Britain’s Treaty of Versailles

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“Vote leave, take control” was the slogan of the “leave” campaign during the run-up to the vote on whether the United Kingdom should exit the European Union. With 17 million people voting in favor, it is impossible to say whether the vote was primarily about issues like immigration, the fishing industry, or others. Given the slogan, however, it is possible to say that every one of those voters wanted to “take control” of future lawmaking from Brussels. Despite this, British Prime Minister Theresa May has negotiated a deal with the European Union that actually cedes further control over British law to the EU, and has given the EU a veto over Britain extracting itself from the deal. The deal makes Britain a vassal state of the EU.

For a thorough explanation of just how bad this deal is, I recommend Martin Howe QC’s thorough treatment at the Spectator (registration required), and his further examination of the deal’s “political declaration.” A shorter version of the article on the declaration appeared in the Sunday Telegraph under the title “May’s capitulations are catastrophically incompetent.” A hundred years after the original, May’s deal could be a new Treaty of Versailles—except that Britain did not have to lose a war to be subjected to such humiliating terms.

The key points to note are that the deal is essentially open-ended, and that the entire EU must agree to any proposal to replace it—which gives leverage, for example, to Spain to demand sovereignty over Gibraltar or Cyprus to demand control over the strategically important British bases there. In the meantime, Britain has to accept EU law, but is excluded from “the nomination, appointment or election of members of the institutions, bodies, offices and agencies of the Union, as well as the participation in the decision-making and the attendance in the meetings of the institutions” (Article 7 of the agreement). As Howe says:

This is true vassalage, during which we will be required to abide by laws which we have no vote in shaping. There are no legally effective safeguards in the Agreement against the EU making changes to its laws which actively damage vital UK industries such as financial services.

In other words, legislation without representation. The American colonists were better off.

Nor is there any meaningful form of arbitration when disagreements occur. In fact, a wholly foreign court will have jurisdiction over the UK’s law. The UK will be subject to the EU’s Court of Justice, without being a member of that court. The “arbitration panel” will also defer to the ECJ.

Needless to say, with these principles in place, the UK will have less freedom from EU control than it does as an EU member. There will be no possibility of the deregulation that both the UK and the EU desperately need. The deal doesn’t just damage Britain’s vital national interests; it damages America’s as well. Trade deals with third parties like the United States are out of the question. The declaration envisages the UK being tied into EU’s military structures, something that should raise eyebrows at the Pentagon.

How could the UK have ended up here? It appears all the blame lies with Prime Minister May. Daniel Hannan MEP outlines the sequence of bad decisions, most foolish of all the acceptance of an “Irish backstop,” that led to this sorry state of affairs. The “backstop” could end up with Northern Ireland being essentially ruled from the EU even if the rest of the UK somehow extracted itself from the deal. This is an astonishing concession from the Conservative and Unionist party leader.

As Hannan explains, the source of all these decisions seems to have been May’s belief that the leave vote was about immigration, which is fundamentally mistaken. She also appears to have decided that British business should suffer as little disruption as possible the day after Brexit, which led to her capitulation over accepting EU trade terms.

As Rory Broomfield and I pointed out in 2016, Britain’s attachment to the EU is a Gordian Knot, which is proving impossible to unravel strand by strand. It has instead to be cut, which will inevitably cause disruption. The key to minimizing disruption while taking back the control the voters demanded was preparation—creating a new institutional framework to replace the EU’s while negotiating a series of separate deals in areas like aviation access that are currently subsumed in the EU structure.

It is ironic that May’s deal, if defeated in Parliament, may bring about just such a full exit—the EU has said there is no other deal on offer. However, with Brexit due to happen by law at the end of March 2019, there is virtually no time to create such a new framework or negotiate these separate deals. Britain will likely suffer a severe economic shock under a No Deal exit, and Brexit itself will be blamed.

However, if Britain’s government were to react the right way to such a shock, history suggests the country could recover quickly. What Milton Friedman called “the tyranny of the status quo” would end, and Britain would be free to adopt free market policies of the kind that helped West Germany recover quickly after the end of rationing and price controls in 1948.

Unfortunately, an alternative scenario is equally possible. The Conservative government could fall and a far-left government could take its place. Britain would then be subject to the sort of redistributive and punitive policies it has not seen since the 1950s. Those policies helped make Britain the “sick man of Europe” and propelled its entry into the European Economic Community, (as it then was called) in the first place.

The May government’s failure to grasp what is at stake with Brexit—and British businesses’ refusal to countenance any change from the tyranny of the status quo—may have doomed Britain’s economy for the near future. The damage to its institutions will be far greater. Britons are unlikely to forgive Theresa May for inflicting that damage.