Time is ticking away for a Brexit deal. If the next hurdle of the negotiations isn’t completed by December, then vaulting the remaining hurdles by March 2019 will be too difficult. Bloomberg summarised:

At a meeting in Brussels on Wednesday, the EU’s 27 governments without Britain approved work to start on their response to the prospect of the U.K. and the EU not making enough progress over the next two months to allow trade talks to begin at the end of the year, four people familiar with the discussions said. At the same time, preparations will begin in case of a more positive outcome.

The next seven weeks are critical to the entire Brexit process as time ticks down to the U.K.’s departure in March 2019. The EU needs to agree there has been “sufficient progress” on the main issues of the U.K.’s departure before negotiations can begin on a transition period and a future trading arrangement.

What a load of crap. March 2019 is more than a year away in a process that provides for two years of negotiations with an extension explicitly provided for in the law. You can’t lose a marathon less than halfway through. Someone needs to tell the Europeans the story of the tortoise and the hare.

But it’s the nature of the hurdles that is even worse. When the negotiations began, the EU declared the principle that “nothing is agreed until everything is agreed”. But now, something has to be agreed before the rest can be agreed upon.

This simply doesn’t work. You can’t agree to something without knowing the rest of the deal. Imagine agreeing to pay someone something without knowing what service they’ll render you. That’s what the EU wants!

Most ridiculous of all is the requirement to agree on the Northern Ireland border. How can this possibly be agreed upon without knowledge of the rest of the agreement? Management of the Northern Ireland border will entirely come down to the laws and trade relationship detailed in later negotiations.

You can’t agree to keep the border open if you’re going to restrict trade and immigration. You can’t agree to restrict the border crossings only to agree on free-trade and migration. It makes no sense.

This is, as Wikipedia explains, a Theatre of the Absurd:

The Theatre of the Absurd (French: théâtre de l’absurde [teɑtʁ(ə) də lapsyʁd]) is a postWorld War II designation for particular plays of absurdist fiction written by a number of primarily European playwrights in the late 1950s, as well as one for the of theatre which has evolved from their work.”

I’m too irritated to continue. How can you analyse nonsense? Suffice to say, once more, what a load of crap.

If only Britain wasn’t at risk of an economic crisis big enough to make the EU negotiations look boring. If this is correct, we might have to go asking for a bailout from the countries we just split from…


Japan is back to haunt itself

Much more interesting are geopolitical events overseas.

Yesterday, Bill Bonner outlined the economic mismanagement of Japan. Today we look at their latest bungle – to officially re-arm the country.

With his resounding electoral victory, Japanese Prime Minister Abe may have cleared the path to constitutional change. The Japanese constitution renounces war and the maintenance of armed forces with the potential to wage it.

Not that Japan doesn’t have impressive military capabilities anyway. They just called them “Self-defence Forces” and focused on the offensive wording in the constitution as a loophole. The military can even be used to self-defend allies!

But the North Korean crisis is escalating fast. As each day passes, Kim Jong-un’s military capabilities grow. It’s like a hostage taker who grows stronger over time.

You can see why Japan wants to rebuild its offensive capabilities. A first strike to defend Japan could become important.

The thing is, Japan’s military capabilities are rather extraordinary already. Their navy is likely the main power in Asian waters, not China’s (yet). Not bad for something which shouldn’t really exist according to the constitution. China’s attempt to turn the tide is another reason to re-arm.

The point being that, if Japan does decide to have a proper military, it’d be a very impressive one. They only have to grow in size, not expertise, experience, equipment, or technology like China does. They’re scaling up something that works well and is in synch with American military prowess thanks to rather a long history of training together.

A few months ago, I was walking on a Japanese beach facing Korea. As I looked up into the sky to try and spot any North Korean missiles, I fell into a drainage ditch. My potential grandparents in law sat in the car crying of laughter.

And so it will go with Japanese policy. If Abe rearms, there’ll be more trouble, not less.

An update from the land of Oz

Apologies for my absence yesterday and the day before. I’ve returned to Australia from our conference to discover the government is toast. As ever, Australia’s problems are absolutely pathetic compared to Europe’s. But this time, far more hilarious.

Australian law requires its members of parliament to be Australian citizens only. No dual nationality allowed. Unfortunately, a whole swathe of MPs recently discovered to their horror that they we also foreign nationals.

Today, the High Court of Australia ruled that five of the seven miscreants were ineligible to serve in Parliament. Unfortunately, they weren’t arrested, imprisoned or fined like the rest of us lawbreakers.

Instead, there’ll be by-elections in their seats. Most are senators, sitting in Australia’s version of the House of Lords. But enough are in the lower house to become a problem for the one-seat majority there.

Two of the seven escaped the chop. One because he didn’t “activate” his Italian citizenship, despite his mother getting hers. The other because he is a British Overseas Citizen, not a British Citizen. The confusion has something to do with Cyprus leaving British rule and the precise departure date of his father.

The funniest news is that the leader and deputy leader of the coalition’s National Party are two of the victims of the law against foreign nationals. Not to mention, you should’ve seen the slinging matches and waterfalls of Karma as one after the other the politicians criticised others for being foreign citizens, only to discover they themselves are.

And so, Australia is set to follow the global trend of having a referendum. It’ll be to change the rules to allow dual nationals to serve. Compared to the referendum movements overseas, it’s a boring one. But at least we got a laugh in the meantime.

Until next time,

Nick Hubble
Capital & Conflict