I want to direct today’s article mostly to Leavers. For the breadth of this piece, I will not suggest that leaving the EU is a good or bad idea, nor even that leaving with no deal is a good or bad idea. Let’s park those arguments for now. What I want to talk about here is just the idea, the erroneous idea I hasten to add, that leaving the EU with no deal at the end of March means we get to keep the £39 billion all to ourselves. This is a myth, one that the political media just will not step in and debunk in any way, so here goes.
For a start, the £39 billion is an agreed figure between the UK and the EU. Now, you can say that to hell with the agreement, we should never have agreed that figure with the Commission. Walking away from the agreement at this point, however, and you then have an ongoing problem. A UK out of the EU will want to strike new trade deals, right? As in, that’s one of the main reasons for leaving the EU, so we can have an independent trade policy? Agreeing to pay £39 billion and then simply reneging on that figure will make it hard for any other government to trust the UK in the near future. It could also cause huge damage to the current international system, stuff like the WTO that largely works via good faith from every country (if countries broke agreements all the time, the amount of complaints to settle at WTO level would be totally unsustainable and the system would simply collapse), the very same system a non-EU UK is going to have to fall back on.
The £39 billion isn’t something the UK has agreed to pay to keep talks about a future relationship between the UK and the EU alive: it is what we’ve agreed to pay in terms of outstanding debts. Now, you can say that figure is ludicrous, we should never have agreed to that, etc, etc. The point is, the UK has.
Beyond the maintaining the trustworthy reputation of the United Kingdom point, there is actually a much more pressing and unavoidable reason for the UK having to cough up the £39 billion in the end. If we crash out with no deal, in the immediate term the UK will have to come to a fairly complex set of arrangements with the EU, and quickly. This is what Tory cabinet ministers talk about when they say “managed no deal”; the idea that the EU will have a vested interest in keeping things like aeroplanes flying in and out of London. That could very possibly be the case in some instances. But they aren’t going to even begin discussing this without legally tying down the £39 billion. This will be step 1 of “managed no deal”, which won’t be nearly as managed as the UK would like it to be. And not only will Theresa May not think twice about agreeing to that under the circumstances, so would anyone else who was prime minister. Any other Tory, whatever they might say in public now, would sign over the £39 billion in those circumstances. Hell, I reckon even Nigel Farage would do it.
Again, whatever you want to happen with Brexit is one thing. Maintaining this fantasy about keeping the £39 billion is just that. The only way to not pay this money over to the EU is, ironically enough, by remaining in the EU. £39 billion will be the price of any Brexit, including no deal.
Even without walking away from our debts, the UK’s reputation is already tarnished. The government has looked totally inept since the referendum; they’ve deliberately mislead the public about the negotiations; attacked many of our closest friends and allies; called unnecessary elections, and had to do sordid deals with minority, regional parties or vocal minority Eurosceptics; and now are desperately trying to prepare for a No Deal, because they’ve burnt their bridges.
Meanwhile, parts of the world see easy pickings: a weakened, ill-equipped UK no longer a major player in the largest trading bloc in the world. Worse, some now see us a deceitful and untrustworthy country to do deals with. Still, we’ll be the perfect partner for authoritarian regimes looking to buy weapons platforms.
Trade is about willing buyers after something they want and willing sellers with something to provide them with. It is not about “blocs”. Ask the Swiss or Singaporeans.
Your point about the UK being easy pickings is a good one. It beggars belief that the people complaining about the EU being “unfair” don’t seem to realise that countries such as the US and China will be just as hard-nosed, if not more so.
Is there an itemised account somewhere for how this £39 billion figure was arrived at? I mean, if it’s the cost of our outstanding debts and obligations, then there should be a list somewhere of what all those are and how much they are, right? Minus for example the UK’s share of all the infrastructure built by the EU which the EU is now buying it out of.
I mean, this figure obviously wasn’t just pulled out of where the sun don’t shine, was it?
M
Well, as the EU’s accountants don’t seem to have had much in the way of itemised figures to keep them gainfully occupied for the past 20 years, perhaps they could spare 20 minutes of their sacred continental lunch “hour” to knock up something in Excel for Spreadsheet Phil to peruse at his desk, while he scoffs a Greggs’ sausage roll in the traditional British lunch half hour?
Well what I mean is, if the £39 billion is what we owe in terms of outstanding debts, then obviously we owe it and we have to pay it and that’s that. In which case there should be an account of the debts so we can see what it is we owe. When I pay off a loan form my bank I always get a statement of the account, with interest charges, etc on it so I know exactly how much I need to pay to clear it. Same should apply here, obviously, albeit a lot more complicated because it has to have on it deductions for the UK’s equity in EU capital infrastructure that we partly paid for, etc etc.
On the other hand if it’s not an itemised debt bill but a political part of the Withdrawal Agreement, then we haven’t actually yet agreed to pay it, because we haven’t agreed to the Withdrawal Agreement yet (and we might never agree, if Parliament won’t vote for it), and nothing is agreed until everything is agreed and the actual papers are signed.
M
You are right of course, but I fear it’s like asking for the moon when it comes to expecting an “itemised bill” from the EU. Everything operates in the EU through the prism of coalition-building, deal-making and trade-offs, thus making decisions contingent on the politics of any given situation (even when that’s not meant to be the case – as in the matters of budget deficit and public debt rules). Perhaps the EU couldn’t operate in any other way. But it isn’t pretty. So your observation “On the other hand if it’s not an itemised debt bill but a political part of the Withdrawal Agreement…” is very apposite in this regard.
Right, so, point is that the article relies on two arguments:
1. The £39 billion is something we morally have to pay; we owe it, we’ve agreed we owe it, and if we don’t pay it we will be the welshers of the world, and nobody will ever trust us or do business with us ever again.
2. If we do leave we will be in such desperate straits that the EU will be able to demand anything they want from us, including the £39 billion and probably more, and we will just have to pay it.
So unless we can get an itemised bill I think we can dispense with (1): it’s not a moral debt, it’s part of the Withdrawal Agreement, it was provisionally agreed as part of that agreement, and if the whole withdrawal agreement isn’t signed, then the £39 billion clause is also null and void. We can continue to point out that we are willing to pay our debts as soon as the EU gives us an accounting of what they are, even ring-fence some money for doing so. We won’t be the pariahs of the international system for doing this.
That leaves (2) which is indeed plausible. I guess that depends on how desperate you think the EU is going to be. Personally I think that trying to cut Europe’s busiest hub airport out of everone’s routes might be just a teensy bit disruptive for the entire continent’s air transport routes, all the aeroplanes in the wrong places, that sort of thing, so a solution to that one would be found pretty damn quickly, but what do I know?
The point about trust is so obvious I am surprised it still needs debunking. Clearly, no country is going to want to waste time negotiating with a government that can’t be relied upon to stick to its agreements. Given the government’s performance over the Norther Ireland backstop, I suspect that a lot of this trust has been lost already.
I also think that the idea of a managed is a fantasy. In the event of the UK crashing out, the remaining EU countries will do what they feel is necessary to to minimise the damage to the EU. Whether these actions help or harm the UK will be entirely coincidental.
In the event of the UK crashing out, the remaining EU countries will do what they feel is necessary to to minimise the damage to the EU. Whether these actions help or harm the UK will be entirely coincidental.
Yes, that’s how the world works. As Adam Smith wrote: ‘It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest.’
If trust has been lost then why bother paying anyway take the CCJ and walk away. We survived quite well after two world wars without the EU thank you very much. In fact they would not exist if not for the many brave men and women of this country who made the ultimate sacrifice. Shame on you for forgetting what we Britains can and will achieve again. If you cant believe in your own countrymen and women leave and join your Euro buddies. They didn’t do too well without before did they. A den of thieves and hypocrits like rats leaving the sinking ship. Get on board quickly or you MAY miss the boat
Coming back to this checking for updates, I just keep thinking of Chris Tarrant saying to Jean-Claude Junker, ‘You’ve got the £39 billion, that’s in the bank…’
The £39 billion isn’t contingent on any future trade deal I’m unaware of any serious person claiming this. However it is contingent on the UK signing the withdrawal agreement. If we leave without that being signed then how is the £39 billion due?