Leavers' Remorse: Why Brexit May Never Happen

Now the British citizenry will at least know what it feels like to be an American in Europe! With their stunning 52-48 decision to opt for "door number one" -- leave the European Union -- without knowing much, if indeed anything, about what's behind it, voters in the United Kingdom literally cast their fate to the winds (or to the windbags who led the Brexit campaign). It turns out that what's behind the exit door is both too little (as the EU leadership quite quickly made clear, Britain won't get to cherry pick the terms of exit by keeping free trade without free movement of workers) and -- by way of the Leave campaigners' shifty and shameless overbooking the overstated savings from elimination of the UK's annual European Union dues -- too much! It is apparent that the billions supposedly saved by Brexiting have been promised by the Leave campaigners to so many separate and distinct British constituencies that only a "loaves and fishes" level of miracle could square accounts -- and the Lord would seem to have other things to do.

Fortunately for Leave leaders like former London Mayor and erstwhile UK Prime Minister Boris Johnson, British bicycles are capable of backpedaling, which Johnson has been doing since the vote results were announced faster than Donald Trump's Twitter finger.

Speaking of triggers, the so-called "Article 50" invocation notice under the EU treaty that would officially set in motion the process of the UK's divorce from the European partnership (and also activate the power of any member state to veto any attempt by the UK to reverse course and stay "IN"!) seems to be hotter than an Irish potato in a Dutch oven.

Brexit is a bit like a victory nobody in quite wants to own enough to pull the ripcord just yet. Prime Minister Cameron, who kept his campaign promise to hold the referendum and paid the price of his office for that blunder, has refused to invoke Article 50 and instead passed that "poisoned chalice" to his Tory successor, who is to be chosen by early September.

The "poison," of course, drips from the fact that whichever prime minister officially files the divorce papers will most assuredly "own" the exit decision and all its consequences (which financial/currency markets in the UK and around the world are saying loud and clear ain't looking so good, given credit rating downgrades and housing price vulnerabilities).

The collapse of the British pound and the trading market losses in the two days following the Brexit vote were worse than levels from previous crises, as they discounted the future of a UK economy where aging working class voters in depressed areas somehow were led to cast votes against an EU that was both a prime source of budget subsidies for their region and of jobs with manufacturing concerns that located in the UK precisely to gain access to EU markets!

It would seem that intense anger about a perceived increase in legal (under the EU) immigration -- a prime theme of the most extreme Leave campaigners, such as Nigel Farage of the UKIP Party -- trumped even the most basic economic self-interest for these voters, who now face a future without EU assistance, without British government assistance from EU dues savings already promised several times over to other areas, and without the jobs provided by EU-oriented manufacturers. Brexit is turning out to be an example of "cutting off your nose to spite your face" worthy of Sweeney Todd.

The Brexit referendum need not become a suicide pact. As a legal matter, the Brexit vote is not binding on Parliament, which will need to authorize and set the terms for the negotiation of Britain's exit from the EU under Article 50 process. Some have suggested that Parliament simply move to secede like South Carolina and dare the EU to sue the UK for damages or whatever other remedy would be imposed on a renegade member walking away from its obligations. Given the number of UK citizens living and working in the EU, this approach is highly unlikely, however, and it is simply not allowed under the Article 50 rules.

Thus a negotiation of "divorce" will be necessary to effect a Brexit; but this will be a first-of-its-kind divorce. There is no precedent or roadmap for it, but other European countries have worked out over time different forms of relationship with the EU that could serve as models for the UK going forward. The most appealing seems to be the Norwegian model, which includes most of the free-trade aspects of the EU (except regarding agricultural products) but requires Norway to live up to the EU norms for free movement of EU nationals to live and work there.

The question is whether the Norway option will be palatable to the Leave side, which campaigned to keep all the benefits of membership, like free trade of goods and services across the EU borders, but without the financial obligations -- and especially without commitment to the free movement of member citizens across those borders. These are concessions that few, if any, EU leaders are willing to contemplate, especially newer members from Central Europe who have already compromised on benefit restrictions for their citizens living and working in the UK.

Some have spoken of an "associate" relationship status for Great Britain with the EU. It's most unlikely that the UK would pursue the position of Monaco as merely a minter of Euro currency, which the UK has no interest in adopting. Surely, it would also want to stay out of the "Shengen" passport-free zone grouping given the fears expressed by the Leave camp regarding both legal and illegal immigration, and especially refugees from the Mideast war zones. A status like that of Norway would come about through membership in the European Economic Area, which is governed by an agreement with the EU to abide by its rules as to the free movement of persons, goods, services and capital without actual membership in the European Union. Because, as noted, this type of arrangement would be anathema to the hard-right, anti-immigration hawks of the Leave side, it seems like a non-starter for them. And Chancellor Merkel has made it quite clear that Great Britain would have to accept free movement of persons to get the current benefits of free trade in goods, especially in the more important areas of services and capital.

That leaves only the current status of Turkey in the European Customs Union as the remaining model, or that of Switzerland as a part of the separate European Free Trade Area along with the aforementioned Norway, Iceland and Liechtenstein. Or Britain could simply go it alone and trade with the EU and its member countries just like the US under the rules of the World trade Organization. But these options are surely not the way to "Make Britain Great Again."

The best hope of the Leave campaign is that the EU's collective $100 billion trade surplus with the UK would bend the Union to Great Britain's will in the negotiations to have a form of exemption from the free movement of EU citizens to its shores. But Merkel's stance -- which amounts to the sort of "informal" discussion she says the EU will not carry out until the UK invokes Article 50 and comes to the table with its own proposition -- surely means that such a core principal of the EU is off the table. The Leave side seems to know this already: nobody from the Brexit side has talked about deporting the three million EU citizens now enjoying the "free movement" privilege of living and working in the UK.

More importantly, by her "non-negotiation" negotiation messaging, Merkel is also giving the UK "leadership" -- once it is reformed after Cameron's resignation and resolution of the Labor Party's leadership crisis -- time to think anew about the cliff they are heading over (see The New Yorker's cover of June 26) and consider the options for a "Bloxit."

In effect, Merkel has stepped away from the EU's "first responders," who sharply suggested the UK should move quickly to a divorce under Article 50 (a course Cameron has cannily rejected in any event), and spiked the already poisoned chalice of the next prime minister by making abundantly clear that the Brexit "vision" -- such as it was -- of having Britain's cake and eating it, too, amounts to pure fantasy, and that much more pain will come once the new PM invokes Article 50 and its two-year clock starts ticking (no deal by then means Britain is simply OUT, with no privileges or concessions of any kind). Merkel has shown before, in the series of Greek financial crises, that she knows how to play a winning hand (especially one leveraged by the rules) and also how to leave room for a face-saving capitulation. Whoever's trigger finger is on Article 50 could start to get very shaky, and the prospects for no Brexit at all may start to attract respectable betting odds.

The fact that both major UK political parties, neither of which covered itself with unified glory in the referendum campaign, are in the process of changing leadership may tempt both new teams to push for a new election, which could turn on the question of whether the government of the day should trigger Article 50 -- not to do so would be a de facto do-over, which could be just what the UK needs!