On Brexit, there’s no doubt that UK negotiators have adopted a hard bargaining strategy

British PM Theresa May and European Commission President Jean-Claude Juncker after their meeting on Brexit at EU headquarters in Brussels, Belgium. Ye Pingfan/ Press Association. All rights reserved.

All eyes
in British politics are on the negotiations between the UK and the EU over the
terms of the forthcoming British withdrawal from the Union, or Brexit.
Surprisingly, questions of bargaining strategy – once the preserve of diplomats
and niche academic journals – have become some of the most defining issues in
contemporary British politics.

The
new politics of bargaining

Cabinet
disagreements over the conduct of the negotiations led to the resignation of
David Davis and Boris Johnson in early July 2018 and the issue continues to divide
the ruling Conservative party. Theresa May’s most recent statements have all
addressed the question of how hard she has pushed Brussels in the talks.

But is
the hard bargaining strategy appropriate, or will it ultimately harm the UK?
The salience of this question should occasion deeper analysis of the
fundamentals of international bargaining, given the extent to which the course
of British politics will be determined by the government’s performance (or
perceived performance) in the Brexit talks.

Driving
a hard bargain

A
hard-bargaining strategy isn’t necessarily a poor one. To the extent it is
workable, it may even represent the sensible option for the UK.

Hard
bargaining is characterised by negative representations of negotiating
partners, unwillingness to make concessions, issuance of unrealistic demands,
threats to damage the partner or exit the negotiations, representations of the
talks in zero-sum terms, failure to provide argumentation and evidence, and
withholding of information. From diplomats’ portrayal of the EU as an
uncooperative and bullying negotiating partner to a set of demands recognised
as unrealistic in Brussels and Britain alike, the UK’s approach to the Brexit
negotiations scores highly on each of these measures.

The
consensus in the academic literature is generally that hard bargaining works only where a given party has a
relative advantage. Powerful states have an incentive to engage in hard bargaining, since
by doing so they will be able to extract greater concessions from weaker
partners and maximise the chance of achieving an agreement on beneficial terms.

But
weaker actors have less incentive to engage in hard bargaining, since they
stand to lose more materially if talks break down and reputationally if they’re
seen as not being backed by sufficient power,

So which
is Britain?

Power
distribution

The
success of hard bargaining depends on the balance of power. But even a cursory
examination would seem to confirm that the UK does not hold the upper hand in
the negotiations. Consider three standard measures of bargaining power: a country’s
economic and military capabilities, the available alternatives to making a
deal, and the degree of constraint emanating from the public.

When it
comes to capabilities, the UK is a powerful state with considerable economic clout
and greater military resources than its size would typically warrant. It is the
second-largest economy in the EU (behind Germany) and its GDP is equal to that
of the smallest 19 member states. And yet in relative terms, the combined
economic and military power of the EU27 dwarves that of the UK: the EU economy
is five times the size of the UK’s.

Next,
consider the alternatives. A ‘no deal’ scenario would be damaging for both the
UK and the EU, but the impact would be more diffuse for the EU member states.
They would each lose one trading partner, whereas the UK would lose all of its
regional trading partners. Moreover, the other powers and regional blocs often
cited as alternative trading partners (the US, China, the Commonwealth, ASEAN)
are not as open as the EU economy to participation by external parties, nor are
they geographically proximate (the greatest determinant of trade flows),
nor  will any deal be able to replicate the common regulatory structure in
place in the EU. This asymmetric interdependence strongly suggests that the UK
is in greater need of a deal than the EU.

Finally,
consider the extent of domestic constraints. Constraint enhances power by credibly preventing a leader from
offering too generous a deal to the other side. On the EU side the constraints
are clear: Barnier receives his mandate from the European Council (i.e. the
member states) to whom he reports frequently. When asked to go off-piste in the
negotiations, he has replied that he does not have the mandate to do so. On the
UK side, by contrast, there is no such mandate. British negotiators continually
cite Eurosceptic opposition to the EU’s proposals in the cabinet, the
Conservative party, and the public, but they are unable to guarantee any
agreement will receive legislative assent, and cannot cite any unified
position.

Perceptions
of power

But the
real power distribution is not the only thing that matters. While the EU is the
more powerful actor on objective criteria, a number of key assumptions and
claims made by the Brexiteers have served to reinforce the perception that
Britain has the upper hand.

First, on
the question of capabilities, the discourse of British greatness (often based
on past notions of power and prestige) belies the UK’s status as a middle power
(at best) and raises unrealistic expectations of what Britain’s economic and
military resources amount to. Second, on the question of alternatives, the
oft-repeated emphasis on ‘global Britain’ and the UK’s stated aim to build
bridges with its friends and allies around the globe understates the UK’s
reliance on Europe, the (low) demand for relations with an independent Britain
abroad, and the value of free trade agreements or other such arrangements with
third countries for the UK. Third, on the question of domestic constraint, the
post-referendum discourse of an indivisible people whose wishes will be
fulfilled only through the implementation of the Brexit mandate belies the lack
of consensus in British politics and the absence of a stable majority for
either of the potential Brexit options, including the ‘no deal’, ‘hard’, or
‘soft’ variants of Brexit. Invoking ‘the people’ as a constraint on
international action, in such circumstances, is simply not credible.

Conclusion

Assumptions
about Britain’s status as a global power, the myriad alternatives in the wider
world, and the unity of the public mandate for Brexit, have contributed to the
overstatement of the UK’s bargaining power and the (false) belief that hard
bargaining will prove a winning strategy.

Britain
desperately needs to have an honest conversation about the limits of the UK’s
bargaining power. This is not ‘treasonous’, as ardent Brexiteers have labelled
similar nods to reality, but is rather the only way to ensure that strategies
designed to protect the national interest actually serve this purpose. Power is
a finite resource that cannot be talked into existence. Like a deflating puffer
fish, the UK’s weakness will eventually become plain to see. The risk is that
before this occurs, all bridges will be burned, all avenues exhausted, and all
feathers ruffled.

The
arguments in this blog are based on the findings of a Dahrendorf Forum working paper by Benjamin Martill and Uta
Staiger titled ‘Cultures of Negotiation: Explaining Britain’s Hard
Bargaining in the Brexit Negotiations‘.

The
opinions expressed in this blog contribution are entirely those of the author
and do not represent the positions of the Dahrendorf Forum or its hosts Hertie
School of Governance and London School of Economics and Political Science or
its funder Stiftung Mercator.