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Oslo Delenda Est

One of the rhetorical oddities of the Brexit process is the emergence of a sort of cargo-cult legalism. Adherents of this practice view the law as a series of debating club tests, where a sufficiently cunning interpretation of the rules – spoken in the appropriate venue – will allow the speaker to reshape legal realities in their favour; treaties can be nullified or joined over the objection of existing parties; rights can be secured when the treaties guarantee them fail; alternative ways of doing things can be summoned from thin air.

A sure sign that you are about to encounter cargo-cult legalism is the invocation of the Vienna Convention on the Law of Treaties, a document which has assumed the status of a contested holy text, invoked by all sides to show that they and they alone possess the one true path to Brexit nirvana.

Advocates of the “Common Market 2.0” scheme are merely the latest to strike upon this remarkable source of power, claiming that the correct invocation of the convention could force the EU into giving us the Goldilocks Brexit; neither too hard nor too soft. A fundamental rule of life in the 21st century is that if you encounter the suffix “2.0” anywhere outside of software versioning, someone is trying to sell you a bridge. Common Market 2.0 is absolutely no exception to this law. To understand why, it’s better to refer to it by its original name: Norway+.

  1. The Norway+ Proposal

The core of the Norway+ model is that the UK seeks an arrangement akin to the one currently enjoyed by Oslo within the single market. We leave the EU, take our place in the European Free Trade Association (EFTA), and through this join the European Economic Area – the single market consisting of the EU member states and the EFTA/EEA countries (Norway, Iceland, Liechtenstein). As this would create the potential for tariff divergence between the UK and the EU – and the need for enforcement at either the Irish border or the Irish sea – the UK also agrees to stay within the EU’s customs union.

A more accurate name for the model might be EU minus: you keep the regulation, the free movement, and the customs union; you lose some elements of political integration and the right to vote on the rules governing your economy.

This is understandably not how advocates of the scheme describe it; Nick Boles speaks glowingly of Norway’s ability to influence EU legislation. Nicky Morgan tells us we would be a “rule-shaper and would remain a lawmaker” by gaining “a voice, vote, and ability to refuse”. Rob Halfon goes so far as to say that he’d rather have been in the EFTA bloc to begin with.

As they tell it, the Norway+ model offers the UK the chance to do something very special. We’d be within the EU’s single market, but unlike the member states we’d be able to say no to new regulations. We’d be free of the European Court of Justice. We’d be able to stop free movement if we wanted to, and pay pennies on the pound on our current contributions to the EU budget. There’d be no need for an Irish backstop, and we could leave at any time with just a year’s notice. We’d be out of all political union, regulating our own agriculture and fish, and in the near future we’d even be able to negotiate our own trade deals. And best of all, we can use the Vienna Convention to force the EU to agree this deal with us – ah.  

As you may have guessed, this is almost entirely untrue. The purpose of the single market is regulatory homogeneity; allowing for the sale of goods and services across the EEA without regulatory barriers getting in the way, and without countries undermining common standards. If you are in the single market without following the rules, then the structure springs a leak. If the country not following the rules is as large as the United Kingdom, that leak turns out to be on par with the one that sunk the Titanic.

2. Strategically placed figleaves

Nick Boles, High Priest of the Norway+ revivalists, was not always so keen on the model. As he noted in 2016, following Norway would see us “still in the single market, still bound by freedom of movement laws, and still subject to rulings by the European Court of Justice”. Far from receiving all the marvelous benefits of sovereignty listed above, “we would have gained almost nothing while losing any say over future developments in EU rules”.

If you were to ask Boles what changed since, it’s likely that he would tell you about his journey of discovery; how his naive preconceptions about the Norway model fell aside; how he came to see the light. In reality, Boles has discovered cargo-cult legalism.

To be fair to the member for Grantham, the EEA agreement is written in ways that are meant to confuse the reader into believing the non-EU member states retain considerably more sovereignty than they really do. Understanding the document relies on understanding the distinction between sovereignty de jure – the formal legal status – and de facto; where the power actually lies.

Norwegians have had plenty of time to experience this distinction, and a report produced by a government commission unsurprisingly takes a dim view on the sovereignty fig leaves offered by the agreement. Norway “formally retains its sovereignty”, but signs up to “a supranational and dynamic political union” with “continuous adaptation to its rules”. The agreement “has never been viewed as an agreement between equals”, and features “a substantial gap between formality and reality”. While Norway transfers no formal lawmaking powers, in reality “there is massive delegation of legislative power to the EU, a considerable delegation of judicial power to the EU Court… and some delegation of executive power… to the Commission”.

The Norwegian Parliament is reduced to the status of an Apple customer; new terms and conditions are downloaded, and it can either accept the new terms or end the agreement. It is this “choice” that Norway+ advocates believe would make Britain more sovereign. The only reason they do not see it more clearly is the power of cargo-cult legalism; “for political and constitutional reasons”, the arrangement works through international law agreements that “consequently give the impression of conceding less power than actually is the case”. The gap between formal legal structures and real world outcomes – between the incantation and the reality – is huge, and concealed.

At the same time, it’s clearly there if you know where to look. We might not be able to see tectonic plates moving over one another, but we can follow the fault lines by watching the hills.

3. When Storegga slides (Follow the hands)

At the core of the Norway model is a marvellous conjuring trick. The single market works because the EU countries involved pool sovereignty; they set rules collectively, and agree to follow them. Norway doesn’t take part in the first part of the process; it doesn’t get to vote on the rules, but under the terms of the EEA agreement is still bound to follow them. Understandably, this is a constitutionally and politically difficult position for a country to put itself in; a formal surrender of sovereignty has all sorts of negative connotations.

To get around this, the EEA agreement adopts a very particular structure. The EU countries sit in one pillar. Under their agreement, common market regulations take ‘direct applicability’ in national law; once the EU passes them, they are in effect without further action needed. Directives – larger and more sweeping pieces of law that need a more nuanced approach to fit them into different national frameworks – do not. Instead, EU countries transpose their intent into domestic law. If EU countries deviate from the rules, then the European Court of Justice (ECJ) has the right to issue fines.

The EFTA countries – Norway, Iceland, and Liechtenstein – sit in a second pillar. They do not transfer any formal powers to the EFTA authorities, but commit to aligning themselves dynamically to EU legislation relevant to the maintenance of the single market. This is where the trick begins; watch the magicians hands carefully. EU legislation is not ‘directly applicable’ in the EFTA countries, the European Commission does not make decisions for the EFTA countries, and the European Court of Justice does not have jurisdiction. Instead, a second set of institutions — an EFTA Court and Surveillance Authority — are created.

When the EU passes a law, the new legislation is incorporated into the EEA agreement by the EEA Joint Committee — a forum of EFTA ambassadors and EU officials. At this stage, some alterations may be needed to account for the unique status of the EFTA countries; references to EU external trade policy might be removed, and the powers given to EU authorities are adjusted to the appropriate EFTA authority. The core of the law, however, is unaltered.

For some laws this is the end of the proces. For others, the EFTA states may need to win parliamentary approval due to the contents of the law, and their own constitutional requirements.

This is the aspect of the agreement that Common Market 2.0 advocates believe gives Norway a vote and a right of refusal; the UK’s constitutional requirement is likely to be that all new laws are approved by Parliament (assuming no ‘conduit’ for new laws is created by one overarching act of legislation), and the EFTA countries do have the right to refuse new EU legislation.

This can take place in one of three ways. The first is that only single market relevant legislation is included in the agreement (although EFTA countries have voluntarily decided to include legislation the EU failed to flag as relevant). This opens the option of contesting the single market relevance of legislation, as Norway has done with some regulations on the trade in seal products.

The second is that the EFTA countries can delay the process, failing to take necessary national steps, dragging out negotiations with one another and the EU, failing to reach a conclusion in the Joint Committee, and so on.

Finally, the EFTA countries reach decisions on the addition of new laws to the EEA agreement by unanimity. If one disagrees, they have the formal power to veto the addition of new laws.

On the face of it, the EFTA countries have performed a remarkable feat; they are inside a homogeneous trade area without formally having to follow the rules. And if you believe this, you haven’t been watching the conjurers hands.

One small aspect of the structure of the agreement de jure means that in practice, the EFTA countries are bound to follow the EU’s rules. If after a year of attempts to resolve a dispute over a refusal to incorporate legislation no decision can be reached, then the EU can begin to suspend parts of the EEA agreement.

Clearly, the EU can suspend the directly affected parts of the agreement. In some cases, this can be remarkably far reaching; the integrated nature of financial services, for instance, means that refusal to incorporate one act can lead to massive suspensions of access. But as the European Parliament notes, suspensions do not have to halt there; to “effectively oppose” attempts by an EFTA partner to incorporate legislation “in a selective manner”, the EU can aim to suspend related parts of the agreement in an attempt to “impact negatively on the partner’s interests”.

And there, ultimately, is the trick. This process has never been brought, because there has been no need to; the threat is sufficient. To understand what this means, think of it as a cliff-edge Brexit in miniature for the affected sector. Overnight, access to the EU market is lost. And it is lost in a way which may well be unpredictable. As Erik O Eriksen writes, “the cost of applying [the veto on legislation] is considered so high that none of the EEA countries have used it so far”. The Norway model offers the illusion of sovereignty through a succession of Hobson’s choices; take this rule, or lose all access for that sector. And once a rule is in place, there is no unilateral mechanism for its removal.

To see the collision of the de jure ‘right to refuse’ with the de facto reality, look at what happened when Norway decided to deviate from the EU in the most minute way possible.

Norway has vetoed legislation once, refusing to implement the EU’s postal services directive in 2011. In response, the EU threatened to cut Norway’s access to the single market. Norway caved. The trick with the EEA agreement is to remember that you cannot take issues in isolation; while you can only suspend parts of the agreement affected by delay or refusal, at any given time there is usually a backlog of EU legislation waiting to make its way into the EEA agreement. There is little stopping the EU ending its lenient stance on delays on one issue to put pressure on the EFTA countries over another.

One substantive clash on a relatively minor matter of homogeneity, and the fundamental imbalance of the EEA agreement is laid bare. The artful edifices constructed to give the illusion of retained sovereignty fall down. When Storegga slides, Doggerland is washed away.

4. In the European Free Trade Association, no-one can hear you scream

Once the fundamental imbalance of power between the EFTA countries and the European Union is understood, the value of Norway’s “voice” is similarly laid clear. Norway and the other EFTA countries have no vote in the EU’s legislative process. They take no seats in the European Parliament, or in the Council, and Norway cannot suggest that new laws be brought in, or changes be made to those that already exist.

Instead, they are invited to participate in expert groups and committees put together by the European Commission during the drafting of laws. Once this stage is completed, one of two things will happen. Either the rules will be adopted by the Commission – in which case national experts act as state representatives in an EU-only process where Norway is excluded – or they will be passed on to the Council. In the latter case, Council working groups are formed, EU member states begin the process of horse-trading, and Norway is shut out from the most important stage of the process entirely.

The only influence Norway has from this point on is through diplomacy; relying on “detailed knowledge of the priorities and positions of individual member states”, informal mechanisms for contact with the European Parliament, and the goodwill of friends and neighbours.

Norway has a voice in the process until the stages where most of the major trade-offs are made; at that point, they must leave the drafting room and wait in the corridor – sometimes quite literally.

In turn, this means that no matter how hard Norway works to stay on top of developments in EU law it can still be taken by surprise. On one end of the scale, new rules on central heating boilers forced companies “to make multimillion investments overnight”. On the other, Norway’s most crucial industry – oil and gas – is regulated by Brussels without the Norwegian government being able to vote on its future.  

The fundamental problem is that when it comes to the crunch, Norway’s voice is absent and the country is out of the loop. And with no votes to back its position, its best hope is that another country’s interests will align with it.

If you want to know how this works out, you can ask Norway’s prime minister: “We are not at the negotiating table when the EU is assembled and we’re lucky if we’ve made it into the hallways of Brussels”. There is a notable “political deficit” for the EFTA members.

On any reasonable metric, the UK has been extremely influential in persuading the EU round to its point of view. Quite how the UK would do when excluded from the bulk of the decision-making process and stripped of its large vote share (~13% of the total) is another matter entirely.

5. Overruled

Suppose that the Norway+ advocates accept the arguments put forward so far. They agree that the veto is, in practice, unworkable, and that Norway’s voice is severely limited by its lack of votes. But as true devotees of cargo cult legalism, they have one last strand of argument to advance: EFTA has its own court to interpret EU laws, enjoys safeguard mechanisms, and can work legislation to be closer to its needs. Through careful invocation of these loopholes, Norway gains sovereignty relative to EU members.

The reality is that the existence of the EFTA court is precisely why Norway cannot work legislation to its advantage; it will be consistently overruled if it attempts to deviate from EU law.

Return again to the subject of fig leaves. Because Norway, Liechtenstein, and Iceland do not formally cede power to the EU, the ECJ cannot make decisions for them. Instead, the three countries have their own separate EFTA court. Advocates of the Norway model frequently tout this as a significant benefit, liberating the UK from the all-powerful ECJ. The reality is that it would do no such thing.

The core principle of the EEA agreement is homogeneity. The aim of the EFTA Court is not to provide Norway and the other EFTA countries with a mechanism for deviating from the law of the single market while remaining within it, but to ensure that they hold up their end of the bargain.

To this end, the EEA agreement makes some explicit provisions. The first is that the EFTA Court is bound to the case law of the ECJ prior to the signing of the EEA treaty in 1992. The second is that the Joint Committee keeps an eye out for deviations between ECJ and EFTA case law. Where these arise, the EU and EFTA can try to negotiate a common consensus. If this fails, they can agree to refer the case to the ECJ for an agreement. And if that fails, then the EU can turn back to the old standby: suspending the relevant parts of the EEA agreement.

If the case law of the EFTA Court and the ECJ diverges, the overwhelming weight of political power is with the latter. The EFTA/EU agreement is a partnership of equals, where one partner happens to be holding a gun to the others’ head. So long as everyone plays nice, everything is fine. And if they disagree, it’s pretty clear about which side is going to get its way.

In practice, these divergences don’t arise. As one study notes, the EFTA Court is often accused of being more “Catholic than the Pope”; in order to avoid undermining the agreement, the EFTA Court essentially asks itself what the ECJ would rule if it was in its place.

Even when legal principles in EU law are not transferred to the EFTA states – such as the concept of “Union Citizenship” – the EFTA Court works to preserve homogeneity with the EU, and has read the EEA provisions in a “citizenship-friendly” manner.

It’s the existence of this Court that means that attempts to ‘work’ single market rules to the national interest simply aren’t a feature of the agreement. The aim of the agreement, in every sense, is to preserve homogeneity. National sovereignty is incompatible with this. If Norway twists the rules, then the mechanisms for enforcement swing into play. That the Court’s rulings are advisory rather than binding is irrelevant; if Norway is in breach of the agreement, that hands the EU a large stick with which to bring it back into line.

For all the talk of the EFTA Court lacking a principle of closer union, it enforces the same rules as the ECJ, aspires to homogeneity, and is in a politically subordinate position. To sing its praises as a mechanism for supervising the EEA agreement relative to the ECJ is to plead for a prison on account of the attractiveness of the jailer.

Even the doctrine of primacy of EU law sneaks into the EEA agreement by the backdoor; all EFTA states participating in the agreement agree to introduce a principle “to the effect that EEA rules prevail in cases of conflict with other statutory provisions”.

The safeguard mechanisms – such as the much-touted emergency brake – are a non-starter when it comes to seriously deviating from EU law. They exist to correct major detrimental effects, when they can be shown to exist, and entitle a proportionate response from the other party. Going into the agreement with the intent of pulling the metaphorical handbrake on immigration is unlikely to be met with approval from any party involved.

6. Yes, Commissioner.

A staple of cynical conversation is that voting makes no difference; politicians are all the same, and civil servants hold most of the power anyway. In Norway, this is at least partially true. The EEA agreement guts domestic democracy and distorts the relationships between the various branches of government.

By the time EU laws reach the Norwegian Parliament, there is no room for decision making. Either they accept the laws as they stand, or they face the suspension of the relevant part of the EEA agreement. This being very little choice at all, the role of Parliament in debating issues vital to the national economy is significantly reduced; why discuss an area where you have no regulatory power?

The Parliament has no role in Brussels, and no incentive to take part. Where there is influence, it lies with the civil service and ministers; with expert groups and conversations with other governments. There is no direct impact of voting on EEA laws; no-one can be held to account for them. The influence of Norway on the rules governing it is reduced to a tenuous set of connections with ministers vulnerable to reshuffles and elections, and the work of the foreign office overseas. As a government commission notes, “the arenas where Norwegian politicians can involve themselves… are few and far between… they do not represent the main development and often are not even particularly important”. Policy, meanwhile, becomes disjointed; Norwegian positions “are to a great extent formulated by civil servants in individual government agencies often at a low level”.

The balance of power between parliament, the civil service, and the executive is distorted, with the only Norwegian influence in some areas coming from the latter two branches. While all branches are weakened in absolute terms, central government benefits relative to the others.

The effect of the deal on domestic politics is also unappetising. Because the EEA agreement is written to preserve an illusion of sovereignty where none exists, the exact nature of the pact is at best obscured for votes. The structure is designed to give the necessary fig leaves to politicians who want to proudly proclaim sovereignty without doing the hard work of governing, with the result that “few comprehend the real scope and depth of Norwegian integration”.

The end result is by the time an issue reaches public attention, “Norwegians are presented with a fait accompli”. When the EU brings in the Services Direction, the debate is “what would happen if Norway were to say no, rather than on the merits of the Directive itself”.

One might think in turn that the EEA agreement would be considered controversial in Norwegian politics, an ever-present issue in electoral politics. On the contrary; coalitions generally form with “suicide clauses” breaking up the government if membership of the EEA is ever put on the table.

Every criticism levelled at the EU – that it is undemocratic, and unaccountable – comes back at the Norway model tenfold. And it is very difficult to argue that it is in any way unjustified. To many intents, Norway is trapped in a permanent political adolescence; neither fully independent nor involved in the decision-making process.

7. The Perks

The Norway model is a terrible fit for the UK. The sections above have gone out of their way to demonstrate this. That does not, however, mean it is a terrible fit for Norway; the two countries interests are very different.

The key benefit for Norway is that while it enjoys full integration in most of the single market, its key industries enjoy a certain special status. The deal excludes agriculture and fisheries, meaning one large industry is entirely under Norwegian control. While EU tariffs make high added value exports to the bloc uneconomic in many cases, Norway judges the trade-off to be worthwhile.

The second major Norwegian industry is petrochemical; oil and gas. This sector accounts for 22% of GDP and 67% of exports, and while it is regulated under the EEA agreement there is a limit to the amount of damage that can be done. Oil and gas deposits don’t move across borders simply because a new regulation says they must. The end result is that the Norwegian government judges the trade-off to be worthwhile; a loss of control in some sectors is worth the opt-out for key industries, particularly given the lack of support for joining.

To illustrate the difference between the UK and Norway, look at each country’s goods exports. Norway sells fish, oil, and gas. The UK exports cars and pharmaceutical products; industries where small regulatory tweaks can shut off exports and create massive headaches for firms.

Cast your mind back to the regulation that proved so costly to Norwegian boiler manufacturers. Now imagine something similar taking place for financial services. Mark Carney, for one, has clearly thought about this and decided he doesn’t much like the possibility, saying he would not be comfortable “outsourcing supervision of this incredibly complex, incredibly important financial sector”.

The opt-outs in the agreement would be worth significantly less to the UK. While would still end up following the majority of EU rules (approximately 75% by one measure) we would find our hands tied when it comes to managing the most important parts of our economy. When Nick Boles tells his readers that “most EU rules would not apply to us at all”, he is being deeply dishonest, and also missing the point; counting rules is a fool’s game. What matters is their import.

Norway wields much of its influence through friends and countries with similar interests. The UK is already an outlier within the EU, and has spent the last three years thoroughly irritating the countries who would be setting the rules for us under the Norway+ proposal. Do we really think that the EU wouldn’t take the chance to snatch a few crown jewels from the British economy? The EU27 have already tried to offshore euro clearing activities with the UK as a full member; once the UK leaves, there is very little to stop the bloc attempting to regulate activity ‘onshore’.

There is also, at the core, a fundamental difference in the view Norway and the UK take of their relationship with the EU, and this is particularly highlighted by the way Norway has sought time and again to join EU programs outside of the EEA agreement. Norway is on the outside but wants to be as integrated as it possibly can be; Norwegians even pay roughly the same amount that we do, on a per capita basis. The UK, on the other hand, is on the inside but wants to be less integrated. The two parties are coming at the model from very different directions, and this could cause frictions.

8. Off-the-shelf, off the table.

The one great advantage of the Norway+ model – as described by its advocates – is that it would be simple to negotiate. I suspect the EU would certainly be keen on the framework, with suitable adjustments; the problem is the other EFTA countries.

Remember that essential difference in outlook; the UK is on the way out and wants to be less integrated, while the EFTA countries are on the outside but want to be as close as possible. Combine this with the UK parliament’s reluctance to be backed into a corner, the hugely disproportionate size of the UK relative to the other EFTA countries, and the controversy surrounding the EU within the UK, and the net result is that the EFTA agreement could well take on a different feel if the UK were to join.

The nature of EFTA – and its unanimous adoption of regulation – means that when one country refuses a change in the law, every other member is dragged to the cliff-edge. As one Norway politician notes, “letting the UK join EFTA and the EEC agreement to veto parts of it could undermine the agreement for all of us”.

Neither the EFTA countries nor the EU would be keen on the UK using the EFTA agreement to cherry pick single market access. Joining with the explicit intent of slowly diverging one sector at a time is unlikely to win us many friends. In turn, the EU could well take a far more robust approach to enforcement to an enlarged EFTA, making use of the rights afforded to it by the treaty rather than merely threatening to do so.

If the EFTA countries don’t want the UK to join, it is extremely unlikely that cargo cult legalism will carry the day; the most likely interpretation of the agreement is that the UK has no automatic right to remain within the EEA after leaving the EU. If the UK does enter into a Norway style arrangement, it is likely to have certain key differences.

9. Enter Norway+

The Common Market 2.0 proposal does not stop at single market membership. Unlike the existing EFTA countries, proponents of the scheme envisage the UK staying locked in a customs union with the EU so as to remove any barriers between Northern Ireland, the Republic, and Great Britain.

This would of course prevent the UK operating an independent trade policy; between regulatory alignment through the single market, and the binding obligation to keep tariff rates at those set by the EU, there would be no room for the UK to make concessions to other countries when attempting to win access to their markets. At the same time, we would lose our say on the EU’s trade policy.

This problem is compounded when you recall that leaving the EU involves losing our existing trade deals we hold through our membership of the bloc. While the customs union would force us to lower tariffs for countries the EU signs deals with, there would be no reciprocal obligation for them to lower their tariffs on UK goods.

Considering the size of the UK, it is unlikely that the ‘+’ element of the plan would stop there. The EU is likely to insist on elements of agricultural and fisheries policy being added to the agreement at least insofar as Northern Irish farmers are concerned, and for enforcement of the deal to be far more stringent than the current arrangement with Norway.

The UK is a large and important economy. Norway, bluntly, is not. If the UK is within the single market but not playing by the rules, it has the potential to create political havoc. As EU sources told the Guardian, we would have to follow the rules. We would be bound tighter to the current rulebook, with less room for manoeuvre. Norway has occasionally decided to delay rules, and taken time to back down; “with the UK we cannot accept such a slippage”.

The other EFTA states – and the EU – are unlikely to be particularly keen on the idea of the UK merrily vetoing EEA legislation. Not only would this be economically disruptive, it is likely to be politically toxic: as Hans Petter Graver puts it, “The UK is likely to politicise the EEA agreement and in doing so may render more starkly apparent the fact that EEA countries are not EU members, but must accept EU law.”

One measure the EU could adopt to handle the potential for Britain to diverge is a ‘guillotine clause’; if the UK pulls the emergency brake to control immigration, or diverges sufficiently for part of its single market access to be suspended, the entire agreement with the UK is suspended. This is the approach that the EU has taken in its relations with Switzerland, and so far the leverage granted by the clause has forced the Swiss into backing down on an attempt to end an agreement on free movement with the EU.

And then there is the ever-present issue of the Irish border. It is not beyond the realms of possibility that the EU either insists on the withdrawal agreement as a precondition for agreeing to the EEA model – locking the backstop into law – or seeks to have it written into the UK’s accession.

10. Norway for now, Norway forever?

There is a school of thought that sees EFTA as a staging post to some better future agreement with the EU; Norway for now, but in the future nirvana.

Amusingly, this is precisely how Norway found itself in its current situation. Pro-EU membership parties viewed the EEA as a stepping stone on the way to membership, and a way to prevent Norway from slipping into euroscepticism.

The EEA has ended up “a second choice that nobody particularly likes but that they can live with”. It keeps EU membership from being on the agenda, but prevents anti-EU parties from getting what they want. Norway can’t leave the agreement without all the agonies of leaving the EU. And at the same time, it can’t go in further because there is no political will to do so; it ends up “committed to co-existing in an undemocratic association with the EU, because this is the only solution on which it has democratically managed to agree”.

British parties interested in Norway as a temporary solution should take note.

11. The UK’s interest

A Norway+ Brexit would be the worst possible outcome for the United Kingdom. We would end up effectively following the majority of EU rules without any vote on their contents, and with very limited ability to influence them. The illusion of sovereignty granted by the veto and safeguards does not make the consequences of their use any less painful or practicable, assuming they even make it into an adjusted model.

Economically, we would be trapped within an inferior customs union, and likely to face an extended period of reduced access to overseas market. Regulations would not written with our interests in mind, and may well be designed specifically to draw economic activity back to the continent.

If the UK enters the EEA arrangement with the explicit intention of deviating from EU law – using it as a way to slowly diverge over time – the EU is likely to take strict enforcement measures. If British businesses face a series of unpredictable cliff-edges in business with the EU, they will be at a significant disadvantage. Those that can do so may simply up sticks for the continent in order to preserve continuity.

It is worth remembering too that the UK is the loud free market voice within the EU. Even with the best intent, rules set solely by the EU27 are likely to be significantly more interventionist than those set in a bloc where the UK has full participation and a hefty set of votes. The Norway model works for Norway – with its independent trade policy – because of its exclusions and the makeup of the Norwegian economy. It would be a very poor fit for the United Kingdom. It would not even be a model necessarily available off-the-shelf.

Democratically, the Norway+ model would reduce Parliament to the status of a chamber for rubber stamping the regulation of our key industries. In preserving EU law, the jurisdiction of a European court closely aligned to the ECJ, free movement of people, and significant budget contributions, it would run contrary to every promise made during the referendum to take back control of the UK’s money, borders and laws. While leaving the EU to join EFTA and stay in the EEA would fulfil the technical interpretation of the instruction to leave, it would run explicitly counter to its spirit.

Nick Boles previously described attempts to pass a Norway style deal as a “guerilla war” waged “in the not-so-secret hope a future government… will be able to take us back in”. I believe he is probably correct in judging this as a potential outcome.

It is likely that the Norway model would prove to be unstable if applied to Britain; we would end up rejoining, or leaving the EEA. Either way, we would simply be postponing the pain of refighting the 2016 referendum until significant further damage had been done.

And the world would not stand still while we make our decision. In our absence the EU is likely to push ahead with further political integration, and may well make our participation in all aspects of the EU – Schengen and the Euro included – a precondition for rejoining.

Whatever Brexit model we choose, Norway+ should not be on the table. To make my own views clear, I personally do not want to leave the EU. My judgement is that the withdrawal agreement and makeup of Parliament make it likely that a model similar to Norway may be the end result, eroding our democracy in exchange for very little gain. The alternatives – no deal, or a deal that separates Northern Ireland and Great Britain to the detriment of the Union – are unappealing in their own way.

What I will say is this; any Brexit outcome fixed in the next few weeks is likely to be catastrophically bad. What we have seen time and time again in the years since 2016 is the consequence of under-preparing; triggering Article 50 without setting a negotiating position, an end goal, or making any serious effort to prepare for a no deal. This in turn put us in a position where we were utterly reliant on the passing of a withdrawal agreement and granting of a transition period, and gave the EU very little incentive to give way. Signing the backstop agreement just to move talks on with a deadline looming in turn has given the choice of accepting a new status as a rule-taker, or dividing our country. Understandably, when this choice was presented to Parliament, both outcomes were rejected.

With very little time left until we leave without a deal, the EU has us at a heavy disadvantage. Whatever outcome you want – WTO, Super Canada, Remain, anything in short other than Norway+ – the best way to see it through is to revoke Article 50, halt the clock, and begin the process again as if we mean it.

Leaving the European Union is going to reshape the British constitution for a generation at the very least. Whatever form Brexit takes should not be dictated by a weak Prime Minister in thrall to her back benches. It certainly shouldn’t be trusted to a geriatric Stalinist. A genuinely cross-party approach is needed, drawing on expertise from around the country. Years, not months, of preparation would be required before we could think of triggering Article 50 again.

I acknowledge that this approach would be slow, but we have wasted three years on May’s efforts. If we had adopted this approach in beginning, we could now be about to trigger Article 50 with our destination set, a viable no-deal plan, and a great deal of leverage. Such is life. The most important thing to remember is that if a thing is worth doing, it is worth doing right; rushing through Brexit to find ourselves trapped in the EFTA twilight zone would be a very poor return to so much effort.

Header image courtesy of AlvaroPrieto, used under a creative commons license.

Comments Off on To the brink we go.

To the brink we go.

When humanity next gets round to revising the fundamental laws of the universe, Theresa May will surely earn a special mention. Her deal breaks down in flames. Her party, riven both by Brexit and her unique approach to implementing it, collapses around her ears. Her voice, worn out with meaningless catchphrases and outright untruths, gives out on her. Parliament refuses to back her deal. Refuses again. And still she clings on to power.

At this point, even the Terminator’s famed powers of resilience have nothing on the Prime Minister’s seeming indestructibility. Long after the nuclear fires of the next war wipe the world clean of humanity, May will still be stood behind a lectern determinedly informing the cockroaches that Brexit means Brexit. However insurmountable the obstacles, however staunch the opposition, however blatantly, laughably unworkable her strategy becomes, she continues undaunted by past failure or present reality.

Today, with preparations for Operation Yellowhammer – the government’s undercooked no-deal strategy – slowly winding into place some nine days before the ultimate deadline, May stood in front of the nation to explain how the Brexit process has ended up so badly off track.

You might think given everything that has come to this point that she would show some humility. That she would accept that her strategy of triggering Article 50 without a plan in place was premature. That negotiating in secret so as not to ‘show her hand’ – keeping both opposition parties and Parliament excluded from the process – had been an unwise move. That the deal she reached – keyed to her preferences and those of her immediate confidantes – could not be passed, and that a more inclusive process might have made this obvious earlier. That her strategy of driving the country up to the cliff-edge in an attempt to force MPs to acquiesce to her deal was undemocratic, and a mistake. That, in short, she bears some personal responsibility for the mess we finds ourselves in.

You would be sorely mistaken. The Prime Minister looked into the cameras and told the country – a country where in the frenzy of the 2016 vote an MP was murdered by a man who gave his name as “death to traitors” and “freedom to Britain” – that any hold-ups in the Brexit process are down to obstructive MPs.

MPs who were “infighting”, playing “political games”, revelling in “arcane procedural rows”. Refusing a deal that “delivers on the result of the referendum”. Who perhaps “do not want to leave at all, causing potentially irreparable damage to public trust”. Who can’t decide what they want. MPs, reading between the lines, who are letting down the public who just want this “over and done with”, while Theresa May – who has tried her very best, and who unlike them is “on your side” – can only stand by helpless as they reject her brilliant deal.

And if MPs choose to extend Article 50, and cause European elections to be held – well. Theresa May, the person who is supposedly in charge of this process, cannot be held responsible for what follows. “How bitter and divisive”, she mused, “would that election campaign be at a time when the country desperately needs bringing back together?”. The shadow of Thomas Mair looms large behind those words. To use them in an attempt to bully parliament into doing her bidding is beyond shameful; strongman rhetoric from a weak leader.

It takes some nerve to give a speech like that while standing in the middle of the greatest British policy failing since the Suez crisis. It takes even more to do so amid a crisis which is largely of her own making. And a simple lack of tactical foresight, as well: May will need the same MPs she is excoriating today to back her deal tomorrow. Does she genuinely think that this was the way to win them over?

Her tactic, such as it is, appears to be to drive the country up to the very brink of the no-deal cliff and dare Parliament to blink. The problem is that her pitch – that the choice is between her deal and no-deal – is not entirely true. Parliament can still choose to revoke Article 50, although there may not be enough time or political will to do so. But the simple fact that the option could be perceived to be on the table may mean that Remain-minded MPs refuse to back down, while the hard-leavers in the ERG continue to hold their ground as their favoured outcome comes ever closer.

In other words, there is absolutely no guarantee that her strategy – which has so far failed in every particular – will come good at the last. The only thing that we can be remotely certain about is that if we do go over the cliff, Theresa May will take no responsibility whatsoever.

Header image courtesy of James Loesch, used under a creative commons license.

Comments Off on Venezuela and the Blairites

Venezuela and the Blairites

I haven’t been writing as much as I should recently, and I think that’s largely because there’s simply been too much to write about. Every time I get a piece halfway to the finish line, something else drags my attention away.

Traditionally, this problem has resolved itself when somebody writes something so monumentally wrongheaded that I really can’t drag my brain away from it, and I’m pleased to report that a certain deputy editor has kindly stepped in to fulfil this role.

Consider the following statements:

“Often forgotten that New Labour’s “Third Way” was an early influence on Venezuela. Parallels between overdependence on oil/City of London to fund social spending”.

[considering Venezuela’s “overdependence on oil”]: “One is reminded of Gordon Brown’s Faustian pact with the City of London”.

Let’s ignore, for now, the idea that Chavez was a Blairite who slowly found that his political hero’s ideology simply did not work. Let’s ignore the idea that it was simply a collapse in the oil price — rather than the deleterious effects of government policies — that landed Venezuela in its current state. Let’s even ignore the basic economics of the comparison. Instead, let’s look at the numbers: was the City as important to Blair as oil was to Chavez?

No. Not even close.

Tony Blair left office in 2007. At that point, the UK’s finance and insurance industry – every last bit of it, from local bank branches and building societies to the City and Canary Wharf – was worth about £118 billion, or 8.6% of GDP. The exchequer netted a total of around £68 billion from this, or 14% of total government revenues 1.

In Venezuela, oil accounts for up to 50% of GDP and 98% of export earnings. In a given year, about 60% of the Venezuelan government budget is financed from oil revenues.

To say that Blair’s “overdependence” on the City of London inspired Venezuela’s overdependence on oil is like saying you were inspired to blow your life savings on lottery tickets after your neighbour bought a scratchcard. It’s also just historically wrong: Venezuela has been hooked on oil since the 1920s.

The one comparison which might have been halfway reasonable would have been between Venezuela’s profligate use of oil revenues, and Britain’s use of the North Sea windfall in the 1980s — although that wouldn’t have made for a gratuitous pop at the Blairites.

Another problem with the comparison is that while oil runs out, finance is forever. For all the money that Qatar and the United Arab Emirates are spending on cities in the desert and Farquaad-style overcompensation, they’re also stashing money in sovereign wealth funds and working on plans to diversify their economies; they know perfectly well that without the oil money it will all collapse back into sand.

In the meantime, that oil means there are rents to be extracted; politicians find it far more attractive to fight over petrodollars than to invest in the development of a country. Hugo Chavez’s daughter is allegedly worth $4.2bn; Tony Blair’s son runs a recruitment agency.

For all that finance fluctuates, markets are somewhat differentiated and contagion does not necessarily spill over borders; a crisis in Thailand does not necessarily mean a serious problem in the United Kingdom. If you simply rely on selling oil, then changes in supply or demand in other countries create large price swings. And if politicians are spending or expropriating every incoming penny, then it’s hard to build up reserves for the lean periods.

In short, what matters is less the make-up of your economy and more your political structures. There are plenty of oil-dependent economies out there, with greater or lesser levels of diversification, but we’re not discussing the inevitable collapse of Norway, or the terrible fate of the United Arab Emirates. We’re wondering how a country with the world’s largest oil reserves has managed to inflict upon itself a crisis worse than the Great Depression.

The answer probably isn’t Blairite policies. As Eaton notes, Chavez does cite our former PM as an influence in an interview he gave in September 2006 “When I was released from prison [in 1994] and began my political life, I naively took as a reference point Tony Blair’s proposal for a “third way” between capitalism and socialism”.

Chavez followed this up with “I no longer think a third way is possible. Capitalism is the way of the devil and exploitation”. Earlier in the year, he described Blair as “the main ally of Hitler” and “a pawn of imperialism”.

In practice, rather than implementing a moderate path Chavez followed his election by removing effective limits to his power and ramping up government interference in the economy. What flowed from that point was the predictable consequence of his policies and politics.

Header image courtesy of Michaelarcand, used under a creative commons license

Comments Off on The Unspoken Backstop

The Unspoken Backstop

Comments Off on Theresa May, Sheriff of Nottingham

Theresa May, Sheriff of Nottingham

My favourite Alan Rickman performance is his turn as the snarling, flouncing, delightfully villainous Sheriff of Nottingham. It really has everything; the hair, the voice, the outfits, the wickedly delivered threats. Sadly, it’s the last of these that Theresa May has decided to emulate: “Cancel the kitchen scraps for lepers and orphans, no more merciful beheadings, and call off Christmas!”

While May can’t have the European Research Group rounded up and sent to the headsman – no matter how much she might wish it were so – her bid to sell her deal to her party is going so well that Conservative whips are already threatening to cancel Christmas if she doesn’t get her way.

Even Liam Fox is playing attack dog, telling MPs that they will have to face up to tough choices and back the PM. But with 100 MPs from her own party publicly speaking out against her deal and the Labour party set to oppose it, it’s difficult to see a path through the Commons for the deal.

Part of the problem is that MPs simply don’t believe May when she says it’s her deal or no deal. Labour’s Yvette Cooper publicly called the prime minister out on this, saying that she simply doesn’t believe May would go through with a no deal Brexit. MPs are fully aware that there are always other options, or at least they should be if they read this briefing email on a regular basis.

An even bigger part of the problem is that May’s deal simply isn’t very good. While May and her allies are attempting to sell the deal to the country, all they seem to be doing is highlighting its many flaws. The process is not entirely unlike a game of whack-a-mole. David Lidington, for instance, was dispatched to Scotland to argue that the deal wouldn’t undermine the union because the rest of the UK would voluntarily ‘remain aligned’ with Northern Ireland.

Mole squashed, but up pops the obvious next question. If we’re going to ‘remain aligned’ with the single market, how exactly are we taking back control?

As stage-managed media blitzes go, it’s a curious one which seems to spend most of its time explaining all the ways in which the deal is a shambolic humiliation for Britain. It’s no wonder then that May is insisting any televised debate be between herself and her fellow Brexiter Jeremy Corbyn. The difference between the two is, after all, mostly branding. Allowing Boris Johnson onto the stage to make the case for the charms of a no deal Brexit would be disastrous.

Allowing a campaigner for a People’s Vote into the mix would be even worse. After all, the only sales pitch she has is that there’s no way out; why give the lie to that, too?

Photo credit: I took this one. Well done me.

Comments Off on Rhetorical Contagion (Britain is not America)

Rhetorical Contagion (Britain is not America)

British politicians, I suspect, feel a degree of envy towards their American counterparts. An MP who proceeds along the time-honoured route through Eton and Oxford to the Palace of Westminster will spend most of their lives surrounded by the same sort of people in the same sort of architecture, and eating the same sort of curious canteen food.

American politics is different. It is glamorous; senators and congressman wheel and deal across our TV screens. It is expensive; money pours into campaigns seemingly (and legally) without limit. It is high stakes and high powered. And best of all, the Americans very rarely have to field questions about the punctuality of the fortnightly bin collections in Upton Snodsbury, or take to the stage with a candidate wearing a bucket on his head.

It’s probably unsurprising then that some British politicians seem to make strenuous efforts to make their lives more American, at least as far as the trappings of power go. They hold televised debates and fix the dates of elections long in advance, bringing in the long campaign trail common to American politics. They hire American campaign gurus like David Axelrod and Jim Messina. Backbench MPs appoint chiefs of staff. And, of course, ministers like Boris Johnson make pointed comments about wanting their own government plane.

Longing for the glamour and accoutrements of American politics is fine so far as it goes. It might be crass and even slightly embarrassing to see our politicians cosplaying their cross-channel counterparts, but it isn’t actively harmful. The obsession with American political argument is.

For all our shared heritage and all the similarities, Britain and America are still very different countries. Our Prime Minister is not a President. There is a totally different set of powers accruing to the position. Our highest court – however American in name – is appointed and functions in a way utterly unlike it’s US counterpart. Our devolution of powers is unlike theirs. We do not have a written constitution, but instead a web of documents and norms and pieces of legislation that come together into a system that functions so long as you don’t look at it too closely.

We do not share the same fraught history around issues of race. We do not share their demographic make-up. We have a very different set of values on environmental issues. On social issues. On economic issues. We already have single-payer healthcare, government caps on tuition fees, subsidised loans for poor students, generous maternity and holiday allowances.

Many of the battles the Americans are fighting, in short, are on political terrain utterly alien to us. They take as read the various powers of the different American branches of government, the political and social history of the nation, the mood of the population towards the issue. They are, in other words, just the tip of an enormous iceberg, resting upon a vast mass of assumed knowledge and context and fact. And if you immerse yourselves in these arguments and then deploy them in Britain, you do so on foundations of thin air. The assumptions that underpin them are gone.

Political ideals may be universal, but contexts are definitely not. We would probably agree with Americans that it is a good idea to drive on the right side of the road. It’s just that by right, we mean left. The action which best achieves an ideal is dependent on where you stand – and so will the arguments you make.

This rhetorical contagion is where Britain’s cultural obsession with America becomes unhealthy. When British politicos spend their time thinking and reading and arguing about American policy, then it is all but inevitable that this begins to shape their thinking on British issues. American rhetoric is adopted and employed in an environment with which it is fundamentally at odds. And are all the poorer for it.

Header image courtesy of ehpien, used under a creative commons license.

Comments Off on Brexit’s contradictions trap May between border and sea

Brexit’s contradictions trap May between border and sea

With four months remaining until the UK leaves the EU, Theresa May is caught between the devil and the deep grey Irish sea. The November meeting of EU heads of state, originally pencilled in as the date when Brexit negotiations would be signed off on, could now become an emergency response to a potential no-deal Brexit.

The major obstacle to closing a deal is the Irish border. Leave won the 2016 referendum by promising voters new trade deals around the world, the continued territorial integrity of the United Kingdom, and a frictionless Irish border. As these promises cannot coexist with one another, May faces the unenviable task of choosing which to renege on.

If Britain leaves the customs union and the single market, then it must have customs procedures for trade with the EU. This means either checks at the border, or on goods crossing the Irish sea. And if Britain stays within these institutions, there is little point to leaving: the EU rulebook is retained, there will be no new trade deals, and a large chunk of the voting population will be left feeling betrayed and angry.

The main thrust of the Brexit negotiations has revolved around squaring this circle. The most recent proposal involved keeping Northern Ireland within the single market, and Britain in the customs union.

This still leaves major issues to be resolved. Quite apart from stifling cross-sea trade, it would involve accepting illegal migration into Britain. The government says there will be no special immigration treatment for EU nationals after Brexit. That means work visas. And that also means that the lack of ID checks on travel from Northern Ireland would become a glaring loophole in Britain’s new migration regime, with little chance of checking if EU nationals are overstaying their welcome.

The alternative would be to introduce passport checks on journeys from Belfast to Liverpool – political suicide for a government dependent on unionist votes, and a threat to the peace process.

This, ultimately, is the great flaw with every suggestion made to date. Whichever side loses out in the negotiation, the peace process is put at risk. While the EU is focused on the need to prevent border infrastructure becoming a target for republican bombs, hardline unionists are unlikely to be amused by a regulatory and travel regime that leaves Northern Ireland more closely aligned to the Republic than to the United Kingdom. If the government insists on a full separation from the EU, then there is an argument that a second referendum should be held: a border poll on reunification.

The assumption underlying the current settlement is that is equally possible to feel British or Irish within the six counties. If Brexit means introducing barriers within these islands that have not existed for decades, then this will no longer hold. In a vacuum, such a poll could reignite sectarian violence. But with Brexit throwing the region into turmoil, a border poll could have the effect of legitimising the new arrangements – or replacing them with ones more to the populations liking.  

If the Conservative and Unionist party decides it wants to live up to the second half of its name, then it does have two other options. It could scrap Brexit entirely, or it could keep Britain in the single market and customs union.  While the latter might be more palatable to May’s backbenchers, it would contain a delicious irony; at long last, London would be ruled from Dublin.

Header image courtesy of Greg Clarke, used under a creative commons license.

Comments Off on How bad politicians drive out the good

How bad politicians drive out the good

One of the best known laws of economics is that bad money drives out good. If a country debases its coinage, mixing the gold and silver in new coins with lower value metals, people will hold onto the older and more valuable coins and spend the new ones. The bad money flushes the ‘good’ money from circulation. As Britain prepares to leave the European Union with its weakest crop of parliamentarians for decades, it’s worth wondering whether a similar principle might apply in politics.

The application of this law to elections could be termed a cycle of mediocrity – or possibly a ‘Chris Grayling spiral’, and it goes something like this. Becoming an MP is objectively a bad career choice for top talents. The pay, while generous, is nowhere near what they might earn in business or finance. Opportunities to add on high-paying consultancies or newspaper columns, before or after serving in Parliament, accrue only to a lucky few.

Moreover, becoming an MP costs a small fortune in time and money. In 2014, you could expect to drop a neat £34,000 on your bid to win a seat. You have to take time off work, hit the doorsteps, print the leaflets, put down your deposit, keep up with the local politics, while maintaining your primary career in case you lose. The job security is variable at best, and tied to the fortunes of your wider party – including factors which have absolutely nothing to do with you.

And even if you have a strong motivation to serve the public good, there are better paying options available. You could be a director in a local council. You could work for an NGO. Work in the civil service. Become a lawyer and take on pro bono cases. All of these would give you that pleasant sense of making a difference, while leaving your wallet far heavier. And each of them would come with a second huge advantage: generally speaking, if you take up these careers then you will not – as an individual – have to deal with the British press.

For all that our newspapers pride themselves on their fearless reporting, quite a lot of what they do could be classed as ‘spirited attempts to destroy the personal lives of political opponents’. If you work in a bank, you are unlikely to see the sort of treatment meted out to Chuka Umunna, who saw his grandmother doorstepped when he considered running for Labour leader, or Carrie Symonds – whose fling with Boris Johnson saw her traduced on the front pages. Even better, you don’t have to deal with the toxic work culture: the archaic whip system, the bullying, and the backstabbing needed to climb the greasy pole.

And this is where the cycle begins. When Parliament pays poorly and is an unpleasant place to work, it implicitly selects for people with a strong intrinsic motive to undertake that work. In turn, this often means highly partisan views about how the world should be. People who probably don’t play nicely with people holding different views. And people who make the idea of choosing a different career far more enticing.

The end result is that Parliament is increasingly filled with Boris Johnsons and Chris Graylings; power hungry public schoolboys, and mediocrities with strong views. And the bad currency drives out the good.

The kicker is that just as debasement of currency can eventually trigger a financial crisis, the debasement of parliament can trigger a political crisis. Highly partisan mediocrities are the type of politician most likely to launch grand schemes to reinvent the country – and also the type least capable of seeing such a scheme through.

Remind you of anything?

Header image courtesy of patternghosts, used under a creative commons license.

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