The EU must prepare for a no-deal Brexit


This is a dangerous moment for the EU. It says that it is prepared for a no-deal Brexit, but we all know this is not true. The European Commission has readied itself on a technical level. But this is not the kind of preparedness that matters. EU leaders have not yet braced their voters for the economic impact of a large EU country leaving the customs union and the single market overnight.

The EU is right not to take the new British prime minister’s provocations at face value. They are designed for a domestic audience. But when the rest of Europe’s economies are slowing down sharply, it must prepare for the shock of a no-deal Brexit. I would advise EU leaders to look in the mirror and test whether their determination to uphold the Irish backstop would still hold in the hours before the advancing deadline. It is one thing to claim solidarity with Ireland as a principle; another to tell factory workers who stand to lose their jobs that this is a price worth paying. The tough negotiating stance was, at least in part, informed by assuming a near-zero probability for a no-deal outcome.

I have argued before that this assumption was complacent. The probability was at no point anywhere close to zero. It increased when Boris Johnson emerged as the winner of the Conservative leadership contest. But it never made sense to attach ultra-low probabilities to a legal default position. Especially when there were no House of Commons majorities for the alternatives under European law: ratification of the withdrawal agreement or unilateral revocation of Article 50 by the UK.

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An unintended consequence of the campaign for a second referendum was to increase the probability of no-deal further. The campaigners managed to kill off Theresa May’s withdrawal agreement while failing to generate enough momentum to pave the way to revocation — a combination that left the UK in no-deal territory. Unwittingly, they turned themselves into the hard-Brexit campaign’s useful idiots.

Remainers should have taken the deal. It would have ensured a close relationship with the EU while keeping the option of rejoining in the future open. A no-deal Brexit closes it for a generation.

The EU has been complicit in this miscalculation. No one more so than Donald Tusk, the outgoing president of the European Council. He explicitly supported a second referendum and interfered in the European election campaign in the UK by supporting a pro-Remain candidate. His interventions had two simultaneous effects. It gave Remainers in the UK the false hope that the EU would intervene on their behalf, and be successful. And it lead Europeans to underestimate the risk of a no-deal Brexit.

Whenever I go back to Germany, there is always somebody asking whether the UK might reconsider. The German media covered Brexit almost exclusively from the perspective of the second referendum campaign. These days, they write about Mr Johnson’s buffoonery. A no-deal Brexit, its economic impact on regions and sectors, and on the EU’s geostrategic interests are hard to spot on political radar screens.

One reason is that the EU has been lucky during its many crises. Alexis Tsipras blinked during the Greek government’s showdown with the Commission in 2015. So did the great Charles De Gaulle when he ended the so-called “empty chair” policy in 1966. If the leaders of Greece and France blinked, then so surely will Mr Johnson, a lesser figure.

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I think it would be unwise for the EU to lose sight of Brexit’s uniqueness. The political incentives for Mr Johnson are different from those of non-departing EU leaders. First, the EU might want to reflect on its persistent failure to understand the support for Brexit in the UK, as evidenced by two general elections, one European election, a Brexit referendum, and the emergence of Mr Johnson as prime minister. There is a pattern here.

EU leaders should also reflect on their own mistakes. They should have made it clear from the start that they would not extend the Brexit deadline in March this year. If they had followed this advice, the withdrawal treaty may have had a fighting chance. The tactical error they committed by turning Brexit into a three-way bet was foolish. Each step of the way — the European elections, the Tory leadership contest and the political dynamics that have followed — the UK moved further and further towards a hard Brexit.

Only a fool would try to predict the course of British politics over the next three months. A no-deal Brexit is a possible outcome but not the only one. I expect Mr Johnson to try to unite the pro-Brexit vote, and to pitch himself against a splintered Remain opposition. This would seem to be an intelligent strategy. There is one prediction I am willing to make: if this ends in a no-deal Brexit, much of the EU will not have seen it coming.

munchau@eurointelligence.com



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