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Brexit negotiations have long been stalled on an issue that may seem marginal. This is the UK’s right to grant government subsidies to British companies. This is because the EU has a framework that limits a national country’s opportunities for this. The idea is that you cannot have free trade between countries that are so close to each other if national governments can double their own industry with subsidies exactly as they wish. It just won’t be fair.
Therefore, the EU has been insisting for months that Britain must promise to adhere to EU rules on state aid even after Brexit. Otherwise, it is not possible to have a free trade agreement, they claim.
There are other difficult issues in the debate, including the question of the right of European fishermen to British waters. But here are signs that the EU may consider compromising. There is currently no state aid.
But then why doesn’t Boris Johnson commit? Why is the issue of state aid so important?
After all, Boris Johnson is a Conservative Prime Minister. Reasonably, he has no plans to distribute public subsidies to British businesses or to turn Britain into some form of socialist planned economy. And in practice, it is difficult to imagine a concrete situation in which Britain cannot help any of its industries after an economic crisis. And the stakes are high right now.
If the UK and the EU fail to reach a trade deal, the UK will leave the EU common market and the EU customs union on New Year’s Eve. No one knows what this will mean financially on January 1. There is no country that has done something similar before.
The UK will trade with the EU in accordance with WTO rules. This will mean high tariffs on everything from beef to cars, complicated new rules, and the risk of trouble in Northern Ireland. There may be food shortages. There may be a shortage of drugs and it will certainly affect British growth.
The UK is one of those countries in Europe, which has been the hardest hit by the economic pandemic. British growth fell almost 20 percent in the second quarter of this year, which was almost double that of Germany.
Why in the world is Boris Johnson prepared to take the financial risk of the century in such an uncertain situation? All because of the still quite marginal question of state aid? When Theresa May was Prime Minister, most of what seemed strange from the outside could be explained by the power struggle between her and Parliament. But Boris Johnson has a large and stable majority. He is the one who decides.
Maybe Boris Johnson is having a hard time deciding? Do you want a free trade agreement? Is it all just a way to blame the January troubles in the EU: “I did my best to avoid a hard Brexit, but now sadly, it happened anyway …”
However, one thing is for sure: Brexit has become a religion in the British Conservative Party. It is no longer about the practicalities. It’s about principles. The state aid issue has become a matter of principle: “At least the EU should not believe that the EU should continue to rule Britain even after Brexit.”
It’s like a regular divorce. In fact, everyone can conflict on the question of who should be the owner of the toaster if now the toaster has become a symbol of something greater. You do not love me! You never cared about me! You always thought only of yourself!
That is exactly what has happened in the Brexit negotiations. And that is why it is so difficult.
