Ça commence

29 February 2020

The extent of Johnson’s ambition is emerging, with his administration setting the scene for thoroughgoing domestic reform. Eventually this may encompass going after the BBC, the judges and who knows what else, but for the time being it’s best to aim off these targets. Here and now, it’s all about Number Ten controlling delivery, for which Cummings is Boris’s gadfly, enforcer, trouble-shooter and lightning-rod. Patel has a similar role, particularly as to this last. And make no mistake, both will be out when it suits their boss: remember Edwina Currie, late-eighties lightning-rod to Thatcher.

Boris’s current bidding is what new PM’s always want: to “take control” by asserting the pre-eminence of Downing Street over ministerial waywardness, by preferring elected and appointed officials over the permanent Civil Service. This is the context for the elevation of Sunak over Javid, stemming from Number Ten’s wish to centralise Treasury SPADs, with additional talk of its PUS, together with those at the Home and Foreign Office, in Cummings' cross-hairs. Frost’s speech in Brussels should also be seen in this light: his Burkean parable was as much to encourage his former FO colleagues to toe the new line as to inform EU decision-makers.

-o-

This takes us to the position of the parties ahead of negotiations next week. The EU’s guidelines put familiar tanks on the lawn, with thirteen references to a “level playing field”. Oddly enough, the UK’s approach has none. The EU presses its Court as ultimate arbiter, while the UK mentions it only to reject it. The EU also threatens a showstopper on judicial cooperation, insisting that the UK continue to regulate human rights under the ECHR system (EU, paragraphs 11 and 118), whereas the UK reserves its right to plough its own furrow (UK, paragraph 31). The EU’s demands are balanced by goodies, not just trade but also ancillary programmes, eg, Galileo (EU, paragraph 140). But then it gives the game away by placing trade last in its list of objectives (EU, paragraph 10). It hardy matters: the UK is so opposed to dynamic alignment and European jurisdiction that it prefers to do without the accompanying goodies.

The EU reaches out for alignment with 285 instances of what the parties “should” do, swamping the 241 from the UK, which instead plays hard-to-get with such weaker language as “could”, “is open to”, “will consider” and “is ready to” (UK - 37; EU - 2, the latter both instances of “could”). Similar discord applies to final paperwork. The EU contemplates a single deal, incorporating every aspect of future relations. The UK entertains a diversity of arrangements, stating that for many purposes it can do without an “institutionalised relationship” (UK, paragraph 8).

London’s draftsmen have, moreover, contrived to plant a sly time-bomb. This is to snooker Brussels’ treatment of financial regulation, where it insists on a unilateral right to deny equivalence (EU, paragraphs 44 and 46). First, the UK calls for “appropriate consultation and structured processes for the withdrawal of equivalence findings” (UK, paragraph 55), but buries its implications by relegating “equivalence decisions themselves” to a footnote. This directs readers to the document’s final page, where remarks on “…processes beyond the scope of the future relationship negotiations” deliver the final payoff, stating that both sides

  • “…have committed to carrying out unilateral equivalence assessments for financial services, distinct from [this agreement]. The fact that the UK leaves the EU with the same rules provides a strong basis for concluding comprehensive equivalence assessments before the end of June 2020.” (UK, paragraph 63.)

This brings the timetable to the fore as a negotiating tactic. Early on, the UK states that it envisages

  • “…a limited, but sufficient, time for the UK and the EU to reach agreement…The Government would hope that, by [June], the broad outline of an agreement would be clear and be capable of being rapidly finalised by September.” (UK, paragraph 9.)

This has put the wind up France at least, with the French Europe minister stating yesterday that the EU would not sign just “any” deal by December and that “substance was much more important than deadlines”.

-o-

Who can tell whether the impulse of negotiators to make a deal will overcome the hardening of positions, bound to arise out of missed deadlines and midnight disagreements? The parties are continuing to talk past each other, with a sense that they find it hard to take each other’s positions seriously. The Brits have always been wrong in expecting the Europeans to buckle in the face of economics: the Europeans did so well last time that they are bound to see Boris’s deadline as a bluff. Hardball tactics could backfire, with the most likely outcome a barebones deal, if any. 

Note, moreover, that the talks take place amid the gathering uncertainty of the outbreak of coronavirus. If the epidemic takes the most adverse course, it will have effects unprecedented for a century. The markets already predict turmoil, with supply chains at risk, business activity falling back and interest rates likely to stay low - in Europe at or below zero. This may save the Continent’s derelict banks for another day, but no-one could begin to say how it will affect attitudes in Brussels towards London’s capital markets, equivalence or negotiations in general.