Paris Gourtsoyannis: May's Brexit deal is actually a trap

All smiles: EU President Jean-Claude Juncker greets Theresa May at the EU Commission in Brussels. (Picture: PA)

The safest assumption to make about politics in polarised Brexit Britain is that whatever the UK Government does, it will always make at least half the country unhappy.

So it was a strange and novel experience to see the deal struck by Theresa May last week, clearing the deadlock in the first phase of negotiations with the EU, celebrated pretty widely.

It was tolerated without much complaint by staunch Brexiteers in Cabinet on the Tory benches, despite Boris Johnson passing up few opportunities to derail the Prime Minister’s agenda, and the ‘Leave Means Leave’ group of MPs issuing a last-ditch appeal to respect their red lines that was largely ignored.

Compromise is said to be a foreign concept to the DUP, but they loved this. Not only has it demonstrated their power over the UK Government, but in the words of Ian Paisley Jr, they think they’ve “done over” Irish Prime Minister Leo Varadkar.

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But the deal was also hailed by Remainers, many of whom see the commitment to “full alignment” in order to keep the Irish border open as an admission that a “soft Brexit” inside the single market and customs union is inevitable. Tumbling out of the EU without any deal at all is now impossible, they claim.

One side or the other must be mistaken. On this occasion, it’s probably both.

At the heart of the confusion is the idea of “full alignment”, which has been included in the text of the phase-one agreement between the UK and EU as a “backstop” to ensure the Irish border stays open.

Fittingly, in the wake of a referendum that saw the winning side present a blank slate on which voters could project all their unrelated fears and desires, full alignment is ill-defined, misunderstood, and is being interpreted very differently, most worryingly by the two sides that are about to sign off on the agreement.

David Davis believes the language paves the way to a deal on “mutual recognition” of regulations, allowing the UK to set and police its own trading rules provided they lead to the same outcomes as those in the EU. That would form the basis of the comprehensive trade deal the UK Government craves, giving the country deep access to the single market. It’s also anathema to Brussels, where “full alignment” is seen as being akin to a vassal state – the UK accepts EU rules without power to influence them.

Both sides seem content to let this clear difference in opinion slide in the interest of making progress – but it will be impossible to ignore once trade talks begin in earnest.

Striking a phase-one deal has finally given a sense of momentum to Brexit after months of stalemate and negative headlines. The sense that the UK is finally on its way out of the EU might be enough to keep Brexiteers happy this side of Christmas.

But any truce within Cabinet and the Conservative Party over the shape of Brexit will be short-lived. Downing Street knows that “full alignment” isn’t a phrase to lift the spirits of true-believer Eurosceptics, which is why it allowed not just David Davis but Northern Ireland Secretary James Brokenshire to go on TV and suggest last week’s deal wasn’t legally enforceable.

For Remainers, “full alignment” has prompted them to marshall their forces for another push towards a soft Brexit. The SNP’s Westminster leader, Ian Blackford, toured the TV studios reminding the nation that they didn’t vote to become poorer. Keir Starmer has tried to bounce the far-left eurosceptics in the Shadow Cabinet to accept this as the direction of travel. The problem with this approach is that it forces Remainers to advocate for “vassal” status, an economic position their opponents, if they get their act together, can easily construe as thoroughly undesirable. Brexiteers have so far failed to engage on this point, simply arguing that because the UK voted to leave, it also has to leave the single market and customs union. Libertarian Conservatives probably can’t understand why consumers aren’t excited at the thought of the free market putting chlorinated chicken on the shelves.

But that doesn’t mean the case for single market membership is already won. The SNP have fallen particularly hard into this rabbit hole, with the First Minister tweeting last week that “a UK Government that is able to say that come what may, it will avoid hard borders with Ireland/NI after Brexit can never again tell Scotland that independence would mean a hard border” with the rest of the UK.

Putting aside the fact that Northern Ireland’s status is protected by international treaty, what the First Minister was also highlighting was the precarious position an independent Scotland would find itself in if it was outside both the UK and the EU.

Wishful thinking around “full alignment” isn’t limited to politicians. Some of London’s big banks, which have spent this year growing increasingly alarmed at the lack of progress in negotiations, and warning that they will accelerate plans to shift staff out of the UK without a clear transition arrangement agreed by Christmas, now appear to be optimistic of a deal that will allow them to keep operating in the EU single market after Brexit.

Several sources in the City were quoted telling the Financial Times that the bridgeheads they have set up in other EU member states, to ensure the loss of “passporting” rights doesn’t mean an end to their business, could be wound down.

This is premature. There is nothing in the phase-one deal that speaks to the future status of financial services, nor are they covered under Irish north-south co-operation within the Good Friday Agreement. “Full alignment” doesn’t mean the threat to London’s position as Europe’s banking hub is lifted, and the City is just as dependent on next year’s trade negotiations as it ever was. For a brief moment last week, the complex machinery of internal contradictions that is the UK’s Brexit negotiation finally came into contact with domestic political reality. As a result, the Rube Goldberg machine nearly shuddered to a halt. When both sides discover their preferred Brexit isn’t on offer in Brussels, expect it to do so again.