Nick Hubble – Capital and Conflict (Great Britain) –
When you last saw me here in Capital & Conflict, we were on the road to an unexpected Brexit vote. I woke up on the day of Brexit to find my housemates utterly furious because they wouldn’t be able to visit Spain any more. I left to become a flying trapeze artist in Phuket the next day. But that’s another story.
As I tried to tell my housemates, Brexit is just a vote to leave the EU. It’s not a vote for something. The UK’s policies are all to play for. When the dust settles and British politicians decide on British policies, who knows what they’ll come up with. We might end up more pro-trade and immigration than the EU. We might provide more civil rights, and allow more refugees into the country.
With the power to make decisions back in our own national hands, we could even adopt the euro or invade Normandy. Anything is possible once we’re making our own decisions. We should focus on being better than the EU, not moan about being different to the EU.
Nobody knows what our politicians will come up with once Brussels isn’t dictating things. I’d hope the average British politician is better than the average EU one, whatever “better” means in your opinion. The majority of British voters will soon get what they want, not what the majority of EU voters want. Theoretically that’s how a sovereign democracy works, anyway.
My bet is that the typical British voter is more pro-trade, immigration and free-market than the typical EU voter. Maybe not by much, but still. Inside the EU, Britain consistently pushed liberal ideas and was held back. British history is firmly on the free-market side of the scale compared to Europe. And during the campaign EU politicians were worried Britain will be an economic success story outside the EU once it loses its shackles.
If I’m right about our voters and politicians, Brexit will be a good move. The snag is the Brexit negotiations that will have to happen first. The EU could cut off its nose to spite its face, doing serious damage to us both. So let’s take a look at how those negotiations are taking shape…
Brexit negotiations aren’t about the UK
You might think the Brexit negotiations are going to be about the UK and its relationship with the EU. But you’d be wrong. To understand what’s going on, you need to think about this in terms of individuals and the incentives they face.
The British negotiators will want to look tough but fair. They have to appease their electorate and respect the referendum without ruining ties with Europe. That could be a difficult balance. But I think the referendum was just a rejection of the EU, not a vote for closed borders with Europe.
The British side isn’t as interesting as what the EU negotiators face. EU politicians and public servants are worried about their jobs given the dramatic changes afoot in EU institutions. Those very institutions are at stake if Brexit is a success and other countries seek to follow Britain’s lead. And that means EU negotiators have their eyes turned to the continent, not to the UK.
The Europeans’ goals for Brexit negotiations will be all about discouraging other countries from leaving the EU. That’s because their own careers are built on the EU continuing about its weird and wonderful ways. In other words, for EU negotiators, the talks with Britain will be about what’s happening inside Europe, not the European relationship with the UK. They’re watching France’s Marine Le Pen and Holland’s Geert Wilders, not Britain’s trade balance with the EU. And they must be worried.
About half of Europeans polled by Ipsos Mori in April last year wanted their own referendum. About a third were in favour of their own country’s exit. Now that the apocalyptic warnings about a Brexit vote are discredited, those numbers will be more in favour of a breakup of the EU.
The pro-EU heartland is turning
Even the French farmers are turning away from the EU. Which is quite a surprise given the infamous subsidies they receive for leaving their fields fallow. What’s gone wrong? Believe it or not, French farmers are complaining about the cost of EU regulations.
Pig farmer Bertrand Hourdel told David Chazan of The Telegraph that EU regulations are a “straitjacket”. A straitjacket that comes with 40,000 euros in subsidies for Monsieur Hourdel, mind you. But he says compliance costs him far more.
Monsieur Hourdel is on to something. His French labour regulations make his employees an expensive nightmare, while the Germans use eastern European labour. The expensive EU regulations on pig farming don’t even apply in Spain. The EU’s sanctions on Russia destroyed its own farmers’ major export market. And the EU got rid of its milk production quotas, increasing supply and crushing the price. Put all this together and you can see just how politics has made a mess of things for French farmers. They’ve had enough of the EU.
Their solution is of course is to vote for Le Pen, who proposes restricting imports of agricultural products and has a pro-Moscow position. If you’re put off by her nationalism, the mainstream political solution is to make Europe’s awful regulations apply everywhere equally. Ruining France wasn’t enough. But good luck imposing tens of thousands of euros of compliance costs on Spanish pig farmers. Either way, more politics is always the solution to political problems if you ask politicians.
But what of British farmers? Will they be freed of some straitjackets if the UK leaves the EU? Remember, it depends what the British government comes up with to replace the EU’s meddling. If we make the same mistake as the French and propose more political solutions, it’ll just be a slightly different mess.
Anyway, the EU’s Brexit negotiators have a lot of anti-EU sentiment creeping up on them. If they did an honest job of representing this sentiment, they might end up with France, Italy and Greece negotiating alongside the UK instead of inside the EU.
But I doubt they’ll see the error of their ways, given who President Jean-Claude Juncker appointed as chief negotiator for the EU. We’ll introduce him tomorrow…
Until next time,
Editor, Capital & Conflict