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It’s starting to heat up in Brexit-land after 17 months of jockeying for position, and this month more than any month since June 2016 might indicate whether UK Prime Minister Theresa May’s critics are right or wrong.
Will Theresa May travel confidently to the European Union this week to explain what she expects to receive in exchange for offering a £40 billion divorce payment? Or will she arrive and meekly accept whatever crumbs fall from the EU master’s table?
The result will determine what Prime Minister Theresa May will be called for the rest of her political life — she’ll either be known as ‘Theresa the Brilliant’ or ‘Theresa the Appeaser’ — or worse variations of those two titles.
Why Would the UK Choose to Offer £40 billion to the EU?
Certainly, the UK has pension and other legitimate obligations to the European Union that must be covered in the post-Brexit timeframe, no one is disputing that.
Also important to this discussion is that the UK has been and remains the second-largest contributor to the EU budget and is thereby part owner with the European Union of many shared buildings and properties — like the EU Parliament building in Brussels, for instance. (Total UK equity in the EC/EEC/EU institutions and real estate could be as high as £9.65 billion, although it’s difficult to find agreement on the amount)
So the question becomes; What’s the UK paying for, when it offers apropos of nothing, £40 billion?
Clearly, it isn’t to cover the legitimate obligations of the UK post-Brexit which amount to £6.15 billion, nor does it factor-in the UK’s share of the EU’s institutional equity — some £9.65 billion worth of land, buildings, and other holdings.
Indeed, Germany (#1) and the UK (#2) have paid the largest share of the EC/EEC/EU’s operating budget since 1972, and in recent years the UK’s annual net payment to the EU has hovered around £8 billion.
Therefore it would seem that the £40 billion offer to the EU isn’t to pay future obligations, but that PM Theresa May has decided to pay in advance for (a) a bespoke free trade agreement with the European Union, (b) a bespoke Northern Ireland border agreement, and (c) to clear every single miscellaneous issue so that Brexit can proceed quickly.
And if that’s the Prime Minister’s thinking, it seems sound logic although it could be seen by some pundits as an expensive way to go.
Q: “Could I Have a Nice and Clean Brexit?”
A: “That Will be £40 Billion, Please.”
If Prime Minister May gets a nice clean Brexit, the UK can then sign free trade agreements with most of the countries and trading blocs in the world, in addition to maintaining a healthy trading relationship with the European Union which accounts for 15% of all global trade.
In addition to that, such a bespoke Brexit payment should guarantee perfect cooperation on a soft border between the Republic of Ireland and Northern Ireland.
It should guarantee that the European Court of Justice won’t comment or interfere on UK matters, and it will simply become one of many global courts that UK judges consult when making precedent-setting rulings.
And because in the whole history of the world there has never been such an unprecedented £40 billion divorce payment, Prime Minister Theresa May and every subsequent UK Prime Minister should be entitled to the utmost respect in EU capitals until the year 2100.
It Sounds Expensive, But It Isn’t
Once the UK signs free trade agreements with China, with all of the UK’s Commonwealth partner nations, with the United States, and perhaps ASEAN nations, MERCOSUR, Russia and its CIS partners, African Union member nations, and with other free trade associations like the Pacific Alliance, the UK will dramatically ramp-up exports to more than five billion people around the world.
If the Prime Minister and her negotiators can sign reasonable free trade agreements with much of the world immediately post-Brexit, it means that instead of paying the EU a net annual payment of £8 billion — increased exports and other positive economic activity (such as increased tourism) will boost the UK economy by £10 to £20 billion annually.
Making Theresa May’s present plan look brilliant, in retrospect.
A Slight Lag, Followed by Economic Boom
Although the first year won’t show instant results, and it depends on the quantity and quality of those free trade agreements and upon how quickly UK exporters can respond to the changed market, as time rolls forward, paying £40 billion to the EU in order to gain a bespoke Brexit and Free Trade Agreement might seem like an exceptionally wise decision by Theresa May.
At the very least and to get the ball rolling in the first few days after Brexit, the United Kingdom could coordinate military procurement with other Commonwealth of Nations countries so that navy destroyers, frigates, coastal patrol craft and army tanks required by Commonwealth countries could be sourced from the United Kingdom. The bonus of such a plan is that through bulk purchasing power and common design parameters, such military equipment costs could be reduced for all member nations.
That plan has ‘instant success’ written all over it because there is a real need among those countries for new and used UK military equipment.
Either Theresa May is one of the brightest politicians of our century (paying £40 billion to get free of the EU more quickly and completely, and by obtaining a bespoke UK/EU free trade agreement) or she’s heading off to Brussels this week to accept whatever crumbs the EU mandarins toss her way.
As the entire country waits this week for the news reports, let’s hope she’s the former.
On June 23, 2016 the United Kingdom held an historic referendum so that voters could decide whether they wanted to leave the European Union governance architecture and over 52% of UK voters elected to “Leave” the EU.
Subsequent divorce negotiations between the two sides have been sporadic with short bursts of progress.
In recent days, UK Prime Minister Theresa May suggested to EU negotiators that a figure of £40 billion would be an appropriate amount for the UK to pay the European Union as a sort of “divorce fee” to allow the UK to leave while still gaining a favorable post-Brexit trade deal with the European Union.
However, the day after PM May suggested the £40 billion divorce payment, her government tabled an autumn budget with massive budget reductions for the already cash-strapped British military, one assumes to be able to afford the unprecedented divorce bill that the UK must now pay before March 29, 2018.
This blog post discusses the pros and cons of UK Ministry of Defence cuts and suggests a better way to afford the Brexit divorce bill.
The Responsibility of Government
The Number One responsibility of every government in the world is the protection of the country’s citizens and the sovereignty of the national borders. Everything else by definition, must be of lower importance. That’s how countries work.
Yes, even the UK’s cherished and highly ranked National Health Service (NHS) funding must fall to second place behind the safety and security of the country — as the NHS could (if worst came to worst) access significant billions in funding via corporate sponsorship — an option not open to the military.
How to Determine Military Funding
The size, composition and funding of the UK military MUST be determined by its overall mission — not arbitrary decisions by bureaucrats. Full stop.
(NOTE 1) Long-term stable defence funding is far better than generous amounts one year, followed by low funding the next (due to arbitrary budgetary decisions not based on actual military need) and then, who knows what funding they might get the year after? It’s the absolute worst way to fund a military. Pencil-pushing bureaucrats might as well be working for the enemy at that point.
(NOTE 2) This blog post isn’t “for” or “against” Theresa May or Philip Hammond, it’s a general statement on how to best fund any military, anywhere.
(NOTE 3) This blog post is based solely on the opinion of its author, although any military officer in the world would agree were they to view it from the UK perspective.
So, what is the mission – in order of priority?
- Absolutely 100% protection of the land, sea and airspace around the UK.
- NATO commitment.
- Commonwealth mutual aid.
- United States mutual aid.
- Potential Commonwealth member mutual aid.
- Only UN Security Council approved missions (and never any unapproved foreign missions)
- Creation of a HUGE civil engineering department, on par with the U.S. Army Corps of Engineers which build many of America’s roads, bridges, dikes, levees, ports and other infrastructure too important to be left to corporations where profit makes the final decisions. Oh, by the way, the U.S. Army Corps of Engineers saves the American taxpayer more money than it costs when compared to having U.S. infrastructure projects built by corporations. The UK has missed “windows of opportunities bigger than the sky” by not building critical national infrastructure using the UK military under a USACE-style system, and it has cost multi-billions more that it should.
- Humanitarian assistance delivered to any natural disaster zone or human-caused crisis anywhere in the world.
Military forces perform better when their mission is clearly defined, when they have stable funding (and once the amounts have been promised by the government, untouchable) and have very clearly defined powers.
Tampering with this age-old formula for success is the surest way to help any military fail in its appointed role, and will work to demoralize the troops and cost the taxpayers much more than by using universally accepted practice.
- To watch a segment from LBC’s The Nigel Farage Show on the topic, click here.
- To read a related Westmonster.com blog, click here.
“It’s starting to get a little rich.” That seems to be the general opinion of UK taxpayers judging by the thousands of terse comments posted in the comments section of UK newspapers, on UK talk shows, and in places like YouTube where hundreds of Brexit videos (both pro and con) await your viewing pleasure.
But the general consensus seems to be that these extremely large numbers will require huge tax increases and may reflect badly on the Conservative Party’s chances in the next election.
It’s Fun, Fun, Fun, ’till Daddy takes the T-Bird away as the Beach Boys tune goes.
It’s great to make nice with the EU people and pay them billions in exit fees, but after a certain large number is reached taxpayers are likely to revolt, signalling the end of the Conservative reign for the foreseeable future.
Why Should There be a Divorce Bill at All?
This still, even at this late date, hasn’t been explained. AT ALL.
Not even Theresa May’s government seems to have received guidance from the EU Parliament or their negotiators as to why the UK should pay the outrageous sums demanded by the EU.
What’s it for? Everyone wants to know. The silence on this is deafening.
Both sets of numbers, whether proposed by the EU or the UK seem completely arbitrary to put it mildly.
Let’s Leave on Good Terms
Having said that, when you exit a marriage or a long-term business agreement it’s expected you don’t leave the other party in the lurch. Of course some kind of payment for loss of opportunity by the jilted party is de rigueur if you want warm trade relations to continue.
It’s also good business to NOT ask for wholly outrageous amounts of money (too late for that, I guess) otherwise, they risk ‘poisoning the well’ and even if trade continues, over time evermore billions of UK trade will be done with the U.S. and billions less with the EU.
What is Fair?
No change in money flowing across the English Channel for four more years (but no lump sum payment to the EU either) and Brexit can occur as scheduled on March 29, 2019 — but until then, the UK should continue to receive the exact same benefits from the EU as it will remain a paid-up member until that date. (Hey, no shorting us!)
After that date, the UK can continue to pay the EU the same £8 billion (net) for three more years — a full three years beyond Brexit day.
- Article 50 triggered March 29, 2017, therefore,
- March 29, 2017 to March 29, 2018 (£8 billion net)
- March 29, 2018 to March 29, 2019 (£8 billion net)
- Also, March 29th 2019 will be Brexit day, and after that date the UK will no longer be an EU member
- March 29, 2019 to March 29, 2020 (£8 billion net)
- March 29, 2020 to March 29, 2021 (£8 billion net)
- March 29, 2021 to March 29, 2022 (£8 billion net) and the final payment to the EU
Take it or leave it Mr. Barnier, or the EU won’t get to sell their goods to the UK after March 29, 2019 except under WTO rules.
Many UK citizens will miss buying BMW’s, Mercedes Benz, Volkswagens, etc. for a couple of weeks (hehehe) until the EU would come to its senses. I bet EU heads would roll if it ever came to that.
OK, Seems Reasonable Enough. But What Will the UK Get in Return?
Nobody seems to know…