In Stratfor's annual and quarterly forecast, we said that if the British Parliament rejected the Brexit agreement, the United Kingdom would ask the European Union to delay the date of its exit. Today's developments track with those forecasts. While the possibility of a no-deal exit on March 29 cannot be ruled out, the chances of it happening have been significantly reduced.
The British House of Commons on March 14 passed a motion establishing that if lawmakers approve the Withdrawal Agreement the British government negotiated with the European Union by March 20, London will ask the Continental bloc to move the country's departure date from the bloc from March 29 to June 30. This would give Parliament time to approve the legislation necessary to ensure an orderly Brexit. The motion also outlines that if the Commons fails to approve the deal by March 20, the British government would ask Brussels for a longer, as-of-yet unspecified, delay, sufficient to allow negotiation of a different exit agreement. London said that if a lengthy delay was granted, the Commons would hold a series of "indicative votes" on the variations of an exit deal to better gauge lawmakers' objectives. Also on March 14, the Commons rejected a proposal to put a second referendum to a popular vote to determine whether the United Kingdom should indeed withdraw from the European Union.
What It Means
The March 14 vote suggests that the British government will put the Withdrawal Agreement, which has been rejected by the Commons twice in recent months, to a third vote next week. The government hopes that fears among hard-line Brexiteers in the Conservative Party that the divorce from Europe would be delayed for a number of months, if not years, would inspire them to change their votes in support of the deal. Those lawmakers object to the inclusion in the deal of the Irish backstop (the clause keeping the United Kingdom in a customs arrangement with the European Union to avoid instituting a hard border between Ireland and Northern Ireland until a solution to the border dilemma can be reached). However, whether enough lawmakers change their minds to approve the Withdrawal Agreement is far from certain; it was rejected by 149 votes on March 12.
The big questions now before the EU and UK are: How long should Brexit be delayed? And what will happen during the delay?
If the Commons continues to reject the Withdrawal Agreement, today's motion gives the British government a mandate to ask the European Union for an extension of the negotiation process under Article 50 of the Lisbon Treaty. The European Union is likely to accept this request, which would significantly reduce the chances of a disorderly Brexit on March 29. Over the next few days, then, the big questions before Brussels and London will be: How long should Brexit be delayed? And what will happen during the delay?
Whatever delay is agreed upon will be the result of a negotiation between the United Kingdom and the European Union. After all, London can request the extension, but it is ultimately up to the 27 remaining EU governments to grant it. The EU leaders will hold a March 21-22 summit, and Brexit will be one of the main topics. Not all of the bloc's leaders are on the same page when it comes to the duration of an Article 50 extension: While the Irish government recently suggested giving the United Kingdom an additional 21 months to negotiate a new Brexit plan, other governments support only giving it three more months, so that the United Kingdom does not have to participate in the elections for the European Parliament in late May.
In fact, those elections will be one of the main issues determining the final duration of the Brexit delay. If the United Kingdom is still an EU member on July 2, when the new parliament holds its first session, it will have to be represented in the supranational legislature. The commonly accepted interpretation of EU legislation is that would require the United Kingdom to hold elections in late May to fill its seats in the European Parliament. But the remaining EU governments can decide to, for example, extend the term of the United Kingdom's sitting parliamentary members, so that Britain can be represented without holding another election. At the end of the day, the decision of how to represent the United Kingdom in the European Parliament will rest on the ability of lawmakers from both entities to devise a solution so that the United Kingdom is not left in the awkward spot of needing yet another extension while lacking representation in the European body.
In asking for a Brexit delay, the British government will also have to present a plan to the European Union for what it will do with the time. The options on the table include a renegotiation of the existing exit agreement, drawing up a new agreement that seeks a softer Brexit, holding early general elections for the British Parliament, or putting a new referendum before the public. A referendum would be the least likely of those options, especially if Theresa May's government remains in power.
Looking for Alternatives
In the meantime, hard-line Brexiters are looking for legal justifications to accept the existing WIthdrawal Agreement. Some members of the Conservative Party fear that the Irish backstop would mean that the United Kingdom would become trapped indefinitely in the EU Customs Union, as the agreement does not allow it to exit the arrangement unilaterally. These hard-liners have been seeking legal advice on whether the United Kingdom could invoke Article 62 of the Vienna Convention, which allows countries to exit international agreements unilaterally if the conditions under which those agreements were struck change substantially. The hard-liners hope that, even if London accepts the Irish backstop, it will have an option to withdraw from it in the future. But even if legal justification is found, a unilateral withdrawal from the Irish backstop would risk creating bad blood between the United Kingdom and the European Union. And that would reduce the chances of reaching the comprehensive free trade agreement between them that London desires. Ultimately, the European Union will retain the upper hand in negotiating London's withdrawal terms given the United Kingdom's overriding need to successfully negotiate a deal with its largest trading partner.