Iain Duncan Smith is the latest Conservative Eurosceptic MP calling for the Withdrawal Agreement, negotiated at the last minute by Boris Johnson and his adviser David Frost, to be scrapped, thus giving a new twist to the old adage about doing something in haste and repenting at leisure. In his case, having voted in favour of it a few short months ago, he seems to be repenting in haste as well.
Responding to an article in The Sun, the MP for Chingford tweeted:
He claims that somewhere in the fine print and “unnoticed by many” (i.e. him) is the fact we “remain hooked into the EU’s loan book” for a potential £160bn, four times the divorce bill. The figure was said to come from unnamed “experts” and is for what The Sun describes in inverted commas as loans for “investment projects” across the EU27, some of them said to be “economically fragile.”
ITV’s James Mates drew attention to IDS’s short memory, if not his rank hypocrisy:
Now video footage of Mr Duncan Smith from the House of Commons in December 2019 has emerged where he declares he would support “without question of a doubt” not only the WA itself but also the programme motion curtailing debate where the “fine print” could have been examined in detail.
At the time he said, “if there was anything about this arrangement that we have not now debated, thrashed to death, I would love to know what it is.”
We now know the answer to his question. It’s the commitment to honour our obligations to the European Investment Bank and the apparent potential for a massive additional bill.
Brussels quickly rejected his call to reopen the divorce deal signed by Boris Johnson and the 27 EU members last year. Commission spokesperson Eric Mamer said:
“I think it’s very clear that we are not going to get into a debate with British politicians on liabilities or any other of the provisions of the Withdrawal Agreement.”
So, we have learned that IDS didn’t read the Withdrawal Agreement although he does read The Sun. But is what they claim true in any case? Apparently not.
James Crisp, Brussels correspondent of The Telegraph says in order for Britain to be liable for £160bn it would take an extraordinary set of circumstances so incredible as to be all but impossible.
Firstly, the European Investment Bank is a triple A rated institution. Member countries originally paid in 10 percent of the bank’s capital with the remaining 90 percent there to be “called in” if necessary. The total “subscribed capital” is just under €249bn with countries actually paying in just €25bn. The UK’s share after Brexit is about 12 percent of that, according to Crisp.
As to whether Britain or any other countries would ever be “on the hook” for the rest, the answer is technically yes, but as Crisp points out, it will not happen.
Loans were given mainly for infrastructure projects like energy or transport: roads or bridges and the like. The assets will continue to exist whatever happens to the borrower. They are hardly economically fragile.
It would take the simultaneous failure of all of the EIB’s thousands of investments to require the bank to write off the loans. And before countries are asked to make good on their guarantees the EIB’s own assets of £600bn would be used to fund any short-term losses anyway.
In other words, the £160bn figure quoted by The Sun’s experts is so totally unrealistic that it amounts to a fabrication.
Will that satisfy IDS? Probably not.
Owen Paterson is another Brexiter unhappy with the WA. He is chair of the Centre for Brexit Policy (CBP), a newly formed ‘think tank’ with IDS, Patrick Minford, Martin Howe, John Longworth, Roger Bootle and others either on the board or described as ‘fellows’.
They published a paper last month attacking the Withdrawal Agreement and also arguing that it should be replaced. Their website gives a quick summary of it all HERE. While future EIB liabilities are mentioned almost in passing, the figure of £160bn does not appear and they would like a €12.3bn share of EIB reserves and 2019 profits to be paid to the UK. It seems the EIB is a remarkably successful enterprise.
Paterson and his cadre of hard Brexiters want the WA replaced with a ‘sovereignty compliant’ agreement. They concentrate mainly on the Northern Ireland protocol.
This is from the executive summary:
“The current situation results from a failure in the original Withdrawal Agreement (WA) – negotiated by Theresa May – to appreciate the irreconcilable position of exiting the EU, but instead signing back into EU law without any voting power over that law.”
Note the blame is heaped on Mrs May while Johnson and Frost escape any criticism and are described as being “surprisingly successful in eliminating the Irish Backstop and facilitating an official exit from the EU in January of this year on the basis of transition to a fully sovereign state.”
In a baffling reference, Paterson’s organisation claims the UK government, “sees the revised Withdrawal Agreement (WA) as only transitional until the end of the [Transition Period] in December” instead of a permanent treaty.
They say the agreement amounts to a “poison pill” and leaves the UK subjugated to the EU, specifically with regard to the Northern Ireland Protocol and gives power to the EU to encroach on UK sovereignty. This concerns state aid, EU citizens’ rights, ‘divorce payment’ liabilities, future financial liabilities, EU data protection laws, EU geographical indications of origin, provisions relating to UK sovereign bases in Cyprus and Gibraltar, as well as “numerous other matters”.
EU demands for fishing rights and a ‘level playing field’ are also criticised and the political declaration inviting the UK to participate in various defence and industry schemes is rejected since it would “undercut our future independence and freedom of manoeuvre”.
Last year’s oven-ready deal is obviously completely under done and the ERG, while praising the chefs, now want to send it back to the same kitchen and reorder.