Theresa May's Herculean Brexit task

Theresa May's Herculean Brexit task
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According to Greek mythology, Hercules succeeded in the highly challenging task of clearing the Augean stables. Theresa May, the United Kingdom’s embattled prime minister, now too has a Herculean task in gaining parliamentary approval for the Brexit deal that she has negotiated with the U.K.’s European partners. 

However, judging by the senior defections from her cabinet and the deep divisions within her own party, it would seem improbable that she will hold onto her job. That could mean that by March 2019 the U.K. could crash of Europe without a Brexit deal.

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Were that to occur, it would have serious economic implications that would go well beyond the United Kingdom, holding the potential to reach U.S. shores.

One of May’s basic challenges is that the Brexit deal that she struck with her partners is a compromise that would seem to satisfy nobody on her side of the aisle. This point was made rather poignantly by Dominic Raab, her erstwhile Brexit secretary, in his letter of resignation from the cabinet, in which he underlined two basic weaknesses in the very lengthy and complex compromise deal.

The first weakness he noted was that the regulatory regime proposed for Northern Ireland could present a real threat for the integrity of the United Kingdom. It could do so in the sense that while the U.K. would at some point completely exit Europe, Northern Island would remained aligned to some EU rules if another solution could not be found to the Irish border problem.

This proposal has already been rejected out of hand by the 10 members of the Northern Island Democratic Unionist Party, on whose votes May’s Conservative Party relies on for its parliamentary majority.

The second and more serious weakness noted by Raab is one that is likely to draw the ire of all too many supporters of a hard Brexit. It will do so as a betrayal of the basic promise that they made to the U.K. electorate of securing a clean break from Europe.

This is especially the case since the deal struck includes an indefinite backstop arrangement where the EU would hold a veto over the U.K.’s ability to exit Europe.

As Boris Johnson, the colorful cheerleader of the Brexiteers, has argued, that could lead to a situation where for the first time in its 1,000-year history, the U.K. Parliament would not have a say in laws that govern the country.

It would do so in the sense that for at least a transitional period, the U.K. would remain in a European customs union, but it would no longer have a seat at the table that sets the rules for that union.

With her party deeply divided and with the Democratic Union Party unanimously against the deal, the only straw at which May might clutch for parliamentary approval of her deal is support from many "Remain" members from the opposition Labor Party.

However, that would seem to be a long stretch because the Labor Party is now smelling blood and seeing the opportunity for early elections that could return it to power.

All of this heightens the risk that the United Kingdom is now in for a long period of political instability that could see the end to May’s premiership and the calling of early elections. It could also mean that the U.K. will crash out of the EU without a deal by the end of March 2019, when the two-year negotiating period under Article 50 of the Lisbon Treaty comes to its end.

No deal would certainly be highly disruptive for U.K.-European trade flows with all of its attendant disruptive consequences for the U.K. and European economies.

What makes matters worse is that it would be occurring at a time that the German economy is already stagnating and that Italy is on a collision course with its European partners. We have to hope that like Hercules, May will succeed in doing the impossible.

Desmond Lachman is a resident fellow at the American Enterprise Institute. He was formerly a deputy director in the International Monetary Fund's Policy Development and Review Department and the chief emerging market economic strategist at Salomon Smith Barney.