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Brexit: a Walter Mitty (sometimes) in Brussels

2017-09-04 06:59:31

There's something of the Walter Mitty about David Davis. The media picked him up on one thing while he was in Washington – his claim to have been called a "charming bastard" on the front page of the Financial Times when in fact it was a label he applied to himself, then for it to appear on page 19 of the august journal.

But while he was in Washington he came up with another oddity. Asked about phytosanitary standards and border checks Davis referred back to his previous career in the sugar industry, working for Tate & Lyle, when he claimed to have sold "high fructose syrup" across the Canadian border into the United States to "big breweries in Detroit". He says he was, therefore, "very conscious of my syrup going off if the customs people kept them for too long".

There are several points of interest here. High fructose syrup is actually a preservative and can extend the shelf-life of foods to which it is added, particularly bakery goods. It has a working shelf-life is six months when stored at ambient, although it is still usable long after that. The idea that it would go off while being delayed by customs, is not really plausible.

Secondly, although Tate & Lyle had Canadian refining interests, which it later sold, its high fructose syrup was produced in the United States, coming from plants in Illinois, Indiana and Tennessee. To get to Detroit and the like, it would not have had to cross an international border.

David Davis worked for Tate & Lyle for 17 years, during which time one of his tasks was to restructure what was then its troubled Canadian subsidiary, Redpath Sugar, headquartered in Toronto. Redpath never produced high fructose syrup and, in fact, regarded the product as a threat, citing it as a reason for restricting sugar imports from Europe.

And then, the product is used primarily as a sweetener, in a wide range of consumer goods but has no direct application in breweries. It is hard to see why David Davis would be selling it to breweries in Detroit, or anywhere else for that matter – assuming he was in that business, which he wasn't.

To put it bluntly, Davis was never in the fructose business, the product has a long shelf-life and it is produced primarily from corn, so it's heartland is the United States, not Canada. His story about being conscious of the effect of customs delays on the deterioration of the product coming in from Canada to the United States is, on the face of it, an invention – a fiction.

Now fast-forward to yesterday's Marr show (video above) and we see Davis commenting on last week's talks in Brussels, arguing that "the Commission puts itself in a silly position if it says nothing's been done …". The Commission's stance, he said, "looked a bit silly as there plainly were things that we've achieved".

This, though, is a straw man – another invention. There is no way the Commission is saying nothing was achieved. Barnier himself said that we made "some useful clarifications on a lot of points, for example, the status of frontier workers, the aggregation of social security rights, and pending legal proceedings before the Court of Justice, to name but three".

He also said that we made "real progress on the question of the Common Travel Area, on the basis of guarantees by the United Kingdom, and we clarified, in a constructive manner, what remains to be done, particularly with regards to North-South cooperation in the Good Friday Agreement".

But the crucial point is, to use Barnier's direct quote, "we made no decisive progress on the main subjects". That's the issue – no one is asserting that there was no progress, simply no decisive progress on the core issues.

Yet Mr Davis is not exactly on the ball here. Having spent a mere hour in Brussels on the Monday, he immediately returned to London, coming back only for the final session on the Thursday. He then jetted off to Washington for a vanity session with his fan club and now, via the Canadian border which he visited on his way back, he was attending the early morning Marr show to tell us all about the Brussels talks.

One suspects, though, that Mr Davis has as much a grip on this part of his life as the rest, inhabiting a world where he is a "charming bastard" and one-time fructose salesman who now divines that the Commission wants to "put pressure on us", but has put itself in "a silly position" by so doing.

That being the calibre of the man representing us, it is not surprising that the talks are in trouble. Perhaps if he actually spent a little more time there, when the talks were in progress, and then debriefed his staff immediately afterwards instead of jetting off on a transatlantic jolly, he might be better informed.

Small wonder, therefore, that Michel Barnier found himself at the Ambrosetti forum in Italy, declaring that part of his role is "to teach the British people and others what leaving the EU means". He added: "There are extremely serious consequences of leaving the single market, and they haven’t been explained to the British people. We intend to teach people... what leaving the single market means".

And well he might. Clearly, neither the politicians nor the media in the UK are making a job of it. Academia has largely lost the art of communication and is more intent on self-aggrandisement and most think tanks are a waste of space. To this date, none of them have explained, consistently and lucidly, the consequence of the UK becoming a third country, and nowhere outside this blog will you see a serious exploration of the effects of a "no deal" scenario.

Worst of them all, though, is David Davis who accuses the EU of "trying to play time against money". Without the first understanding of the Union's negotiating position, he takes pride in arguing legal niceties over what is and always has been a political stance and is wasting time arguing over legal obligations when he should be looking at the bigger picture.

The stupid man even went so far as to compare the financial settlement with a "large hotel bill", talking of going through it "line-by-line" to check the totals. If ever there was an example of penny wise, pound foolish, this is it. The cost of crashing out of the EU without a deal is incalculable, but will doubtless cost the UK GDP hundreds of billions, and he's blathering about hotel bills.

What's at stake is adequately illustrated by this piece which notes that, while bankers may be leaving London, Brexit "could still offer opportunities to buy UK commercial real estate with the market in flux".

This is from Australia's largest pension fund, AustralianSuper, which has $95 billion in assets and is looking to invest more overseas, with real estate and infrastructure in the UK, Europe and the US of particular interest.

Melbourne-based chief investment officer, Mark Delaney, says, "Brexit may present an opportunity for us, but we will need to be patient. There are likely to be some good quality assets that become available that will be worth looking at.

Uncertainty surrounding the terms of Britain's exit and future access to the single market has seen international banks look to Dublin, Frankfurt and other European capitals for office space - raising doubts about London's economic prospects and causing the value of older buildings to decline. With some investors losing their appetite for riskier assets, opportunities remain for long-term buyers, Delaney says.

This so much reminds me of my piece on disaster capitalism, where the vultures are circling in the hope of a feast. Even without opportunists guiding us towards a crash, just the drop in asset values arising from a "hard" Brexit could be many, many times more than any "divorce bill". 

That, of course, is only part of the bigger picture – the cost of disrupted trade from chaos at the ports could amount to hundreds of billions, before normality was restored.

The very last thing we want, therefore, is a "Walter Mitty" type character in charge of the negotiations. More than ever, we need someone who knows what they're doing. We never deserved Davis and as long as he's at the helm, it's unlikely we'll get anywhere.