Brexit: It Is a Matter of Interests!

There are a bunch of roads around where I live in Dublin called Palmerston Road, Temple Road, Cowper Road; each called after Lord Palmerston (1784-1865) and his wife. Temple was Palmerston’s surname while his wife was Countess Cowper. Of course, this side of Rathmines was never noted as a nationalist stronghold; quite the contrary, in fact. But it shows how popular Palmerston was.

But why should this be of any interest to anybody in 2016? Well, it certainly may if you are interested in Brexit. Lord Palmerston is famously remembered for his reaffirmation of the famous dictum on foreign policy, “Nations have no permanent friends or allies, they only have permanent interests”.

Indeed, this was a dictum that underpinned his policies as Foreign Secretary and later as Prime Minister of the UK. It appears to have stood the test of time. Leafing through the history of British Petroleum or of how Britain gained control of India will bear this out. The so-called Brexit negotiations will be no different if they ever take place; it will all be decided on interests. This is where matters get complicated, and life ceases to be as simple as ‘in’ or ‘out’.

But, hasn’t Theresa May on her first day at work said in public, “There will be no attempt to stay inside the EU?” Didn’t she stress on her arrival at Downing Street that, “Brexit means Brexit”? Were these statements merely to offer assurances to those who voted to ‘leave’? Is there a clear commitment on her part to accept the referendum’s result? She says ‘yes’ now, and demonstrates this by giving up Britain’s 2017 presidency of the European Council. But what will happen if it transpires it is in the best interests of the UK to ‘remain’? Will she still say Brexit is Brexit?

As I have pointed out in an earlier blog, Parliament is supreme in the United Kingdom and referenda are consultative only. Indeed, the enactment of Article 50 will need parliamentary approval. Later in the week Mrs May went on record as saying she will not trigger Article 50 until the Scots have signed up: after all, Scotland voted by a large majority to ‘remain’, as did Northern Ireland, whereas England voted to ‘leave’. As a conservative and unionist, she is committed to keeping the Union intact, but will she be tempted to put the wishes of England to ‘leave’ above those of the Scots and the Northern Irish who want to ‘remain’?

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Will Theresa May be tempted to put the wishes of England to ‘leave’ above those of the Scots and the Northern Irish who want to ‘remain’?

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Let’s take two examples of interests from the motor industry. Sunderland, a small city in the North East of England, voted 61% to ‘leave’ the EU. But Sunderland is also the home of Nissan Motors which employs nearly 8,000 people directly, with a further 32,000 people working in the supply chain. If there is a threat that Nissan has to move part of its production line to the continent due to new tariffs, it will most certainly affect this 61% who voted to leave. Nissan produced nearly half a million cars in 2015 and many were destined for the EU market. Will Theresa May put this in danger by triggering Article 50 without having a good alternative for Sunderland?

Our second example relates to the German auto industry. Will Angela Merkel put a portion of the 820,000 odd German cars sold in the UK last year in danger due to a new tariff barrier? Will Merkel put the 6.9 bn Euros of sales of German engineering companies in the UK in danger if it affects German national interests? In fact will Merkel put the favourable German trade gap with the UK in danger? I doubt it. All sides will act in their interests.

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Will Theresa May put this in danger by triggering Article 50 without having a good alternative for Sunderland? Sunderland voted 61% to ‘leave’, but is also the home of Nissan Motors… Or will Angela Merkel put a portion of the 820,000 odd German cars sold in the UK last year?

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Even though Theresa May is well respected as an upright politician, we should never forget she has to be seen in the light of Lord Palmerston’s dictum. She is a pragmatic politician, so nothing is written in concrete for her; the circumstances will dictate. The union of the United Kingdom is high on her agenda. We can assume therefore that she will not be rushed in to trigger Article 50, as the French Government seems to want. She will wait until a workable alternative to the EU is in place before initiating Article 50 and not before.

The French may huff and puff but they can do nothing unless the UK decides to initiate Article 50. It’s Britain’s call. The outgoing Foreign Secretary, Philip Hammond, who is now the new Chancellor of the Exchequer, said last week in the House of Commons that the exit process could last up to six years. May’s first approach to the non-EU world was to Australia with an offer of a free trade agreement: we can expect other offers to non-European countries will follow. But these are merely possibilities at the moment.

Surely this will create more uncertainty? Germany will, without any doubt, insist that some level of certainty be restored as soon as it is practical. On the other hand, both the Germans and the French have elections next year and neither Merkel nor Hollande will want to have Brexit on their election agendas. So a long pause might suit everybody with the final aim of establishing a reasonable settlement for all.

These negotiations will be frustrating for many of the other 27 member states and if history is a guide we only have to read the early history of the Anglo-Persian Oil company which later became BP (British Petroleum), and Britain’s subsequent history in Persia, including the founding of modern Iraq and its oil industry to understand that Lord Palmerston’s dictum is the only game in town for everyone. Leopards don’t change their spots even if they are leopardesses! Indeed, a full Brexit may never happen; it will end in a compromise of interests.