More on the Brexit (probably #15+): strategic and tactical errors

The Economist reports thatin a statement and, later, a full debate this week David Davis, the Brexit secretary, rejected repeated demands by MPs that Parliament should have a vote over the invocation of Article 50 of the EU treaty, the legal route to Brexit. Article 50 sets a two-year deadline after which Britain will cease to be a member unless the other countries of the EU 

great briitain leaves european union metaphor

unanimously agree to an extension. Mr Davis argued that the Leave vote in the June 23rd referendum gave the government sufficient authority to invoke the article, which it plans to do by the end of March … [and] … The issue is not just political but legal, as two court cases, one in London and the other in Belfast, show. The High Court began hearing the former this week. The core argument is over whether the government is right to be relying on the royal prerogative that gives it sole authority to make (or unmake) treaties. The plaintiffs claim that the EU goes much deeper than other treaties, for instance in conferring citizenship rights. They also argue that, because Article 50 can lead automatically to Brexit, invoking it may in effect overturn the 1972 European Communities Act, breaching the principle that a parliamentary act can be reversed only by another act … [and, further] … The Northern Irish case adds another argument, which is that Britain’s EU membership is entrenched in both the 1998 Good Friday peace agreement and the subsequent Northern Ireland Act. The plaintiffs in Belfast say that Britain’s membership can be overridden only by a change in the act, which requires the assent of Northern Irish voters, giving them an effective veto over Brexit (a majority in the province voted to Remain in June). The two cases are likely to be joined before the Supreme Court in London, which has already set aside two days to hear them in December.

Why is the government so resistant to letting Parliament vote on Article 50?” The Economist queen-elizabeth-ii-3asks. “One answer, “it explains, “is a narrow desire to protect its royal prerogative. It is similarly loth to give the devolved administrations in Northern Ireland (or Scotland or Wales) any direct role in Brexit negotiations. Yet over the centuries the royal prerogative has been eroded, most notably through judicial review. One former senior legal adviser calls the government’s defence “surprisingly weak”, suggesting that the Supreme Court may yet rule against it … [but] … The bigger reason for the government’s intransigence is political. Brexiteers’ deepest fear is that Remainers may yet manage to overturn the referendum result. Mr Davis argued that the 17.4m voters who backed Leave constituted the largest mandate in British history. And he said that MPs who demanded a vote were confusing accountability, which the government promises to observe through many questions and debates, with micromanagement of negotiations best carried out in secret … [and] … The underlying problem about Brexit is that, although voters decided by 52% to 48% to leave the EU, they said nothing about what should replace membership. In particular, they did not vote to leave the EU’s single market, which is what backers of a “hard Brexit” now favour. Indeed, as Sir Keir Starmer, the new shadow secretary to Mr Davis, reminded him, the 2015 Tory manifesto that promised the referendum also pledged to “safeguard British interests in the single market”. Nick Clegg, the Liberal Democrats’ former leader, justifiably asked what constitutional principle gave the government the exclusive right to interpret what Brexit meant and to impose that on the country, rather than protecting the rightful role of Parliament.

scales-and-gavel

stone_age_weapons_000013698887smallThe royal prerogative is an important constitutional principle, which also underlies our,Canadian, constitution, but, like all all such constitutional conventions, it is one that is continuously variable. The Economist says it “has been eroded” over the centuries but I prefer to think of it as a large wooden club that has been whittled down and shaped and polished into a nice, effective gavel. But, like a judge’s gavel, it we really don’t, or shouldn’t, anyway, want to see it used too often. The royal prerogative has its constitutional origins in medieval times … it is a very useful thing to have but it doesn’t bear a lot of legal scrutiny because it is a convention, not something written down in statutes with which judges and lawyers can parse and debate. It can be used, needs to be used, now and again, and should be used with great care.

Ambrose Evans-Pritchard, writing in The Telegraph, explains why Prime Minister May’s government is taking the wrong course: “If the central purpose of Brexit is to restore the supremacy of Parliament,” he says, then “we should congratulate Labour for forcing a debate on the proposed terms of withdrawal. Let us demand that MPs should have a vote as well … [because] … Brexit belongs to no faction. The referendum was not an election where the winner takes all. The circumstances are entirely sui generis and extremely delicate … [and] … Both Scotland and Northern Ireland voted to remain, and the constitutional implications of this have yet to be confronted. A great majority of those below the age of thirty opposed Brexit, and many feel betrayed. It amounts to an inter-generational crisis … [further] … The exact contours of Brexit were never defined. There was no Manifesto. The binary ballot presented to us on June 23 – nolens volens – contained not a single word about immigration. Many who voted to leave the EU want a liberal, amicable, open settlement with Europe … [and,, finally] … It is the proper role of Parliament to discern the national will, and to impose its verdict on ministers. Theresa May is well-advised to bow to this imperative before Article 50 is triggered, even if raucous wrangling in the House greatly complicates negotiating tactics with Brussels.

But, he cautions: “That said, one must guard against certain vested interests in the City that are actively seeking to whip up hysteria in financial markets. There is an attempt underway to create a bad Brexit narrative in the hope of overturning it, or at least to frighten the country into a minimalist outcome that achieves much the same thing … [because] … The interests of the financial elites should not be conflated with the national interest. A legitimate case can be made that they are in conflict .. [and] … Paul Krugman, the Nobel trade theorist, says the UK has been suffering from a variant of the “Dutch Disease”, an over-reliance on finance that drove up pound and hollowed out manufacturing industries. This economic deformation has greatly enriched London’s financial set and those who service its wealth, if non-one else.

Mr Evans-Pritchard explains further that “There may be serious economic trials ahead as we extract ourselves from the EU after more than forty years, but the slump in sterling is not one of them. The devaluation is necessary and desirable. The pound is now near ‘fair value’ based on the real effective exchange rate used by the International Monetary Fund … [and] … All that has happened is a correction of the extreme over-valuation of sterling before Brexit, caused by capital inflows. This left the country with the worst current account deficit in peace-time since records began in the 18th Century … [thus] … The fall is roughly comparable to the devaluation from 2007 to 2008 – though the same financial elites who talk so much of Armageddon today played it down on that occasion, mindful that their own banking crisis was the trigger.

But there is a deeper point today,” he goes on to explain, “that is often overlooked. Central banks across the developed world are caught in a deflationary trap. The ‘Wicksellian’ or natural rate of interest has been falling ever lower with each economic cycle and is now at or below zero in half the global economy,  a full seven years into the expansion … [and] … This paralyses monetary policy and has dark implications for the next downturn. It is why central banks are desperately trying to drive down their currencies to gain a little breathing room, or in the case of the US Federal Reserve to stop the dollar rising … [but] … By the accident of Brexit, Britain has pulled off a Wicksellian adjustment that eludes others … [and] … With luck,  the economy may even generate a few flickers of inflation, enough to let the Bank of England raise interest rates and start to restore ‘intertemporal’ equilibrium.

Which brings us back to the “soft” versus “hard” Brexit. Ambrose Evans-Pritchard says that “Personally, I have been in favour of a “soft Brexit” that preserves unfettered access to the single market and passporting rights for the City, but not at any political cost – and certainly not if it means submitting to the European Court, which so cynically struck down our treaty opt-out on the Charter in a grab for sweeping jurisdiction … But what has caused me to harden my view – somewhat – is the open wtyrLqLintimidation by a number of EU political leaders. “There must be a threat,” said French president Francois Hollande. “There must be a price… otherwise other countries or other parties will want to leave the European Union.”” In other words, some European leaders, notably from Europe’s Latin or Romantic Southern tier, might want to punish Britain … which would, very likely amount to shooting themselves in the foot.

These,” Mr Evcans-Pritchard says, of President Hollande’s remarks, “are remarkable comments in all kinds of ways, not least in that the leader of a democratic state is threatening a neighbouring democracy and military ally. What he is also admitting – à son insu – is that the union is held together only by fear. He might as well write its epitaph … [because] … Mr Hollande and German Chancellor Angela Merkel invariably fall back on the four freedoms -movement, goods, services, and capital  -enshrined in EU treaty law, as if they were sacrosanct … [but] … These freedoms are nothing but pious shibboleths. They often do not exist, and where they do exist they are routinely honoured in the breach. Services make up 70pc of the EU economy yet account for just 22pc of internal EU trade. All attempts to open services up to cross-border commerce have been defeated, to the detriment of Britain … [and] … The sorry saga of the Services Directive in 2006 tells all you need to know about how the EU works. “The French and Germans gutted it,” said Professor Alan Riley from the Institute for Statecraft … The ‘country of origin rule’ that would have allowed firms to operate anywhere in the EU under their own domestic law was dropped, casualty of the “Polish plumber” scare. The directive did not cover health care, transport, legal services, professions, tax experts, and the like. Germany protected its guilds … Online and digital trade across borders remains minimal, riddled with barriers. Britain’s All-Party Parliamentary Group for European Reform concluded that “there is no single market in services in any meaningful sense.”

As Brussels correspondent I covered the parallel fiasco of the takeover directive,” he goers on to explain, and “This too was sabotaged by France and Germany,  after fourteen wasted years. They reinstated poison pills and a host of tricks in an explicit attempt to stop ‘Anglo-Saxon predators’ taking over their companies, even as their own companies were free to stalk British prey … “It was disgusting,” one Commission official told me at the time. Frits Bolkestein, the quixotic single market chief, was despondent.  “It is tragic to see how Europe’s broader interests can be frustrated by certain narrow interests,” he said.”

So much,” he says, “for the freedoms of capital and services. Nor has the free movement of people been strictly upheld. France and Germany – unlike Britain – blocked access to their labour markets and welfare systems for East Europeans for seven years after they joined the EU in 2004. It was a political decision … [and] … The four freedoms are really just aspirational guidelines, enforced when expedient, neglected at other times. The rigid exhortations from Paris, Berlin, and Brussels that there can be no free trade with Britain unless there is unrestricted migration – even after leaving the EU – is politics masquerading as principle. If they want to find a compromise solution, they can do so easily.

In fact, he suggests, a “hard” Brexit may be the better choice because it will, sooner rather than later, show the Europeans that they need Britain at least as much as it needs Europe.

So how does this relate to a parliamentary debate?

Well, the “raucous wrangling in the House” that, Mr Evans-Pritchard suggests “greatly complicates negotiating tactics” will, I believe, inform the Europeans that the British are less divided than many think and that they are, in fact, better prepared for a “hard” Brexit than is Europe. It will give British Brexit proponents a chance to enumerate the many and manifest failings of the common market. It will give Bexit opponents an opportunity to pressure the government into announcing some defensive measures that may make many Europeans think twice about not offering Britain a soft(er) Brexit than President Hollande envisions. It will also give the British people an opportunity to revisit how they see their relationship with e.g. Australia, Canada and New Zealand versus their relationships with, say, Austria, Croatia and Malta.

The whole Brexit process is a crisis of sorts. It is not true that, in Chinese, the words for crisis and opportunity are the same, but there is a saying in Chinese that “危机与机会并存/机遇与挑战并存” which means, roughly that challenges and opportunities coexist or there are opportunities to be found in crises. So it is with the Brexit: yes it is a crisis and a “hard:” Brexit may be a bigger, more complex challenge than a “soft” Brexit. But there are also commensurate opportunities for Britain and for Europe. The best way to find the opportunities is to explore the crises through open, reasoned debate.

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