Via Naked Capitalism

I have to confess that I did not anticipate that the EU Council would be willing to sign off on a political draft of a deal where the text that is not final (it has not gone though the legal review) nor been presented to the sherpas for their close reading and advice to their principals. So my bad.

Bear in mind that this is not final on the EU end: the deal still needs to be ratified by the EU Parliament, and then formally approved by the EU Council. But the next step in the process is sign-off by Parliament, which is very much an open question.

The EU was willing to bend on its normally strict procedures for one simple reason: that Johnson having so committed himself to needing to get a deal by the EU Council gave them negotiating leverage, which they exploited. Even though the non-binding future relationship document envisions a more bare “free trade agreement” type arrangement than May’s deal did, which is something the EU isn’t keen about but must regrettably accept, it got the UK to accept a “sea border” with some rules on customs duties to improve the optics. A high-level explanation from the Financial Times:

Mr Johnson’s negotiating team has accepted that, following Brexit, Northern Ireland would apply the EU’s customs and tariffs rules and have them overseen by the European Court of Justice. The agreement means there would not be significant customs checks on the island. Instead, all goods would be checked in mainland Britain.

The plan bears similarities to the Northern Ireland-only backstop the EU put forward in February 2018. That idea was superseded by Mrs May’s alternative all-UK backstop idea which was then rejected three times by the UK parliament.

Under the agreement, Northern Ireland would benefit from UK trade deals with third countries — a key demand of Mr Johnson — and Northern Irish businesses would be eligible for a rebate on some tariffs. But the system would still entail the creation of a significant border between mainland Britain and Northern Ireland. 

Or another way of thinking of it:

Note that the text is already being criticized as being too sketchy and bearing the marks of being cobbled together, with the risk of allowing smuggling, a big EU concern, and argues more needs to be fleshed out.

Some other changes are worth noting. One is that due to the passage of time, the cost of the famed exit tab has fallen from an estimated from £39 billion to £33 billion.

And the “future relationship” document, which is admittedly non-binding, contains a huge concession if it holds up: that the UK will maintain a “level playing field” with the EU, as in not undermine EU environmental or labor standards. That gives Johnson a big talking point with Labour, since a big concern was weakening labor rights. Of course, this would also wipe out one of the big reasons for squillionaires to back the agreement: that they’d be able to profit handsomely with a low-regulation, buccaneer Britain. If I were an MP, I’d worry about a bait and switch.

Another very big advantage to the EU of getting this deal done is the blame game. If Parliament fails to approve it or other UK machinations (will skip over the scenarios) result in a crash out, the EU can correctly say it bent over backwards, and the fix the UK is in is entirely of its own doing.

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This situation also appears to put Johnson in the catbird seat, but we’ll lay out some alternate scenarios below. He is unquestionably in better shape than he was a few days ago. Per Clive:

Johnson doesn’t I suspect give a fig about the deal. It’s primary purpose is as a political device.

If the deal does pass, that’s a win. All hail Johnson, king of the deal. And it does at least resolve the matter.

If the deal doesn’t pass, then even so it allows Johnson to resolve the niggly criticism which would otherwise dog him — that nasty old no good no dealing Johnson, ooh, isn’t he just awful wanting to crash out, tut tut. Oh… wait a minute.

Having not passed the deal, it gets even better for Johnson. The Remain rabble alliance have then do something. But what? Add some referendum clause to a provisional approval? That lets Johnson off the Benn Act letter hook. A referendum would need EU approval via an extension, but, oopsie, Johnson no longer has to ask for one as a deal has been passed. Or the Remain faction needs to form a government, but we’ve been round that loop and it doesn’t seem to get anywhere Because Corbyn.

So we’re then back at an election where, astoundingly, it’s Johnson the Moderate, middle-way’ing through the Brexit extremists (Leave Spartans on one side, Remain Spartans on the other). That’s if the EU gives and extension for an election. But who’s going to ask? The Remainers could force Johnson to comply with the Benn Act, but the letter will be sent on the basis of an election, not more negotiations for a deal.

Does Johnson have the votes? He doesn’t have a majority in Parliament but the math is way more complicated and no one seems close to having a good whip count.

The DUP is against the deal. Conventional wisdom is they’ll accept a bribe from Johnson but I’ve also heard a contrary view, that the DUP members are hard core ideologues and are willing to pay the political price for sticking to their guns. Of course, it’s way easier to do that if the margin of loss is greater than the votes you represent.

LibDems predictably are against the deal:

SNP predictably are against the deal:

Labour is a mess. Corbyn is making outraged noises about the deal, but a lot of Labour MPs are expected to defect:

The Guardian reports that Labour may allow MPs a free vote and we’ll know Friday if Labour tries to whip them. A pessimist based on Labour’s shambolic record:

….but a later Jones tweet says the leadership is getting its act in gear:

The Tories are more of a mess than you’d think. Remember that Johnson engaged in an unheard of purging of the Cabinet. The Hammond wing of the party is sour on the deal due to it being a harder Brexit than May’s. The Financial Times also reports a lot of businessmen are not happy, but they’ve never made themselves a faction that has to be reckoned with.

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On top of that, despite Rees-Mogg coming out hard for the deal and ERG rag Brexit Central also high-fiving, it’s not clear all the Ultras are on board either. As vlade noted, “Some are just really beyond the ken.”

So there are likely to be be Tory votes against or at least abstentions, but it isn’t at all clear how many, but there may be a better nose count as the day progresses.

What might the opponents do? Johnson’s best friend is speed. If he can’t get the deal over the line Saturday, the Benn Act kicks in. Seeking an extension doesn’t just slow things down, it vitiates the air of inevitability and allows more sand to be thrown into the gears. Note that Juncker’s remarks on an extension have been misinterpreted, plus this is the EU Council’s call. Politico’s AM newsletter reported that the EU leaders were respecting a Johnson request to avoid discussing an extension, but that didn’t last long:

It has always been pretty close to certain that the EU would grant a UK extension request, but may come back with a short one (as opposed to the Benn Act January 31 drop dead date) and tell the UK that to get a longer one, it needs to say how it plans to come up with a different outcome, like a GE or second referendum.

Various plots are afoot. Only a partial list:

On the legal front, Jo Maugham has been in overdrive. Note that the view below is based on some arguably poor drafting in the Benn Act as it appears to contemplate a different order of approvals than the ones that apply. Nevertheless, the Act states that the UK must have “concluded an agreement with the European Union under Article 50(2) of the Treaty on European Union” or otherwise seek an extension. But it cannot have done that until the EU Council ratifies the deal. The Government will argue that the Act if read literally could not be met. It will be interesting if Benn himself has to testify if the House does issue the order and the Government contests it.

Maugham has already lodged a filing, due to be heard Friday, that the deal is illegal because, to quote the BBC:

Under the current law, Section 55 of the Taxation (Cross-border Trade) Act 2018 prevents Northern Ireland from having different customs rules than the rest of the UK.

Now that means that Parliament has to vote to overturn that first before it can approve Johnson’s deal…but that isn’t what the Government planned to do, and more moving parts create more points of failure.

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Finally, Richard North points out that if a deal fails, Johnson would face a vote of no confidence (although we have the complicating factor that Labour has been very loath to call one, for the obvious reason that polls suggest they’d lose lots of seats to the LibDems….so weirdly, their incentives are to drag things out and still hope that Brexit happens, since that would make voting for the LibDems to vote for a second referendum moot. How you square that circle is beyond me).

Johnson would still be able to control the timing of an election if he lost, but if he goes past December 12, he runs into logistical issues:

Predictably, when you think about it, many village halls and other locations used for polling station will already be booked for festive events like pantomimes and parties in the weeks leading up to Christmas. To avoid clashes – with a minimum of five weeks required for an election campaign – that means an election would need to be called within the next three weeks.

Add two weeks to that, if the vote of no confidence option is triggered – the period allowed for the second vote – and that would give Johnson the very narrow window of a week. If missed, it could be February before an election could be held, with all the complications that that might entail.

In terms of the potential for electoral success, there might be significant variations in the outcome for Johnson in the different campaigning scenarios. Generally, the polls seem to suggest he might do better if he went to the country after the UK has left the EU, as against a situation where he had failed to achieve a deal and was forced to fight against a background of continued EU membership.

What hasn’t been tested, though – as far as I am aware – is the scenario where he has successfully negotiated a deal, but where the three-month extension is implemented anyway, again forcing him to go to the country while we are still in the EU.

As you can see, this is still an overly dynamic situation. Stay tuned.

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