Brexit: So Where Are We Now?

By February 5, 2019 Risk Management

Mr. Andy Davis
MSc, CPP, CSyP, FSyI

TAL Global Corporation
Regional Director, Europe

On the 23rd June 2016, the British public voted in a referendum to leave the European Union. On the 29th of March 2017, the UK government invoked Article 50 of the Treaty of Europe which then set the clock ticking for departure on the 29th of March 2019. During this time there has been much posturing and a great deal of showmanship by all UK political parties as well as by the EU parliament and some member states who are using the process to further their own political agendas.

Things became clearer when on the 29th January 2019, the UK Parliament voted for the British government to return to the EU and to renegotiate the ‘back-stop’ agreement that related to the border between the Republic of Ireland and Northern Ireland. However, the EU, at least publically, refuses to change its position and states that the deal on the table is the only deal that exists.


So Where Are We Now?

The honest answer is that we continue to be in the depths of uncertainty with no clear pathway presenting itself. We continue to be in uncharted territory and while the UK’s view is a little clearer, the EU is facing a huge political dilemma. It either agrees to changes to the withdrawal agreement and addresses the UK’s concerns over the ‘backstop’ (i.e., the non-introduction of a hard border on the island of Ireland), or it refuses and risks a ‘no-deal’ Brexit. Both options bring with them severe problems for the continued success of the EU as a body.

If the EU sides with Ireland, then the whole process is again plunged into turmoil as the British parliament is so split and divided that no other agreement (except a possible short extension) has any chance of being passed by parliament. That could then result in a number of different scenarios, including a ‘no-deal’ situation, a general election, or even a second referendum (discussed later).

If the EU agrees to the UK demands and does make changes to the ‘Irish backstop’ question, then a deal can go through, but Ireland will feel betrayed and other nations may force through their own agendas using a perceived weakness of the EU as a justification to do so. The EU finds itself in a very difficult situation.

From a UK perspective, there is still a number of politicians from all parties who are trying to thwart the Brexit process, seek a second referendum or even reverse the vote and remain within the EU. As with the EU, the UK government is having to walk a very fine line to try and maintain a degree of support to pass legislation; not an easy task when the governing party is equally as split as the rest of the nation on the whole question.

Having reached the agreement, the UK government has bought itself a bit of breathing space by giving the EU a clear message: ‘renegotiate the Irish backstop.’ Now they await a formal response. If the formal response is that the EU will not renegotiate, then there will be a political crisis within the UK caused by the conflicting thoughts and agendas about how to take things forward, and in what manner.


Expect Uncertainty

UK Prime Minister Theresa May arrives for a meeting with European Union leaders, Brussels June 2018.

I do not anticipate an apocalyptic or doomsday scenario, as has been advocated by some mainly pro-EU pundits, nor do I expect there won’t be any disruption. Everybody has to be realistic and anticipate a degree of uncertainty; some actions will create more than others. However, it is in nobody’s interests for the uncertainty to continue. The UK is a lot more resilient than many realize, and while there will be a short-term impact and cases of severe disruption, in time, the situation will normalize. On the other hand, the UK is the second largest contributor to EU funds after Germany. The UK is one of the most significant trading partners with many EU members states and more importantly, it needs the £30+ billion that has been agreed as a part of the divorce agreement. Globally, there may be some markets that will use the situation to make short term gains, but any continued uncertainty about the future relationships will not be accepted by other G20 leaders.

The impact on multinational businesses operating in the UK will be mixed. I do not envision a major impact on the service sectors. The threats of increased tariffs are countered with the prospects of retaliatory ones for inward services. Manufacturers will be impacted far more than the service sector with the risks surrounding the supply chain not really being understood until the endgame is known. To that end, many organizations have already started stockpiling items critical to timely delivery of products.


Where Does That Leave Businesses?

Firstly, the risks associated with the Brexit scenario should not came as a surprise to any organization; the outcome has been known since 2017! Unfortunately there are still those organizations operating in the UK who failed to fully assess the risks and build in contingencies by asking at the strategic level ‘What if?’ Some senior executives I have spoken with since the decision to leave the EU have adopted an approach of either pinning their faith in a political solution being found with very little disruption being experienced, or the have ignored the warning signs and buried their heads in the sand. Neither options are a course that I recommend. There has been time and an ability to ‘wargame’ different scenarios that would have identified organizational risk and the anticipated levels of impact. Sensible risk management solutions could have been prepared and resilience created that would buffer most organizations from the initial impact of leaving.

I was recently asked whether there are any security implications or concerns caused by Brexit. Unless and until we know what the final outcome is going to be, we are not really able to predict with any degree of certainty. I do not believe the general security situation will change as a result of Brexit. I believe intelligence cooperation will continue as it is and will always be mutually beneficial.

There are some Brexit scenarios which may impact and amplify existing and ongoing security situations that are currently being experienced throughout mainland Europe, including Yellow Shirt protests in France, political unrest in Greece and people smuggling by organized crime groups throughout the south of Europe.

Providing organizations have ensured they have resilience both in the UK and Europe, and emergency and continuity plans are up to date, tested and reviewed, there should be no direct security implications; anarchy is not going to break out. If an organization has not started planning and developing resilience models (where have you been?) then resources should be sought from within their own organizations or via professional third party vendors.


Brexit & Nationalism

Right wing demonstrators in Trafalgar Square

If, as has been discussed by some UK politicians, the decision not to honor the people’s decision to leave the EU and cancel Brexit is raised or even introduced, the results could be severe. It is highly possible that such a move would increase nationalistic and far-right wing activities to the extent that a militant backlash could follow.

I do not have concerns about a hard border appearing on the island of Ireland; there is no appetite from any party as this matter will be resolved politically. However, a nationalistic show of strength cannot be ruled out if there was disruption at the border, this has already resulted in crude car bombs being exploded in Londonderry.

In mainland Europe, nationalist and ring-wing militance has been on the rise and is evident across many countries, even those once viewed as being liberal. Immigration and the refugee crisis have played a significant role in this and those issues are not going away. A no deal Brexit could embolden them further and increase the disruption and protests that are being caused, resulting in increases in violence.


Conclusion

The EU will be financially impacted by Brexit and as such, there will be a requirement on existing members to increase their contributions; many cannot and are already in critical financial situations. It is extremely likely that violence and disruption in the southern European countries is going to increase especially in Italy and Greece.

Any increased turmoil caused by the fallout from Brexit could be exploited by terrorists in reaction to increased nationalistic and far-right activities. Global brands and organizations will continue to be targeted because of their newsworthiness.

A broader security concern that isn’t often discussed but is worth mentioning is the threat from Russia. Presently, Vladimir Putin must be sitting in the Kremlin rubbing his hands with glee at the political turmoil that exists; and not just in Europe. He has shown that he is prepared to disregard global condemnations and take unilateral actions that are Russia’s strategic interests. A weak NATO and dysfunctional Europe could be just the excuse and opportunity he needs to take action without fear of repercussions.

Business will go on and the world will find different ways to trade. It is in nobody’s interests for there to appear to be a winner or loser in this matter. All we can hope is that the disruption is minimal and trading relationships which are acceptable to all parties can be found.
Sincerely,

Mr. Andy Davis
MSc, CPP, CSyP, FSyI

TAL Global Corporation
Regional Director, Europe


About the author: Following an early career specializing in operational intelligence, analysis and investigations, Mr. Andy Davis became a diplomat with the British government. His role was the provision of diplomatic security risk management services and involved assignments in many difficult environments including East Africa, Colombia, Venezuela, Saudi Arabia and Pakistan.

Mr. Davis entered the corporate security world in the Middle East and was responsible for the physical, technical and operational security design reviews on a number of multi-billion dollar, iconic development projects including hospitality venues, museums, educational institutions and residential complexes. This role led to collaboration and engagement with governmental and multinational organizations in the Middle East and Europe.

Mr. Davis specializes in corporate governance, travel risk management and the conducting of threat, risk and vulnerability assessments. This has led to international due diligence engagements, development of personal security programmes and operational deployments on behalf of Tal Global Group in Europe, the Middle East and ASIA.

Mr. Davis holds a Master of Science degree in Security and Risk Management, is a Certified Protection Professional (CPP) with ASIS Intl., and is identified as a Chartered Security Professional (CSyP) and a Fellow of the Security Institute.

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