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25 January 2017

Brexit and the Art of the Politically Possible

Britain, like Hungary, needs a foreign policy geared to its long-term interests in a rapidly changing world no longer en route to a liberal democratic end of history. This has become an urgent task in the wake of the 23 June vote to leave the European Union. Unlike the seemingly interminable process of “ever closer union”, the Brexit referendum was a Big Bang political event. It requires some guiding principles to govern the process that follows from it and a global strategy to turn uncertainty into opportunity. As new Prime Minister Theresa May’s government has come to recognise, policy must not only consider the economic dimension of Brexit, but also how economics and geopolitics are linked in an interconnected but by no means integrated world.

Among the options for a post-Brexit Britain that this article evaluates are calls for unilateral free trade and tariff disarmament, engagement with the Asian model of Free Trade Agreements (FTAs), and an Anglospheric alternative of FTAs with states that share liberal market values and common law principles. In terms of national interest and geopolitical strategy the last option seems both more pragmatic and relatively straightforward, at least in principle.

At the same time, the UK needs to extricate itself from the EU. Two contested positions have emerged on how best to do this: hard or soft Brexit. Hard Brexit would involve a clean break. The UK would give up membership of the single market for goods and services but “take back control” of its budget, laws and borders. Trade with the EU from the outside would occur under World Trade Organisation rules with UK exports subject to tariff and non-tariff barriers.

Soft Brexit would see the UK outside Europe but inside the single market with some tariff-free access. The UK would still be subject to some EU laws and regulations, freedom of labour movement and contributions to the EU budget. This is the trade deal that Norway and Iceland have as members of the European Economic Area but not the EU.

Evidently, the European Commission, in the shape of President Jean-Claude Juncker and chief Brexit negotiator Michel Barnier, wishes to punish Britain for questioning the validity of the EU model. This together with the default Eurocratic position that any trade deal has to involve free movement of labour a deal no Conservative leader could plausibly entertain – means hard Brexit becomes the logical political option even though this could hurt the EU more than the UK. In other words, a hard Brexit would arise from Europe turning its back on Britain rather than vice versa.

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