On January 15, the UK Parliament resoundingly rejected May's proposed Brexit plan.
Harish Puppala | Rakesh Sharma
Moneycontrol Contributors
Brexit: The referendum where Britain decided it’s never, ever, ever getting back together with Europe. The solution, some may even say, has not been tailored to fit, and has been far far from swift.
The EU played it cool - Brussels warned about the changes it would bring, then set about framing the rules for Brexit, even as the rest of Britain came to terms with the break up, and had a panic attack. Not a day goes by that a Brit journalist doesn’t warn about the doom that will follow. Brexit is like a 10-car pileup in a formula one race, with wheels, gearboxes and bodies flying everywhere - we can’t believe it’s happening but we just can’t look away.
Shepherding what many believe is an ungainly mess is a woman who must be gifted with enormous patience - Theresa May. She has to wake up every day and deal with it. I can just imagine the long sighs she lets out as she opens her eyes every morning. Britain made a boo-boo, and now it’s up to a woman to ensure there’s no mess. David Cameron, who caused the mess, was last seen surfing in Costa Rica. The question that's looming large over Britain's gloomy skies is one that you simply cannot escape - like the London Eye except really more like the Eye of Sauron. The question is what Duchess Meghan in her previous life as a suitcase girl used to ask: Deal or No Deal. Except, it's even murkier than the bloodline of the British royal family. Where Britain finds herself in a saga that's as dramatic as any Eastenders plotline is our Story of the Day. Shepherding you along the Central Line via knotty hills and (Oxford) circuses to station Brexit, or not, is me Rakesh Sharma right here on Moneycontrol.
What is Brexit?
Ok, first things first. What is Brexit, why is the UK Brexiting, and why is everyone getting their knickers in a twist over Britain leaving? Well, to be fair, historically whenever Britain exits something, it tend to leave a bit of a mess. India, Ireland, the Middle East, Africa...you get the drift. With Brexit, the fear is that the mess will be at home.
So, what is Brexit?
The European Union consists of 28 European countries. Each of these member states pays to be a member and, in return, they receive access to special ways of working together. This includes being part of a ‘single market’, which means that countries can trade with one another and people can move around freely – as if we were all living together in one big country. All very kumbaya.
Then we come to the difficult part, which has been partially responsible for the rise of right wing politics in some EU nations. The EU has its own parliament, laws and currency (the Euro). The EU was set up after World War 2 with the idea that if countries work together, they are unlikely to go to war again.
The first mention of Brexit happened in 2013 when David Cameron spoke about it in Parliament. To give a background to why it came about, I’ll quote the newspaper The Independent: “The British public have not had a direct say on our relationship with Europe since 1975, when we voted to stay in what was then the European Economic Community. In the intervening years, Europe has changed...Then, we were voting on joining a “Common Market” of nine member states, with a population of 250 million. Today, the EU has 28 member states and a population of more than 500 million...successive treaties since 1975 have seen the European Union transform...to a fully-fledged political union, giving Brussels influence over many other areas of policy.” It added, “Ever since the Maastricht Treaty of 1992, which created the modern EU, there have been those calling for another vote to take into account how things have has changed, with Eurosceptics claiming that membership now represents an unacceptable transfer of powers from our Parliament to Brussels.”
Around the time of the recession in 2008, and after, then PM David Cameron, as well as the overall political class, underestimated the groundswell of public resentment caused by the influx of European migrants to the UK since the accession of Eastern European countries in the early 2000s. Good ol’ those-Polacks-are-stealing-our-jobs-mate xenophobia. This anger was ripe for manipulation, and in stepped Nigel Farage and a party known as UKIP or UK Independence Party. One thing led to another, and in 2015, Cameron, while campaigning for re-election, promised a referendum on the EU membership if he won. He won handsomely, something even he didn’t expect, reportedly. Well, soon, in 2016, Brits from all walks of life found themselves following that grand old tradition - queuing up. This time, to decide what should be done: leave the EU or stay. The result stunned many, and the condescending jokes about conservative Brits suddenly seemed unnecessarily provocative: Leave won by 51.9% to 48.1%. That’s 52 to 48. The referendum turnout was 71.8%, with more than 30 million people voting, around half the population.
The 48% who voted to remain in the EU, including former Prime Minister David Cameron, felt that being a member of a 28-nation club is better than going it alone. They felt it was easier for us to sell things to other EU countries, meaning it was good for businesses and trade. The 52% didn’t care. Cameron then resigned as Prime Minister and Theresa May was chosen to lead the UK through the Brexit maze. The reluctant divorce was apparently going to proceed.
Well, what’s the holdup?
It’s been over two years now, so many wonder what’s happening, and why isn’t the break-up happening faster?
Well, for one, the British government is dragging its feet. They don’t like it but they have to do it. Kinda like eating fresh vegetables, I suppose. You have committed to it, but, god, it’s awful tasting!
For Britain, it turns out ending a 45-year union is not as easy as the Brexiters claimed it would be. Well, imagine my shock! The fear of creating some serious unintended consequences (economic or otherwise) is high, and many hurdles have yet to be overcome. CNN claims that some opinion polls suggest the delays, the dangers and the constant bickering are now -- a little over two months before Britain is due to Brexit its way out of the EU-- prompting some who voted to leave to change their minds. Remember the news about Brits Googling “What is Brexit?” the day after they voted for it?
The two parties - EU and the UK - have been trying to work out a divorce deal, since Great Britain will henceforth be outside of the EU trading block. The thought of the UK tumbling out of the EU without a future trade deal scares business people in Britain as well as Europe. The negotiations have been tough. So now, after more than two years of wrangling, they've come up with this: a draft agreement (a breezy 585-page read) that lays out how the UK will leave the EU on Friday, March 29, 2019. That’s the day IPL 2019 is slated to start, by the way. It will be a day to remember!
But the UK will stay inside the EU's single market and still be subject to EU laws and regulations until the end of 2020. That will give everyone enough time to hammer out a future trade deal. So yes, probably two more years of status quo. Remember, no one in the British establishment wanted this: the referendum was supposed to a release of simmering frustrations, not a game changer. Must be hating democracy right about now.
So, the UK will leave the EU by basically staying in it for another two years. That's clear, right?
Also, the agreement guarantees protections for the more than 3 million EU citizens in the UK, and over 1 million UK nationals in EU countries to continue to live, work or study as they currently do.
There’s also the Ireland issue. Ireland, which is partitioned into the Republic of Ireland and Northern Ireland is open, could see serious problems. Because, you know, the English tended to partition lands they conquered. People and trade move between the two Irelands with ease. One CNN analysis claims there are fears that could change in a Brexit divorce. The Republic of Ireland is in the EU. Northern Ireland, which is part of the UK, won't be in the EU after the split. Normally that would require something called a "hard border," with checkpoints, border crossings etc. Those could seriously slow trade and other economic activity. To quote CNN, “Irish politicians also fear they could escalate tensions and raise the need for security to be in place.”
What about a second referendum?
Some people want a second referendum. That’s right, a second vote to decide if Britain really wants to Brexit. And it’s a pretty popular thought, even among conservative politicians. The Guardian reported about a group of Tory MPs who want Britain to remain in the EU. It said some Conservatives claimed that “There were 4 million like-minded Tory voters out there who were fed up with being lied to, who recognised the prime minister’s deal was dead and wanted to take back control of their lives by having another say on leaving the EU. It was a bold claim to make when the total membership of Right to Vote seemed to be limited to the same few Tory MPs – Anna Soubry, Sarah Wollaston, Dominic Grieve, Heidi Allen, Justine Greening, Sam Gyimah and Lee – whose views on a second referendum were already well known. But small steps and all that. Right to Vote Anonymous might now be a bit too niche and too anonymous, but if you build it, people will come. Just give it time. They had been expecting one more MP to appear but he’d pulled out at the last minute.”
But it’s not that simple. As the BBC reported, “Stopping Brexit would require a change in the law in the UK. The European Court of Justice ruled on 10 December 2018 that the UK could cancel the Article 50 Brexit process without the permission of the other 27 EU members, and remain a member of the EU on its existing terms, provided the decision followed a "democratic process".”
That’s not all. The Beeb added, “Prime Minister Theresa May warned Conservative MPs thinking of voting against the deal she reached with the EU that they risk "no Brexit at all". This is a reference to another referendum, which is backed by the SNP, Lib Dems, Plaid Cymru the Green Party, a small number of Conservatives and larger group of Labour MPs, who want the public to be given the final say, with the option to remain in the EU. They are trying to get the Labour leadership to back them - but Jeremy Corbyn wants to try and force a general election first.”
CNN reported that influential British leaders like former prim minister Tony Blair have been calling for a second vote, but, realistically, there's no plan to take this back before voters. Theresa May slammed the door on that idea, saying a new vote would be a “gross betrayal” of democracy. Not to mention, it would look rather foolish to keep having elections until you get your desired result. The draft agreement will be voted on by the parliaments of the UK and the EU, and that's that.
Far from safe
A few days ago, on January 15, the UK Parliament resoundingly rejected May's proposed Brexit plan. At 432 to 202, it was a historic defeat, with more than a hundred No votes cast by members of May's own party. A distraught May said after the vote, “Every day that passes without this issue being resolved means more uncertainty, more bitterness and more rancour. The government has heard what the house has said tonight but I ask members on all sides of the house to listen to the British people who want this issue settled, and to work with the government to do just that.” The Financial Times said, “Under normal political rules, any prime minister confronted by such a savage rejection of their core policy programme by MPs would resign. But Mrs May immediately signalled that she was determined to soldier on and try to breathe new life into her damaged withdrawal agreement.”
May herself survived a scare after her government won a no-confidence brought by her opponent Jeremy Corbyn. The Tories won the vote by a narrow margin of 325-306, just a day after May’s Brexit plan suffered that political defeat in the House of Commons.
Meanwhile, European Council President Donald Tusk regretted the vote, but suggested the solution was for the UK to stay in the EU. He said, “If a deal is impossible, and no one wants a no deal, then who will finally have the courage to say what the only positive solution is?”
In a video that’s viral on social media, French President Emmanuel Macron is seen saying that “the first losers” in a no-deal Brexit “would be the British.” He added, “Either way, we will have to negotiate a transition period with them because the British cannot afford to no longer have planes taking off or landing at home, and their supermarkets, as much as 70 percent, is supplied with (products) from continental Europe.”
And that’s where Brexit stands. After a defeat in parliament at the hands of backbench MPs last week, and the resounding rejection of her Brexit deal by the House of Commons, Theresa May survived the no-confidence vote, but there is now a need to make a statement quickly on a new plan of action. As Mary Poppins - someone who has only recently returned to clean up another British mess - would say: Spitspot, hurry along.
