Against all odds and despite all the rude remarks about EU leaders, Boris Johnson, the British prime minister, has struck a “deal” on the United Kingdom’s exit from the European Union, well in time before the October 31 deadline. It looked highly unlikely just three months ago when Johnson became prime minister in July and promised to exit by October 31, deal or no deal or die in the ditch in the process.
Johnson hasn’t had much luck with the British House of Commons since he became prime minister and suffered serial defeats. He managed to antagonise the Opposition and even his own party when he expelled 21 MPs who had voted against him. As such, he had inherited a party with no majority and the expulsions and other departures reduced his numbers in Parliament. He prorogued Parliament three weeks ahead of schedule which was appealed against in the courts. The Supreme Court declared it illegal and ordered Parliament to be resumed.
His prorogation united the Opposition. In order to forestall a possible departure on October 31 without a deal, Parliament passed an act asking him to come back with a signed deal by October 19, the day after a summit meeting of the European Union, and the last day for getting an agreement signed by the EU and the UK before the October 31.
If he had failed, then in that case, he had to ask for an extension of the departure date. Just seven days ago it looked likely that Johnson will not succeed in getting a deal signed by October 19. But, he also threatened not to obey Parliament and ask for an extension in the departure date till January 31, 2020.
The principal obstacle to the deal was the “Irish Backstop”. Northern Ireland is a devolved part of the UK which shares the island territory with the Republic of Ireland, from which it was partitioned a century ago. The republic is a member of the EU. If the UK was to exit the EU Customs Union, then any goods lorry going from Northern Ireland to the Republic would need to be inspected and would have to pay a tariff.
However, in 1998, a treaty was signed by the UK and the Republic, with the USA being the broker, declaring that the border between the north and the south would be free. Thus the departure of the UK from the EU would be impossible as customs inspection and a free border would be incompatible.
Theresa May had got a deal in which it was promised that the entire UK would stay in the customs union even after Brexit until the EU and the UK had negotiated a free trade treaty. This deal was rejected by the House of Commons four times. Northern Ireland rejected the option of being separately treated from the rest of UK for the purpose of the customs union.
Theresa May was asked to resign by her party and Boris Johnson was elected leader by the Conservative Party. He promised to exit by October 31 — deal or no deal. It looked like he preferred a no deal which would have brought all trade between the UK and the EU, especially between North Ireland and the Republic to a halt and cause severe damage to all economies.
In a meeting with the Irish Taoiseach (the prime minister) Leo Varadkar, Johnson made a breakthrough. It was proposed that Northern Ireland would remain in the single market (enforcing common standards of health and safety and environment in production of goods traded) which would avoid health inspection. As to customs union, Johnson proposed inspections not at any spot but electronically and at random locations. This was not enough, but provided ground for further negotiations. October 16 and 17 being the summit dates for the EU, day and night negotiations followed over the last weekend and well into this week.
The objections were formidable. Northern Ireland insisted on coming out with the rest of the UK from the EU. The compromise is that in law, all UK will exit together. But a free economic zone would be declared for Northern Ireland which will admit goods from mainland UK. These goods will be taxed if they go south to the Republic but not if they stay north. To ease the burden, all goods will be taxed as they cross the Irish sea but those staying within the north would be granted a rebate.
To ease trade between the north and south Ireland, as before, it is agreed that the rules of the common market would apply. But, to make it more effective, the UK has promised to obey common market regulations when it negotiates a free trade treaty with the EU. Thus, the border between the EU and the UK is in the Irish Sea which was originally rejected by Northern Ireland. Now, that has been agreed on. Northern Ireland will, de jure, leave with Great Britain but, de facto, be a free economic zone permitting trade across the customs union.
Johnson’s troubles are not over yet. He has to bring the deal to the House of Commons which will meet on a Saturday for the first time in 40 years. He will have to persuade Parliament to support it. With reduced numbers, he has to take back his expelled colleagues, keep the Democratic Unionist Party (DUP) MPs supporting the deal and win over about 20 more votes from the Opposition benches. MPs who want Brexit but with a deal may vote with Boris.
It has been a tense few days and the coming days will be even more so. I put the probability of success no more than 65 per cent. Johnson would be hailed as a great prime minister if he delivers a Brexit with a deal by October 31. If he wins, he will call for an election which he will win handsomely.
If he loses the vote, there may be a second referendum putting his deal to a vote or he may face a no-confidence vote. If he loses that vote, an interim government would take over, get an extension, and start negotiations all over again.
This article first appeared in the October 19 print edition under the title ‘The end game’ (The writer is an economist and member, House of Lords, UK)