#Brexit: Rise of the soft Brexiteers? Not so fast

As Chancellor Philip Hammond (pictured) gears up to deliver his delayed Mansion House speech to the City of London, his purported “soft Brexit” bloc seems to be building steam and putting pressure on Theresa May to secure an extended transition period for Britain’s exit. The Chancellor’s argument against Britain making a sudden departure from both the European customs union and single market, as proponents of “hard Brexit” advocate, has been buttressed by support from business and industry as well as by support from key members of the Conservative Party. As May works to consolidate her diminished control over a hung parliament, it seems Hammond could prompt an entirely new course for Brexit negotiations… or perhaps not, writes Colin Stevens.

In reality, much of the furor surrounding the Chancellor’s machinations comes down to both sides of the Brexit debate projecting their own ideas onto his motives. Among the most ardent proponents of Brexit, Hammond’s actions are seen as erecting a sort of fifth column from within the party to water down the final Brexit deal and keep Britain in the customs union, nixing plans for an independent trade policy. Hammond is seen as orchestrating a campaign of critique over the prime minister’s Brexit vision, undermining May in negotiations with the European Union. For suspicious Brexiteers, his moves have led to widespread suspicion that his intention is to undermine complete withdrawal from the EU. For pro-Remain voices like Hammond’s predecessor George Osborne, that is exactly what Hammond should do.

A closer look at the Hammond camp’s demands, however, indicate that his idea of Brexit is far from the soft Brexit called for by Osborne. Hammond is not, in fact, calling for continued membership of the single market, or even permanent membership in the customs union. Instead, he has framed his proposal to remain in the customs union as a means of ensuring a “transitional period” for business. While Hammond and May have diverging timeframes, they have the same ultimate result in mind: a post-EU “global trading nation”. The Chancellor’s differences with the Brexit hardliners mostly comes down to timing.

The renewed tensions within the Conservative Party are fundamentally tied to the customs union question. There is an critical distinction between temporary or permanent membership: temporarily “remaining” offers significant benefits like resolving Irish border issues for the time being, especially after Ireland’s EU Commissioner warned of a “hard border” with the country if Britain were to depart the customs union. Tensions have been exacerbated by talks of a Conservative alliance with the far-right Protestant, Northern Irish Democratic Unionist Party. Despite calls for neutral dealings between London and Dublin, an alliance between May and the DUP party may undermine the confidence of Northern Ireland’s Catholics and revive tensions along the border. Remaining in the customs union (for now) buys time to ensure peace during a protracted Brexit. A transition period would also allow the British and Northern Irish economies time to adjust to an upended trading landscape, reassuring markets and preserving financial stability in the short- to medium- term.

Permanent membership, on the other hand, would prevent Britain from pursuing an independent trade policy and lucrative bilateral trade agreements with non-EU countries such as India, China and the US. It would also undermine one of Brexit’s fundamental tenet: taking back control of economic and immigration policy, which is still what the Conservative base demands. Britain cannot transform itself into a Singapore on Europe’s doorstep without establishing its independence from the EU and pursuing deals beyond European borders. Despite the election, critical trade talks will move ahead with major trading partners such as with India and the Gulf Cooperation Council. Hammond is hardly undermining these talks; in fact, he’s leading them. Since the referendum, Britain’s Chancellor has regularly visited major economic partners like the Gulf Cooperation Council (GCC) states to engage with investors and strength Britain’s future trade relationships.

Those visits are important because their hosts, especially those in the GCC, will be lynchpins for the future of the post-Brexit British economy. Hammond has been a key voice for deepening economic ties with the region since his time as foreign minister. The Gulf Arab states are themselves pushing for an early deal on free trade to secure preferential arrangements, with regional officials saying they could have a draft agreement with Britain ready in months.

When it comes to these critical trade ties, Hammond is marching in lockstep with Theresa May and the rest of the Cabinet. GCC members like Saudi Arabia and the United Arab Emirates are already significant investors in the British economy and markets for British goods and services. Since Brexit, Saudi officials have gotten into the habit of receiving visits from their British counterparts. Theresa May herself made a high-profile trip to Riyadh in April, encouraging deeper economic cooperation and Saudi investment in Britain. With the head of the London Stock Exchange in tow, May also lobbied the Saudis to choose the City of London as the home of Saudi Aramco’s upcoming IPO. There is political momentum on both sides for a trade alliance, especially as GCC states move to diversify their economies and boost non-oil industry sectors after more than two years of low global oil prices. May’s primary objective may be to attract Gulf money into Britain, but both she and Hammond have been eager to offer British assistance to their partners’ reform efforts as well.

Hammond goal now is not to undermine these initiatives, but instead buy time amidst critical trade negotiations with both European and non-European partners. Thanks to the election, his leverage over the prime minister has been dramatically boosted and rumours of his potential sacking have been silenced, but his ultimate vision of a full Brexit remains the same.

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