Sunday 20 June 2021

A UK-EU trade war moves a step closer

Historians often claim the First World War was inevitable in 1914, that the players were responding in the only possible and perhaps even rational way way to events as they occurred against the backdrop of the tensions that existed in Europe at the time. Some leaders had more power than others but all were constrained in some way by domestic pressures and national feelings. It seems, without suggesting for a second that we are headed for anything on a remotely similar scale, that we are facing the same sort of inevitability problem in 2021, this time through Brexit.

The German newspaper Der Spiegel (The Mirror) have seen diplomatic memos, from Maroš Šefčovič it seems, suggesting that there is a "growing suspicion in Brussels that the British government wants to disregard the explosive Northern Ireland part of the Brexit agreement."

According to the report, the EU is already preparing "countermeasures."

The German representative to the EU Michael Clauss, after a meeting with Šefčovič last week, cabled confidentially to Berlin apparently. The British government, Šefčovič warned, may not want to implement the Northern Ireland Protocol - "despite paying lip service," 

I don't think this is news. Johnson is clearly in denial about what he was signing up to and now wants to renege on it. 

Šefčovič has told ambassadors of the EU27 either the EU must be flexible on the way the NI protocol operates of the UK will "go it alone" presumably meaning doing things unilaterally, or Brussels will need to bring pressure on the UK. In the latter case, the British government "must be persuaded to be faithful to the treaty by all available means."

This apparently could included "punitive tariffs on British imports."

Again, this isn't surprising but what may be a surprise is the hard line being taken by France and Germany.  This is direct from the Google translation of the Der Spiegel page:

"In Brussels, the French government in particular is urging that the EU 'must mobilize all available levers to defend its interests,' said another confidential report by the German representation in Berlin, dated June 15.

"Other infringement proceedings or the mechanisms built into the trade and cooperation agreement between the EU and Great Britain, such as dispute settlement or 'autonomous measures' by the EU, could be considered.

"The line of the federal government is hardly less harsh: Great Britain must 'fully implement its contractual obligations,' wrote Ambassador Clauss. Renegotiations are out of the question. In the face of 'repeated unfortunate rhetoric' by the British government, he also considers it questionable whether London is 'really willing' to implement the Northern Ireland Protocol."

Šefčovič has said we are at a crossroad and I think he's right but as in 1914 neither side can back down without a massive loss of face. Macron faces re-election next year and Germany will have a new Chancellor in September. Both will face domestic pressure not to make concessions to an ex member of the EU who seems intent on breaking a solemn treaty and acting like a rogue state in Europe.

Johnson has a lot of support in this country where a big chunk of the population would like nothing better than to see John Bull send the Europeans packing.  Also, feelings in NI among the loyalist communities are running very high and the UK government will use the threat of violence as a lever in talks with the EU.

It seems certain now that things will get significantly worse before they get better.  A trade war would be a disaster for Britain but the odds have now shifted quite a bit in my opinon.

John Campbell, the BBC's NI Economics editor tweeted about the Der Spiegel report and linked it to the speech given by Lord Frost (see yesterday's post) at Königswinter on Friday:

Frost was sucking up to Germany and trying to drive a wedge between Brussels and Berlin which has been British policy for the last five years and has not succeeded. It is a throwback to Britain trying to manage the balance of power in Europe for the last 200 years or more to make sure we were always the most powerful. That hasn't been the case for 60 years or more and is unlikely to be so ever again, but it doesn't stop the Brexiters from trying to restore Britain's imperial past.

It will never succeed but things will certainly be rocky for the next few months - and maybe much longer.  

Having poor relations with Brussels is probably politically advantageous to Boris Johnson and the Tory party. They can continue to blame Brussels for all the problems, absolve themselves, create a hostile atmosphere, probably win an election in 2023-4 and minimise the prospects of Brexit being reversed for years.