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Who’s Afraid of No-Deal?


As Parliament prepares for a series of dramatic votes, Brussels is anxiously waiting for the United Kingdom to decide what it wants to do—but many have made peace with the idea of no-deal chaos.

Parliament TV handout via © REUTERS

This is it, the Brexit endgame. At least, that’s how British Prime Minister Theresa May is portraying it to a nervous nation.

On Tuesday March 12, members of the British Parliament will take what May promises is the final vote on the Withdrawal Agreement she negotiated over two years with the European Union. The deal has already been rejected twice, first in a vote cancelled at the last minute in December, and then again in a vote in January that saw the largest rejection of a sitting government in modern British history.

The Withdrawal Agreement was defeated by strange bedfellows: a mixture of Remainer MPs opposed to Brexit entirely and Leaver MPs opposed to the agreement’s backstop arrangement for Northern Ireland. The deal stipulates that if the UK and EU can’t agree a free trade arrangement that would prevent a hard border on the island of Ireland, the UK will automatically—and involuntarily—be put into a customs union with the EU until a solution can be found.

For the EU27, all that can be done is sit and wait to see what the week brings. Agreeing to May’s 11th hour dash to Strasbourg on Monday evening and to what the prime minister said were “legally binding assurances” regarding the backstop was the utmost the EU could do to help. “There will be no further interpretation of the interpretation,” Commission president Jean-Claude Juncker warned.


But will the additional assurances be enough to get May’s deal over the line? Tuesday afternoon will see the UK parliament vote once again on it. Labour leader Jeremy Corbyn has called upon the House of Commons to reject the exit agreement, and a rough survey of MPs’ positions shows it is still unlikely to pass—but never underestimate the power of last-minute panic.

If May’s deal does actually pass, Brussels and London will immediately start negotiations on a future free trade deal. The UK will officially leave the EU on March 29, but everything on the ground will remain the same at first.

That’s because May’s deal has provided for a two-year transition period during which EU rules continue to apply to the UK while the future relationship is hammered out. During this time the UK will be a rule-taker, having to follow EU laws and pay into the budget while having no vote in the EU’s institutions. British representatives will immediately leave the European Parliament, European Council, and European Commission.


However, if MPs reject May’s deal again, it will be indisputably dead. She has even conceded this herself. And that would mean that there would be no deal in place by the March 29 deadline, resulting in a disorderly Brexit which, under the most alarming projections by economists, could throw the entire world into economic chaos. At the very least, it will throw the UK into chaos in April.

To avoid this, May has agreed to a vote on Wednesday on whether or not to rule out no-deal Brexit as a possibility. May has said she is opposed to no-deal Brexit, but ruling it out would destroy the UK’s leverage at these pivotal last moments. The UK would no longer have a bomb to strap to its chest in the closing days before March 29—a bomb which would chiefly injure itself, but also its European neighbors.

It is unclear whether a vote to rule out no-deal can pass. There are many hardcore Brexiteer MPs who actually want a no-deal Brexit, saying that the economic chaos will be worth it for the sovereignty won, and that in any event the predictions are exaggerated. Dominic Raab, May’s former Brexit Secretary, has even called for May to whip her party to vote for a no-deal Brexit.

If the UK Parliament rejects the motion to rule out no-deal, then we are heading for a disorderly Brexit in two weeks’ time. Many expect that after such a result, the pound would enter a free fall on Thursday and global financial markets will wobble at best, panic at worst.


If Parliament votes to rule out no-deal, then May will table a motion the following day to ask for a short extension of Article 50, moving the Brexit deadline from the end of March to the end of June.

The ball then moves to Brussels’ court. Under normal circumstances it might seem reasonable that the 27 other EU countries would agree to such a request in order to avoid catastrophe. However, the situation is complicated by the European Parliament elections taking place in May.

Right now, the UK is not planning to run a vote to elect MEPs for the next European Parliament term starting in July because it expected to be out of the EU by the time of this election. That’s fine if the UK really does leave by end June. But EU diplomats are skeptical. After all, what can be achieved in three months that couldn’t be achieved in two years?

The EU27 are going to want assurances from May that she sees some way to move the needle by then. Because if she were to ask for another extension, it would mean the UK is still in the EU when the new European Parliament takes its seats on July 2. If the UK hasn’t run elections in May and does not seat new MEPs, it would mean the new European Parliament is illegally constituted. Any laws it passes could be challenged in court. Obviously, the EU sees this as an unacceptable risk.

That’s why many EU leaders, including in Germany and France, as well as the EU Commission according to reports, believe that the EU should insist on a two-year extension and force the UK to run a European Parliament election in May. However other EU leaders, notably the European Parliament’s chief Brexit negotiator Guy Verhofstadt, are opposed to this idea. They believe this would continue the Brexit limbo indefinitely. Better to rip off the band aid now and get it over with.

On the UK side, May’s government has said it would be politically impossible to ask citizens to vote in a European Parliament election when they voted to leave the EU three years ago. It could prove very hard to get approval for a two-year extension in London.

However, with Labour leader Jeremy Corbyn now ostensibly supporting a second referendum on leaving the EU, such an outcome is more likely. A second referendum would take six months to organize. If there is still a possibility that the UK is staying in the EU, it is logical that it should take part in this year’s European election. Indeed, the outcome of that election in May would be a barometer for whether a second referendum is likely to result in a changed outcome.

If the week ends with a rejection of May’s deal, a rejection of no-deal, and an approval of a time extension, it will fall to May to convince her EU counterparts that she can find a solution within three months. She may travel to Brussels as soon as Friday to do so.

Given the political situation in the UK, it’s hard to see how she can be terribly convincing. In fact, if the votes unfold as many predict, she may be unable to survive as prime minister until the end of the week.

Sharpening the Knives

According to the Sunday Times, her rivals within the Conservative Party are already sharpening their knives. “Allies of the four main contenders to succeed her—Boris Johnson, Sajid Javid, Jeremy Hunt, and Dominic Raab—said they were ‘ready to go’ and that ‘things could move quickly,’” the newspaper reported.

It may be that these Conservative rivals believe the threat of no-deal Brexit will scare Brussels into a last-minute accommodation in the days or hours before March 29, as often occurred during the Greek debt crisis.

But in this they are likely mistaken. In the rest of Europe there is an awareness that any no-deal chaos will not stop at British shores. But many, boiling with frustration over Britain’s behavior, have come to believe it is the only realistic outcome of this drama. Better to get the pain over with now then let it drag on for years and years.

In any event, some say, the timing just before the European Parliament elections could prove to be an effective weapon in blunting the appeal of anti-EU populists throughout Europe. If European voters see Brexit Britain embroiled in economic chaos, it could convince them that voting for parties that would take them down the same path is not a good idea.

Brussels has much less reason to blink than London in the closing hours of this drama.

NB. This article was updated on March 12 to include May’s late visit to Strasbourg the previous night.