Bracing for Brexit: Theresa May’s Endgame

After two years of positioning, posturing, and politicking, we are entering British prime minister Theresa May’s so-called endgame. The United Kingdom and the European Union has just announced that a provisional withdrawal agreement has been reached. The negotiating cards (all 500 pages of text) will now be placed on the table, first for May’s cabinet to approve the agreement (or resign) and then onto the House of Commons to vote.

The current state of Brexit play has been essentially the same since July, minus an increasing number of cabinet resignations. The United Kingdom and the European Union have completed “95 percent” of the withdrawal agreement and accompanying political declaration. However, the last 5 percent has really become a major obstacle: terminating the Irish backstop plan—or, as some call it, the “backstop to the backstop.”

To recap, both the United Kingdom and the European Union agree that there must not be a hard border between Northern Ireland and the Republic of Ireland after the United Kingdom leaves the European Union, but both parties disagree on what that exactly means. For the European Union, it is a strict interpretation that Northern Ireland must remain in a customs arrangement with the European Union with close regulatory alignment (in essence, it must stay in the European single market to avoid border checks). For the United Kingdom, it means that one part of the United Kingdom cannot be treated differently from the rest of the United Kingdom; therefore, the United Kingdom must also be bound by the same customs and regulatory alignment as Northern Ireland, until such time as a new free trade agreement between the United Kingdom and the European Union can be negotiated.

The transition period will end on December 31, 2020. But what happens if the time runs out and a free trade agreement is not negotiated?

The European Union says that there can be no time expiration because there cannot be a hard border; therefore, there can be no unilateral UK withdrawal from this customs union arrangement. The United Kingdom—seeking to negotiate other free trade deals with other nations—does not wish to be locked into this arrangement in perpetuity and insists there must be a time limit to the transition period. A compromise has been suggested by way of creating a joint arbitration mechanism where both sides mutually agree on termination of this backstop. But this compromise smacks of having the United Kingdom ask permission to leave the European Union all over again. Or to put it another way, what Brexit means today is that the United Kingdom will remain in the European Union in everything but name only but paying more for the privilege (e.g., the divorce bill) and not having any say over the European Union’s future trade rules. This is why the political road has become so very fraught.

Theresa May is trying to use the clock to her advantage. She seeks a deal with the European Union this week so that the agreement can be formally approved during the November 25 European Council meeting. This ensures the House of Commons can vote before the end of the year. May is also trying to make sure there is no other viable alternative other than her agreement (such as a second referendum) and a no deal catastrophe (which feels like the pre-referendum “Project Fear” campaign but with more government provided details). No deal means no transition, which means the United Kingdom crashes out of the European Union on March 30, 2019.

The cabinet meets tomorrow afternoon (November 14th) where ministers will decide to either support the prime minister or resign. It will take names such as Secretary of State for Exiting the European Union Dominic Raab and Foreign Secretary Jeremy Hunt, to resign to really shake Theresa May's position. Over the past two weeks, Prime Minister May has been proactively trying to flush out dissent within her party before she presented the final agreement. Her cabinet will not like the deal that has been negotiated—and several may resign—but at this moment, it appears that the cabinet will hold. But this may be the least of Theresa May’s worries.

All indications suggest that May does not have enough votes in the House of Commons. Theresa May needs to keep her “confidence and supply” partner, the Democratic Unionist Party in Northern Ireland, and their 10 votes in the Commons on her side while she tries to lure members of the Labour Party to support the agreement and keeps Conservative defections to a minimum.

If the agreement fails to pass, May can let the market impact take its political toll and attempt another vote. She could also use a failed vote as leverage for greater EU concessions and present a revised agreement, arguing that she was able to get a better deal for Britain. Failing this, and should she remain prime minister, the political focus shifts to the Labour Party. What will Labour Party leader, Jeremy Corbyn, do? Corbyn has told Laborites that they should not support Theresa May’s proposed deal. He clearly wants a snap election as his first priority, but two-thirds of the Commons would have to agree (under the fixed term parliament law), which would require the Conservative Party to support new elections. Most likely, Mr. Corbyn would be under great political pressure to seek a second referendum (the alternative that Theresa May has worked so hard to avoid). To date, he has stated he would not support a second referendum, but momentum is building.

But the timing of holding a second referendum is also problematic. The clock moves closer to March 29, 2019. There is a current case before the European Court of Justice to determine whether the United Kingdom can unilaterally revoke its Article 50 letter (which set the two-year EU divorce clock in motion) or if the European Union must also agree to its withdrawal. A ruling should be forthcoming in November.

Breaking up is indeed hard to do.

Heather A. Conley is senior vice president for Europe, Eurasia, and the Arctic and director of the Europe Program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

Commentary is produced by the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s).

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