Brexit

Brexit: United Kingdom at a crossroad?

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Many of us (especially those outside the UK) may be wondering what’s all these fuss about Brexit. Well, here’s explanation on what the issues are:

1. It’s not news that the UK voted in 2016 to leave the European Union (EU). 51.9% voted to leave and 48.1% voted to remain. David Cameron whose campaign promise was to hold the vote resigned his job as Prime Minister (PM) because he supported and voted remain therefore he excused himself from presiding over the exit.

2. Mrs. Theresa May won the conservative party leadership contest therefore automatically became PM. In the UK there’s no general election for PM instead whoever is the leader of the party with the majority of Members of Parliament (MPs) becomes PM. The twist here is that Mrs May herself supported and voted remain but took up a job to preside over exit.

3. On 29th March 2017, the PM triggered ARTICLE 50 which is the clause in the EU agreement that sets in motion the exit of a member state. It provides a 2-year timeline to conclude the exit process. If you have been hearing of 29th March 2019 deadline then know that it’s 2 years from the date article 50 was triggered.

4. Mrs May in order to assert her authority and test her popularity decided to call for a snap election in 2017 before she commenced work on the exit. She lost the majority the conservative party held in Parliament therefore could not form a government. She had to go into a coalition with the Democratic Unionist Party (DUP). So if you’ve been hearing of DUP that’s how they have become a key part of the jigsaw. If the DUP withdraw their support the conservative government of PM May will collapse. Meanwhile the DUP don’t want a united Ireland (that’s Northern Ireland and the Republic of Ireland forming a union). This would be revisited later.

5. After rounds and rounds of negotiations between the UK and EU amid resignations of key figures in PM May’s cabinet, a draft EU exit deal was said to have been reached last month. This draft EU deal was presented to the UK Parliament for ratification and a vote on it was scheduled for . However the PM saw the handwriting on the wall that she will be heavily defeated and at the last minute decided to call off the vote scheduled for Tuesday 11 Dec 18.

6. The draft EU divorce agreement is not supported by remainers (for obvious reasons) and a majority of exiters for the following reasons:

The draft EU exit agreement tabled before the UK House of Commons is not supported by a majority of MPs which has forced the Prime Minister (PM) Mrs Theresa May to call off the vote on it today at the last minute to avoid a heavy defeat.

Mrs May instead embarked on a shuttle diplomacy across Europe meeting with the German Chancellor, the PM of the Netherlands and EU Council President. Mrs May is hoping to get better terms in the draft EU exit agreement for the clauses that have caused her much grief and has her government in revolt mode. Based on the comments released today by the German Chancellor and the EU Commission President, Mrs May may just have wasted her fuel and time on a fruitless junketing.

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The opposition leader in the UK Parliament Jeremy Corbyn said on the floor that Mrs May ran away from Parliament to avoid defeat and has called upon her to resign so as not to further demean the office of PM.

So what are the terms in the draft divorce bill that have landed Mrs May in such hot okro soup:
1. Those who voted remain will not support any exit bill because to them remaining in the EU is the best option for the country. Since the result of the referendum was tight, Mrs May has lost about half of the country before she even started.

2. Majority of those who voted exit did so expecting a complete break from the EU (this is what is called HARD BREXIT). This will entail EU rules adjudicated by the EU courts of justice will no longer be applicable to the UK. Stoppage of free movement of EU citizens in and out of the UK. No more payments by the UK to fund EU budget. But the downside of this is that UK will have to exit the single market and the customs union. Since you must have been hearing of these terms frequently during this debate, let’s clarify what they are:

SINGLE (COMMON) MARKET – A single market is where countries come together and agree to eliminate all together every tariffs and taxes on goods and services crossing their borders. Therefore a car manufactured in Germany is exported and sold in the UK with no import duties levied by the UK i.e. there’s no difference between Berlin and London as far as the market goes for the German car manufacturer. A UK bank can trade in Germany just as any local German bank. With the single market mechanism all 28 member countries of the EU formed one market with unhindered movement of goods, services, capital and people across borders. This is what has made London to become the financial capital of Europe as UK banks traded freely in 28 countries unhindered which also equally applies to other sectors of the economy. The UK economy has grown tremendously to be the world’s 5th biggest as a result of EU membership

CUSTOM UNION – A custom union is when countries come together to apply the same tariffs to goods and services being imported from a country outside the custom union. The EU is also a customs union.

To demonstrate the single market and customs union let’s look at these transactions:
If a Mercedes manufactured in Germany is exported to the UK there will be no import duty levied by the UK because Germany and UK are in a single market.
But if a Ford manufactured in the US is exported to the UK then the UK is free to levy tarrifs on the car. But because the UK is in a customs union once that car crosses the customs of the UK it can be taken to France or any of the EU countries WITHOUT any more tarrifs. If the UK charged say 30% custom tarrifs on cars from the US then all EU countries will charge same tariff of 30% on all cars from the US. In all cases its the country that first received the import outside the custom union that levies and collects the tarrifs.

With hard Brexit the UK must leave the single market which is the 2nd largest economy in the whole world. The UK must also leave the customs union.

3. The Irish BACKSTOP arrangement. This is such a nightmare to PM Theresa May that has caused her all sorts of issues from her camp and her opponents camps. Before explaining the issue in details some contest is required.

THE IRISH ISSUE
Those who are familiar with the map of Europe will notice that to the West of continental Europe are 2 Islands. The bigger Island which is also closest to continental Europe contains 3 countries – England, Scotland and Wales. This is what is called Great Britain (GB). The second Island (also called the Island of Ireland) contains 2 countries – Northern Island/Ireland and Republic of Ireland (RoI) (Southern Island). As it stands today Northern Island/Ireland (NI) is in a union with Great Britain and the union of all 4 countries is officially called THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND. This is what most of us call the UK.

As it stands today all 5 countries are members of EU therefore in the same single market and custom union. No wahala. But the koko will show when UK pulls out of the EU. It will mean NI will no longer be in the same single market and customs union with the RoI. This will necessitate building a HARD BORDER (if you’ve been hearing/reading about it) to divide the north from the south so that customs officials of both countries will tariff the goods crossing the border. Neither the UK nor the EU want a hard border.

Following from the above, both the UK and EU have inserted a backstop clause to support the Irish border issue post Brexit. This backstop allows free movement of goods and services across the Island of Ireland and therefore removes the necessity for a hard border. But the biggest CATCH with this arrangement is that EU rules will continue to apply with free movement of people and payments made to EU.

Mrs May’s biggest headache is that those who voted to exit did so precisely because they did not want free movement of people and EU rules applying to them. Now the backstop arrangement will keep EU damocles hanging over them. This is where Mrs May has lost the bunch of those who voted to exit. They are saying the deal Mrs May is proposing is not what they voted for.

Further troubles for Mrs May on the backstop arrangement:

a) The EU wanted to apply the backstop to NI alone and not to GB. But Mrs May does not want this because this will effectively set the NI apart from the UK which effectively divides the Union she is superintending as PM. She wants the backstop to apply to the whole UK but by so doing the downside is that EU rules and free movement of people will equally continue to apply to the UK after the exit. Exiters are saying this is not what they voted for. Remainers are calling her dumb because how can she exit the EU (no longer around the decision table) and still have EU rules and free movement apply to the UK and, this will be after she has lost the single market and custom union. Very bad deal, in fact it’s no deal.

b) The DUP on whose support Mrs May has formed a government are also applying pressure on her. The DUP are suspicious and indeed worried that Mrs May’s handling of the Irish border issue may lead to the north and south of Ireland coming together as one country and DUP are saying over their dead bodies. If the DUP fail to support Mrs May her government will collapse immediately. In fact they served Mrs May yellow cards last week by voting against her bills to remind her say dem still dey o.

OPTIONS:
So what are the options left for Mrs May and the UK-

1. Go ahead with the current deal:
+ It will not be supported by Parliament
+ Brexiters don’t support it
+ It’s music to the ears of Remainers
+ Mrs May has come back today empty handed from Europe as Angela Merkel told her point blank there will be no new negotiation which the MPs are looking for.
+ Current deal is dead on arrival.

2. Negotiate a new deal:
+ There will be push back from EU
+ In diplomacy never say never until it’s over so possibility of EU conceding ground exists
+ But no time left. 29th March 2019 is around the corner

3. Remove Mrs May from office:
+ Mrs May may not survive this quagmire
+ Already breaking news as I write is that enough letters have been received from her conservative party MPs to trigger a no-confidence vote on her which can be as early as tomorrow.
+ I don’t think removing Mrs May will change anything. The new PM will still be confronted with the same issues though they may possibly take a different approach in tackling them.
+ The opposition labour party has not offered any plausible alternative that solves the issues faced now. They are waving a blank sheet of paper at us!

4. Revoke Article 50
+ It was initially said that once article 50 is triggered there’s no going back
+ But the EU courts threw UK a lifeline by ruling in a landmark judgement that a member nation can revoke and take back the article 50 card played at anytime before the exit deadline.
+ Thus the UK can revoke article 50 at anytime before 29th March 2019.
+ The problem is that EU does not negotiate exit deals unless article 50 card is on the table.
+ Therefore taking back article 50 puts paid to anymore negotiations.

5. Call another Referendum:
+ This is the option supported by almost all Remainers and now a mounting number of exiters
+ What we are saying is that the nation voted for Brexit without knowing what was the deal. Now that the deal has been negotiated and we know the implications let this be put before the nation again. If the nation looking at the deal still votes to leave so be it!
+ What we are saying is like you see a house in Banana Island and another one in Ojuelegba, immediately you like Banana Island house and agree to buy it. When the estate agents now do all the surveys and the cost of the house is put before you plus maintenance charges etc. You’ll definitely have a second decision to make whether to go ahead or not. The nation voted to leave but now the bill (cost) of leaving is before us let us review and vote again whether leaving is worth more than remaining.

6. Do nothing until 29th March 2019:
+ If no deal is signed and articles 50 is not revoked, the UK will exit the EU automatically at 11pm on 29th March 2019
+ Access to the single market and customs union will stop
+ Free movement of people and capital will stop
+ Funding EU budget will stop
+ Exit bill of £39 billion will become payable
+ WTO trade rules will apply in trade between the UK and EU. Unfortunately WTO trade rules are not robust enough as they don’t cover a number of sectors such as aviation therefore there will be no more flights between UK and EU until an aviation trade deal is ironed out. How long it’ll take only the Almighty God knows.
+ Needless to say that the UK will become a smaller economy and there will be consequences the degree to which only God Almighty knows.
+ Northern Ireland will most likely leave the UK and join RoI to remain in the EU (they voted Remain). There will be increased pressure from Scotland (which also voted Remain) to also leave the UK. A new independence referendum will most likely succeed this time around in Scotland.
+ The UK is not just at a crossroad but THIS MAY BE THE BEGINNING OF THE END OF THE ONCE POWERFUL UNITED KINGDOM.

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