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Brexit: Geopolitics trumps economics

Whilst the UK has been staring at its political navel for several days yet, developments in the rest of the EU have been crowded out by the shrill response of constitutional ignoramuses concerning Article 50 (1) and (2) writes Tim McNamara.

It should be noted that it is of little interest to the EU27 how the UK starts the divorce proceedings, as there appears to be little prospect (for now) of the UK Government changing its position. The EU27 still presume that the timetable for invoking Article 50 will remain the same and little appetite in the rest of the EU for a further delay.

What has occurred, in Germany especially, has been developments of a highly significant nature. that do not auger well for a ‘smooth Brexit’ from a UK point of view. If those forces in May’s government who believe that economic self-interest will be the major driving force of the EU’s negotiating position, they are in for a very nasty surprise.

As in any international negotiation, the self-interest of each individual sovereign states paramount. All decisions/compromises/negotiating strategies and tactics flow from that basic principle. To understand the position of parties is to understand not just their ‘red lines’ but their core interests.

It is apparent that elements within the UK government seems not to yet understand that this is not a zero-sum game based purely on economic self-interest. Government ministers such as Fox, Johnson, Davis, Grayling etc seem to cling to a naive belief that since the EU exports more to the UK than the other way round, then market-based analyses point to only one way forward in the upcoming divorce proceedings.

It simply won’t be an economics-driven reductionist process akin to a double-entry accounting  exercise conducted by bean counters. It should also be noted that most German exports to the Uk are high-end manufacturing. Not only are these type of exports fairly immune to price sensitivity they are also extremely difficult to replace (fungibility) by either domestic sources or imports from elsewhere.

The fungibility of exports is especially relevant if a trade war were to break out, if German car exports to the UK were to suffer from price sensitivity because of tariffs, the reverse would apply to UK exports to the EU. Since the UK exports more cars to the EU than it imports, there would only be one loser in such disputes. Yet, this relatively small beer when taken in the context of German foreign policy and its consequent geo-political interests.

Matthais Wissman, the president of the German Association of the Automotive Industry recently stated that  “The UK is important market for the German car industry but cohesion of the EU and the integrity of the single market is more important for us.”

This a clear a signal as you can get that Germany’s geo-political interests (such as the medium to long-term stability of the EU) will be fat more important than it’s national commercial interests. This includes the viability and sustainability of the eurozone.

Germany perceives Brexit as a strident form of geo-political vandalism that could be highly damaging to its core interests. Those core interests (Political, economic, military, social) are vested in the viability of the European Union. Anything that is seen to threaten the integrity of the EU is by extension a threat to Germany.

This will include the interests of the French government who have been Germany’s main strategic partners for over 50 years. The Germans will not allow the UK to pursue a policy of divide and rule across the continent as this would be the antithesis of German foreign policy goals for two main reasons. EU integrity per se AND the current threat of Russia.

it is blatantly apparent that the UK will not be able to have its Black Forest gateaux and eat it.

Tim McNamara is the editor of www.policyreview.eu 

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