Cyprus Mail

Looking beyond the Brexit gloom

Britain's Prime Minister Theresa May and her Polish counterpart Beata Szydlo

By Zenon Katsourides

Every day we are told that the UK is entering the Brexit negotiations not knowing what it wants. The UK Labour Party goes berserk about the lack of any plan and keeps on pressing the government to give them more details. Prime Minister Teresa May of course cannot oblige them because revealing her strategy to the opposition is equivalent to playing poker with open cards. Many claim that even with a plan the UK will be crushed by the weight of the 27 EU members which are supposedly infinitely more powerful than the UK and determined to drive a strong and unpleasant bargain.

When the prime minister of tiny Malta suggested recently that the EU was immovable and would not consider any of the UK’s proposals, his comments were prominently reported by the BBC and other anti-Brexit media. I sincerely hope the English tourists who usually flock to Malta in their thousands for their summer holidays will give it a wide berth in the future. The anti-Brexit group actually wants the forthcoming negotiations to fail so that Brexit can be recognised as a total disaster. They fail to understand that it is in everybody’s common interest for the government to obtain the best possible deal.

I believe there are very good reasons for thinking that the UK holds many more cards than accepted. In many respects the UK is more necessary than is assumed while the EU is in no state to hang the UK out to dry. Oddly enough, such a view has now surfaced in the Financial Times which until recently was a strong advocate against Brexit. Rather belatedly they are now hinting that the British have a strong hand to play during the forthcoming negotiations. In fact six months have passed and a lot of work has been done by the senior civil servants who eventually realised that the UK had a lot of leverage.

If you look at the economic and political mood of Europe, the British economy (whose immediate collapse was predicted by former chancellor George Osborne) will grow more quickly than the EU’s three other large economies i.e. Germany, France and Italy. Even taking into account the pessimistic assessment of the Office of Budget Responsibility, next year the UK is expected to grow more than either Italy or France.  All this in effect means that an economically weak European Union is in no position to attempt to strangle the British economy since such an act will make its own economy more precarious. More than a fifth of all German car production comes to the UK and therefore it is unthinkable that Germany will really risk damaging this by imposing import tariffs against the UK. Furthermore, the UK imports more goods from the EU than it exports.

That much was well known during the referendum campaign, but what has changed since then is the increasingly political instability of several European countries which more than likely will weaken any appetite the EU might have for a deadly fight with Britain. On Sunday Italian Prime Minister Matteo Renzi lost the referendum held on various constitutional issues. This means an upheaval of Italy’s economy and a close examination by the markets of all its near bankrupt banks.

The British prime minister recently held talks with her Polish counterpart who had written a newspaper article earlier that the EU must be prepared to compromise to secure a Brexit deal that works for everyone.

Such statements are based on common sense and also on an awareness of the UK’s vital security and defence contribution to the union even after it leaves. It is well known that already UK is or will be sending troops and aircrafts as well as military personnel to Romania and an armour division to Estonia. This is a result of Russian President Vladimir Putin’s aggression which leaves the EU vulnerable since nearly all members spend less on their defence than they should, and thus regard the UK as a much-needed ally. Funnily enough even the competitive French, with little love lost for Britain, privately admit that the GCHQ at Cheltenham has an intelligence facility which helps protect the whole of Europe and none of the other European countries can match this. Brussels last month warned Britain that “it would not be allowed to have its cake and eat it”. Surely the same applies for the EU countries because after Brexit, for the reasons detailed hereabove, their cake will be substantially smaller!

I believe that some of the unelected political showoffs such as Jean-Claude Juncker, the president of the European Commission, might like to appear tough and aggressive but reasonable political leaders who live in the real world and are answerable to their voters will be much more realistic and sensible. It is to me quite obvious that Europe needs Britain in more ways than one, and the EU is in no condition to punish the UK for deciding to choose its own destiny. England is a much smaller country (area wise) than Germany or France and up to June of this year double the amount of immigrants than before came to the UK, almost half of them from EU countries. The UK simply does not have the infrastructure to support such a level of migration. Furthermore, the British people have got fed up of having all the decisions by British courts or parliament overturned by the European High Court based in Brussels. After all the commissioners and other high ranking officers are appointed but not elected in exactly the same way that the Communist commissars ruled the Soviet Union.

I believe that at the end of the day, common sense will prevail and we will have a soft Brexit to the benefit of everyone.



Zenon Katsourides is a former director of the board of the Central Bank of Cyprus and former vice-president of the Cyprus Shipping Council

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