Has British Prime Minister Theresa May outmanoeuvred all her opponents? By defeating Parliament's effort to rule out a disorderly "no-deal" rupture between the European Union (EU) and its second-largest trading partner, May has redoubled pressure on EU leaders to accept her demands by the Brexit deadline of March 29.
Holding a gun to one's own head is rarely a successful negotiating strategy, as Greece discovered when it threatened to leave the euro. But a collapse of trade with Britain is a far more alarming prospect. Moreover, the main concessions that May is demanding are literally peripheral to every European country except Ireland. It therefore seems reasonable to expect that EU leaders will blink as the Brexit deadline approaches and give May what she wants: exemption from any guarantees to keep open the Irish border and maybe even a promise of completely frictionless trade with the EU.
May also appears to have outmanoeuvred her domestic opponents. By persuading dozens of Labour MPs not to oppose her in the crucial votes on Brexit, May managed to discredit the Labour Party in the eyes of an entire generation of pro-European young voters. And by persuading Tory Brexiteers that she would magically erase the most objectionable features of the EU withdrawal agreement, May has won herself the possibility of staying in power until the next general election and perhaps beyond.
But this happy outlook for May rests on one crucial assumption: that the March 29 Brexit deadline will remain unchanged. European leaders could easily neutralise May's threat of a no-deal Brexit and therefore eliminate any need to offer the concessions she demands. To do this, they must understand the method behind May's maddening strategy of indecision and delay.
Throughout her political career, May has used procrastination as a winning strategy. As Home Secretary, she often won battles against other ministers simply by refusing to express her views or even to appear at meetings until minutes before a final decision had to be made.
May's strategy of "running down the clock" often wins, but only if there is a hard deadline that forces her opponents to capitulate. Without that, "running down the clock" becomes "kicking the can down the road," an ineffectual effort to shirk responsibility, reflecting May's paradoxical character traits of robotic inflexibility and exasperating indecisiveness.
Once May's negotiating strategy is properly understood, the EU's rational response becomes obvious: total inflexibility on the Brexit deal's substance, but removal of the Brexit deadline. European leaders should make no concessions of any kind on the withdrawal agreement, allow no shadow of doubt on the commitment to Ireland, and offer no hints about future trade deals. But they should also state publicly that they no longer consider March 29 a hard deadline and would be happy to extend the Brexit negotiating period for as long as is necessary not only to agree on a new UK-EU relationship, but also to demonstrate that what is agreed satisfies both sides.
To lift the deadline of March 29, an arbitrary date that came to dominate the Brexit negotiations only because of a quirk in the EU Treaty, would merely acknowledge what is already happening behind the scenes. European and British officials are already planning for an extension, but both sides are reluctant to admit this publicly, because they think the deadline gives them negotiating leverage. Contrary to earlier expectations, however, it should now be clear that the deadline has actually weakened the EU's negotiating position. It is only the March 29 deadline that has allowed May to weaponise the threat of a no-deal Brexit. Without it, May would be unable to threaten EU leaders with economic chaos and would have no chance of forcing through Parliament a botched withdrawal plan that will never command popular support in Britain and could poison UK-EU relations for years to come.
Now consider what would happen if EU leaders voted to suspend the deadline and offered to continue Brexit negotiations for as long as necessary to reach an agreement that was genuinely satisfactory to both sides.
May could, in theory, refuse to accept an extension and still insist that Britain would crash out on March 29 if the EU refused her demands for renegotiation or if Parliament failed to support her deal. But in that case, the blame for no-deal chaos would fall entirely on May and her Conservative Party. Under these circumstances, even the most anti-European Labour MPs would not want to vote in favour of a totally arbitrary deadline imposed on Britain by May for purely partisan reasons.
As a result, a clear majority of MPs would almost certainly push through Parliament the legislation that narrowly failed last month. This would remove from UK law the March 29 Brexit deadline and eliminate the possibility of leaving the EU without a deal.
But now suppose that Parliament turned down the EU's offer of an extension, perhaps to signal support for May's no-deal threat. Even then, the EU would lose nothing by unilaterally abandoning the March 29 deadline. Those EU leaders planning to capitulate to May's demands at the last moment to avoid a no-deal Brexit could still do this on March 28.
In short, an EU initiative to remove the arbitrary deadline could be the key that unlocks Brexit. Instead of allowing itself to become a captive to May's no-deal threats, the EU could offer Britain the time to seek a national consensus and then decide calmly on its future relationship with Europe, whether a customs union, a Norway-style single market arrangement, an arms-length trade deal, or no Brexit at all. In every successful hostage negotiation, the first crucial step to a breakthrough is to remove the deadline. European leaders should take that step now.
Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics and the author of Capitalism 4.0, The Birth of a New Economy.
Copyright: Project Syndicate, 2019.
© 2017 - All Rights with The Financial Express