The Shell Deal Option

By the editor, Jun 10 2020 01:41PM

Brexit is back in the news. Having been ousted by Covid-19 for a while, the two topics have become linked, and the decision on whether the transition period should be extended has become more pressing.

Little progress appears to have been made in negotiations on a potential deal. The UK has repeatedly stated its refusal to extend the transition period. Since there are 3 basic options - a deal, an extension, and no deal - it's logical to conclude from all this that a no deal result is the most likely.

However, each of these options includes variations. For example, just as with a pre-Brexit 'no deal', there are different angles of cliff edge to a no deal outcome this year, depending on what 'mini-deals', if any, might be agreed. Alternatively, an extension of 6 months, with no progress on talks by the end of the year, may be little different from a no deal outcome, and very different to a 2 year extension.

There are also different sorts of deals. The negotiations are apparently aiming at an all-encompassing deal, and it is this that many commentators consider to be unrealistic in the time available, hence the calls for an extension. But there's nothing in the Withdrawal Agreement I can see that requires the UK and EU to reach a deal that covers everything, or most things, or indeed anything in particular. They could reach a very limited deal that left most points to be determined later. So there could be a deal that effectively provides for an extended transition period (whether 1 or 2 years or more), at least for all the contentious matters, while perhaps securing some limited, uncontentious, permanent changes.

Why would the UK Government be interested in such an option? There are a number of reasons.

1. The poor alternatives. The Government won't get a comprehensive deal that it wants in the time available, and it won't want a deal that gives the EU everything it wants. It is said that some in the cabinet are bullish about a no deal outcome, but even if that's right, there are others who will be less keen. If those making the key decisions in Government consider that there's a reasonable chance of some signficant problems from a no deal outcome, such as chaos at the ports and food and medicine shortages, they may be keen to avoid this if they can.

2. The hard decisions - on regulatory standards, the borders with Northern Ireland and so on - can be delayed till after the Covid-19 crisis is over, and there's sufficient time to reach both internal and external agreement on them.

3. Popular support. Polls suggest increased support for a transition extension since the Covid-19 crisis, and the fact that a deal was reached (even if it achieved a very similar result) might appease some Leavers who would have opposed an extension. Meanwhile, polls also show that the importance of the EU to voters has decreased significantly. Many voters, of course, were happy to see Brexit 'done', and aren't too bothered about the details.

4. It could be sold as a victory to the hardcore Brexiteers and media. The Government's critics are currently attacking it for refusing to consider an extension, and for failing to make progress on a deal. The Government could claim it had confounded those critics - not backing down on the extension, and getting a deal when the 'liberal elite' said it was impossible. (It would be helpful in this regard to include something in the deal of symbolic importance, even if of little actual consequence, e.g. on fish, which the Government could claim as a massive victory.) They'll say Boris Johnson has proved yet again that he can defy expectations. The elite underestimated him before, when they said he couldn't get a new Withdrawal Agreement - but he did. They underestimated him this time when he said he couldn't get a deal - lo and behold, once again he's pulled it out of the bag! The critics, of course, also pointed out before that his new Withdrawal Agreement was essentially the same proposal that he and other Brexiteers had previously rejected. It didn't matter - or didn't matter enough. Would the Brexiteers buy it again?

That seems to be the crucial point. Boris Johnson is of course not an ideological Brexiteer, and will be most concerned about public support and party unity (both currently heading in the wrong direction). The option above would appeal to him, if he could get away with it. But who else is key to the decision? Dominic Cummings is one, of course, and Brexiteers have mobilised behind him recently, after his Durham escapades, to 'keep Johnson honest' on the extension issue. For Cummings, Brexit is part of a bigger revolutionary project, and we don't know how important he considers a 'clean break' this year. Who else is key? Michael Gove, who seems to flit between ideological certainty and political pragmatism? Rishi Sunak, whose hardboiled Brexitism might or might not have softened from exposure to Treasury orthodoxy and leadership ambitions? And then there are the Conservative backbenches, which control Johnson's fate, now purged of Remainer dissidents: how ideological are the new MPs; to what extent have they been merely mouthing Brexiteer slogans, and to what extent actually believing them? We ought to recall that, once upon a time, Brexiteers were dead against any transition period at all, but ended up fully behind the current Withdrawal Agreement. But for how much longer would they be prepared to stomach 'BRINO'? Might enough of them fear (and this might be behind the Brexiteer support for Cummings) that a failure to achieve a clean break this year will destroy the dream forever?

Even if the UK Government proposed such a deal, there's no guarantee, of course, that the EU would agree. Though given the unpalatable option of no deal, and given a refusal to agree to an extension, it may not seem such a bad result for them either.

We may still be hurtling towards a no deal outcome. I'm still glad I bought my spare freezer last year, and have no intention of selling it. But there does seem to be a realistic alternative, if those in power want to take it.

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