United Kingdom News

Subterms

    More stories

    • 100 Shares149 Views

      in World Politics

      Stopping at Diego Garcia Raises Questions for Germany

      by

      The frigate Bayernset sail for the Indo-Pacific at the beginning of August, as a German contribution to upholding the “rules-based international order.” Germany increasingly views the rules-based international order as under threat, not least through China’s vast territorial claims, including its artificial islands, in the South China Sea.

      The German government has repeatedly drawn attention to China’s disregard for international law, especially in the context of its refusal to abide by a ruling of the Permanent Court of Arbitration, which declared its territorial claims in the South China Sea illegal under international law in 2016. Yet the German warship’s chosen route takes it to a US base whose status under international law is — to say the least — contested, thus torpedoing the implicit criticism of China.

      US Media Amplifies Afghan Chaos

      READ MORE

      Diego Garcia is the largest island in the Chagos Archipelago, which formerly belonged to the British Indian Ocean colony of Mauritius. In 1965, the British illegally retained the Chagos Islands in order to construct a military base there. The United Kingdom declared the archipelago a restricted military area and deported its entire population to Mauritius and the Seychelles. Since then, the base on Diego Garcia has largely been used by the United States. The Brits have leased the island to the Americans until 2036.

      Violation of the Right to Self-Determination

      Mauritius has been seeking to reclaim its sovereignty over the Chagos Archipelago since the 1980s. In 2019, an advisory opinion by the International Court of Justice (ICJ) found that the UK’s claim to the archipelago contradicted the right to self-determination and called on UN member states to “co-operate with the United Nations to complete the decolonization of Mauritius.” A resolution adopted by a large majority of the UN General Assembly called for the United Kingdom to “withdraw its colonial administration.” Most European states abstained, including Germany.

      Unique Insights from 2,500+ Contributors in 90+ Countries

      While the advisory opinion and resolution are not legally binding, they certainly possess normative power. In 2021, a ruling by the International Tribunal for the Law of the Sea (ITLOS) in Hamburg concurred with the ICJ’s interpretation. A separate issue of fundamental human rights is also involved: The US base housed a detention facility where terror suspects are known to have been tortured. Unlike Guantanamo Bay, the Diego Garcia facility remained completely secret until it was revealed by investigative journalists in 2003.

      A so-called bunker call at Diego Garcia is the obvious option for keeping the German warship’s replenishment as simple as possible on the long leg from Karachi in Pakistan to Perth in Australia. Calling at a NATO ally’s port is easy to arrange, with simplified procedures for procuring food and fuel. Resupplying in Sri Lanka or Indonesia, for example, would be much more complex.

      Alternative Route Possible

      The obvious operational benefits are outweighed by the cost to the mission’s normative objectives: Calling at Diego Garcia will inevitably invite accusations of double standards. The UK’s open defiance of the ICJ opinion and UN resolution means that visits to the Chagos Islands implicitly accept — if not openly support — a status quo that is at the very least problematic under international law.

      The bunker call would run counter to both the ICJ opinion and the ITLOS ruling, as well as boosting Beijing’s narrative that the West is selective in its application of the rules of an already Western-dominated international order. At a juncture where international norms and rules are increasingly contested in the context of Sino-American rivalry, none of this is in Germany’s strategic interest.

      Embed from Getty Images

      There are alternatives to replenishing at Diego Garcia. Changing the route would involve costs, but it would also underline Germany’s interest in upholding the rules-based international order. One possible outcome of a reevaluation of the current route planning would be to omit the call at Diego Garcia but, at the same time, to take the vessel closer than currently planned to the contested Chinese-built artificial islands in the South China Sea.

      In connection with a detour avoiding Diego Garcia, that would represent a gesture boosting international law, rather than a demonstration of military might toward China. Germany could show that it is willing to comply with international law, even where doing so contradicts its own immediate operational interests and its partners’ expectations.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 100 Shares149 Views

      in World Politics

      Is Football Still a Bastion of White Supremacy?

      by

      On the morning preceding England’s narrow defeat in the European Championship final, The New York Times published an article containing a heart-warming lesson about the power of sport to overcome and eliminate the scourge of xenophobic racism. Rory Smith, The Times’ football specialist based in Manchester, England, wrote: “Euro 2020 has become, in other words, a moment of genuine national unity.”

      What Is Behind Football’s Persistent Racism?

      READ MORE

      Smith quotes the article by anti-racism activist Shaista Aziz in The Guardian. Ms. Aziz exulted in the humanizing effect England’s football team was having on a nation that has been “a tiptoe away from racism and bigotry.” She seemed convinced everyone in England believed “this team is playing for all of us.” That special “moment of genuine national unity” proved to be short-lived.

      Today’s Daily Devil’s Dictionary definition:

      National unity:

      A fragile and often superficial sentiment of fraternity in modern nations provoked alternatively by the success of a team in a popular sport (e.g. winning a championship) or by the collective hatred of a real or imagined enemy following a destructive incident (e.g. 9/11)

      Contextual Note

      On Monday, The Guardian ran a story with the title, “Boris Johnson condemns ‘appalling’ racist abuse of England players.” Immediately following the England team’s defeat, social media provided proof of the illusory quality of the sense of national unity that the Three Lions’ success in reaching the final had provoked. It also highlighted the perverse link between political authority and the raw xenophobic emotion that some politicians feel they must encourage to establish and validate that authority.

      Modern democracies in our competitive, liberal civilization desperately want to believe in the gradual but inevitable triumph of virtue over vice. Thanks to the phenomenon of “progress,” which they define as their DNA, the superstitions and injustices of the past are condemned to fade away under the pressure of common sense and the respect of honest competition.

      The Times’ Rory Smith anticipated the thrill of knowing that “tens of millions of British fans would be watching avidly, glorying not just in the team’s success on the field but off it as well.” This would be a turning point in the nation’s history and its troubled relationship with its colonial past. In his mind, the spectacle offered by the gladiators in the arena heralded a new dawn for a people still in the throes of existential doubt after centuries of playing the role of a global empire that, seven decades after its dismantlement, was still seeking to understand its legitimate place in a diverse world.

      Embed from Getty Images

      Smith saw the fans “as a microcosm of a nation seemingly more enthusiastic about its evolving identity as a more tolerant, multiracial and multi-ethnic society than is often suggested.” On or off the field, inside or outside the stadium, Smith’s fervent wish appears to be just that, a vain wish. On social media, which exists in its own abstract space but reflects some of the deeper reality, a part of the nation insisted on reminding optimists like Smith of its competitive disunity.

      Ever since Pierre de Coubertin launched the modern Olympic Games in 1896, sport and nationalism have gravitated toward each other. This has created the hope in some sectors that the spirit of cooperative teamwork at the core of sport could triumph over the very human tendency to let petty rivalries lead to conflict, enmity and crime and even world war. But today’s liberal society is driven by two forces: winning — the proof of one’s superiority — and money. Because of that need for the most competitive talent, diversity has become a feature of all sports, including those like football, rugby and even tennis that were developed by Britain’s 19th-century white elite. Football emerged in the 20th century as the most universal and popular of British sports.

      The mingling of athletic performance, commercial interest, politics and nationalism was inevitable. The internationalization of sport’s economy that began obeying the super-competitive rules of economic globalization, based on optimizing the extraction of resources, led to an increasing focus on economic goals and the transformation of athletic performance into a form of hyperreal or superhuman spectacle.

      Until recently, politicians understood the advantage of defining sport as something entirely separate from politics. They showed a certain condescending respect for the performance of athletes, simply congratulating them for their competitive spirit. But the simultaneous effects of sport’s economic globalization, its financialization and the colonial heritage of Western nations led to a transformation of the traditionally perceived local and tepidly nationalistic character of teams. In Britain and the United States, for most of the 20th century, professional athletes were in their grand majority white. For a long time, non-whites were entirely excluded. Modern sport literally developed as a bastion of white supremacy.

      The pressures of economic competition combined with increasingly vocal frustration of excluded groups across Western societies led to the diversity now prevalent in all professional sports. A further trend, magnified by the media and the advertising dollars that support the media, has turned athletes into superheroes and hyperreal celebrities on a par with Hollywood actors. They belong to a stratosphere political leaders can no longer hope to rival.

      Historical Note

      Soon after his election in 2016, US President Donald Trump broke the entente cordiale that previously existed between sports and politics by intervening directly in the controversy that arose around Colin Kaepernick’s silent protest against police brutality toward black Americans. Trump deemed the act of kneeling during the national anthem an insult to the valiant troops that American presidents have the habit of sending abroad to be maimed and killed in the name of demonstrating the seriousness of the nation’s enduring mission, which consists of maiming and killing people elsewhere in the world who fail to pledge allegiance to the unimpeachable moral standards of the United States.

      After the protests sparked by George Floyd’s murder last year, Kaepernick’s gesture became a universal symbol of passive resistance to persistent racism. Out of electoral expediency, Trump and his followers turned the issue into a major component of the ongoing “culture wars” that have effectively shattered the last trace of the illusion of unity in the profoundly Disunited States, a nation where insult, shaming, calumny and canceling have become an art, if not a science.

      .custom-post-from {float:right; margin: 0 10px 10px; max-width: 50%; width: 100%; text-align: center; background: #000000; color: #ffffff; padding: 15px 0 30px; }
      .custom-post-from img { max-width: 85% !important; margin: 15px auto; filter: brightness(0) invert(1); }
      .custom-post-from .cpf-h4 { font-size: 18px; margin-bottom: 15px; }
      .custom-post-from .cpf-h5 { font-size: 14px; letter-spacing: 1px; line-height: 22px; margin-bottom: 15px; }
      .custom-post-from input[type=”email”] { font-size: 14px; color: #000 !important; width: 240px; margin: auto; height: 30px; box-shadow:none; border: none; padding: 0 10px; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-pen-icon.svg”); background-repeat: no-repeat; background-position: center right 14px; background-size:14px;}
      .custom-post-from input[type=”submit”] { font-weight: normal; margin: 15px auto; height: 30px; box-shadow: none; border: none; padding: 0 10px 0 35px; background-color: #1878f3; color: #ffffff; border-radius: 4px; display: inline-block; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-email-icon.svg”); background-repeat: no-repeat; background-position: 14px center; background-size: 14px; }

      .custom-post-from .cpf-checkbox { width: 90%; margin: auto; position: relative; display: flex; flex-wrap: wrap;}
      .custom-post-from .cpf-checkbox label { text-align: left; display: block; padding-left: 32px; margin-bottom: 0; cursor: pointer; font-size: 11px; line-height: 18px;
      -webkit-user-select: none;
      -moz-user-select: none;
      -ms-user-select: none;
      user-select: none;
      order: 1;
      color: #ffffff;
      font-weight: normal;}
      .custom-post-from .cpf-checkbox label a { color: #ffffff; text-decoration: underline; }
      .custom-post-from .cpf-checkbox input { position: absolute; opacity: 0; cursor: pointer; height: 100%; width: 24%; left: 0;
      right: 0; margin: 0; z-index: 3; order: 2;}
      .custom-post-from .cpf-checkbox input ~ label:before { content: “f0c8”; font-family: Font Awesome 5 Free; color: #eee; font-size: 24px; position: absolute; left: 0; top: 0; line-height: 28px; color: #ffffff; width: 20px; height: 20px; margin-top: 5px; z-index: 2; }
      .custom-post-from .cpf-checkbox input:checked ~ label:before { content: “f14a”; font-weight: 600; color: #2196F3; }
      .custom-post-from .cpf-checkbox input:checked ~ label:after { content: “”; }
      .custom-post-from .cpf-checkbox input ~ label:after { position: absolute; left: 2px; width: 18px; height: 18px; margin-top: 10px; background: #ffffff; top: 10px; margin: auto; z-index: 1; }
      .custom-post-from .error{ display: block; color: #ff6461; order: 3 !important;}

      Once Kaepernick’s gesture had gone universal, most politicians sought to distance themselves from the issue. But not Boris Johnson and his team. As the political profiteer who achieved his life’s ambition of becoming prime minister thanks to his xenophobic campaign for Brexit in 2016, Johnson may have felt obliged to appeal to his base and encourage suspicion of the “darkies’” intent. Johnson’s team branded it “gesture politics,” denying its stated purpose focused on social justice. Home Secretary Priti Patel and Johnson himself declined to condemn the booing some members of the public addressed to the kneeling players.

      The symbolism of sport in today’s culture reflects the evolution of the modern economy. Just as the economy, despite its noble claims, is not really about innovation, efficiency, abundance and meeting the needs of the people, sport isn’t about developing and celebrating the beauty of “the beautiful game” and other popular sports. The money factor trumps all the old associations with personal and collective achievement.

      Now it’s simply about winning and losing. Just as the driving force of the economy is the profit motive — maximizing one’s earnings and crushing the competition, which also means depriving those involved of their livelihood — the only thing the public retains from a sporting event is the celebration of the winner and witnessing the humiliation of the loser. At least in sports, the losers are still well paid and their livelihood rarely compromised.

      Pierre de Coubertin famously claimed for the revived Olympic Games that the aim “is not to win, but to take part; the important thing in Life is not triumph, but the struggle. To spread these principles is to build up a strong and more valiant and, above all, more scrupulous and more generous humanity.” De Coubertin recounted that he was inspired to promote the Olympic Games by the link he saw between the emphasis on sport in Britain’s elite educational culture and the global triumph of its empire in the 19th century. Although it was for the most part officially dismantled in the 1950s, could this be a case of Boris’ empire striking back?

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 75 Shares159 Views

      in World Politics

      Shaping the Future of Energy Collaboration

      by

      The cancelation of British Prime Minister Boris Johnson’s much-awaited visit to India is disappointing but unsurprising. India, a country with nearly 1.4 billion people, is currently confronting a second wave of COVID-19 infections. Though all is not lost as bilateral talks are expected to take place virtually on April 26. High on the agenda remains the launch of Roadmap 2030, which will foreseeably set the tone for India-UK relations in a post-COVID era and pave the way for a free trade agreement.

      The Missing Pieces to Avoid a Climate Disaster

      READ MORE

      This shared vision, forming a critical piece of the “global Britain” agenda and the UK’s post-Brexit foreign policy, is expected to lay out a framework for enhanced cooperation across a much broader set of policy pillars. One such area is climate action, which is a key part of economic growth strategies and the global green energy agenda for both countries.

      As signatories to the 2015 Paris Agreement — the international treaty on climate change — India and the UK have sizable ambitions to invest in creating cleaner and sustainable energy systems. This time last year, the United Kingdom experienced its longest coal-free run to date, a significant milestone for an economy that generated about 40% of its electricity from coal just a decade ago. While India’s green energy transition is comparatively nascent, it has made significant strides toward expanding its renewable energy capacity, especially in solar power, where it is emerging as a global leader.

      Energy Sources

      Although the two countries have vastly different energy sources and consumption patterns, this creates a unique opportunity for each economy to capitalize on its individual strengths. In offshore wind power, the UK is the largest global player, while India has only begun to scratch the surface of its wind potential. The United Kingdom’s technical prowess will play a crucial role in supporting the growth of India’s offshore wind energy — from the meteorological expertise required to evaluate wind patterns and energy production potential to joint research and development opportunities.

      The growth of electric vehicles (EVs) is another area where each market has distinct strengths. India, for example, can rely on the UK’s experience as it undertakes the massive infrastructure exercise of deploying smart charging EV stations. The UK can draw on India’s success with battery-powered three-wheelers to develop sustainable last-mile connectivity solutions. Strengthened bilateral cooperation on these fronts will not only accelerate the EV revolution globally but can also serve to contain China’s dominance in this market.

      Embed from Getty Images

      The Indian and British governments are closely collaborating around climate action. This is evident from recent trips to India by the UK’s Alok Sharma, the president of this year’s UN Climate Change Conference (COP26) that will take place in Glasgow, and Lord Tariq Ahmad, the minister for South Asia and the Commonwealth.

      It is, however, important to expand the scope of these engagements to include small and medium-sized enterprises (SMEs), which constitute a powerhouse of skill and experience. SMEs based in the UK can play a significant role in supporting India’s energy transition. British companies could adapt their innovations for the local market, while in turn benefiting from India’s strong manufacturing base and engineering skills. To tap into this market opportunity, governments could facilitate SME-focused trade delegations as well as joint-venture opportunities for cleantech startups.

      Green financing would play an equally important role in truly unlocking the value of such partnerships. This would be through existing bilateral instruments like the Sustainable Finance Forum and Green Growth Equity Fund or the UK’s soon-to-be-launched revenue mechanism that will mobilize private investment into carbon capture and hydrogen projects. This is especially important for India, which is looking at green hydrogen in a big way and is set to launch its first national hydrogen roadmap this year. As the UK’s carbon capture market grows, this could support India’s plans to produce hydrogen from natural gas, creating new avenues for technology sharing.

      If one thing is clear, it is that the opportunities are immense and the existing foundation is strong. With the stage set and the actors in place, Roadmap 2030 could certainly stand to benefit not just India and the UK, but the world at large in delivering a cleaner, more affordable and resilient energy future.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 88 Shares169 Views

      in World Politics

      The Risk of a No-Deal Brexit Remains

      by

      The risk that we will wake up on May 1 to find we have a no-deal Brexit after all has not disappeared. The deadline for the ratification by the European Parliament of the trade deal between the European Union and the United Kingdom was due to be February 28. But Parliament postponed the deadline to April 30. It did this because it felt it could not trust the UK to implement the Trade and Cooperation Agreement (TCA) — as the deal is formally known as — properly and as agreed and ratified. 

      This distrust arose because the implementation of the Ireland and Northern Ireland Protocol of the withdrawal agreement — the treaty that took the UK out of the EU — had been unilaterally changed by the British government. If a party to an international agreement takes it upon itself to unilaterally alter a deal, the whole basis of international agreements with that party disappears.

      Brexit Trade Deal Brings Temporary, If Not Lasting, Relief

      READ MORE

      The matters in dispute between the UK and the EU — the protocol and COVID-19 vaccines — remain unresolved. The European Union is taking the United Kingdom to court over the protocol, but the court is unlikely to decide anything before the new deadline of April 30.

      In the normal course of events, the TCA between the UK and the EU would be discussed in the relevant committee of the European Parliament, before coming to the plenary session of Parliament for ratification. The next meeting of the Committee on International Trade is due to take place on April 14-15, and the agenda for the meeting has been published. It includes a discussion on the enforcement of trade agreements, the general system of preferences and, significantly, trade-related aspects of the COVID-19 pandemic. It makes no mention of the TCA with the UK.

      Trade-related aspects of the pandemic will inevitably include a discussion on vaccine protectionism, which is a highly contentious issue between the EU and the UK that has poisoned relations and led to bitter commentary in the media. The fact that the committee has not included a discussion of the TCA with the UK on its agenda for what may well be the only meeting it will have before the April deadline is potentially very significant.

      Ratifying the Trade Deal

      The TCA is a 1,246-page document, and its contents, if ratified, will take precedence over EU law. To ratify such an agreement without proper scrutiny in the relevant committees could be seen as a dereliction of the European Parliament’s responsibility of scrutiny. We should not forget the scrutiny that was applied to the much more modest EU trade agreement with Canada. The same goes for the deal with Mercosur states (Argentina, Brazil, Paraguay and Uruguay).

      .custom-post-from {float:right; margin: 0 10px 10px; max-width: 50%; width: 100%; text-align: center; background: #000000; color: #ffffff; padding: 15px 0 30px; }
      .custom-post-from img { max-width: 85% !important; margin: 15px auto; filter: brightness(0) invert(1); }
      .custom-post-from .cpf-h4 { font-size: 18px; margin-bottom: 15px; }
      .custom-post-from .cpf-h5 { font-size: 14px; letter-spacing: 1px; line-height: 22px; margin-bottom: 15px; }
      .custom-post-from input[type=”email”] { font-size: 14px; color: #000 !important; width: 240px; margin: auto; height: 30px; box-shadow:none; border: none; padding: 0 10px; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-pen-icon.svg”); background-repeat: no-repeat; background-position: center right 14px; background-size:14px;}
      .custom-post-from input[type=”submit”] { font-weight: normal; margin: 15px auto; height: 30px; box-shadow: none; border: none; padding: 0 10px 0 35px; background-color: #1878f3; color: #ffffff; border-radius: 4px; display: inline-block; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-email-icon.svg”); background-repeat: no-repeat; background-position: 14px center; background-size: 14px; }

      .custom-post-from .cpf-checkbox { width: 90%; margin: auto; position: relative; display: flex; flex-wrap: wrap;}
      .custom-post-from .cpf-checkbox label { text-align: left; display: block; padding-left: 32px; margin-bottom: 0; cursor: pointer; font-size: 11px; line-height: 18px;
      -webkit-user-select: none;
      -moz-user-select: none;
      -ms-user-select: none;
      user-select: none;
      order: 1;
      color: #ffffff;
      font-weight: normal;}
      .custom-post-from .cpf-checkbox label a { color: #ffffff; text-decoration: underline; }
      .custom-post-from .cpf-checkbox input { position: absolute; opacity: 0; cursor: pointer; height: 100%; width: 24%; left: 0;
      right: 0; margin: 0; z-index: 3; order: 2;}
      .custom-post-from .cpf-checkbox input ~ label:before { content: “f0c8”; font-family: Font Awesome 5 Free; color: #eee; font-size: 24px; position: absolute; left: 0; top: 0; line-height: 28px; color: #ffffff; width: 20px; height: 20px; margin-top: 5px; z-index: 2; }
      .custom-post-from .cpf-checkbox input:checked ~ label:before { content: “f14a”; font-weight: 600; color: #2196F3; }
      .custom-post-from .cpf-checkbox input:checked ~ label:after { content: “”; }
      .custom-post-from .cpf-checkbox input ~ label:after { position: absolute; left: 2px; width: 18px; height: 18px; margin-top: 10px; background: #ffffff; top: 10px; margin: auto; z-index: 1; }
      .custom-post-from .error{ display: block; color: #ff6461; order: 3 !important;}

      Furthermore, the TCA would, if ratified, set up a network of committees to oversee its implementation. These will meet in private and their work will diminish the ongoing oversight by the European Parliament of a host of issues affecting all 27 EU member states. The TCA also contains a system of dispute-resolution mechanisms that will quickly be overwhelmed by work. The TCA has many items of unfinished business, on which the European Parliament will want to express a view. It is hard to see how any of this can be done before the end of April.

      The UK government led by Prime Minister Boris Johnson has adopted a deliberately confrontational style in its negotiations with the European Union. The more rows there are, the happier the support base that Johnson is seeking to rally for his Conservative Party. Johnson’s European strategy has always been about electoral politics, not economic performance. This has led to almost complete confusion between the British government and the EU.

      If the European Parliament ratifies the TCA without there having been seen to be a satisfactory outcome to the EU-UK negotiations about the Ireland and Northern Ireland Protocol and over the export of vaccines, it will be a political setback for Parliament and a source of immense satisfaction for Johnson.

      Yet one should never underestimate the role emotion can play in politics. The entire Brexit saga is a story of repeated triumphs of emotion over reason — and the European Parliament is not immune to this ailment. Boris Johnson could be pushing his luck a bit far this time.

      *[A version of this article was posted on John Bruton’s blog.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 88 Shares179 Views

      in World Politics

      A New European Financial Landscape Is Emerging

      by

      The United Kingdom’s exit from the European single market on January 1 has sent trade in goods plummeting amid much confusion. By contrast, Brexit was carried out in an orderly manner in the financial sector, despite significant movement of trading in shares and derivatives away from the City of London.

      The Brexit Deal Presents Opportunities for a New Partnership

      READ MORE

      After five years of radical uncertainty, it has become clear that the European Union and the United Kingdom will be taking separate paths on financial regulations — a financial “decoupling” that means a significant loss of business for the City. Whether the EU financial sector can gain much of what London loses will depend on the EU’s willingness to embrace further financial market integration.

      Smart Sequencing Ensured an Orderly Brexit

      As with the Y2K problem, the Brexit transition could have gone worse. It took more than luck to avoid financial instability along the way.

      First, financial firms on both sides of the English Channel (and of the Irish Sea) worked hard and were able to preempt most of the operational challenges.

      Embed from Getty Images

      Second, despite all the recurring high-stakes drama between the UK government and the European Commission, the technical cooperation between the authorities actually in charge of financial stability, primarily the Bank of England and the European Central Bank (ECB), appears to have run smoothly.

      Third, the negotiators phased the process in a smart way. The Brexit Withdrawal Agreement of January 2020 helped reduce uncertainty by ensuring that the UK government would meet its financial obligations to the EU, avoiding what would have been akin to selective default. That agreement kept the United Kingdom in the single market during the transition period beyond the country’s formal exit from the European Union on January 31, 2020. It also set a late-June deadline for the British government to extend the transition period beyond December 31, 2020. As London decided not to do so, that left six months of effective preparation.

      To be sure, whether an EU-UK Trade and Cooperation Agreement (TCA) would be concluded remained unknown until late December. But that mattered comparatively little for financial services, since trade agreements typically do not cover them much. By one count, the 1,259-page TCA (which is still unratified by the European Union) contains only six pages relevant for the financial sector.

      The resulting legal environment for financial services between the European Union and the United Kingdom is unlikely to change much any time soon. Contrary to occasional portrayals in the United Kingdom, no bilateral negotiations on financial services are going on, except for a memorandum of understanding expected this month that is not expected to bind the parties on substance.

      From the EU perspective, the United Kingdom is now a “third country,” in other words an offshore financial center, following decades of onshore status. UK-registered financial firms have lost the right, or “passport,” to offer their services seamlessly anywhere in the EU single market. From a regulatory standpoint, they have no better access to that market than their peers in other third nations such as Japan, Singapore or the United States.

      Equivalence Status for UK Financial Market Segments

      Some segments of the financial sector in these other third countries actually have better single market access than British ones, because they are covered by a category in EU law allowing direct service provision by firms under a regulatory framework deemed “equivalent” to that in the European Union. The equivalence decision is at the European Commission’s discretion, even though it is based on a technical assessment. As a privilege and not a right, equivalence can be revoked on short notice.

      So far, the European Commission has not granted the UK any such segment-specific equivalence, except in a time-limited manner for securities depositories until mid-2021 and clearing services until mid-2022. For the moment, the commission appears to be leaning against making the latter permanent. In most other market segments, the commission will not likely grant equivalence to the United Kingdom in the foreseeable future. This may appear inconsistent with the fact that almost all current UK regulations stem from the existing EU body of law. But the UK authorities (including the Bank of England) have declined to commit to keeping that alignment intact.

      Embed from Getty Images

      The commission’s inclination to reduce EU dependence on the City of London is understandable. No comparable dependence on an offshore financial center has existed anywhere in recent financial history. Such dependence entails financial stability risk. In a crisis, UK authorities would not necessarily respond in a way that preserves vital EU interests. Think of the Icelandic crisis of 2008, when Reykjavik protected the failing banks’ domestic depositors but not foreign ones. It is hardly absurd for the European Union to try to reduce such a risk, even if — as appears to happen with derivatives — some of the activity migrates from the United Kingdom to the United States or other third countries as a consequence, and not to the European Union.

      At the same time, the argument that keeping EU liquidity pooled in London is more efficient than any alternative is unpersuasive given the European Union’s own vast size. In addition, the European Commission also follows mercantilist impulses to lure activity away from London, even though these generally do not make economic sense. Added up, these factors provide little incentive for the commission to grant equivalence status to more UK financial market segments, unless some other high-level political motives come into play. None are apparent right now.

      The UK Is Unlikely to Regain Lost Advantage

      How the European Union and the United Kingdom will decouple will not be uniform across all parts of the financial system. Regulatory competition between them may become a “race to the bottom” or “to the top,” depending on market segments and the circumstances of the moment, without a uniform pattern. In any case, such labels are more a matter of judgment in financial regulation than in, say, tax competition.

      In some areas, the European Union will be laxer, while in others, it will be the United Kingdom, as is presently the case between the EU and the US. For example, the European Union is more demanding than the United States on curbing bankers’ compensation but easier when it comes to enforcing securities laws or setting capital requirements for banks. At least some forthcoming UK financial regulatory decisions may be aimed at keeping or attracting financial institutions in London, but they are still not likely to offset the loss of passport to the EU single market.

      All these permutations suggest that the medium-term outlook for the City of London is unpromising, although the COVID-19 situation makes all quantitative observations more difficult to interpret. Once an onshore financial center for the entire EU single market, and a competitive offshore center for the rest of the world, the City has been reduced to an onshore center for the United Kingdom only and has become offshore for the European Union. That implies a different, in all likelihood less powerful, set of synergies across the City of London’s financial activities.

      The few relevant quantitative data points available reinforce this bleak view. Job offerings in British finance, as tracked by consultancy Morgan McKinley, have declined alarmingly since the 2016 Brexit referendum. The ECB (as bank supervisor) and national securities regulators coordinated by the European Securities and Markets Authority are tightening requirements for key personnel to reside mainly on EU territory rather than in the United Kingdom.

      .custom-post-from {float:right; margin: 0 10px 10px; max-width: 50%; width: 100%; text-align: center; background: #000000; color: #ffffff; padding: 15px 0 30px; }
      .custom-post-from img { max-width: 85% !important; margin: 15px auto; filter: brightness(0) invert(1); }
      .custom-post-from .cpf-h4 { font-size: 18px; margin-bottom: 15px; }
      .custom-post-from .cpf-h5 { font-size: 14px; letter-spacing: 1px; line-height: 22px; margin-bottom: 15px; }
      .custom-post-from input[type=”email”] { font-size: 14px; color: #000 !important; width: 240px; margin: auto; height: 30px; box-shadow:none; border: none; padding: 0 10px; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-pen-icon.svg”); background-repeat: no-repeat; background-position: center right 14px; background-size:14px;}
      .custom-post-from input[type=”submit”] { font-weight: normal; margin: 15px auto; height: 30px; box-shadow: none; border: none; padding: 0 10px 0 35px; background-color: #1878f3; color: #ffffff; border-radius: 4px; display: inline-block; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-email-icon.svg”); background-repeat: no-repeat; background-position: 14px center; background-size: 14px; }

      .custom-post-from .cpf-checkbox { width: 90%; margin: auto; position: relative; display: flex; flex-wrap: wrap;}
      .custom-post-from .cpf-checkbox label { text-align: left; display: block; padding-left: 32px; margin-bottom: 0; cursor: pointer; font-size: 11px; line-height: 18px;
      -webkit-user-select: none;
      -moz-user-select: none;
      -ms-user-select: none;
      user-select: none;
      order: 1;
      color: #ffffff;
      font-weight: normal;}
      .custom-post-from .cpf-checkbox label a { color: #ffffff; text-decoration: underline; }
      .custom-post-from .cpf-checkbox input { position: absolute; opacity: 0; cursor: pointer; height: 100%; width: 24%; left: 0;
      right: 0; margin: 0; z-index: 3; order: 2;}
      .custom-post-from .cpf-checkbox input ~ label:before { content: “f0c8”; font-family: Font Awesome 5 Free; color: #eee; font-size: 24px; position: absolute; left: 0; top: 0; line-height: 28px; color: #ffffff; width: 20px; height: 20px; margin-top: 5px; z-index: 2; }
      .custom-post-from .cpf-checkbox input:checked ~ label:before { content: “f14a”; font-weight: 600; color: #2196F3; }
      .custom-post-from .cpf-checkbox input:checked ~ label:after { content: “”; }
      .custom-post-from .cpf-checkbox input ~ label:after { position: absolute; left: 2px; width: 18px; height: 18px; margin-top: 10px; background: #ffffff; top: 10px; margin: auto; z-index: 1; }
      .custom-post-from .error{ display: block; color: #ff6461; order: 3 !important;}

      As noted by Financial Times columnist Simon Kuper, many financial firms’ Brexit policy until this year had been to “sit tight and do nothing until post-Brexit arrangements for finance forced [their] hand.” That phase has ended. Firms that drag their feet face regulatory disruption, as happened to broker TP ICAP in late January. Tussles between regulators and regulated entities, rather than between the European Commission and the UK government, are where most of the financial-sector Brexit action is likely to be in 2021. These disputes typically happen behind closed doors, and the regulators typically hold most of the cards.

      For all the optimistic talk in London of “Big Bang 2.0 or whatever,” the United Kingdom’s comparative advantage as the best location for financial business in the European time zone is unlikely to recover to its pre-Brexit level. The macroeconomic losses could be moderated or offset by cheaper currency and less expensive real estate in London, making the city a more attractive place to do nonfinancial business. Even so, a gap will likely remain for the UK government, which has for years depended heavily on financial sector–related tax revenue.

      The European Union stands to gain financial activity as a consequence of Brexit. How much and where is not clear yet. As some analysts had predicted, Amsterdam, Dublin, Frankfurt, Luxembourg and Paris are the leaders for the relocation of international (non-EU) firms. Dublin and Luxembourg specialize in asset management, Frankfurt in investment banking and Amsterdam in trading. But EU success in terms of financial services competitiveness and stability will depend on further market integration, the pace of which remains hard to predict.

      The European banking union is still only half-built because it lacks a consistent framework for bank crisis management and deposit insurance. The grand EU rhetoric on “capital markets union” has yielded little actual reform since its start in 2014. Events like the still-unfolding Wirecard saga may force additional steps toward market integration, even though a proactive approach would be preferable.

      The one near certainty is that London’s position in the European financial sector will be less than it used to be.

      *[This article was originally published by Bruegel and the Peterson Institute.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 88 Shares179 Views

      in World Politics

      Can the British Army Modernize Under Pressure?

      by

      Over the past three decades, the British Army has faced numerous challenges. British soldiers have been putting their lives on the line in several intense multilateral deployments, including the wars in Iraq and Afghanistan. These operations have enhanced the mechanical wear and tear, necessitating an early replacement of vehicles that were already due to be replaced by newer generations.

      As bad luck would have it, the need for expensive new equipment comes at a time when budgets are scarce. In the wake of the disintegration of the Soviet Union, UK defense budget allocations were systematically slashed by governments that considered the expense no longer indispensable. This has led many observers to describe the modern British Army as a shadow of its former self. The entire British Armed Forces shrank by more than 50% percent over the past three decades, dropping from 311,000 to 145,000 personnel.

      The Far Right Has a History of Infiltrating the British Army

      READ MORE

      While the overall budget has increased from £38 billion ($53 billion) to £48 billion, the figure is misleading as it does not take into account rising costs of development or inflation. A more telling indicator is the percentage of GDP dedicated to defense, which dropped from 3.5% to 1.7% between 1990 and 2020. The rhythm of deployments, however, has not slowed, with the UK taking an active part in virtually every NATO operation in the past decades.

      But things may be changing. As defense expert Andrew Chuter writes: “The British government has approved the largest rise in its defense budget since the end of the Cold War, with £16.5 billion (U.S. $21.9 billion) in additional funding made available for spending on shipbuilding, space, cyber, research and other sectors over a four-year period.” This is welcome news for an institution that can no longer count on European military assistance as it could before Brexit.

      Retiring the Heavy Cavalry

      In the coming decade, Britain will be waving its Challenger 2 tanks goodbye. Put in service at the end of the 20th century, the Challenger has served proudly in Iraq, Kosovo and Bosnia. The 2003 invasion of Iraq was simultaneously its finest hour and the beginning of the end for the heavy tank. During combat, Challengers were repeatedly struck with rocket-propelled grenades and proved exceptionally robust. Throughout the invasion, the tank remained operational despite extreme conditions and performed admirably.

      Embed from Getty Images

      However, it became apparent that the Challenger could only be deployed in certain environments. Challengers were never used in Afghanistan because they could hardly have operated in the mountainous terrain and because this battlefield was landlocked — two factors that threaten the tanks’ very existence. Heavy armor can be moved easily by sea, with difficulty over land and never by air.

      The heavy tanks are, therefore, proving increasingly irrelevant as Britain strives to maintain its global presence and capacity. From a strategic setting that pitched two massive conventional military blocs against each other in the plains of Central Europe, the West discovered a post-Cold-War era in which it needed to be able to deploy rapidly to every corner of the world. Heavy weaponry is considerably less relevant today. This type of firepower is not needed in skirmishes and territory control, and its low deployability presents a problem for many operations.

      As the UK Ministry of Defense struggles to reorganize budgets, it surprises no one that heavy armor would be the first on the list for the difficult cuts ahead. After several drops in numbers, Harry Lye reports that “The British Army’s fleet of Challenger 2 main battle tanks (MBTs) and Warrior Armoured Fighting Vehicles (AFVs) could be cut under plans reportedly being drawn up by military chiefs.” What will replace British armor if it is effectively mothballed is anyone’s guess.

      The Artillery

      Britain’s AS-90s are also getting close to retirement and, for once, this may be good news. The AS-90 is the UK’s standard self-propelled artillery — effectively a tank, mounted with an artillery howitzer instead of a direct-fire barrel. Artillery regiments have also seen their fleets diminished, for the same budget reasons, and they are also plagued with the same logistical difficulties as their colleagues in the heavy-armor divisions. While not quite as heavy, AS-90 howitzers are immensely cumbersome due to their armor coating, are nearly impossible to move quickly and will easily be evaded by today’s nimble insurgencies.

      But Britain is in luck: There is a new type of howitzer on the market that may fix all of the army’s problems at once. New truck-mounted howitzers, such as the French Caesar cannon, swap armor for mobility. Their simpler design makes them easily transportable by air and considerably less expensive than their predecessors. The Caesar howitzer is the first of its kind to have successfully passed the test by fire in operational deployments. Magzter reports that “Using the truck’s ability to move offers the benefit of being able to have a much lower total system weight particularly if armour protection is either limited to the driver/crew cab area or even eliminated altogether.”

      China, France, Japan, Sweden and many others all have turned to this design, which has demonstrated good operational results. The Caesar cannon is also one of the few artillery types that are air-transportable. Should Britain acquire such howitzers, it could simultaneously maintain its current stock numbers and reduce its military expenditure — a rare opportunity in military affairs.

      The Caesar artillery unit also represents a diplomatic opportunity. The UK was hoping that Brexit would naturally lead to closer ties with the US. This has not transpired — and seems unlikely in the future. Plans for an integrated EU army and low financial contributions from Western European countries have led to American exasperation with its Eastern allies, meaning that US strategies have become, in reaction, increasingly self-sustained and self-centered over the years. Building reinforced interoperability with the French and enhancing the capacity among European nations for rapid deployment is a practical and achievable way to rebuild international ties.

      The Boxer Gamble

      And then, of course, there was the Boxer, the now-infamous infantry fighting vehicle which, despite its critical role on the battlefield, was purchased under the worst possible conditions. While the protection of infantry soldiers receives priority, now that new threats are about, it is unclear why London would allow fair competition for the tender to be scrapped.

      Soldiers commonly need to take the threat of improvised explosive devices or drones into account — something that hardly existed in the 20th century. But, given how drastically the battlefield has changed in the past few decades, defense analysts were astounded that the British Army would throw as fundamental a quality prerequisite as a tender out of the window. By a simple decision, the UK bought the Boxer off the shelf, hoping that it would somehow be adapted to modern threats. Andrew Chuter covered the matter, indicating that 500 Boxers would be ordered — without competition — from the defense contractor Artec at a cost of £4.4 billion, to be delivered in 2023.

      The price tag includes 10 years of technical support. This entails that in case the Boxer reveals itself ill-suited to current-day operations, the UK troops will be stuck with it for at least a decade. Hasty and unverified spending is certainly unwelcome in times of financial strain. But what is done is done. The British Army will presumably not be overturning this decision, and we can hope the Boxer performs well.

      Some of the choices facing the British Army will not make commanders’ hair turn gray beyond reason. If new cannons come at a lower cost, the army can stay within its budgetary envelope and maintain, or even increase, its fleet. Other choices, such as deciding whether to shelve the cavalry, will be more of a strategic gamble. Indeed, Britain may have little need for heavy tanks now, but who knows if it will need them again? One thing is sure, however: Buying the Boxer blindfolded was a huge, almost irresponsible risk in a time of budgetary constraints. Let’s hope future choices will be made with more discernment.

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 50 Shares129 Views

      in World Politics

      Will Britain Become Scot-Free?

      by

      Among the consequences of Boris Johnson’s greatest accomplishment, Brexit, the question looms of the possible imminent fracturing of the union of nations known as the United Kingdom. The act of shattering one union — the EU — may have launched a trend. 

      As the second most important political entity of the British union, Scotland sees its quest for independence as symmetrical with Britain’s withdrawal from Europe. The Scots have long felt as oppressed by the English as the Brexiters felt oppressed by Brussels. Moreover, Scotland has traditionally felt a strong kinship with Europe. It once took the form of the Auld Alliance, established in 1295 by France’s Philippe IV, as both nations opposed England. The idea of the alliance resurfaced in the troubled period after James II, the last of the Stuart kings of England, was forced to flee to France following the 1688 Glorious Revolution.

      More recently, following the hesitating but finally successful integration of Great Britain into the EU in 1975, Scotland reveled in its European status. In June 2016, the Brexit referendum that then-Prime Minister David Cameron agreed to hold shocked the world by producing a victory for the “leave” camp. Scotland, however, unambiguously favored remaining in the European Union by a score of 62% to 38%. Nicola Sturgeon, Scotland’s first minister, immediately saw a reason to hold a second referendum for Scottish secession from the UK, an initiative that had been attempted but failed in 2014. Today, the polls indicate a clear majority of Scots will vote for independence. This time around it will be justified by the UK’s effective withdrawal from Europe. Scotland feels a deeper loyalty and kinship to Europe than to England.

      When Will Boris Johnson Be Committed?

      READ MORE

      The Scots are nevertheless divided. Breaking with England would revert to a situation that hasn’t existed since 1707, the year the Treaty of Union was signed. Creating a border between Scotland and England in the 21st century will likely be more of a challenge than the knotty quandary still facing Northern Ireland concerning the unsettled question of a border that may need to be enforced with the Republic of Ireland, which is still part of the EU. The Roman Emperor Hadrian may have presciently anticipated the question of Scottish independence when he ordered the construction of his famous wall in 122 AD.

      As disappointment with Brexit increases and polling shows the Scots as likely to show the same alacrity to exit their union as the Brexiters did with regard to the European one, the minority of Scottish “remainers,” known as unionists, are beginning to worry. To understand the nature of their panic,Al Jazeera quotes one unionist, Sheena Francovich, a retiree from Argyllshire on Scotland’s west coast: “As far as I’m concerned, we had a vote [in 2014] and we voted to stay part of the UK and that’s end of story. Nobody has ever convinced me that [independence] would make any economic sense. If there was another vote and people did vote [Yes] it would be a sad, sad day.”

      Today’s Daily Devil’s Dictionary definition:

      Economic sense:

      The idea that better economic conditions will result from a choice the person speaking has already made, despite having no access to the full range of factors that determine economic success or failure.

      Contextual Note

      Brexit has been officially in place for a month and a half. One commentator highlighted the gap that has become evident between the promises Prime Minister Boris Johnson made five years ago and the reality of what is turning into a new winter of discontent: “During the 2016 Brexit campaign, proponents promised businesses that leaving Europe would mean liberation from suffocating regulations and infernal bureaucracy that supposedly prevailed across the Channel. It was all a lie. Post-Brexit, British companies that trade with the EU now deal with expensive disruptions to their businesses, and watch as their export profits plunge.”

      Embed from Getty Images

      Boris Johnson and his cohorts cannot complain that it’s all because they haven’t had enough time to prepare. The Europeans were ready to allow the UK more time, but it wasBoris who insisted that it was crucial to “get Brexit done.” The long-term consequences of Brexit, including the eventual dismantling of the United Kingdom, are unknown. But the short-term consequences have given an idea of the scope of the material and economic damage. It will take longer to assess the psychological and cultural damage. 

      This will, of course, be compounded by the incalculable effects of the COVID-19 pandemic, not just on the economy, but on the entire youth of the nation. This is occurring at a curious moment of history, marked in recent decades by the vaunted interdependence associated with the idea of globalization. The edifice has begun to shatter, with nothing stable in view to replace it. Sheena Francovich may be right to say that any nation’s independence makes no “economic sense” — but neither does dependence.

      On Sunday, for the first time, pro-independence parties have won a majority in Catalonia’s regional parliament, putting pressure on Spain to take into account a powerful centrifugal force that has been building for some time. The Catalans are already watching closely the drama unfolding in Scotland, hoping the much clearer case for Scottish independence prevails. Fragmentation as a reaction to decades of forced globalization may become a dominant trend of the 21st century.

      It doesn’t even stop there. The world has entered into a new era of uncertainty concerning the way people imagine their future. This has always been the biggest intangible factor of stability for any society. Political and cultural disarray has become the norm throughout the West and across much of the globe, including another “united” nation, the USA. The events of January 6 in Washington, DC, may portend the disunifying of the entity celebrated as “one nation, indivisible,” a scenario difficult to imagine. There are nevertheless telltale signs of serious cracks in the national narrative that, unlike the Liberty Bell in Philadelphia, famous for its crack, offer no reassurance about a tranquil future.

      Historical Note

      The UK became united only slowly and in a largely haphazard way. When Elizabeth I, the Virgin Queen, died in 1603 leaving no successor to perpetuate the Tudor line, the rules of monarchy required seeking a new king among her cousins, the Stuarts. The nearest of kin was the reigning king of Scotland, James VI, son of Mary Stuart, Mary Queen of Scots, who was martyred by her cousin Elizabeth for remaining loyal to the Catholic faith. Elizabeth’s father, Henry VIII, to seal his divorce from Catherine of Aragon, had assumed the equivalent of papal authority over the newly created Anglican Church. 

      The accession of the king of Scotland, who now became James I of England, established the Stuart family as future heirs to the throne. All did not go well. James’s son, Charles I, was dethroned and decapitated by Oliver Cromwell after a civil war in which the Roundheads (the anti-Anglican Puritans) defeated the Cavaliers (the royal army).

      When, following the restoration of the monarchy, James II, son of Charles II and grandson of James, declared his Catholic faith and, to add insult to injury, had a son with his Catholic wife, the defenders of Protestant England were upset enough to stage a coup. A bloodless revolution took place. The Protestant establishment celebrated it as the Glorious Revolution. Luckily for the revolutionaries, James II’s first daughter, Mary, had had the good sense to marry a Dutch Protestant, William of Orange, and the couple were called back from the continent to reign over England.

      Mary’s sister Anne became queen in 1702. Under her reign, the Acts of Union were ratified by the English and Scottish parliaments respectively, creating the United Kingdom of Great Britain. The 18th century witnessed the rapid expansion of the British empire. Scotland tagged along with the triumph, though sometimes grudgingly. The last attempt at securing Scotland’s independence was led by the Stuart pretender, Bonnie Prince Charlie, who had returned to Scotland from France via Ireland. The Scots and their allies were defeated ingloriously at the 40-minute battle of Culloden in 1746 by the equally inglorious duke of Cumberland, known to this day as “Stinking Billy.”

      Though the Scots quickly gave up on the hope of a Stuart restoration, they have never really forgotten the humiliation of Culloden. Brexit, for many Scots, is another Culloden.

      *[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news. Read more of The Daily Devil’s Dictionary on Fair Observer.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More

    • 113 Shares179 Views

      in World Politics

      The Brexit Deal Presents Opportunities for a New Partnership

      by

      It was agreed almost at the last minute: The Trade and Cooperation Agreement (TCA) between the European Union and the United Kingdom, signed on December 30, 2020, prevented a no-deal Brexit just one day before the end of the transition period. Four and a half years after the referendum, relations between the EU and its former member state have thus been put on a new footing. It is a considerable achievement of the negotiators on both sides that such a complex agreement was reached despite the adverse conditions.

      Yet the end result, due to the British quest for sovereignty, is a (very) hard Brexit. Although the movement of goods will continue with zero tariffs and zero quantitative restrictions, many new non-tariff trade barriers will arise when compared to single market membership. Services, including finance, are largely excluded from the treaty, and with very few exceptions, the British are leaving European projects such as Erasmus. London has also excluded foreign and security policy altogether from the institutional cooperation with the EU.

      Brexit Trade Deal Brings Temporary, If Not Lasting, Relief

      READ MORE

      Despite the restricted market access, the EU can claim to have achieved the inclusion of comprehensive instruments to ensure fair competition, a level playing field. This includes the possibility of reintroducing tariffs and other trade restrictions should there be a significant divergence in labor or environmental standards in the future. Both sides have achieved their remarkably defensive goals: Boris Johnson gets his hard Brexit, and the EU was able to defend its single market and its standards.

      To Be Built Upon

      The original idea of an “ambitious and deep partnership” between the EU and the UK, however, has fallen by the wayside. In the first few weeks of 2021, the EU and the UK have already squabbled over vaccines and the status of the EU ambassador in London. Nevertheless, if used wisely, the agreement could represent the low point in British-European relations, from which a new partnership emerges after the difficult Brexit negotiations. However, there are five reasons the TCA could enable an improvement in relations.

      First, the trade deal does not mark the end of negotiations between London and Brussels. The agreement itself provides for a review after five years — that is, just under six months after the likely date of the next UK general election — in the course of which relations can also be deepened again. There is also a review clause for the Northern Ireland Protocol in 2024, transition periods for energy cooperation and fisheries, and further talks on data exchange and financial market services in 2021. Similar to Switzerland, there will be almost constant negotiations between the EU and the UK, albeit at a less politically dramatic level than recently. It is precisely this de-dramatization of relations that offers an opportunity to restore trust and improve cooperation.

      Second, the agreement is designed to be built upon. It establishes institutionalized cooperation between London and Brussels with an EU-UK Partnership Council and a number of specialized committees, for example on trade in goods, energy cooperation and British participation in EU programs. It is explicitly designed as an umbrella agreement into whose overall institutional framework further supplementary agreements can be inserted.

      Continued Interdependence

      Third, economic relations will remain important for both sides despite new trade restrictions. The geographical proximity, the close integration of supply and production chains in many economic sectors, and the mutual importance in trade will ensure continued economic interdependence. The EU remains by far the largest export market for the UK, which, in turn, as the second biggest economy in Europe, will also continue to be a major economic partner (and competitor) for the union. Added to this are the level playing field provisions of the TCA, with both partners committing to maintaining existing EU standards as far as they affect trade and investments, and incentives have been created to keep pace with new standards.

      .custom-post-from {float:right; margin: 0 10px 10px; max-width: 50%; width: 100%; text-align: center; background: #000000; color: #ffffff; padding: 15px 0 30px; }
      .custom-post-from img { max-width: 85% !important; margin: 15px auto; filter: brightness(0) invert(1); }
      .custom-post-from .cpf-h4 { font-size: 18px; margin-bottom: 15px; }
      .custom-post-from .cpf-h5 { font-size: 14px; letter-spacing: 1px; line-height: 22px; margin-bottom: 15px; }
      .custom-post-from input[type=”email”] { font-size: 14px; color: #000 !important; width: 240px; margin: auto; height: 30px; box-shadow:none; border: none; padding: 0 10px; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-pen-icon.svg”); background-repeat: no-repeat; background-position: center right 14px; background-size:14px;}
      .custom-post-from input[type=”submit”] { font-weight: normal; margin: 15px auto; height: 30px; box-shadow: none; border: none; padding: 0 10px 0 35px; background-color: #1878f3; color: #ffffff; border-radius: 4px; display: inline-block; background-image: url(“https://www.fairobserver.com/wp-content/plugins/moosend_form/cpf-email-icon.svg”); background-repeat: no-repeat; background-position: 14px center; background-size: 14px; }

      .custom-post-from .cpf-checkbox { width: 90%; margin: auto; position: relative; display: flex; flex-wrap: wrap;}
      .custom-post-from .cpf-checkbox label { text-align: left; display: block; padding-left: 32px; margin-bottom: 0; cursor: pointer; font-size: 11px; line-height: 18px;
      -webkit-user-select: none;
      -moz-user-select: none;
      -ms-user-select: none;
      user-select: none;
      order: 1;
      color: #ffffff;
      font-weight: normal;}
      .custom-post-from .cpf-checkbox label a { color: #ffffff; text-decoration: underline; }
      .custom-post-from .cpf-checkbox input { position: absolute; opacity: 0; cursor: pointer; height: 100%; width: 24%; left: 0;
      right: 0; margin: 0; z-index: 3; order: 2;}
      .custom-post-from .cpf-checkbox input ~ label:before { content: “f0c8”; font-family: Font Awesome 5 Free; color: #eee; font-size: 24px; position: absolute; left: 0; top: 0; line-height: 28px; color: #ffffff; width: 20px; height: 20px; margin-top: 5px; z-index: 2; }
      .custom-post-from .cpf-checkbox input:checked ~ label:before { content: “f14a”; font-weight: 600; color: #2196F3; }
      .custom-post-from .cpf-checkbox input:checked ~ label:after { content: “”; }
      .custom-post-from .cpf-checkbox input ~ label:after { position: absolute; left: 2px; width: 18px; height: 18px; margin-top: 10px; background: #ffffff; top: 10px; margin: auto; z-index: 1; }
      .custom-post-from .error{ display: block; color: #ff6461; order: 3 !important;}

      Fourth, the willingness of both sides to make compromises to avoid a no-deal Brexit paradoxically also clearly revealed the common interests despite the difficult divorce. For example, the TCA declares climate policy to be a shared interest, in which the UK will play a central role in 2021 by hosting the next climate summit together with Italy. Opportunities will also present themselves here for trilateral cooperation with the new US administration. The continued participation of the British in a small number of EU programs, such as the EU’s Copernicus Earth observation program and parts of the data exchange in home affairs and justice policy, is also stronger than expected.

      Fifth, with the combination of the Withdrawal Agreement and the TCA, Northern Ireland has become a shared responsibility of the UK and the EU. In order to keep the border open with the EU member state of the Republic of Ireland, the rules of the EU single market will continue to apply in Northern Ireland, whereas a trade border has been created in the Irish Sea between Northern Ireland and the rest of the UK. Any deviation from EU standards will now require the UK government to weigh not only whether this breaks the level playing field rules — thus allowing the EU to erect trade barriers — but also whether new intra-UK trade barriers with Northern Ireland are created.

      The EU equally has a responsibility in the interests of its member state Ireland to work with the British government to ensure that these complex arrangements work as smoothly as possible so as not to jeopardize peace in Northern Ireland.

      The trade treaty, which came into being under great pressure, both temporal and political, thus achieves one thing above all — the creation of a foundation on which British-European relationship can be reconstructed. Hard Brexit is now a fact, and the step from EU membership to a third country with a trade agreement has been completed. But negotiations are from over: As neighbors, the EU and the UK will continue to negotiate and renegotiate their relationship in the foreseeable future. It is now up to the political leadership on both sides to determine how this foundation is used. The EU and Germany should be open to building on this foundation with options for deepening cooperation in areas where there were gaps left behind by the TCA due to time or political circumstances.

      *[This article was originally published by the German Institute for International and Security Affairs (SWP), which advises the German government and Bundestag on all questions related to foreign and security policy.]

      The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy. More