Written by 8:05 am Europe Economy

Liz Truss Is About to Get Her Hands on Brexit Dynamite

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The longer the people of Northern Ireland live with the Brexit arrangement known as the Northern Ireland Protocol, the more they seem to like it. A majority (55%) see the Protocol as appropriate for managing the impact of Brexit on Northern Ireland and 53% see a benefit to their economy.

That’s not to say it doesn’t have flaws, which many would like to see resolved through negotiations. But that broad popularity is worth bearing in mind, since the woman tipped to be Britain’s next prime minister looks set to blow up the entire arrangement.

It’s likely that Liz Truss would do that by triggering Article 16 of the Protocol — a provision that allows an aggrieved side to suspend a particular part of the agreement if it leads to “serious economic, societal or environmental difficulties.” Doing so would set off a process of consultation and negotiation.

QuicktakeThe Northern Ireland Protocol

Enacting the long-threatened Article 16 would mark an escalation in tensions between the UK and European Union, but at least an incremental one. However, Truss has a more indiscriminate weapon in the works too, in the form of legislation that unilaterally overrides parts of the Protocol itself. Its ostensible purpose, beyond throwing red meat to hardline Brexit supporters, is to force Europe to make concessions and end the Democratic Unionist Party’s boycott of power-sharing in Northern Ireland, which undermines governance and political stability there. But while the DUP might be appeased, passing the bill would be a big middle finger to Brussels.

The bill has set up a fight within the House of Lords, a battle royale with Brussels and some potentially awkward conversations with the Biden administration, which has a keen interest in keeping the peace in Northern Ireland. How Truss resolves those pressures will be the biggest early test of her ability to both control her party and manage Britain’s international reputation.

Truss argues that the bill is necessary to preserve the peace in Northern Ireland and the integrity of the UK. Former Prime Minister Theresa May takes the opposite view: “Do I consider it to be legal under international law? Will it achieve its aims? Does it at least maintain the standing of the UK in the eyes of the world,” she asked when speaking against the bill in Parliament. “My answer to all three of those questions is no.” 

An early test of the government’s intentions will come when the House of Lords sends back a raft of amendments to the bill, initiating a game of parliamentary ping-pong, as it’s literally called. In a scathing report in July, a Lords committee declared the legislation “wholly contrary to the principles of parliamentary democracy.” Not only does it breach the UK-EU agreement, but the bill is something of an empty vessel into which ministers can pour whatever flavor of regulation they want. The committee described the power grab as “unprecedented in its cavalier treatment of Parliament, the EU and the government’s international obligations.”  

Despite the tough talk, though, the Lords can only delay legislation, not block it. And it’s not clear the unelected and often unwieldy upper house has the appetite for a drawn-out battle, particularly if the Tories are united behind the bill. It’s not an easy battle for the opposition Labour Party either, which doesn’t want to be branded as anti-Brexit.

Truss may overcome the Lords, but the only real way to reduce some of the Protocol’s implementation issues (they cannot be eliminated completely) is through negotiation. The EU remains Britain’s biggest trading partner. Already, the foot-dragging over science research funding — directly linked to the UK’s position on the Protocol — is doing substantial damage to a sector the government is leaning on to drive innovation.

Truss’s modus operandi has been to speak bluntly, take maximalist positions and play to her base (as she did recently in declaring the jury was out on whether French President Emmanuel Macron is friend or foe). That approach may titillate her supporters and distract some from the rising costs of living — but it’s likely to backfire. Her tone will be as closely watched as the policy itself once she takes office.

If cooler heads prevail, there is plenty of potential for compromise. There’s an appreciation in Europe that the British have some good points on problems with the Protocol, notes Charles Grant, director of the Centre for European Reform. But there has to be a basis of trust on which to reach an agreement.

And there is no reason the EU should be categorical about the existing system if improvements can be found. The UK’s proposal for a green-and- red-lane system, so that goods destined to stay in Northern Ireland don’t have to go through customs, is not unreasonable. The key to making that work will be real-time data sharing and the efficient use of penalties to prosecute lawbreakers. The bloc could even afford to give Truss a relatively low-cost domestic win by tweaking the wording of the Protocol if that helps resolve matters.

Ireland’s role, as ever, will be key. “If Truss wants to surprise and make a trip to Dublin, a deal is doable,” Grant says. “But she has to focus on the practical problem of trade friction, not more ideological things.” Any flexibility would not likely extend to the UK’s separate demand that the European Court of Justice be written out of governance arrangements.

Truss shouldn’t underestimate the EU’s willingness to retaliate if things escalate. Brussels would likely interpret it as a bad omen, for example, if former Brexit negotiator David Frost was given a say on EU matters. It’s not hard to imagine a scenario where the tit-for-tat leads to the EU giving notice that it intends to suspend the post-Brexit trade agreement. The harm would be on both sides, of course, but the consequences for Britain would be hard to exaggerate.

The outcome of Truss vs. the EU will either make her the party’s most underestimated political operative since Margaret Thatcher — or confirm the suspicion that she’s a disastrous choice for leader at a perilous time for the country. What will it be: Hothead who will diminish Britain’s economy and damage its global standing further, or cool hand who can help restore both? Watch Northern Ireland. 

More From Bloomberg Opinion:

• Is Kwasi Kwarteng Up for Saving Britain’s Economy?: Adrian Wooldridge

• Is Burberry Ready for a New Creative Direction?: Andrea Felsted

• The UK’s Rental Market Crisis Has Been Years in the Making: Stuart Trow

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Therese Raphael is a columnist for Bloomberg Opinion covering health care and British politics. Previously, she was editorial page editor of the Wall Street Journal Europe.

More stories like this are available on bloomberg.com/opinion

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