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UK on the brink: Alarm and concern in India

There are more than 800 Indian companies based in the UK who do business with the EU from London. There are high end companies like Jaguar, under Indian ownership, which risk being adversely affected. A no-deal Brexit would restrict access of Indian companies to the Continent from London, writes Amb. Bhaswati Mukherjee (retd.) for South Asia Monitor
By Amb. Bhaswati Mukherjee (retd.) Jan 30, 2019
 
The Economist in February 2017 had pointed out: “Truly Brexit is May’s paradox”. The paradox is becoming clearer every day. Brexiteers had initially arrogantly ignored the long shadow cast by the future of the Irish border on Brexit. The European Union had insisted on the ‘backstop’ (a contingency plan to ensure movement of goods and services across the Irish frontier without any customs checks) in case future trade talks fail on the Irish border issue. This was furiously attacked across the political divide in the House of Commons, leading to its rejection on 15th January 2019, after five days of debate, by 432 votes to 202 votes. Prime Minster Teresa May’s own future remains in grave doubt. The Economist (January 2019) has termed the crisis: “The Mother of All Messes”.
 
May’s Plan ‘B,’ revealed to a packed House of Commons on 28th January, seemed curiously similar to her original Plan ‘A,’ rejected on 15th January. Its main concession was a vague promise that the Irish ‘backstop’ would be “changed”. She conceded however, that all options rule out a hard border between Ireland and Northern Ireland. Unfortunately, May refused to extend the 29th March deadline, imposed under Article 50 of the Lisbon Treaty, when UK had invoked Article 50 in the first instance. Nor did she rule out a no-deal Brexit, leaving open the option of a catastrophic crashing out of the EU, in the event of no agreement.
 
May’s obduracy led to back benchers in both parties urging for Parliament to vote to give itself the power to extend the deadline. Their view is that the present deal is not in the interest of the people. As people’s representatives, they have the moral responsibility to take control of the process. May insists that to ignore the result of the 2016 referendum would be to subvert the will of the people.
 
May’s opponents are in favour of new ‘trade-offs’ or even a second referendum. The trade-offs could be a permanent Customs Union with the EU or an arrangement similar to the one between EU and Norway. Both would require UK to compromise on some of the key demands of the Brexit lobby, including relinquishing the right to sign its own trade deals and accepting free movement between EU and UK.
 
In dramatic late night developments on 29th January and under euro sceptic pressure, the House of Commons narrowly passed a Government backed amendment pledging to replace the Irish backstop with ‘other arrangements’. May was given a two week deadline till 13th February to revive the deal. EU Council President Donald Tusk immediately announced that EU will not reopen the deal noting, “The backstop is part of the withdrawal agreement and the withdrawal agreement is not open to negotiation.” May left for Brussels on Wednesday (30th January) for negotiations.
 
Another amendment passed by a razor thin majority, of 318 to 310 votes, tabled by Labour MP Jack Dromey and Conservative Caroline Spelman, ruled out a no deal exit. This will be important during the final vote in end February 2019 when Parliament will finally decide on May’s amended package after her return from Brussels.
 
Amid this chaos, where does this leave EU and India? Writing for the New York Times, Steven Erlanger said: “Some of the smugness in Brussels has gone. They worry that what they have achieved may be a catastrophic success!” A hard exit will badly impact the EU economy since more than 40% of UK’s trade is with the EU.
 
Nor is the EU enthusiastic about extending the deadline, given the impending elections for a new European Parliament, scheduled to begin on 23rd May 2019. There are fears that an extended Brexit debate could increase populist and euro sceptic sentiment on the Continent. There are also crucial elections in some key EU member countries which could be affected by these developments.
 
The deadlocked negotiation demonstrates a fundamental flaw in the functioning of the EU as an intra-state entity. A Dutch philosopher Luuk van Middelaar recently noted: “Being an institution of laws and regulations, EU paid too little attention to the strategic and geopolitical importance of Britain to Europe, focusing on trade first, where Brussels held the cards, and security later”.
 
In India these developments are being followed with alarm and foreboding. There are reports that the Law Ministry has cautioned India’s Commerce Ministry that a no-deal Brexit is a matter of serious concern for India’s trade and industry and government must take legal recourse to protect India’s interests during the process, including through WTO.
 
There are more than 800 Indian companies based in the UK who do business with the EU from London. There are high end companies like Jaguar, under Indian ownership, which risk being adversely affected. A no deal Brexit would restrict access of Indian companies to the continent from London. Many companies are moving to Amsterdam or Dublin with the risk of increased costs in infrastructure and manpower. Some crucial sectors of the Indian economy likely to be affected are automobiles, auto-components, pharmaceuticals, gems and jewellery, education and IT enabled services. FICCI has noted that many of these sectors would be vulnerable to changes in demand and currency values.
 
The French and the Germans have started preparing contingency plans for a no-deal Brexit while realising, too late, the implications and the geopolitical aspects of one of the EU’s most important Member States, a permanent member of the Security Council and of NATO, crashing out of the EU in this manner. It is being compared to a ‘strategic amputation.’
 
Pankaj Mishra in “The malign incompetence of the British ruling class” (NYT) questions if partition is finally coming home to UK, “threatening bloodshed in Ireland and secession in Scotland” and leaving ordinary British people to suffer the unimaginable chaos of a looming no deal Brexit. It does not seem to be clear to Brussels or to India at this stage what UK wants, let alone needs. A deal has never seemed so far away.  
 
 
(The author is a former ambassador with expertise on European affairs. She is author of the book, ‘India and EU: An Insider's View’. She can be contacted at rustytota@gmail.com)
 

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