Theresa May and the UK BATNA – Brexit Negotiations Under Way

Theresa May’s big speech last week on Brexit drew predictable criticism from various quarters, including the opposition Labour Party and many European newspapers and politicians. (Incidentally, it would be nice if Labour got their act together to put some alternatives forward on issues where really they should be more vocal – a plan for the NHS perhaps, or the end of divisive faiths schools maybe?)

But one of the criticisms of May’s remarks shows a lack of understanding of negotiation. According to the Independent, Sir Keir Starmer, Labour spokesman, “focused his fire on what he called the threat to “destroy” the current economic model, by turning Britain into a tax haven, saying: “That would be an act of huge self-harm”. This was in relation to May’s threat that if the EU would not negotiate a satisfactory way forward, the UK could turn itself into a sort of off-shore, low-cost, business-friendly competitor to the European mainland.

Whatever you think of Donald Trump, he does appear to understand that much “diplomacy” and international relations is driven by negotiations, that ultimately are not too dis-similar from those many of us get involved with in our jobs. We were actually quite re-assured by May’s speech, which showed signs she understands that too. The discussions with the EU about the British exit are a negotiation; there is no doubt about that. It will be an incredibly complex negotiation and we would hope it will develop into a “let’s work together to increase the size of the cake” positive discussion rather than a battle over who gets the biggest slice. But a negotiation it is.

Therefore one of the tasks for May and the team is to develop strong BATNA for the UK. The Best Alternative to a Negotiated Agreement, first defined by Fisher and Ury in the classic book Getting to Yes, suggests that having a strong alternative (or BATNA) if you can’t reach a satisfactory agreement puts you in a much stronger negotiating position.

That stands to reason and is intuitively sensible. If I’m not desperate to buy that car, I can negotiate harder and will almost certainly do better than if the other party thinks I have no other option. And that applies even in “win : win” negotiations, not just for “win : lose”.

But another key point is that the other party’s perception of your BATNA is what really matters. In other words, they must believe you have a strong BATNA if you want them to take that into account in their own approach. We might even say that it doesn’t matter what our BATNA really is that matters; it is what the other party think it is that is critical.

So it is absolutely essential for May and the British negotiators both to develop a genuinely strong BATNA, and to make the EU negotiators believe we have a strong BATNA.  Now in reality, the UK BATNA may not be all that great. But developing it as well as possible, by getting Trump to say positive things about doing a deal with the UK for instance, and then talking quite assertively about what the country will do if agreement with the EU can’t be reached, is exactly the right approach. So the tax-haven idea is not something we might all relish, but is at least a vaguely credible idea, and something that could certainly hurt other European countries if it came to that.

Not a bad BATNA, all in all, and one that no doubt will be developed further. The UK wants everyone (our own citizens and the EU) to believe that really, we’re not too fussed if agreement over the way forward can’t be amicably agreed – maybe even that we would quite like that outcome. If May gets the EU negotiators to believe that, then a better deal for the UK can and probably will be done.  And it probably doesn’t matter too much if Labour complain, as long as May sticks to her guns.

Finally, the approach stands in stark contrast to the unsuccessful negotiation approach a year ago followed by David Cameron and his team, when he failed to get concessions from Angela Merkel on restricting immigration – concessions that would almost certainly have tipped the Brexit vote the other way.

That was in part we suspect because he so clearly had no real BATNA on entering that negotiation. Everyone knew he was personally committed to the “stay” option, and was also committed to a referendum. Merkel understood she could say “no” and he would have to accept it.  (We might include Sir Ivan Rogers and other civil servants who advised the PM in that charge of negotiating incompetence too).

We’ll keep a close eye on progress here, but expect more and more from May and others about how wonderful life will be if we can’t reach a transitional agreement with the EU … just remember, it is all part of the plan.

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