Boris Johnson's Real Game of Chicken

After my last contrarian post where I maintained that the UK will stay in the European Union because it faces a binary choice between no-deal Brexit and Remain, I received a lot of pushback from friends.

Boris Johnson is a hardcore Brexiteer, they said. Plus his entire cabinet is made up of people who prefer a no-deal Brexit, they suggested. They diligently directed me to articles that suggested that faced with a determined no-deal Brexiteer, Europe was having second thoughts.

Color me unimpressed.

I get that Boris Johnson is telling his supporters that if he could convince Brussels that he is serious about a no-deal Brexit they would give in to his demands.

What I don't understand is how he could succeed.

As the Irish Times put it succinctly "in game of Brexit chicken, Boris Johnson driving a Mini, Brussels is driving a bus."

I would have gone with a scooter and a Humvee respectively, but you get the point.

Boris' Game of Chicken

The first thing Johnson did upon moving to 10 Downing Street was to ask the EU to unilaterally take the backstop off the table if they want to talk to him.


Similarly, announcing new measures and more money everyday for the preparation of a no-deal Brexit was supposed to telegraph to the European leaders his determination to take Britain out of the EU no matter what.

This week, Dominic Cummings, who has a more than a passing resemblance to Doonesbury's Uncle Duke, will launch a £100 million campaign called "Get Ready."

So I understand that Johnson's message is "we are ready to crash out if you do not give us what we want."

But the strategy makes as much sense as the Cleavon Little gun play in Blazing Saddles.

Your interlocutors are baffled as your are threatening to shoot yourself.

There is no way the EU will get rid of backstop or give in to his other demands.

Michel Barnier just said so, again.

British exceptionalism notwithstanding, everyone is aware that in the event of a no-deal Brexit Britain will be the losing party.

Make that the massively losing party.

British imports from the EU constitutes 8 percent of European exports. Almost half of Britain's exports are destined for the EU. While both sides will be affected, which side do you think will suffer the most?

How do you replace such a market?

As I mentioned in my previous Brexit post, the UK imports almost 40,percent of its food and most of it comes from Europe. How do you find a new source overnight? Even if you could, you will end up buying lower quality food like chlorine-washed chicken.

Then there is the issue of negotiating a trade deal after the divorce. Every single member state has the veto power over tariffs and trade arrangements. What do you think Ireland would do if the backstop was not there and a hard border was being installed?

Perhaps most importantly, it is not that Britain has a lot to lose, it is also that some European countries have a lot to gain from a British exit without a deal.

Take the financial sector.

With £132 billion contribution it represents about 7 percent of the UK's GDP.

As soon as it became clear that Britain was going to leave the EU one way or another, these companies began to move to Europe. Since 49 percent of these activities are centered in London, one immediate effect was the worst real-estate price plunge in ten years

And it will get worse as the exodus have picked up momentum.

Goldman Sachs, Morgan Stanley and UBS are among the firms collectively moving $280 billion worth in assets to Frankfurt from London. Credit Suisse is moving $200 million from its market division from London to Frankfurt. And that’s just the start. These banks are among 25 financial institutions moving to the German city, according to a survey by commercial bank Helaba.

Others are choosing Paris or Amsterdam.

Bank of America is persuading staff to move to Paris, while French firms BNP Paribas, Crédit Agricole and Société Générale are together moving around 500 employees back to Paris from London. In all, Helaba’s survey indicates nine firms are set to move to the French capital.

Dublin is also in the running.

Over in Dublin, more than 100 Britain-based asset managers and funds have applied to the Irish central bank to authorize their move there. Barclays is moving $280 billion worth of assets to Dublin.

Europe may lose a large export market but it will gain a huge new financial services sector.

Moreover, Macron really might prefer a nice clean Brexit.

As I mentioned before, that would make France the only European country with the nuclear bomb and a large military industry. With Trump flirting with the idea of leaving Nato and Putin being frisky, that would make France the most important European country overnight.

In short, how do you play chicken when it is painfully obvious to everyone watching that, in case of a collision, you are the one who will be mortally wounded.

And the guy driving the Humvee has enough incentives to turn you into a roadkill.

Which made me think that maybe there was more to that silly game of chicken.

Boris might be trying to break the binary choice between Remain and No-deal Brexit.

Boris' Blame Game and Electoral Strategy

Let me state one basic fact: Boris Johnson is not a hard Brexiteer.

The man has no principles or convictions. He is in it for Boris Johnson and his playbook is based on his plans to keep himself at 10 Downing Street.

Nothing else matters.

In a binary choice between Remain, where the geriatric Brexiteers would throw him out and No-deal Brexit where the food and medical shortages and economic contraction would become his problems, Boris cannot stay prime minister for long.

To break that equation, Johnson has been constructing a complex blame narrative in order to find a sweet spot for an eventual electoral victory.

At home, his media partners have been placing the responsibility of a no-deal exit on Irish Taoiseach Leo Varadkar.

Leo Varadkar, Ireland’s prime minister, is being demonised by the Brexit-supporting section of the British press. His determination to stick by the backstop provision in the EU withdrawal agreement has particularly outraged the Daily Telegraph and the Sun. (...)

Varadkar is being groomed as the Brexit bogeyman. (...)  A Sun editorial claimed that Varadkar would be responsible for “the potential chaos of a no-deal Brexit”.

The same loudest voices have also been accusing Emmanuel Macron and Angela Merkel of intransigence while Boris simply refused to even call them for weeks after moving to 10 Downing Street.

He was letting them know that if the UK were to crash out of the EU, the ensuing food shortages and recession would be placed at their doorstep.

One advantage of this tactic is that it is likely to harden Leave supporters' dislike of anything European. After long decades of anti-EU media campaign, this reported hostility and perceived intransigence will solidify the existing polarization and ensure a positive electoral outcome for Johnson.

Proroguing the Parliament was part of the same strategy.

On the one hand, it was intended to let the EU realize that, they should not count on the anti-no-deal majority in Parliament, as Boris was willing to tie their hands and force a no-deal Brexit.

On the other hand, it dared the opposition and rebel Tories to pass legislation to stop a no-deal Brexit.

That's the real game of chicken.

So cranking up the pressure on Tory rebels at the start of this crucial week could create a convenient group of bogeymen who could be chucked out of the party, and take the blame. 

Boris and his sidekick after Commons vote defeat

If they do that, he will call snap elections and campaign for leaving Europe on his term.

He might ask for an extension from Europe or better yet, the EU might, without being asked, give him an extension until after the elections.

Such a move would neutralize Nigel Farage and hurt Jeremy Corbyn who has never expressed a clear position on Brexit.

Johnson would tell the British public that Liberal Democrats and Labour never respected the results of the referendum and they allied themselves to those pesky Eurocrats.

That message would resonate well with half the electorate and it might get Johnson a solid mandate.

So if Boris Johnson calls new elections, you will know that this is the real game of chicken.

But if this scenario materializes, I actually don't know what Boris might do.

He might try to negotiate with Europe and get some form of flexibility on the Irish border issue.

If successful that would break the binary equation between a no-deal Brexit and Remain.

But if Europe stands firm, I wouldn't be surprised if Boris made a U-turn and declare himself a hero for having averted the dire predictions of Operation Yellowhammer.

You might have noticed that there are a lot of ifs down the line.

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UPDATE:

Well, there you go.