The EU often stresses that it is a rules-based union but it is flexible when it wants to be.
If there’s a hard Brexit the EU would expect to have:
- a hard border in Ireland rather than respect the Belfast Agreement (which says, no hard border and no change to the UK union without consent of the people in the North);
- no Brits flying to sunshine holiday spots by the Mediterranean (they can go by boat but that won’t leave much time on the beach – oh, and they might be required to have visas too);
- no UK pensioners living in Spain, France or Bulgaria as their residence permits will expire and their pension transfers would be illegal  (unlike their citizens’ situation here, which the UK Government has guaranteed to preserve);
- reduced trade with its biggest export market (by imposing tariffs and checks at the borders).
At least that’s what they’re threatening, because after all ‘rules is rules’, as the saying goes, unless there’s some benefit to the EU itself (by which we mean a benefit to the institution of the EU, not its citizens and businesses of course). For example, banning London-based clearing houses from operating in the EU is essential because of the rules … except, wait a minute, that’s where 90% of trade-finance deals are cleared now so it would be pretty damaging. [Clearing is what provides traders with insurance cover for getting paid in full, including the risk from currency fluctuations.]
As the Sunday Times reported, 4th November: “The European Commission has pledged to allow EU companies and individuals to continue using UK clearing houses to settle euro-denominated contracts, ending fears that Brexit might create a cliff-edge for trillions of euros of financial derivatives.
Valdis Dombrovskis, the commission vice-president with responsibility for the euro, said that counterparties would be given a temporary waiver to avoid disruption to financial markets.
“Should we need to act, we would only do so to the extent necessary to address financial stability risks arising from an exit without a deal, under strict conditionality and with limited duration,” he told the Financial Times.
Britain no longer rules the waves but Brussels waives the rules when it pleases, and only for as long as it pleases of course. Even if there is no deal and any of the threats are not enacted it will be because of pressure from EU-based interests that would be harmed rather than by virtue of enlightened behaviour by the nasty nabobs in Brussels, who are intent on causing maximum harm to the naughty boys in Britain. None of the above threats are a necessary or even legal consequence of Britain leaving without a deal; regulations will be perfectly aligned on Brexit-day-plus-one; divergence can be managed from there.
The EU claims to be a ‘rules-based organisation’. Do Remainers believe the EU can’t help itself? It has rules of rubber when it suits, as we have pointed out before (for some examples see Gas Leak, Solidarity, Multiple Visions).
There is an old, now rather dated joke about government rules:
In England, everything is permitted except that which is forbidden. In Germany, everything is forbidden except that which is permitted. In Russia everything is forbidden, including that which is permitted. In France everything is permitted, including that which is forbidden.
We’ve moved on from that (see The World’s Favourite Law) but the EU, as with most things, seems to be a fusion of the German and French interpretations. The old German stereotype applies to Britain while the French one applies for France and Germany at least (Russian rules sometimes apply to other members, like Greece of course).
When EU financial companies pointed out what would happen if they lost access to London’s derivatives markets the Commission made a law to permit it. No negotiation required, they just did it. So back to our opening paragraph.
Problem with a hard border in Ireland? Then don’t have one – “Just Do IT”.
Problem with flights between EU countries and the UK? Legalise them – “Just Do IT”.
Problem with expats’ rights? Guarantee them – “Just Do IT”.
Problem for businesses because of tariffs? Don’t impose them – “Just Do IT”.
It is pure pretence that the EU is bound by its rules and cannot be pragmatic, it has always done bespoke deals. The UK’s membership exemplifies this but leaving is a different matter; as one commentator remarked recently, “If it was easy to leave the EU, everyone would go.” If that’s true then the EU should become a free trade area, rather like it was when we joined the EEC. That’s what Brexit champions want.
They just did it with derivatives access because it suited them, and sooner or later it will suit them to solve the other issues, possibly after a face-saving period. Otherwise there will be chaos at Calais, ire in Ireland, sorrow in Spain and an exit of expats – none of it necessary.