The politics of gravity
Why Tobias Ellwood will be right ... eventually
Six summers ago, a few days after the Brexit referendum, I sat down for a chat with a senior British civil servant.
Like anyone who has seen EU deal-making up close, this official’s euro-romanticism (if he ever had any) had long since given way to the kind of pragmatism that later got him drafted into the withdrawal negotiating team. This was no deep-state Remainstream mandarin out of the McCarthyite mind of Douglas Carswell. Yet, when I asked him where he thought we would be in 2030, this objective insider said something that has stuck with me ever since.
With their referendum mandate, he said, his political masters would go all-out for maximum independence from the EU. But, step by step and day by day, they would learn that most single-market law reflects British policy preferences while the things conservatives dislike – common standards for health and safety, food hygiene, and environmental protection, for example – are politically untouchable at home. In their political culture, British voters are more “European” than they think.
The upshot, he predicted, was that by 2030, the British would have taken a destructive and time-sucking 15-year roundtrip back to where they began: a relationship with the EU shorn of its political features but closely resembling that of the non-union members of the 30-nation European Economic Area. Like the NAFTA-to-USMCA rebranding, the EEA would need a nip and tuck for the sake of political face, but the gravitational pull of the European market will prove irresistible. Simply put, with the US and the EU, the world has two regulatory superpowers and – until the twice-despatched NTM or TTIP blueprints are resurrected – everyone else must pick a side.
Death by politics
I must admit that, at the time, I thought him too pessimistic. Intellectually convinced by the impossible but clever Richard (and Pete) North, I believed the only way to leave the EU without severe economic (and therefore political) costs and without destabilising Northern Ireland was to stay in the EEA, strike a customs cooperation agreement with the EU and shadow its tariff schedule. Unlike the Brexiteer Norths, I trusted in political inertia and believed this temporary arrangement would become permanent.
It was clear from day one that politicians who claimed to have devoted decades of their lives to the Brexit cause had devoted no study time to how it could be done. As Chris Grey has chronicled better than anyone, the revolutionaries – more Nihilist than Leninist – had neither a blueprint nor a clue. I felt sure that Theresa May and her cabinet grown-ups – Philip Hammond, Amber Rudd, Greg Clark, Jeremy Hunt, Michael Fallon, and Damian Green – would soon realise that a “hard Brexit” was as deliverable as “permanent revolution” and take the EEA+ route. May is now so diminished a figure that it is a struggle to remember what a big beast she was in her first nine months in office. The Conservatives’ Vote Leave faction had crumbled in the wake of their unexpected referendum victory and May held consistent 20-point leads over Jeremy Corbyn until she made the mistake of testing her rare political skills in an election. Either by imposition or cross-party negotiation, May was in a unique position to take the EEA+ path but instead – with advice from experts in everything except economics – she used her January 2017 Lancaster House speech to promise a third way outside the EEA and with renationalised customs.
The referendum was a mistake but this, in my view, was a bigger one – especially since May, unlike most of her MPs and media eurosceptics, understood the special threat that Brexit posed in Northern Ireland. Without the EEA and customs-cooperation agreement and refusing to accept a backstop for Northern Ireland only, May had no choice but to agree to an all-UK backstop until the mirage of a technological solution to keeping the Irish land border frictionless could be delivered. Once she handed the keys to Downing Street to the radical wing of Ulster unionism and European Research Group ultras after the 2017 election, her Chequers plan was doomed.
This gave EEA+ a second wind as Common Market 2.0 in the bipartisan hands of MPs Nick Boles and Stephen Kinnock. There was a moment in late 2018 into early 2019 when this proposal looked primed to break the parliamentary deadlock as Amber Rudd, then work and pensions secretary, said the EEA+ model “seems plausible not just in terms of the country but in terms of where the MPs are” and the Labour Party fumbled for a consensus position. For Labour MPs representing Leave-voting areas, the Boles-Kinnock plan had considerable appeal. They could tell their constituents – hand on heart – that they accepted Brexit but were protecting them against economic disaster. Winning over the Labour leadership – Keir Starmer, and those two old Bennite Brexiteers, John McDonnell and Corbyn – was another matter. As Kinnock pointed out to them, it was a political gift since most Labour MPs could live with it while it would split the Tories. But it couldn’t be done. Starmer was already realigning with the activists’ second-referendum position and taking McDonnell with him. Corbyn, who was and is still a Lexiteer at heart, ensured Labour ended up in no man’s land: a new customs union, “close alignment” with EEA regulations and “shared institutions'', and automatically updated rights and protections for British workers that kept them in lockstep with their comrades in the EU. In other words, shadow EEA+ membership but without free movement. Victim to short-term manoeuvres and political cowardice across the Commons, the Boles-Kinnock plan was defeated by 21 votes but with 95 abstentions.
The Ellwood canary
The rest is recent history. Vote Leave took control of the Conservative Party, chucked Ulster unionism under a bus by signing up to a regional protocol they intended to ditch after withdrawal, purged the parliamentary party of its “soft”-Brexit advocates, then daily thanked the Moggian God who unleashed ten plagues on the Egyptians for a pandemic that masked the immediate impact of their “hard” option.
It was never going to last, whatever Boris Johnson’s hagiographers thought. As the pandemic fog cleared, the economic costs became a little more obvious in the form of lost national output, investment, trade in goods, and a squeezed active workforce just as demand for labour soared. The government could have weathered this rancid mix of inflation and stagnation if it had contained the expectations of its new nationalist/socialist “red wall” voters, assuaged the anger of its old conservative/internationalist “blue wall” electorate, and observed its own social-distancing rules.
Public attention spans are short and people’s willingness to accept economic pain or even inconvenience for the sake of a 50-year project is limited, especially one that is yet to find £350 million a week for the health service and is simply swapping one immigration profile for another. As a result, support for Brexit is slipping. Voters are still split 50/50 on whether the UK should apply to re-join the EU but that isn’t going to happen anyway. Much more interesting has been the little-noticed trend in YouGov’s monthly “in hindsight, do you think Britain was right or wrong to vote to leave?” question. Wrong now leads right by 12 points but it is the breakdown that is truly arresting; wrong now leads among women by 19 points, among every age cohort under 65, across every region, and is even level-pegging among working-class (C2DE) voters.
In the absence of extraordinarily skilful Brexiteer leadership (don’t laugh), this trend can be expected to continue, leading some of the project’s media outriders to head for the gangway. The Labour Party leadership is wisely avoiding the temptation to toy with a Re-join policy even as a long-term aim. It may have 50% support today but, in a campaign, Labour’s offer would be narrowed down to three things only: losing the pound, handing billions to Brussels, and opening the UK’s borders to the EU and all its candidate countries. This last point is what also makes a commitment to return to EEA too high a risk for Starmer at this stage. Instead, working from Dominic Cummings’ playbook, Labour is pledging to “Make Brexit Work” – a perfect three-word slogan that encompasses any arrangement as long as it is outside the EU.
Until the moment it fails to win an overall majority at the next election, Labour will continue to pretend that it can. A strong Labour result would mean a coalition or confidence-and-supply arrangement with the Liberal Democrats, Plaid Cymru and the North Irish centre and centre-left, while a weaker one would require a less formal deal with the Scottish National Party. This would allow “Make Brexit Work” to turn into the Lib Dems’ roadmap to the EEA, starting with extending mobility schemes, and granting full settled status to all EU citizens and their families living in the UK at the end of 2020, formally partnering with the EU agencies and programmes, negotiating a veterinary agreement for trade in food and livestock, and finally re-applying for the EEA.
When Conservative MP Tobias Ellwood declared for re-joining the EEA on 1 June, his proposal was met with bafflement among students of the political game, accusations from ERG ultras that this showed Continuity Remain could not be trusted to carry the Brexit flame if Johnson was removed from office, and jubilation among the prime minister’s few remaining loyalists that this would shore up his support. Why on earth did a potential Conservative leader stake out such a hopeless position, they all asked. More than once, I have been gently accused of finding ingenious political calculations where there was only improvisation. But it strikes me that Ellwood may be playing a long game. Knowing his leadership chances are zero in a Brexit-obsessed party, Ellwood has made himself the new face of Common Market 2.0 and the de facto leader of the small but not insignificant caucus of Tory euro-realists. A return to the EEA “with conditions”, as he puts it, is inevitable. He’s put down his marker and can now sit and wait to become a venerated seer: the Vince Cable of the EEA.
Like a circle in a spiral
Ellwood’s “with conditions” are doing a lot of work. The great advantage to the UK of EEA over EU membership is that it removes the union’s political trappings – no British MEPs, commissioners or direct budget contribution – and leaves it out of the common policies for agriculture and fisheries. On the other hand, the strongest objection to the UK’s return to the EEA – one expressed frequently not only by British but by EU officials – is that the arrangement is undemocratic since non-EU EEA members must adopt any new single-market law without formalised input into their design or amendment. Since this would include financial-services laws, even former Remainers dismiss EEA+ as an option for the City of London.
In my view, in the same way that Brexiteers are oblivious to the gravitational pull of the EEA’s regulatory influence, demoralised Remainers are failing to take adequate account of politics – especially post-Ukraine politics. From day one, the EEA was jerry-built – a halfway house devised by Jacques Delors to provide shelter for applicants (from the European Free Trade Association) until the then Communities had turned themselves into a union and committed to a single currency. As the EEA’s largest non-EU member, Norway is an effective lobbyist when it comes to writing single-market legislation but not even the area’s strongest advocates would claim it was democratic.
As long ago as June 2016, Thierry Chopin and Jean-François Jamet from the Fondation Robert Schuman devised a solution for the EEA’s democratic deficit. Through amendments to Part VII of the EEA agreement, the signatories would agree that the EEA Council instead of the EU’s Council of Ministers would become the competent authority for negotiating and approving directives and regulations governing the internal market, with oversight provided by a reformed EEA parliamentary committee. “This type of scenario might ultimately lead to the realignment of the EMU with the European Union, whilst the EEA would offer an institutional framework for the single market,” they write. “From this standpoint, it would not be as necessary to create ad hoc structures for the integration of the eurozone. It might also offer an alternative to the candidate states which would choose to enter the EEA rather than the EU”.
This was an option in 2016 but today, in the wake of the Ukraine war, it is a gift to the EU’s leadership if – just this once – they can find the sustained vision and political drive of the likes of Delors and Helmut Kohl. Next week, the European Commission will recommend formal candidate status to Kyiv – in the face of Dutch and Danish objections and on the tacit understanding that, in the words of French President Emmanuel Macron, “we can have an accelerated process ... but we know that given our standards and the criteria, in reality, it would probably take decades for Ukraine to join the European Union".
Given the transformed long-term environment for military and energy security and the global geopolitical realignment provoked by the war, this is way too long for everyone. Ukraine, Georgia and Moldova will need to be offered something short of the EEA but beyond their association agreements. So far, Macron has added no flesh to the bones of his “European political community” open to Ukraine and the UK but it will need to go well beyond the lame “European Confederation” talking shop floated in April by Enrico Letta.
There are already four circles to Europe’s political and economic architecture. The Eurozone (20 members from 2023) is the most integrated circle with a joint monetary policy and a coordinated and slowly federalising fiscal and banking-supervision policy. Then the EU (the Eurozone-20 plus seven more) have an integrated market for goods, services, capital and people; a federal competition and state-aid policy; common policies for agriculture and fisheries; and close cooperation on foreign, security, justice and home affairs. In third place are the three non-EU EEA members inside the market and subject to the competition rules but playing no part in the political arrangements – while Switzerland shadows the EEA with its laboriously negotiated and monitored bilateral agreements with the EU. Fourth position belongs to the Balkan candidates (or near-candidates) – Albania, North Macedonia, Montenegro, Serbia, Bosnia and Kosovo – and now the Russia-threatened applicants Ukraine, Georgia and Moldova.
Until now, there has been insufficient political incentive to formalise the EU’s two outer circles. That has now truly landed. Except for accepting Ukraine’s application, I don’t expect them to move quickly – this is the EU after all – but 2024 provides a natural deadline for a 360-degree reassessment of policy, strategy, and architecture. Following elections in the UK and Switzerland, the EU/UK trade and cooperation agreement comes up for review, and the Brussels leadership is overhauled following elections to the European Parliament.
That would allow six more years for the mandarin’s prediction to come true. The British will have chosen their regulatory superpower and, given their horror of chlorine-washed poultry and privatised healthcare, that is not going to be the US.