a divorce treaty with the bloc, was needed to protect Britain’s integrity. 

Obvious Bluff

If "Europe could deal with this with no serious consequences", then why would it care?

The fact of the matter is German exports to the UK would crash in the absence of a deal.

But how did we get to this point? 

EU Made a Power Grab and the UK Responded in Kind 

Eurointelligence fills in the missing pieces of the puzzle.

Our twitter feed exploded yesterday after the UK's Northern Ireland Secretary admitted that the no-deal legislation constituted a breach of international law, in a very specific and limited way, as the minister put it. The anticipated breach of law relates to Northern Ireland: Under the withdrawal agreement, the region would continue to have custom-free links to the Republic, while new customs borders would have to be erected along the Irish Sea. The legislation seeks to nullify this arrangement in the event of no deal. Readers may recall this was the single biggest controversy in the withdrawal agreement negotiations.

It is worth reflecting on how we got to this point. The moment the EU tried to make a power grab for UK state-aid policy, the negotiation turned into an ugly battle of egos.

We heard a lot of tough-luck arguments. The EU is the bigger of the two sides, and can impose its will, for example by anchoring the level-playing-field to its own conditions. This was a short-sighted argument.

The International Court of Justice in the Hague may well end up ruling against the UK. But, first, this won’t happen before the end of the year. And, second, the ICJ has no enforcement powers. If you start playing the relationship talks in the spirit of a geopolitical power game, don’t be surprised when the other side plays in the same spirit.

What determines whether there will be a deal or not is the readiness of the EU to accept a compromise on state aid. If it does, then there will be a deal. If not, there won't.

Forget the EU's Bluff

We are here because the EU demanded fishing rights and interfered in UK internal policies on state aid.

Boris Johnson responded in kind.

If the EU will not compromise, the EU will shoot itself in the foot and Germany in the head.

Mish

Comments (36)
No. 1-11
bluestone
bluestone

I am always interested in your coverage of UK issues. I personally think that the Northern Ireland secretary, for whichever reason, didn't respond with what would have been the stated government explanation which I would imagine would have been along the lines of clause 38 allowing sovereign decisions to trump the agreement, pre-empting any decision by even the EU court of Human Rights as the UK would be subject to EU dictat without any vote, and also clearly the negotiations are not in good faith.
That the UK media have immediately and almost en masse presented a UK government decision that can -only- affect the UK internally as a gross abrogation of an international agreement is something for all to think about independently.
I do also wonder if this is all newspaper clickbait.

PecuniaNonOlet
PecuniaNonOlet

50 days till election. I do not understand the narrative that the EU loses out more than the UK. The EU has 450 million people, the UK 63 million? It seems there are 7x more consumers in the eu than uk. All that needs to happen is the ecb extend credit to those 450m people to buy german goods - problem solved. The world is swimming in funny money so what does it matter at this point?

It is the same reason american companies bow to china every time, they want access to 1 billion consumers.

I searched for the top 10 uk exports. Looks to me the UK stands to lose more in the long run albeit they now have their “freedom.”

  1. Machinery including computers: US$73.3 billion (15.6% of total exports) - EU can get from China
  2. Vehicles: $50.7 billion (10.8%) - EU can get from US, China, Japan
  3. Gems, precious metals: $42.4 billion (9%) - EU can get from Africa or Latin America
  4. Mineral fuels including oil: $41.4 billion (8.8%) - EU can get from middle east or russia
  5. Electrical machinery, equipment: $28.5 billion (6.1%) - EU can get from China
  6. Pharmaceuticals: $27 billion (5.8%) - EU can get from China
  7. Optical, technical, medical apparatus: $19.9 billion (4.3%) - EU can get from China
  8. Aircraft, spacecraft: $18.3 billion (3.9%) - EU can get from US or China (soon)
  9. Organic chemicals: $12.7 billion (2.7%) - EU can get from China
  10. Collector items, art, antiques: $12.3 billion (2.6%) - Oh no EU loses out!

British currency hasnt done well either since brexit vote. So much Trump-like winning.

Quatloo
Quatloo

Eurointelligence recently had a great observation about how EU/UK relations got to where we are today. Rabid Remain journalists in the UK repeatedly published very biased accounts of the UK political consensus that gave the EU false confidence about the strength of theIr position in the negotiations. If the EU had given David Cameron any real concession at all prior to the Brexit vote the vote would surely have failed. But they were convinced by elements of the UK press that there was zero chance of a Brexit decision, so the EU ignored his appeal for help. This mistake continues to be made by the EU.

As Eurointelligence put it:

“The big problem with hyperventilating news reports in the part of the UK press that is read on the continent is that they have been creating persistently false expectations among officials and politicians. From a Brussels perspective, the whole Brexit story has been a series of consecutive political misjudgements, fuelled by wishful thinking.

This goes back to 2015. Was it really a victory for the EU to blackball David Cameron during the pre-referendum talks? If you look back at this period today, he really didn't ask for all that much. In 2016, well after the referendum, we recall a well-known newspaper columnist declaring that Brexit was very unlikely to happen because a second referendum was now a near certainty. Subsequently, the media vastly exaggerated the momentum for the second referendum campaign. Brussels listened to those voices. After the lockdown, a well-placed UK journalist reported that the UK government would have no choice but to extend the deadline. That nonsense, too, was widely believed. “

TonGut
TonGut

Mish: “German exports to the UK would crash in the absence of a deal.” Why on Earth would that happen? Could somebody please explain why all those good listed by PecuniaNonOlet would suddenly stop.

Seriously? Is Trade illegal until the bureaucrats of the two blocks agree on how their respective peoples can trade with each other? Does the absence of an agreement suddenly erect some sort of hidden automatic sanctions or restrictions or tariff regime that is outside the control of the respective governments? Why wouldn’t it just be free trade initially? Sure, it Is up to the individual governments how long and how free that trade continues but one thing is for certain, trade agreements are definitely not free trade.

Just end it already. Be done with it. The Northern Ireland issue will eventually resolve itself post Brexit. In the mean time, the issue will at least prevent tariff barriers.

Tony Bennett
Tony Bennett

"EU is to Blame for the Latest Brexit Crisis"

...

No.

C'mon. Brexit was voted on in June of 2016 ... ALL they have done since?

"Miserable Squabbling"

This is ALL on the UK.

More "Miserable Squabbling" to come ... for years.

Eddie_T
Eddie_T

Welcome to the Hotel California. You can check out any time you like, but you can never leave.

The EU requires it member states to sacrifice way too much in sovereignty for the amount of benefit they get in return. Unsustainable things will (eventually) not be sustained.

Brexit was always about immigration, and little else.......if that hadn't been a legitimate issue, none of this would have been necessary. The US should pay attention, and quit pretending the unlimited immigration issue benefits anyone other than tech corporations and the flagship universities.

Scooot
Scooot

I think Boris will get the bill through parliament despite the objections, he’s demonstrated he won’t stand for those that don’t support him. Once the bill passes the EU won’t be able to rely on the UK caving into their demands because of concern about a customs border in the Irish Sea, which I guess is the objective of the bill. Will the EU cease negotiating as a consequence? Who knows but at least we’ll know where we stand by the 15th October and we can move on.

caradoc-again
caradoc-again

Mish, it's more complicated than can be posted here.
In effect the Withdrawal Agreement (WA) is valid so long as certain terms are met, including the negotiating in good faith to an end. See link below as one input.

There are opinions that the EU has breached the WA on at least the good faith element so the change is proposed so if no agreement is reached NI is not left in limbo. Breaching a Treaty in limited and specific ways.

Now, there was a court case - Gina Miller - she wanted to stop Brexit. It led to unintended consequences which now enable Parliament to vote to over-ride the Treaty with domestic legislation - that is a massively simplified explanation but powerful.

God only knows how this plays out but its one for the history books. If it goes to court we will get the full story.

It is possible this power Parliament has was in a document the EU has exposure to and was ok'ed or ratified so someone missed the implications. Likely not an open and shut case if it goes to court.

caradoc-again
caradoc-again

There will be more miserable squabbling for years. Truth will out as to who breached the WA when it reaches court. There will be some considerable embarrassment.

caradoc-again
caradoc-again

Lord Moylan: “The EU promised in the Withdrawal Agreement to recognise ‘Northern Ireland’s integral place in the United Kingdom’s internal market’, and pledged its ‘best endeavours to facilitate the trade between Northern Ireland and all other parts of the UK’.” So who’s breaking the law?

Telegraph - “The EU has systematically refused to comply with the judgments of the WTO, flouting rulings on GMO crops, hormone beef, and Airbus subsidies, as if the matter were optional.” The UK has to defend itself against predatory diplomacy, deal or no deal.

ERG delivering opinion UK actions do not break the law - TBD.

Lets see it go to court. Other examples are coming to light. EU acted in bad faith.

paul2090
paul2090

The dispute isn't about fishing rights it's about immigration. Nigel Farage has spent 20 years insulting his co members in the EU. If the EU was so demonic, why did he work for them? The British are condescending, rude and believe their the chosen people. Per capita GDP in Ireland is almost twice as high as Northern Ireland. They're tossing NI to the curb and everybody knows it. I was in Nuremberg in the run up to Johnson's election. All the British did was air their dirty laundry and vent it at Merkel and Van der Layen. England's problem with immigration isn't the EU, it's the colonies. They may have Roma that commit crimes but it's Indians that are going to run England in a few years.