As part of TCW’s Brexit Watch, Adrian Hill will be keeping a regular look-out for us from Switzerland. His focus will be on the German language papers and the Neue Zürcher Zeitung (New Journal of Zurich) in particular, respected as the best German language paper in the world, and which, moreover, is read by all those who fall under the umbrella label of ‘gnomes of Zurich’. Articles in the NZZ, as it’s known, can affect confidence in Britain and sterling. Here is Adrian’s first report from Bern.
OUR Brexit trade negotiations with the EU are taking place alongside those with Switzerland. The latter are being used as a test laboratory for dealing with Britain. Thus any comment by the NZZ political editorial team is worth reading.
Today I am focusing on one of the most eye-catching articles that I have seen in the NZZ for months, published this weekend and written by their former Dublin correspondent Peter Rásonyi, who used to cover London as well. When reporting from Dublin he took a rather pro-EU line, I think it’s fair to say. No doubt as a good reporter he had excellent access to the Irish Government and the EU representatives in Dublin and London. All of a sudden the tone has changed, near enough reversed, which makes me wonder if he was briefed that with Tony Blair as team captain and the Speaker as referee, plus the EU Commission and maybe the German Embassy as well, that they had control of our Parliament and therefore Brexit blocked and, as several others of us were told by three or four EU ambassadors in 2016, that Brexit would not happen. Whatever the underlying reasons for his change of tone, his article is worth reading – and by the press team at Number Ten too. Here is my translation:
Brussels is under a false sense of security
Prime Minister Johnson pretends that he is not interested in a close connection to the European single market. This is more than populist noise. The British keep their distance for good reasons.
By Peter Rásonyi
For EU negotiator Michel Barnier, the UK has to decide whether it wants to continue to abide by the EU rules or not – the extent of future free trade will depend on this.
It could all too easily be dismissed as populist perturbation in front of a home audience, when Boris Johnson said on Monday in his speech on future EU policy: ‘We will have full sovereign control over our borders, immigration, the rules of competition, the State aid and public procurement.’ Johnson was diametrically opposed to the demands of Brussels, which as a condition for a free trade agreement calls for the continued close ties of the United Kingdom to precisely these rules.
But behind Johnson’s provocative announcements there is definitely strategic substance. Great Britain is well advised to be confident and distant at the start of the upcoming negotiations with Brussels on the future bilateral relationship. At first, that’s tactically negotiable, because when a country negotiates with a bloc of 27 countries that is almost eight times larger, it shouldn’t demonstrate weakness right from the start.
But more important is the strategic goal of Britain’s independence. Until now, it was taken for granted that the island would depend on a close co-operation with the EU for a trade regime and that it would be easy to blackmail. It is credit to Johnson or his adviser Dominic Cummings to vigorously shake this deceptive self-assurance. It is true that 45 per cent of British exports and 53 per cent of imports (figures for 2018) cross the EU border. Warnings of economic turbulence, job losses and short-term bottlenecks are justified if border controls, tariffs and other obstacles are to be set up at once. But this view does not do justice to the long-term dynamics of economic processes.
Prime Minister Johnson also has time. Since he won a strong government mandate in December, he does not have to worry about his re-election until late 2024. As a result, he can afford a temporary economic weakness if negotiations with the EU fail by the end of the year. In return, he could explain his logic over Brexit to his supporters: If Brexit is to make sense beyond questionable symbolic politics, Great Britain must have more freedom than in the past to create rules and regulations that are appropriate for itself. What else is there for the dramatic exit, if nothing should change afterwards?
Negotiators and politicians in the EU should therefore not underestimate the British determination to go its own way and think about the consequences. If a mutually useful trade agreement fails, then that also has negative effects for the EU: trade will also be affected for the member countries. The willingness of the British to co-operate in other areas, such as defence policy, foreign policy or research, will suffer to the detriment of the EU. Does the EU really want to drive the UK into this corner through a tough negotiating policy?
There are some signs of this. EU negotiator Michel Barnier said coolly on Monday that it was up to the United Kingdom to decide whether to continue to abide by EU rules or to deviate from it – the extent of future free trade would depend on it. Commission President Ursula von der Leyen emphasised that the Commission would defend the interests of the EU to the last. Little willingness to compromise is demonstrated here.
What was behind it, the group leader of the European People’s Party in the European Parliament, Manfred Weber, made clear last week in an interview with the World: ‘If Brexit feels like success, it is the beginning of the end of the EU.’ Exit from the EU was a mistake, Weber added, which is why the UK must be affected. According to the calculation of Brussels’ centralist power politicians, Brexit is supposed to fail in order to deter doubtful member countries from copying.
This is not a strong and self-confident union, but an alliance that fears for its own future. Why doesn’t Brussels face the challenge of an independent UK that has yet to prove in the competition between systems whether it will make it stronger or weaker? Why is the EU not interested in the British solo experiment because it might learn something from it and become stronger? Because the EU leadership itself does not trust its own strength and attractiveness. London rightly opposes the muscle play of such a frightened Union.
Adrian Hill writes: In other words, Boris, there’s everything to gain by taking a tough line!
The Neue Zürcher Zeitung, published by the NZZ-Gruppe in Zurich, can be found here.