McShane on Brexit

I am a UK citizen, a German civil servant about to be pensioned, who also studied and worked in California. I have considered myself an EU citizen and still do so. Readers may well understand why pending Brexit is worrisome as well as saddening for me. It is also frustrating in that there are 1.2 million of us UK citizens living and working in the rest of the EU, many of whom – all of us who have been 15 years or longer non-resident in Britain – were denied a say.  As if professionals such as myself didn’t have enough bureaucracy in our lives already, the consequences of the June 23 vote have added another layer, necessarily taking away from effort spent, in my case, on technical matters in system safety and security. It’s been hard in any case, because of the Brexit brouhaha, to maintain intellectual focus on my technical work in the last few months.

To my mind, one rational reconstruction of Brexit-vote politics is as follows. The UK wanted to impose restrictions on internal migration from other EU countries to the UK while retaining access to the single market. This is against the EU constitution, which declares the freedom, without restriction, of EU citizens to live and work in other EU countries than that of their citizenship. This British position was discussed in the European Council, which was unwilling to restrict the freedom of movement. The British government has declared its intent to invoke Article 50 and leave the EU. (A change of UK government is not practically in sight.)

A number of things could happen. The placatory option: the European Council could decide that it wants Britain to stay, fudge the free-movement issue to satisfy the British government on the undertaking that the UK will not leave (i.e., not invoke Article 50 within the current governmental period) and leave the British government to sort out the British politics of that. The mistake option: the UK declares to the EU that it made a huge mistake and it’s not going to leave, and sorts out the UK internal politics of that (as well as attempting to recompense for wasting the time and effort of all its EU colleagues). The spoiler option: the UK government could declare (and mean it) that it is not going to invoke Article 50 until there is an almost-certain prospect of various treaties, with the rest-EU and with other countries, that satisfy it. The self-destruct option: the UK could invoke Article 50 before it has any good idea of what it can negotiate and how satisfactory to UK interests the negotiations will turn out to be, and hope that by invoking a time-limit the UK will get a better deal than otherwise. The give-up option: nobody on any side has the resources to perform all the necessary negotiations, so everybody will just go through the motions (invoke Article 50, meet for two years), try to do the best they can and hope everyone is going to be nice to each other and look out for each other because they think it is in their mutual best interests to do so.

These are just five options. Readers are hereby invited to think up more of their own. There is lots to say about these options, and this is surely what professional negotiators with a suitable background in game theory will be discussing. But it is not generally the way people writing in newspapers seem to be discussing it.

For example, the politician Denis McShane published an article in The Independent newspaper on 2016-08-08 giving 12 observations why Brexit might not happen:

MacShane is plumping either for the mistake option or the spoiler option here. I enjoyed reading the article, but it’s not a set of reasons for either of those options. Much of the logic is missing. Being a logician, I was tempted to supply some of it. Here goes (I won’t necessarily succeed!).

Many of MacShane’s “reasons” sound more like observations on the current miserable state of professional-political behaviour in the UK, of which there are surely many more than 12, than they seem like reasons why Brexit may not happen. For example, Point 4 bemoans a lack of formal Opposition performing its constitutionally-conceived task of representing those who did not vote for Brexit:

The duty of Her Majesty’s Opposition (although apparently not the Labour Party right now) is to oppose. Someone has to speak for young, the Scots, London and modern cities as well as the four million people who signed a parliamentary e-petition calling for debate on second referendum. In fact, 63 per cent of the UK registered electorate did not vote for Brexit.

This is all true (though I didn’t check the 63% figure). It forms a lament, not a reason for non-Brexit. To be turned into such a reason, the premisses need to be added that

  • 4a: such an Opposition will arise, and
  • 4b: that Opposition will effectively represent the 63% of the electorate (MacShane says) who did not vote for Brexit

This would be nice. But both 4a and 4b are open to doubt.

Point 8 also doesn’t seem quite like a “reason”:

There needs to be early clarity from Paris, Berlin and Brussels on whether or not all £100trn worth of euro trades and clearing can stay in London once the UK is outside the EU. Confusing and contradictory statements from EU commissioners encourage complacency in the London press that the City really won’t face any financial loss if Brexit is consummated. That may not be the case, and UK citizens need to understand the true implications of the decision to leave.

This observation puts a demand on the UK’s EU neighbours to behave in a way which would help the UK’s interests. I don’t know if people have been paying much attention, but the UK has been doing quite a bit of such demanding in the EU over the last six years, and it hasn’t always turned out the way the UK wanted.

If there is a family member making demands, who says “if you don’t do what I want, I’m going to shoot myself in the foot ” and then goes ahead and does it, then besides offering first-aid and calling the ambulance, it’s not clear what you should do. You could accompany the victim to the hospital, administering the anaesthetics and transfusion, operating on the foot, repairing the bones and tissue, and then staying night and day with the patient until all is well and promising everyone in sight that you will do everything in your power to hinder any further such self-injury. Or you could wave the ambulance goodbye, with sadness and good wishes, and then wait until the hospital calls with news that the patient is recovering and would like a visit.

The UK has been making demands on its EU neighbours which have been hard to accommodate. Brexit is another, much heavier, demand, which will take time and effort to negotiate, and it is not just the UK which is short on the resources for that but everyone else as well. There is inevitably a certain amount of resentment.

No one knows yet whether all that trading will (be able to) stay in London. Being clear about it could help the UK to understand the enormity of what it’s doing, and could change some UK Brexit-voters’ opinion on whether indeed it would be a good idea to leave the EU. Or not. But why do EU Brexit negotiators need to be clear on it to a UK-convenient timetable? There are other places in the EU who’d like to take over some of that business; their governments are surely going to be looking out for that opportunity and may well negotiate against any UK interest in retaining it. And choosing their own timetable to do so.

Point 8 could be a reason why Brexit will not happen if the additional premisses are supplied:

  • 8a: Brexit is against the interests of EU members both in general (it would be bad for the EU as an organisation) and in particular (it would be bad for Germany in this way; bad for Poland in that way; bad for Italy in……. and so on);
  • 8b: other EU member states recognise that, and
  • 8c: are willing to do what it takes to avoid Brexit, and
  • 8d: being clear about whether Euro trades and clearing can continue to be executed in London is one of those things.

It would be nice. Indeed, I think 8a is true for the EU as a whole, and true of many individual members (sufficiently many? I don’t know). Point 8b is, I think, partially true. Certainly there are many informed Germans who think that Brexit is bad for Germany as well as for the EU. But point 8c sounds to me like wishful thinking. For one thing, few people in the rest of the EU believe they have any influence. The very simplest means to avoid Brexit is for the UK not to invoke Article 50, and that action does not depend on other EU members. And, second, once Article 50 is invoked then the UK will leave. So it seems to other EU members, with reason, that there is not anything very much they can do about encouraging or avoiding Brexit. And 8d is, well, almost the entire Point 8. Any reasoning in this point so far is looking almost circular to me.

Let’s try to fix it. Consider the following propositions connecting euro trading and clearing in London with Brexit negotiations:

  • 8x: If the EU is clear that euro trading and clearing on the current scale cannot remain in London upon Brexit, then the UK will reconsider Brexit and not invoke Article 50;
  • 8y: If the EU is clear that euro trading and clearing on the current scale in London can remain more or less as it is upon Brexit, then …. what?

Many variations on Item 8x were exercised before the June 23 vote. None of them avoided a vote for Brexit. So if the UK is to reconsider, it’ll be the government reconsidering, not the voting populace. The government already has access to the information and reasoning concerning the business of euro clearing and trading in London, and much more possibly-affected economic activity besides. No one in the UK government has given any indication that they will reconsider Brexit. So I consider 8x implausible.

Complete 8y whichever way you please. If you complete it with “the UK will reconsider Brexit and not invoke Article 50 ” then it would suffice to establish a Point-8-like point, but it would also be a whopping non-sequitur.

So I don’t see there’s any way to rescue Point 8 as a reason for non-Brexit.

Now to Point 9:

No one wants to be rude, but EU leaders may be doing Theresa May a disservice by not being frank and clear that the UK will lose access to the single market by leaving the EU. While trade in goods continues under World Trade Organisation (WTO) rules, the service sector exports in which Britain does well in Europe, and which are not covered by the WTO, are not going to survive a full Brexit.

Again, this is not a reason against Brexit. It would be a reason if premisses 8a, 8b and 8c are added, along with the premisses

  • 9a: if it is clear that service-sector exports are not protected upon Brexit, then UK opinion will turn against Brexit; and
  • 9b: there will be a chance for that opinion to attain governing force in the UK (another referendum; a decision of Parliament)

Now Point 10:

Brits need to understand that Article 50 negotiations only cover a small number of issues, such as who pays for the pensions of UK MEPs and other Brits working for the EU who will be dismissed, and the transfer of the European Medicines Agency and European Banking Authority from London.

The other issues – devising a visa and work permit scheme, for example – will take many years of talks to conclude, and will only get under way once Article 50 talks are over and the UK plays no part in the EU. That could be 2019 at the earliest, before the start of the next Commission cycle 2019-2024. Spain has just signed a trade deal with China to export plums; it took eight years to conclude. There is no chance of a ‘quick Brexit’.

Again, not a reason against Brexit. Premisses need to be added similarly to those above (this time, an exercise for the reader).

Yes, it’s a mess. There is a point to suggesting that the UK will not be able to pull off a half-way satisfactory Brexit. There is a point to shouting it loudly from the rooftops. Indeed, the Institute of Fiscal Studies said a week ago that EU membership was worth 4% of UK GDP:  If more is needed than that to persuade the UK voting public as well as its government that Brexit is a mistake, I wouldn’t know what it would be. Certainly not any of MacShane’s dozen.


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