Regulatory Series on Cryptocurrencies: US SEC Reviews Recently Declined Bitwise Bitcoin ETF Application
Cryptocurrency Derivatives Series: CFTC Reckons ‘Digital Assets and Blockchain Domain Needs Principles-based Regulation Over Rules’
Digital Currency Revolution Series Fidelity Investment, Now NYDFS Licensed To Offer Bitcoin Trading Platform
Brexit turmoil: five ways British MPs misunderstand the European Union
With Theresa May on her way back to Brussels in an attempt to renegotiate a Brexit deal that has already been agreed, it’s once again clear that she and the parliamentary colleagues who sent her on her journey still harbour some fundamental misunderstandings about how the European Union actually operates and what it’s members think, even two years into talks.
Those who know how the EU works, such as the former UK permanent representative in Brussels, Ivan Rogers, are tearing their hair out over the level of ignorance and wishful thinking on display.
At this crucial stage in the Brexit process, it’s important to explore why so many MPs, both Tories and Labour, misjudged the situation and what is realistically on offer. These are some of the problems that have ultimately caused such failings. They need to be recognised as soon as possible if the UK wants to thrive regardless of the Brexit outcome.
1. Labour lost interest years ago
Knowledge of the EU and professional connections in Brussels have been eroding in the UK over the years because of declining priority given to it by leaders. Under Tony Blair, the government was keen to set the agenda for EU. This started to change under Gordon Brown, who showed little interest in, or appreciation of, Brussels politics. Labour’s loss of knowledge continued the longer it stayed out of power and some former ministers left parliament, but also because those MPs with experience of governing under Blair were being sidelined under new leader Jeremy Corbyn. Corbyn himself, a lifelong eurosceptic, tends to see the EU as an unreformable neoliberal project.
Now, he erroneously thinks that delivering the 2017 Labour manifesto requires freedom from EU state-aid rules. If EU membership is perceived as a problem, there is no need for coalition building with the socialist parties in Europe who want to stay and reform.
2. The Conservatives abandoned their friends
The Conservatives’ understanding of the EU suffered from David Cameron’s early decision to withdraw his party from the conservative grouping in the European parliament in exchange for Brexiteer support for his leadership. This cut off the Conservatives from the European mainstream, damaged relations to sister parties such as the German CDU, and disrupted information flow and influence. As a result, British MPs overestimated both Germany’s capacity and willingness to accommodate British demands.
The 2011 watershed failure of the government to block the fiscal compact designed to save the eurozone was the first sign of misreading EU partners, closely followed in 2015 by futile efforts to block Jean-Claude Juncker becoming Commission president after his party grouping won the European Parliament elections.
3. They can’t see the EU’s viewpoint
British MPs, and to some extent the British public, suffer from mirror-imaging when it comes to Brexit. This is when we deal with uncertainty about the intentions of the other side by imagining what is rational from our own point of view. From the perspective of many British MPs, the EU insisting on the backstop even if it risks a no deal is an irrational strategy given the economic damage it would incur.
Many also don’t understand why Britain could not enjoy the same kind of access to the single market as before. Why would the EU block its access and, at the same time, create new barriers for European businesses trying to operate in the UK? This reflects a strong tendency in British political discourse to evaluate policies, and the EU in particular, from a short-termist bottom-line perspective.
The EU sees Brexit not just on its own terms, but as a precedent-setting issue. How it deals with this matter will define its credibility in the future. Cutting a deal with Britain would come at the unacceptable price of weakening the union at a time when populist parties in member states are rising. The integrity of the single market is at stake if Northern Ireland leaves the customs union without border controls or if Britain is allowed to undercut standards to gain competitive advantage while enjoying good access to the single market.
4. They aren’t used to compromise
Furthermore, many British MPs struggle to understand that EU politics is largely defined by compromise. They see Brussels through the lens of their own confrontational system, where two parties dominate in first-past-the-post elections and are heavily whipped to toe the party line.
Many continental European countries are run by coalition governments and parliaments focuses on problem-solving. They more readily understand the give and take in Brussels. The EU is a compromise-making machine geared towards building the broadest possible support among its members. This only works because members agree on informal rules on how to act and share a certain amount of trust.
Casting vetoes, going into battle with publicly announced red lines and reneging on agreements has lost the UK trust and goodwill. That lost trust has now become a major obstacle for negotiation success.
5. They’re stuck in outdated assumptions
Finally, MPs have failed to update their thinking. Their perceived understanding of how Brussels works no longer applies. They are remembering the long EU summit negotiations of the past and the late-night compromises that typically enable a deal to made.
But Brexit negotiations are unlike EU summits where everyone needs to have prizes to sell at home. By deciding to leave, Britain has placed itself in a fundamentally different position. It is now a prospective “third country” against which the remaining EU members must defend their interests. The EU is keen to get Brexit done, and will show flexibility – but it’s not going to let either Ireland or its mandated negotiator, the European Commission, stand in the rain on a such a solidarity and credibility defining issue.
The need to address these misunderstandings is pressing, whatever the outcome of Brexit. It will be central to making a success of the coming negotiations about future relations if May’s deal passes. Remaining successfully would require a major change of attitude. And even if Britain crashes out, it will still be connected to the EU by virtue of geography, economic links, law, security and, indeed, people.
As long as the EU exists and confounds Brexiteers’ predictions of its imminent demise, Britain, without a seat at the table, will need to understand how it works. How else can it influence the EU from the outside?