Friday 17 March 2023

Limited realism and the limits to realism

In last week’s post I wrote about the strategic incoherence of post-Brexit politics, despite the more pragmatic approach embodied in the Windsor Framework. The fate of that agreement, specifically, remains somewhat unclear. The DUP continue to make noises that could mean rejecting it, but might not, whilst Brexiter MPs are restless (£) that they will get bounced into the deal, but if so there may not be much they can do.

As things stand, the Joint Committee overseeing the Withdrawal Agreement are due to sign off the Windsor deal by the end of next week, with a vote being held in the Commons on Wednesday. That vote will be, specifically, on the Statutory Instrument (SI) to create the ‘Stormont Brake’, but the government has said it will be treated as the promised vote on the Framework itself (there may be further debates on other related SIs, but it’s not clear there will be votes). That vote will be won, no doubt, but, in my view, the widespread assumption, or implicit assumption, that this issue is going to quietly disappear is not yet justified.

In the meantime, the theme of strategic incoherence can be thought of in a slightly different way, and one which shows why, even if Sunak is minded to create a more coherent and realistic approach, the very nature of Brexit continues to undermine it. Back in 2019, I wrote about the way that a core strategic problem of Brexit is that of a nation existing in a global context but which has eschewed a regional anchoring. If the three levels of national, regional and global are thought of as the legs of a stool, what Brexit has done is to cut off the regional leg, creating a fundamental imbalance.

That imbalance flows from the way that the case to leave the EU relied upon marrying together quite inconsistent ideas about Brexit as a project of national independence and Brexit as a project of global greatness. One way that inconsistency was temporarily glossed over was by ubiquitous references to the UK being ‘the world’s fifth largest economy’, as well as to its membership of various international bodies and organizations. The implication was that Britain was powerful enough to ‘go it alone’ and also to be a global leader. In such an imagination, regionality, in the form of the EU, was irrelevant.

But an imagination was all it was, and the consequences of it being false run through many of the latest Brexit-related events. Some of them show a growing realism, whilst others continue the delusions.

Geo-politics: a degree of realism

As foreshadowed in my previous post, the Franco-British summit and the AUKUS summit, along with the publication of the ‘refreshed’ Integrated Review of Security, Defence, Development and Foreign Policy (IR23), offered Rishi Sunak an opportunity to develop a more realistic and effective post-Brexit geo-political strategy. I think it is fair to say that he has had some success.

The Franco-British summit was effective in soothing the very strained relationship of recent years, strains which aren’t entirely to do with Brexit, though it also served as a reminder that on the high-profile issue of migrant returns there is no bilateral substitute for an agreement with the EU, which is not going to be forthcoming. Nevertheless, the joint declaration that followed the meeting contained not just warm words but some substantive initiatives, including, for example, easing travel formalities for school trips, though again that’s a reminder that the problems were caused by Brexit in the first place, and an agreement with one EU member state is only a small reversal of those problems.

However, whilst recognizing the genuine value of the summit, Professor Richard Whitman of Kent University, an expert in this area, argues that the Paris-London relationship is somewhat less important than it was pre-Brexit and pre-Ukraine War. Still, within that context, the meeting was as effective as it could have been, and certainly an improvement on the legacy Sunak inherited from his predecessors. Certainly only a few of the Brexiter diehards complained about it, and that to little effect.

The refreshed Integrated Review was also an improvement. Whitman, again, notes that its tone was one of “sober realism”, with the hubris of the previous version now largely gone, along with its ‘Global Britain’ tagging. In line with defence analyst Joseph Huminski’s account of US expectations for the review, cited in last week’s post, it put far more emphasis than before on the centrality of European-Atlantic security, manifest in the extent of UK bilateral relationships with EU states, and reflecting, of course, the impact of the Ukraine War.

It’s true that the Indo-Pacific tilt of the 2021 review continued to feature strongly, but I read that as now more being bound up with falling into synch with US hawkishness about China – again in line with Huminski’s explanation of US expectations – rather than being, as it appeared before, a fantasy about the UK as a Pacific power in its own right. That is underscored by the new stress on the AUKUS pact which had not been created at the time of the previous review.

Overall, from a Brexit perspective, there are two observations to be made. One is that there is nothing the UK is doing in defence and foreign policy that required Brexit, unsurprisingly, since, as an EU member, the UK already pursued its own policies in these areas. On the other hand, what has been lost is insider influence over EU decisions in these areas. One immediate practical consequence is that UK firms look set to be locked out of bidding for contracts under the EU’s plans to massively increase arms spending for Ukraine. Moreover, conspicuously missing from an otherwise acute and thorough appraisal of the global scene (about which there is far more to be said than I have done here) is any recognition of the extent to which Brexit was a gift to Russia’s strategic interests.

The second observation is that, given Brexit has happened, post-Brexit defence and foreign policy does now seem to be in the process of being ‘normalized’, in the sense of losing at least some of its Brexity delusions of grandeur, reverting to a position of closely shadowing US definitions of western interests and trying to repair Britain’s regional standing with European neighbours. Of course, some may feel that this traditional posture is problematic, and indeed that the extent of UK ambitions is some way ahead of its ability to afford them. That raises questions which are beyond the scope of this blog, but to the extent that Sunak is engaged in such a normalization, it does undo some of the reputational damage of Brexit.

Trade and regulation: lessons in realism

The refreshed Integrated Review, like its predecessor, makes frequent reference to how defence, security, development and foreign policy are related to trade policy and to economic performance and stability generally. This is clearly true (for any country, not just the UK) and works in both directions, since, for example, the value of pledging to devote 2.5% of GDP to defence spending can’t be separated from the scale of total GDP.

From that point of view, the emphasis on the government is putting on the apparently imminent accession of the UK to the CPTPP, both in IR23 and more generally, is excessive. This was discussed at some length in Alan Beattie’s excellent Trade Secrets column (£) in the Financial Times, which, apart from pointing out that it will only be worth a “pitiful” 0.08% of GDP, identifies the “rough ride” the UK negotiators have had. This is because, in essence and to coin a phrase, ‘we need them more than they need us’ – not so much for economic reasons but for the political one created by “ministers desperate for deals to put in the post-Brexit trophy cupboard”. To that could be added precisely the geo-political emphasis the government is putting on CPTPP membership as an aspect of its Indo-Pacific tilt.

From the other side of the table, this means that individual CPTPP members have few reasons, either economic or political, not to take what advantage they could of this supplicant from the other side of the world, perversely determined to seek a regional place in another continent having discarded the place it had in its own. The consequences, it seems, from both Beattie’s report and other sources, are likely to include significant and potentially controversial concessions for example to Malaysia (by granting zero tariffs on UK palm oil imports) and to Canada (by granting generous tariff-free quotas for beef imports). The latter arises in part because Canada wants the same one-sided benefits already given to Australia and New Zealand by the UK in its ‘desperation for deals’. This is also a reminder of the naivety of those Brexiters who imagine there is a cosy familial bond within ‘the Anglosphere’, and a reminder more generally of the ruthlessness of international trade negotiations.

That ruthlessness is especially evident when a single country, like the UK, is negotiating for itself rather than as part of a regional bloc, and is doing so with a much larger regional bloc. Such asymmetries also apply to regulation, an instructive example this week being the case of regulations about the amount of arsenic allowed in baby foods (I may not be the only person who didn’t know that arsenic in baby food is a thing). New EU rules reduce the amount allowed, which initially raised questions about how, under the Windsor Framework, the difference between EU and UK rules would be managed in Northern Ireland. However, subsequently, the UK trade body for baby food manufacture announced that its members would follow the EU standard, even for products made and sold in Great Britain.

This may seem extremely abstruse or esoteric, but it goes to the heart of the entire question of post-Brexit regulatory independence and, with that, the Brexiter idea of sovereignty. For what it illustrates is that, regardless of what UK regulations may be, businesses will adopt the product standard that suits them. That will generally mean, as in this case, the standard that allows them to sell into both markets, which will be the higher standard, and especially the higher standard of the larger market, making the Brexiters’ idea of regulatory sovereignty facile (the so-called ‘Brussels effect’). In some cases, it may mean simply not serving the smaller market at all.

It’s true that there may be some sectors for which, either because of the size of the UK’s market (e.g. some financial services) or their scientific novelty (e.g. gene editing), the UK* could conceivably be a standard-setter, but as a generality that’s not the case. And even the examples given have much complexity, with many of the ideas for the ‘Edinburgh reforms’ of financial services being controversial, the more so in the wake of the collapse of the Silicon Valley Bank this week, and both may be matched or overtaken by changes in EU regulations.

Science and technology: between hubris and realism

It’s worth looking at science and technology in more detail, because it’s clear from numerous statements, including the refreshed Integrated Review and this week’s Budget statement, that the Sunak government sees this as key to the UK’s post-Brexit strategy. That’s not unreasonable, and nor would it have been without Brexit, but there are problems with the government’s approach, and they are all connected with Brexit.

Firstly, it is very much bound up with the ‘global dominance’ version of Brexit, symbolised by the constant rhetoric of Britain being ‘world-leading’. In fact, as a major new independent review of UK R&D published this month shows, that rhetoric rests heavily on past achievements and on a few small research clusters. Overseen by the Nobel Prize winner Sir Paul Nurse, the review depicts UK science as being good, but not that good, and as on a trajectory of gradual long-term decline (£). Perhaps that can be reversed by the new UK Science and Technology Framework but, at least in its headline aspirations to be a ‘Superpower’ in this domain, a term repeated in the Budget statement, there still seems to be the equivalent of the ‘Global Britain’ hubris of the original Integrated Review, rather than the ‘sober realism’ of IR23 (perhaps tellingly, the ‘Superpower’ theme goes back to Johnson’s time in office, although Sunak has used it assiduously).

Secondly, as the Nurse review clearly acknowledges, but the government is incapable of even mentioning, Brexit has already damaged UK science. A key issue here is participation in Horizon Europe, which, as I discussed in my previous post, the government is now, bizarrely, fighting shy of, despite the path to participation being cleared by the Windsor Framework agreement. The government’s alternative plan is described by Nurse as “utterly inadequate” and, along with the Royal Society, business groups have urged the government to join Horizon (£). Nor is Horizon the only issue – the end of freedom of movement has, for science as for business, made international collaborations more difficult. For whilst it is true that the post-Brexit immigration rules have seen a surge in skilled immigration (£), the costs and bureaucratic processes involved are a far cry from the free-and-easy interchanges within, at least, Europe that have been lost.

Thirdly, as regards regulation specifically, this aspect of the Framework, which is also the subject of the Vallance Review, is again predicated on the hubristic vision that by 2030 “the UK leverages post-Brexit freedoms and is at the frontier of setting technical standards and shaping international regulations”. There is in that some acknowledgement of the role of other countries and of international bodies, but, with it, the ambition to ‘lead’ and ‘convene’ the international standard-setting ecosystem. What’s lacking is recognition of the brutal truth that the rest of the world neither needs, nor desires, nor is likely to accept such a role for the UK. The hard lessons that the UK is slowly being taught about the realities of power asymmetry in trade negotiations have yet to be learned in the equally unforgiving sphere of international standard-setting.

With that said, there was one revealing feature of the Budget statement in the announcement that the government would use “our Brexit autonomy” in relation to regulating medicines to “move to a different model which will allow rapid, often near automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the United States, Europe or Japan”. That doesn’t mean the end to independent UK medical regulation, and the statement goes on to say that the MHRA will be able to approve some medicines in advance of those other regulators, but it does seem to be a realistic recognition of the ‘regulatory pull’ of larger jurisdictions. Whether it is sensible in terms of medical safety I am not competent to judge, but it is certainly piquant to think that, in the name of “Brexit autonomy”, EU-licensed medicines will be effectively rubber-stamped for use in the UK.

Overall, it would be wrong to be completely dismissive of the government’s post-Brexit science agenda. Within the documents referred to there are plenty of interesting ideas, and there are a lot of serious, highly competent, people who are going to be involved in delivering it. Yet, if they do so, it will surely be despite the overall framing of the approach. In other words, it may be successful if it acknowledges the realities of the UK is a medium-sized scientific power possessed, no doubt, of certain advantages, but needing to work co-operatively with others and mindful of its regional location adjacent to the EU and the particular relationships that entails.

It's also notable that the science strategy, including the revised Investment Zone plan, is heavily reliant upon and makes frequent reference to Britain’s – yes, of course – ‘world-leading’ universities. For that to work, the government might wish to consider the state of morale in UK Higher Education, riven for years by strikes over pay, pensions and casualisation, and to reconsider its complicity in endless attacks upon ‘woke’ academics as well as the Brexity disdain for ‘experts’. Indeed, there’s a certain irony in universities being so often decried for being bastions of ‘remainerism’, whilst also being charged with a central role in digging the country out of its Brexit hole. Equally, irrespective of Brexit but made harder by the impoverishment caused by Brexit, its success will require significant increases in government spending, without which any strategy, however realistically defined, will be mere rhetoric.

Small boats: scarcely a glimmer of realism

Rhetoric without substance is hardly a new feature of politics, but arguably it has become a particular problem in post-Brexit Britain. That is evident in the performative trade policy that prizes ‘doing trade deals’ above their value, but most grossly illustrated by the latest drive to ‘stop the boats’ with the Illegal Migration Bill, which has dominated recent news headlines recently and engulfed the BBC in a major row.

Rafael Behr identifies the Bill as prime example of this post-Brexit performativity, in the sense that, for all its cruelty, it will not ‘stop the boats’ and this is not its purpose. Rather, its purpose is the grimly populist one of enabling the government to declaim its commitment to ‘the people’s priorities’ whilst demonizing those who oppose it, including Labour and ‘lefty do-gooders’, as out of touch with ‘the people’. Yet, as Nick Tyrone points out in his latest Week in Brexitland substack, if this were genuinely the popular consensus then why make such exaggerated and vitriolic claims about the need for the policy?

Both the performativity and the populism of this are, indeed, hallmarks of Brexit, but there is something else here, too. It is the most extreme example of imagining Brexit as mandating untrammelled national independence. It does so by trying to detach the UK from the global flow of refugees: if all those who have passed through a safe country on their way to the UK are deemed automatically ‘illegal’, and with seeking asylum by direct travel being virtually impossible, then Britain has no responsibilities. That may be somewhat ameliorated by providing for refugees from favoured places, such as Hong Kong and Ukraine, but otherwise uses the accident of an island geography to pursue a policy of national isolationism.

So, suddenly, in this domain, there’s no talk of the UK ‘leading’ or ‘convening’ international standards or responses, still less of ‘Global Britain’. On the contrary, at least for the hardliners, there is outrage that such international standards should apply, most especially those of the European Convention of Human Rights (ECHR) and the ‘meddling foreign judges’ of its associated Court. For them, the Illegal Migration Bill is not, or not simply, performative politics because its anticipated failure is a gateway to the Brexit 2.0 of ECHR derogation. And if that brings with it the termination of the Trade and Cooperation Agreement with the EU, and puts the Good Friday Agreement into crisis, that would not bother many of them, and indeed might be welcomed by some of them.

Yet even in this area there is a glimmer of recognition, from the government if not the hardliners, shown in the discussions with France and, more widely, the ‘Calais Group’, that international cooperation is necessary. And, for all the noise of those who would derogate from the ECHR, it is still difficult to envisage the government actually doing this, or being able to do so in the face of what would undoubtedly be a huge backlash even from within the Tory Party, let alone from other domestic and international actors. Still, Sunak will allow ministers to dangle the prospect, as well as continue his ‘stop the boats’ rhetoric, despite the costs to international reputation, since whatever realism he shows in other respects is trumped by his apparent belief that it is a vote-winner.

The real consequences are clear

It’s easy to identify the many ways, including those discussed here, that Brexit has rendered the UK directionless, confused or destabilized across just about every policy area. And whilst there is no single measure to capture the consequences, one which is highly revealing is business investment, since it implies some degree of confidence in the current and future UK economy and polity. Moreover, it allows a degree of comparison with other countries.

On that metric, the verdict could hardly be more damning, as, for example, expressed this week by BYD, China’s largest electric car manufacturer, which is currently considering where to open its first European car plant. In the words of its European president, “as an investor we want a country to be stable … To open a factory is a decision for decades. Without Brexit, maybe. But after Brexit, we don’t understand what happened … Even on the long list we didn’t have the UK.” It’s an interesting formulation as although, no doubt, the economics of Britain being outside the single market are part of the calculation, issues of stability, presumably both political and regulatory, and, more intangibly, ‘reputation’ are foregrounded.

Overall, the Office for Budgetary Responsibility’s report that accompanied this week’s Budget statement not only confirmed the stagnation of business investment that started immediately after the referendum, but showed a larger and more long-lasting negative impact than it had initially expected**. A briefing published by the Economics Observatory this week shows that a similar picture emerges from a variety of different sources and models and, significantly, that it obtains across multiple business sectors (see Table 1). These sources show the UK’s investment levels since 2016 to be poor by international standards (see especially Figure 3).

It is hardly surprising. “Brexit has cracked Britain’s economic foundations” as CNN’s Hanna Ziady put it at the end of last year. But it has done more than that. It has fractured Britain’s relationship with the world across multiple domains, all of which show the strategic incoherence of Brexit. There are some signs, limited but welcome, that the government recognizes and is trying to repair some of these fractures. But these attempts are patchy, painfully slow and, in the final analysis, inevitably constrained by the ultimate reality that the multiple problems Brexit is causing are inherent in the lies and fantasies of Brexit itself.



*Note that as regards the specific example of gene editing, the proposed new regulatory framework will apply in England only.

**The second link in this sentence shows the investment chart. To put it in context, it is Chart F on p.48 in the overall report (the first link in the sentence) which itself sits inside Box 2.4 (pp. 46-49) which reviews the OBR’s previous and current assumptions and forecasts about Brexit more generally.

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