War-gaming Brexit: Prepare for a Canada-style deal or nothing

John Hulsman
Theresa May Meets Angela Merkel In Berlin
Understand the basic political drivers behind these politicians, and you'll know the outcome of the Brexit talks (Source: Getty)

One of the most interesting things I get to do in my day job running a global political risk consulting firm is to design and run war games for businesses and governments.

To understand what a war game actually is, think back to the momentous days of the Cuban Missile Crisis, when the embattled Kennedy administration had to formulate policy on the fly, in real time, as the world held its breath, hoping the young President could avoid nuclear catastrophe.

Their response to this horrendous challenge was – in the reported view of Bobby Kennedy, the President’s brother and consigliere – to put a bunch of smart guys in a room, under the starkest of time constraints, and hope for the best. War games passed their baptism of fire, as the Kennedy administration (just) out-calculated the out-classed Soviet Khrushchev regime, seeing off the very real possibility of nuclear war.

Used by the US government to assess the major foreign policy issues of the day ever since, my firm has gone a step better and tailored war game analytics for companies, helping them see the basic contours of the new, challenging multipolar world we find ourselves in. War gaming allows participants to assess the basic drivers that actually determine Great Powers’ foreign policies, and then crucially how the interactions of the various foreign policies lead to global outputs. It is a major reason why my firm has been right about Brexit, the decline of Europe, the rise of Asia and much else besides.

Recently we have spent a lot of time gaming out the coming Brexit negotiations between London and Brussels, arriving at some stark – and analytically highly useful – policy assessments.

Read more: The EU's mask has slipped: Political union is all that matters

First, despite all the wishful thinking from the centre-left media commentariat, a hard Brexit was always likely to be on the cards. Prime Minister May, tepid Remainer though she was during the referendum, wants first and foremost – as politicians have done since the dawn of time – to survive. A hard Brexit stance is the only way this is possible.

Mrs May does not have to worry overmuch about the 48 per cent of Britons who echoed her in voting Remain, as they are not presently represented by a coherent, credible political party that can challenge her. With Jeremy Corbyn – the poster boy for gormlessness – trailing her by a gargantuan 19 points in the most recent opinion polls, Labour’s Remain majority view can simply be utterly discounted.

The same, of course, is not true for the ruling Tory Party, presently the only credible political structure in the land. The party base’s overall strong emotional attachment to a hard Brexit – plus the ever-present historical reality that the last three Conservative premiers (Thatcher, Major, and Cameron) were all defenestrated in different ways by the Europe question – makes the Tory core’s unapologetic hard Brexit stance by far the most important driver motivating the Prime Minister, explaining her early and consistent championing of both making control of immigration a red line, as well as leaving the Single Market.

The basic driver for her primary European interlocutor, German Chancellor Angela Merkel, is crystal clear too. In an EU wracked by fundamental internal north-south divisions over the endemic euro crisis and east-west schisms over the refugee crisis, what Berlin wants most is for the 27 EU countries merely to stay together, clustered around a common response to Brexit. The specific terms matter far less than EU political unity, as the last thing a hard-pressed Berlin needs is another intractable issue leading the EU to unspool even more.

Read more: Overrated Angela Merkel is no saviour for a free world fearing Trump

As such, in typical German intellectual fashion, Merkel’s government has formulated its initial Brexit response around a series of general principles, rather than crafting specific policies. First and foremost among these is a commitment to the EU-wide free movement of people, precisely what Prime Minister May wishes to undo. Merkel has managed to get furious true believers – such as a vengeful France and creepy and incompetent EU Commission president Jean-Claude Junker – as well as the more sympathetic Netherlands and Sweden to all agree to this common position, which for the German Chancellor is the primary point of the whole exercise.

These basic war game drivers led me to conclude long ago that either a Canada style option or no deal were by far the most likely outcomes of the talks. Nothing has happened since we made this determination months ago, using war game analysis, to change the basic thrust of what is coming.

Finally, war game analysis has led me to the conclusion that, rather startlingly, the coming Brexit negotiations amount to less than meets the eye for both parties, as more important (and less commented on) issues drive things along. For Europe, the larger narrative revolves around it managing to weather the cascade of policy crises calling into existential question its very survival in the next three to five years in its present form, as economic torpor, and the refugee and euro crises swirl all around it.

For the UK it is far more important in the medium term that it cuts good free trade deals with the Commonwealth countries (Canada, Australia, New Zealand), the US, India and China than whatever the specific outcome of the Brexit talks. Free trade with the fastest growing parts of the world will make Brexit an overall success, just as failure to do so would signal a devastating strategic failure.

War game analytics help us all see the world as it truly is. In the case of the upcoming Brexit talks, this is simply not the world most headlines would have you believe it is.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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