A Negotiator’s Take on Brexit

A professional Negotiator’s (that’s me 🙂 ) commentary on Brexit

1) The strength of any negotiation position is always the walk away option: what each side can impose without agreement unilaterally aka what is technically called the BATNA or Best Alternative to a Negotiated Agreement
2) The strength of the UK’s BATNA took a major hit in the last week at G20 meeting, when the US (17% of world economy), Japan (5.6%), India (3%) stated the obvious: that the EU was a higher priority for a trade deal than the UK which was indeed at the back of the line
3) Japan went further and stated the consequences of Brexit if it involved loss of single market access for Japanese investment in the UK
4) Add in Theresa May’s souring of relations with China (14% of world economy) over nuclear power investment and of course the EU itself (12% of world economy without the UK) and 51% of the world economy is not looking very promising for free booting isolated UK
5) and after this 51%, the rest of the world economy is not full of obvious markets for the UK: any takers for South America, Middle East, much of Africa as major markets?
6) The UK is moreover not negotiating with a unified entity able to easily trade off different interests, its component states have, so the reassuring thought that loss of say German export access to the UK will influence EU BATNA is misguided.
7) Any deal will need all 27 members to agree and so Southern Europe resentment of Germany over austerity, and Eastern Europe’s attachment to free movement of labor are unlikely to help drive an acceptable deal for the UK
8) So even though punishing the UK is completely against the EU’s interests, the Prisoner’s Dilemma dynamics will likely lead to this.
9) Ergo the UK is completely screwed by Brexit.
10) But we knew that before the bloody vote….

About creativeconflictwisdom

I spent 32 years in a Fortune Five company working on conflict: organizational, labor relations and senior management. I have consulted in a dozen different business sectors and the US Military. I work with a local environmental non profit. I have written a book on the neuroscience of conflict, and its implications for conflict handling called Creative Conflict Wisdom (forthcoming).
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3 Responses to A Negotiator’s Take on Brexit

  1. stevetravel04 says:

    The EU may be a higher priority for the top economies but that doesn’t mean the many headed beast that is the EU can agree to a deal with the US, Japan or India. On top of that if Trump is elected there might be a great attractiveness to a deal with the U.K.

    • I agree the EU will not find it easy to make trade deals which is why the UK will have such a hard time of it; my whole point. And with modern supply chaim just in time approaches, it is the current high level of trade with the EU that will likely be disrupted. I think Trump will be protectionist and no value to the UK or anyone else. Japan has already set out its views on this for its UK investment and it is a problematic trading partner given its non tariff barriers, the very non tarrif barriers that the EU regs exist to stop. The UK is not that attractive, too small compared with the EU to warrant much enthusiasm against protectionist sentiment growing in the world. But you will see another approach on this blog: scenario based futuring shortly that takes your and others’ stances as one scenario.

    • A friend and I have been arguing since the referendum about whether Brexit (which neither of us wanted) is a disaster (my view) or whether some way will be found to make it work (his view). Both scenarios and many stations in between are of course possible; and time will tell which comes to pass. Under scenario-based futuring of Peter Schwartz, one doesn’t pick one scenario at this stage, but looks for signs that one or other is coming to pass and uses the scenarios to riff on the key variables and also to see if there are ways to steer the outcome in the light of the fundamental forces at work that scenarios aim to uncover.
      1) My friend’s “Invisible Hand Scenario” suggests that UK and EU self interest will allow a good compromise that avoids the destruction of the British economy. This assumes a lot of rationality, and that ways that can be found to align the massively conflicting interests on either side (UK and EU) and a good deal reached or that some good non EU deals can be made somehow.
      2) My “Wrecking Ball Scenario” assumes that the UK and EU will find it almost impossible to align around an agreed set of interests within their respective camps.let alone with each other, as the fundamental contradictions of Brexiters come home and the 27 countries of the EU’s conflicts of interest come home (Germany vs France vs Southern Europe vs Eastern Europe etc.) And that most of the non EU deals are illusory and take years to achieve if ever in an increasingly protectionist world in which the UK is not a big player.
      3) I offer the latter scenario partly as a means to create a possible third scenario: a real interest based negotiating strategy, call it the Mindful Hand. In this I am using the South African Mount Fleur strategy: show how unlikely or awful the alternatives are to restore common sense sans ideology to the negotiations.
      If I had to pick one of these I think 2) would reflect my sense of how history works: contingent, path dependent and often leading to Prisoner’s Dilemma outcomes where following self interest in a badly structured conflict landscape leads to decisions completely against the interests of either side. I hope I am wrong.
      Trip wires (early indicators that a given scenario is unfolding as per Schwartz’s approach) that would suggest I am right would include: 1) Triggering Article 50 early before there is a robust plan 2) Continued public announcements of stakes in the ground like “immigration at the 10,000s” 3) Continued Brexit ideological perspectives without any tangible trade deal examples with numbers and likelihood and so on. So far the trip wires seem to be nodding at scenario 2 but as my friend would say: very early days. I agree and also I hope I am mistaken….

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