So, a little thread on the challenges we face in #Brexit Round 9 and Boris’ backfiring IM Bill.

Despite (or perhaps, because of) the collapse in trust due to the IM Bill, a deal between the EU and UK can still be done. But it will come at a cost. And BJ will have to pay it.

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EU has made it clear it wont freeze FTA talks in response to the IM Bill. ‘Parallelism’ does not apply regarding implementation of NI Protocol. But EU27 will consider legal action once their deadline expires later this week.

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But BJ may anticipate this, and "want" it.

Nothing says “I’m tough on Brussels” than being sued by EU lawyers.

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So talks may continue, while legal steps are taken over the IM Bill.

The UK knows EU27 will only sign an FTA if the sensitive bits of UKIM are removed. But the EU knows the reverse is true as well: HMG can only withdraw the sensitive bits once an EU-UK deal has been agreed.
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And even a “thin” EU-UK deal with a pact on state aid has the benefit of making most of the sensitive parts of the IM Bill superfluous.

(No need to charge GB-NI tariffs when you have a zero-tariff deal)

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So, it’s in BJ’s interest to wait till after a deal emerges before adapting the IM Bill, so he can claim “My threat to violate international law has forced the EU to give me my FTA.”

(p.s. any legal procedures over the IM Bill will stretch beyond 31/12/2020.)

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The Finance Bill or a UK intention to leave the European Convention on Human Rights could add extra fireworks. But essentially the same dynamic could apply.

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So a positive reading of current developments is that this is all about creating a smoke screen for the Ultras at home.

Showing them, BJ means business.

While actually preparing the ground for concessions.

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At the negotiating table, if BJ wants a deal, he will have to move closer to the EU27 -- on state aid, LPF and governance – than the EU27 will move to him.

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This is perhaps why HMG has been briefing last week it is keen to go into “the tunnel”.

The tunnel is a place so dark, it won’t be immediately clear that BJ has made any concessions. In other words, it’s all about duping the ERG.

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With the negotiating teams navigating their way thru the tunnel, it won’t be immediately clear what U-turns BJ has made, giving BJ time to massage the Ultras in his party.

No surprise that some in the ERG are worried.

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This is why Brexiteers, like Steve Baker, have expressed concern that BJ’s IM Bill might be a prelude to a conciliatory move towards Brussels.

He may well be right.

After all, they know BJ has done this before.

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But alas, alas, because trust in the UK has collapsed in recent weeks, the EU27 have indicated they want clearer signals that BJ is ready to move in their direction before entering "The Tunnel."

This would suggest his IM Bill smoke screen may have hopelessly backfired.

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There are other reasons to be pessimistic.

BJ may not make a U-turn, not because he doesn’t want to, but because he can’t.

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Some say BJ needs a deal because his backbenchers are concerned about his handling of Covid19 and the economy, and the Tories are worried about Labour getting a boost (see recent polls).

To me this overlooks an important point.

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Given what BJ & Frost have been promising backbenchers for the past year, it seems like a bit of a stretch to assume those same backbenchers will be thrilled about BJ signing up to EU LPF guidelines & state aid.

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If backbenchers are angry with him now over Covid19, imagine their fury once he turns the UK into an LPF rule-taker.

Besides, the EU will now insist on tougher governance safeguards/ dispute settlement to underpin a deal. Again, the IM Bill smokescreen will have backfired.

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Given this, politically, for BJ the easy route might be No Deal.

Especially if BJ thinks a No Deal can be kept short.

(After all, we all know ‘No Deal’ won’t be the end of EU-UK talks, right? The uncertainty is over how long the No Deal intermezzo will be.)

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If he can keep No Deal short and sharp, BJ might bet that the economic disruption caused will silence the Ultras, and he can return to the negotiating table a freer man.

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He might bet wrong (and Cummings might be right), and the pain and disruption of No Deal is less than expected, and he’ll be all the happier for it. Hoorah!

But of course, if No Deal is long and painful, he’ll pay a political price.

/20

Assuming BJ wants a deal, this would be a tremendously risky bet, but he may see no other option.

There is of course another possibility, and that is the Ivan Rogers hypothesis that BJ actually doesn’t want a deal, and all this is about managing the blame game.

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The point is, there is little the EU27 can do about all this.

In fact, the EU’s ‘escalation’ in response to the IM Bill may be precisely what BJ wants.

Once again, Brexit will be determined not by dynamics in the EU, but by dynamics in and around No.10.

Happy Round 9!

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