12 June 2017

Theresa May: A Bloody Difficult Woman in a Bloody Mess

Theresa May is screwed.

The proper adverb would have been royally but in this instance strongly and stably might be more apt.

A month ago, the Tories looked like they were set to destroy the Labour Party for at least a generation.

Pundits were lamenting "Joseph Stalin Lenin Marx Corbyn" and his disastrously radical policies, you know, commie stuff, like free tuition and publicly owned railways and post office.

Things that existed in the UK a few years back.

Then the proudly "bloody difficult woman" came up with the "dementia tax" which would force older people to give up their homes to pay for their long term care and her lead simply evaporated within a few weeks.

All of this you already know.

Her conundrum is that she is now really cornered with no room of maneuver.

And she desperately wants to hang on to power.

But she may not be able to do so.

Problem Number 1: Hard Brexit vs Soft Brexit?

I have to say that this distinction has always baffled me.

I did a year of graduate studies on the European Union and taught on the topic for a few years so I am reasonably familiar with how things work.

The EU's legal system is largely based on the German and French jurisprudence and neither is remotely flexible. You cannot pick and choose what part of EU legal system you might adhere to.

She and her supporters believe that Hard Brexit means no immigrants (especially swarthy ones), no meddling from EU institution, no payment to them and full access to the common market and full rights to UK citizens in Europe.

The whole thing actually makes sense if you are from the British Isles.

That is because American exceptionalism was built upon British exceptionalism.

You know, the empire on which sun never sets.

From the EU perspective, Brexit has two components.

The first one is Brexit pure and simple, whereby Britain would pay what it owes under its current obligations and vacate the EU institutions. No free movement of goods, labor, services and capital.

They could stop there and World Trade Organization rules would govern the EU-UK trade relations.

The second component will come after the first one is over and it is properly called a trade agreement: it would set new terms for the movement of services, goods and capital.

Both sides could also negotiate new terms for EU citizens in the UK and Brits in EU countries.

In that sense, Theresa May's Hard vs Soft distinction is rubbish. EU will insist on kicking Britain out first and talking about access later.

And don't tell me that the UK does not have to accept those terms.

Without Britain, the EU is composed of 27 member states. We are talking about roughly 450 million people vs 65 million in the UK.

44 percent of UK exports go to the EU and 8 percent of EU exports go to the UK.

Think about it for a minute as a Brexit proponent.

What incentives do they have to treat you according to your idea of British exceptionalism?

Why should they give you access to their market if you offer them nothing?

And why should they allow your citizens to remain in continental Europe when you are free to kick theirs off your islands?

Both Paris and Frankfurt are salivating at the idea of getting those financial institutions out of London, why should France or Germany go easy on Britain?

As you know, service sector represents 80 percent of the British economy. If the banksters go, good luck with everything. Especially the real estate.

What is worse for Theresa May, since the second part of the deal is a trade agreement, any one of the members can simply scuttle the deal.

You see, each member state has a veto power over trade agreements. You know, a country like Bulgaria or Romania or Hungary could say, sorry we don't like it and that would be that.

If I were Tsipras, I would make my vote conditional upon some debt relief. The banksters will get it.

I am just saying.

Problem Number 2: How Do You Negotiate When They Know Your Cards?

Theresa May had a 17 seat majority before the elections, now she has a deficit of 8.

To form a minority government, she needs the support of the Democratic Unionist Party (DUP) which won 10 seats.

In case you are not familiar with them, the DUP was founded by Ian Paisley and it is a hard core evangelical movement. They oppose abortion, same sex marriage, they are climate change deniers, they want creationism taught in school.

The works.

And they have uncomfortably close links to loyalist paramilitaries who murdered quite a few Catholics in their days.

If you are old enough to remember who Ian Paisley was, none of this should surprise you.

Now, the DUP is opposed to any deal that would establish an actual border with the Republic of Ireland, an EU member. The BBC calls it the "Hardest Border" because it cuts through villages and fields and sometimes homes.

Which puts Theresa May in a bind.

How do you negotiate a so-called Hard Brexit, i.e. no swarthy immigration, for which your base supported you, when you have an open border with Europe?

There is more.

The Scottish Tories did exceptionally well this time around and ended up with 13 seats. Scotland overwhelming voted for Remain in the referendum and Ruth Davidson, their leader, made it clear that between access to EU market and Hard Brexit, she and her colleagues are firmly in favor of the former.

Reportedly, Davidson was planning to take her Scottish Tory party away from English control. She later denied that this was her intention.

Now if you were the negotiating team for the EU, how would you react to this picture?

Your opponent has a minority government which stays in power thanks to the support of a regional party. But that party is rabidly anti-immigration yet it does not want an actual border with Ireland.

The same government has another regional faction which is opposed to any form of Hard Brexit and between access to market and anything else, including immigration, they would pick access to market every time.

You go this way, this one pulls out and you go that way and that one pulls out.

How do you negotiate when the whole world knows that you do not have a unified team and any shift in either direction could bring your government down?

In fact, May's position is so precarious that even a simple disagreement on LGBT rights between the DUP and Ruth Davidson could spell trouble.

You see, Davidson is an openly gay woman and she wants to marry her partner in the near future. Same sex marriage is something the DUP is categorically against.

You can see how even such an unrelated issue could bring May's minority government down.

Incidentally, the issue was important enough that Davidson sought and received firm assurances in that regard.

If I were the head of the EU negotiating team I would be so happy to face such a weak opponent.

Problem Number 3: Donald Trump

There used to be a time where the UK would be the pilgrimage site for the newly elected US presidents to go to toast the special relationship between their two countries.

Curtsy opportunities for the first ladies before the Queen and imperial photo ops for successive presidents.

The subtext was always, hey, we are closer than you think.

The UK always played the Atlantic card against the EU, as in I don't need you, my big brother will take care of me.

And ever since the UK was admitted into the EU, member states always suspected of a hidden Atlantic agenda.

In fact, this is why Charles De Gaulle was opposed to the UK membership.

So with George Herbert Walker Bush or George Walker Bush or even with Barack Obama, this would have worked.

But the Orange Man is an America Firster.

Sure, when you surrender your hand to a short-fingered vulgarian he will grab it, as he does most things.

But does that mean that he will come to your rescue after the breakup with Europe?

Not really.

And if you were to claim that in your negotiations you might be screwed.

Strongly and stably.

Because the other side knows who the Orange Man is.



See what I mean?

The European Union has revealed a draft law to give it the power to move the lucrative euro clearing business out of London and keep it in the EU after Britain leaves the Union in 2019.

London currently processes three-quarters of the trade in this financial sector, providing thousands of jobs.

But European Commission vice-president Valdis Dombrovskis said Brexit needed "certain adjustments to our rules".

The law will decide if London will have the right to host the work post-Brexit.

London is currently the world leader for the clearing of all types of currency-denominated derivatives including the euro.

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