Tag: International Commerce

Brexit and Differential Equations

As you may or may not be aware, one of the sticking points on Brexit is that the French and the Spanish are demanding the right to continue to fish (strip mine) British waters.

What I know is that if there is no deal, and Europeans are not allowed to fish those waters, then the pressure on the fishery will be reduced, at least until the British fishing fleet is expanded.

If you have been following this, this is pretty obvious.

The thing that I know, and you probably don’t, is that if the continental fishing fleets are excluded, then the percentage of selachians, sharks skates, and rays, of the catch, will go up.

The short version is that with reduce human predation, other predators will take up the slack.

The longer version, and the one that I learned in differential equation class in college is that  Lotka–Volterra equations were developed to describe the changes in catches in Italian fisheries during the First World War. 

With many fishermen at the front, the total catch declined, and the percentage of sharks and related fish increased.

The instructor described this as the first application of differential equations to what could generally be called ecology, though I had to explain to him what selachians were .

So, a no-deal Brexit is a happy time for sharks in UK waters.

Now you know.

Privatizing Profits and Socializing Losses

The World Bank has now come out in favor of a program that would make taxpayers responsible for guaranteed profits of private business all around the world.

This is an obscenity:

The World Bank has been leading other multilateral development banks (MDBs) and international financial institutions to press developing country governments to ‘de-risk’ infrastructure and other private, especially foreign investments.

They promote public-private partnerships (PPPs) supposedly to mobilize more private finance to achieve the Sustainable Development Goals. PPP advocacy has been stepped up after developing countries’ pleas for better international tax cooperation were blocked at the third United Nations’ Financing for Development conference (FfD3) in Addis Ababa in mid-2015.

………

De-risking?

The World Bank’s latest Guidance on PPP Contractual Provisions measures progress in terms of “successfully procured PPP transactions”. The Bank explicitly recommends ‘de-risking’ PPPs, effectively involving ‘socializing’ risks and privatizing profits.

But the term ‘de-risking’ is misleading as some risk is inherent in all project investments. After all, projects may encounter problems due to planning mistakes, poor implementation or unexpected developments. Hence, Bank advice does not really seek to reduce, let alone eliminate risk, but simply to make governments bear and absorb it.

………

Off the books, out of sight

Both World Bank and International Monetary Fund (IMF) research has found many governments using PPPs and other similar arrangements to keep such projects ‘off the books’ of official central government accounts, effectively reducing transparency and accountability, while compromising governance.

Such project financing typically involves government-guaranteed – rather than direct government – liabilities. Not booked as government development or capital expenditure, it is also not counted as part of sovereign or government debt, e.g., for parliamentary reporting and accountability.

………

Shifting responsibility

PPP financing is typically booked as government-guaranteed liabilities, rather than as sovereign debt per se. Being ‘off the books’, governments face fewer constraints to taking on ever more debt and risk. With such commitments, they also become much more vulnerable to ‘unforeseen’ costs.

Such contractual arrangements, typically set by private partners in most PPPs, do little to improve governance and accountability. To be sure, normal government budgetary accounting and audit procedures for PPPs may not meaningfully improve transparency and accountability.

………

Moral hazard

World Bank guidance is clear that even a private partner who fails to deliver as contracted must be compensated for work done before a government can terminate a contract. Whether private partners actually deliver as promised does not seem to matter to the Bank which provides no guidance for addressing their failures to meet contractual obligations.

The Bank thus contributes to ‘moral hazard’ in PPPs: the less likely the private partner stands to lose from poor performance, the less incentive it has to meet contractual obligations. Guaranteeing cost recovery, revenue and profit erodes the motive to deliver as promised and to consider project risks.

Enthusiastic PPP promotion – by the Bank, other MDBs and donors urging developing country governments to bear more risk – is not only encouraging ‘moral hazard’, but also creating more opportunities for the corruption and abuse they profess to lament.

Instead, private partners have greater incentives to try gouging rents from government partners, e.g., by renegotiating existing contracts to their advantage. Conversely, governments have to choose between bearing the costs of failed projects, and paying even more to save problematic ones in the hope of cutting losses.

………

Ignoring evidence

Many governments can undertake large infrastructure projects themselves, or alternatively, make much better procurement arrangements. IMF research has also found, “In many countries, PPPs have not always performed better than public procurement”.

Ironically, Bank research has shown that “well-run public firms tend to match the performance of private firms in regulated sectors”, concluding, “There is no ‘killer’ rationale for public-private partnerships”.

Even the Bank’s Research Observer has published a summary of “some of the most compelling examples of this kind of emerging critique” of infrastructure PPPs in telecoms, transport, water and sanitation, waste management and electricity.

Yet, the Bank continues to promote PPPs as the preferred mode of infrastructure financing, trying to shift more risk to governments, ostensibly to attract more private investment. Meanwhile, Bank guidance typically fails to warn governments of the risks involved and their implications.

Prejudiced guidance

Bank and other PPP advocates dismiss criticisms as ‘ideological’ despite growing empirical evidence. Such damning findings have had little impact on their PPP advocacy. Instead, the new fad is for more ‘blended finance’ to PPPs, using official concessional finance to subsidise and attract more private investment.

………

Unsurprisingly, despite Bank, donor and other efforts, PPPs have only generated 15~20% of developing countries’ infrastructure investments, according to the Bank’s Independent Evaluation Group, while remaining negligible in the poorest countries.

PPPs, and related institutions are little more than looting by private actors.

It’s Always the Hot Work that Gets You

It turns out that welding (hot work) to secure a door to prevent theft of the ammonium nitrate was what set off the massive blast at the port of Beirut.

This is no surprise.  Hot work has always been a leading cause of fires in industrial settings:

Multiple sources have reported that the disastrous explosion at Port of Beirut was sparked by hot work at a warehouse where officials had stored 2,750 tonnes of confiscated ammonium nitrate and a cache of fireworks. In a new report, senior officials provided Reuters with additional details: early this year they had learned that one of the warehouse’s doors was broken, raising the risk that a malicious actor could steal dangerous explosives. The port’s welding contractors set off the cache while trying to repair the door to protect the cache.

According to the report, the security investigation that set this chain in motion began in January after the broken door and a large hole in the warehouse’s wall were discovered. On June 4 – six months later – state security forces ordered the port to guard the warehouse and make appropriate repairs. On August 4 – two months after the order – the port sent a team of Syrian workers to fix the warehouse. Sparks from their welding work ignited a supply of fireworks, which had been stored next to the ammonium nitrate cache.

As an interesting aside, it appears that we still have no information as to who actually owned the ammonium nitrate which languished for years in a warehouse:

In the murky story of how a cache of highly explosive ammonium nitrate ended up on the Beirut waterfront, one thing is clear — no one has ever publicly come forward to claim it.

There are many unanswered questions surrounding last week’s huge, deadly blast in the Lebanese capital, but ownership should be among the easiest to resolve.

………

But Reuters interviews and trawls for documents across 10 countries in search of the original ownership of this 2,750-tonne consignment instead revealed an intricate tale of missing documentation, secrecy and a web of small, obscure companies that span the globe.

At this point, I’m pretty sure that there are 3 or 4 oligarchs crapping their pants over the possibility that they are tied to this disaster.

The Irony is Delicious

As a result of US sanctions, Huawei has been locked out of Google’s play store.

For most phone manufacturers, this would be something near to a death blow, but since Huawei is large enough to set up a rather competent app marketplace of its own, as well as being able to create its competent equivalents of Google’s services.

This has the effect of creating a parallel ecosystem for the Android operating system, which means that, because the OS is open source, Google is at risk of losing much of its control over Android, including its ability to spy on millions (billions?) of users.

So, Google has gone to the Trump administration hat in hand to roll back the sanctions and bring Huawei back into the fold:

As Huawei takes the initiative to create its own homegrown alternative to the Play Store, Google has reportedly pleaded with the White House to offer it an exemption to again work with the Chinese tech giant.

Huawei’s inclusion on the Trump administration’s Entity List has had dramatic consequences for the company’s handset business, preventing it from using Google Mobile Services (GMS) on its latest phones and tablets.

According to German wire service Deutsche Press Agentur, Android and Google Play veep Sameer Samat has confirmed that Google has applied for a licence to resume working with Huawei.

………

Huawei has said that if Google got an exemption, it would promptly update its newest phones to use Google Mobile Services.

………
That said, Huawei’s strategy has focused on hoping for the best, but preparing for the worst. These preparations have seen the firm invest over $1bn on its app ecosystem, with more than 3,000 engineers working on the AppGallery, according to a statement from the company released earlier this week.

It has also made deals with Western app developers and content providers, most notably Sunday Times publisher News UK, to make its services appear less barren.

………

Huawei has also introduced the ability to download progressive web apps, dubbed “Quick Apps” by the firm, through the AppGallery, which should bump up the app availability numbers – even if they lack the sophistication of a dedicated native app.

It’s likely this that has motivated Google to take the initiative. Although losing Huawei as a customer is a significant financial body blow to Mountain View, given its enduring popularity in Europe and Asia, it would pale compared to the damage caused by a new product that starts to loosen its stranglehold on the Android sphere.

Google Mobile Services can cost as much as $40 per device, and it’s likely that many phone vendors, particularly on the cheaper end of the spectrum, would welcome a less-expensive alternative.

Complicating matters for Google, the biggest Chinese phone manufacturers (Oppo, Xiaomi and Huawei) have teamed up to simplify the process of deploying apps to their in-house stores.

With Google claiming a cool 30 per cent on all Play Store sales, this represents a huge threat to its bottom line.

I’m kind of hoping that the request for a waiver is denied, because anything that hurts Google is good for the rest of us.

The British are Living the Chinese Curse

You know the curse, “May you live in interesting times.”

It’s actually not a Chinese curse, its origin is likely British.

Which is ironic for the British business who have been repeatedly reassured that Brexit will not make any difference in how they do business.

It has been clear from day 1 that the pro-Brexit crowd would not go for a Brexit-In-Name-Only, where the regulatory landscape would still conform almost completely to EU standards.

The Tories, and their pro-Brexit allies have always said that this was about sovereignty, and now the Chancellor has confirmed that there will be no formal synchronization of EU and UK regulations and standards.

Businesses, particularly the City of London, are freaking out:

Sajid Javid, the UK chancellor, has delivered a tough message to business leaders to end their campaign for Britain to stay in lock-step with Brussels rules after Brexit, telling them they have already had three years to prepare for a new trading relationship.

In an interview with the Financial Times, Mr Javid quashed any prospect of the Treasury lending its support to big manufacturing sectors — which include cars, aerospace, pharmaceuticals, and food and drink — that favour alignment with EU regulations.

“There will not be alignment, we will not be a ruletaker, we will not be in the single market and we will not be in the customs union — and we will do this by the end of the year,” Mr Javid said, urging companies to “adjust” to the new reality.

………
But with Brexit now less than a fortnight away, business leaders are eyeing the upcoming trade talks with Brussels with trepidation.

The EU wants the UK to stay in line with its regulations in return for a zero tariffs, zero quotas trade deal but Boris Johnson, prime minister, has repeatedly said he wants to break free from the bloc’s rules.

………

Philip Hammond, the previous chancellor, fought to maintain alignment with the EU but Mr Javid made it clear that the Treasury was now under new management. He suggested being comfortable with some companies suffering from Brexit.

The complaint here is that Boris Johnson  and his Evil Minions did exactly what he promised.

No sympathy from me.

Good Political Strategy

One of the concerns about Brexit is the future of both the UK’s National Health Service (NHS) as well as their price controls on drugs.

Jeremy Corbyn is now explicitly promising that neither the NHS nor drug price controls will even be brought up in trade negotiations with the US.

In fact, he his proposing legislation to explicitly prohibit any such negotiations:

UK opposition leader Jeremy Corbyn said the Labour Party will exclude Britain’s National Health Service and medicines from trade deals with the United States, as he accused Prime Minister Boris Johnson of covering up “secret talks” on the NHS.  

………

“Our public services are not bargaining chips to be traded in secret deals. I pledge a Labour government will exclude the NHS, medicines and public services from any trade deals – and make that binding in law”, he added.

It’s good policy and good politics.

Missing the Point

Over at The Nation, they are wringing their hands over how the recent collapse of coffee prices are devastating small farmers all over the world.

The problem is not the vicissitudes of coffee prices.

The problem is that, as a result of trade policies from the United States and the EU, farmers are forced to move away from growing staples to growing cash crops, which makes those farmers lives even more precarious, because they are subject to the whims of the market, and they cannot eat what they grow.

So they starve, or they are forced to sell their farms.

The problem is heavily subsidized US and EU agricultural products flood their markets, and force them to abandon the production of food crops.

What Do Brexit and the Black Death Have in Common?

Rising wages,* it appears.

This is precisely what the experts said would not happen:

No, really? Yes, really, via Reuters:

Major British employers gave average pay rises of 2.6% to staff in the three months to July, the highest pace of increase in more than 10 years, data from industry consultants XpertHR showed on Thursday.

Annual pay settlements in Britain began to rise roughly a year ago as the lowest unemployment rate since the mid-1970s put pressure on employers to retain staff, but deals had been stuck at around 2.5% in recent months.

And more:

In sharp contrast to the broader economic slowdown that has taken Britain to the brink of recession, the Office for National Statistics said annual average pay – excluding bonuses – rose by 3.9% in the three months to June, the highest rate since June 2008.

The ONS said about 115,000 more people found a job between April and June, when Theresa May extended the Brexit deadline until October, pushing up the number of people in work to a record of just over 32.8 million.

I’m not sure that the whole “Black Death” thing is particularly reassuring though.

H/t Naked Capitalism.

*For those of you who are not up on your labor history, after about half of Europe died of the plague, peasant wages jumped as a result of labor shortages.

This is China Paying for It

Notwithstanding the claims of the free market mousketeers, China has always had more to lose in the event of a trade war.

Now, we are seeing the Chinese consequences of a trade war, where US firms are moving their supply chains from China.

It is neither trivial nor cheap to move a supply change, and once moved, it is neither trivial nor cheap to move a supply chain back, so any changes resulting from Trump’s tariffs are likely to be long term:

U.S. manufacturers are shifting production to countries outside of China as trade tensions between the world’s two biggest economies stretch into a second year.

Companies that make Crocs shoes, Yeti beer coolers, Roomba vacuums and GoPro cameras are producing goods in other countries to avoid U.S. tariffs of as much as 25% on some $250 billion of imports from China. Apple Inc. also is considering shifting final assembly of some of its devices out of China to avoid U.S. tariffs.

Furniture-maker Lovesac Co. is making about 60% of its furniture in China, down from 75% at the start of the year. “We have been shifting production to Vietnam very aggressively,” said Shawn Nelson, chief executive of the Stamford, Conn., company. Mr. Nelson said he plans to have no production in China by the end of next year.

………

“Once you move, you don’t go back,” Mr. Nelson said.

This is something that people miss:  China is far more dependent on existing supply chains than the US does.

Tweet of the Day

I’m reading @JosephEStiglitz‘s new book, “People, Power, & Profits”.

Really appreciate this point about globalisation & wages:

It’s not just that wages are cheaper overseas, but our trade agreements give companies stronger rights if they invest overseas than at home. #ISDS pic.twitter.com/2vLq83cMBR

— Alice Evans (@_alice_evans) April 23, 2019

It’s not just market forces: We have been subsiding offshoring and labor arbitrage for years.

Mark Zuckerberg’s Lips Are Moving Again

Mark Zuckerberg has promised that Facebook will not store data in in countries that, “have a track record of violating human rights like privacy or freedom of expression.”

It appears that everything in Singapore is just hunky-dory for him though:

Mark Zuckerberg laid out his vision for Facebook’s pivot to privacy on Wednesday in a lengthy blog, but it hasn’t taken long for the shine of some of his pronouncements to be dimmed.

Detailing plans to keep user information safe, the Facebook CEO boasted that the company has chosen not to store data in countries that “have a track record of violating human rights like privacy or freedom of expression.”

“If we build data centers and store sensitive data in these countries, rather than just caching non-sensitive data, it could make it easier for those governments to take people’s information,” he said.

………

But within hours of Zuckerberg publishing his 3,200-word missive, it was pulled apart by human rights groups.

In September last year, Facebook announced that it was spending $1 billion building a new data center in Singapore. Zuckerberg posted about the news on his Facebook page, saying it would be the company’s 15th data center and its first in Asia.

………

“Singapore is a seriously rights-abusing government that spends an inordinate amount of time trying to intimidate and harass those who express views the government doesn’t like,” Phil Robertson, deputy director of Human Rights Watch’s Asia division, told Business Insider.

In related news, Roger McNamee, an early investor in Facebook, and what I assume is a former friend of the Facebook founder, called out his “Facebook Manifesto” as unmitigated bullsh%$.

They really need to find someone with more credibility than Zuckerberg, or Sheryl Sandberg as their spokesperson.

I would suggest Mohammed Saeed al-Sahhaf, AKA Baghdad Bob, as an improvement.

David “Joe Isuzu” Leisure would work too.

Brexit, Now With Tits

First, yes, this is British TV presenter Rachel Johnson disrobing in protest to Brexit, and yes, she is Boris Johnson’s sister.

Every time that I think that the political situation cannot get any weirder, someone in the UK seems compelled to say, “Hold my lager, mate.”

Seriously?

This looks like an ineffectual and desperate attempt at relevance, which makes sense, since she recently joined the Lib-Dem party.

She Could F%$# Up a 2 Car Funeral

I am referring, of course to Theresa May, who just lost ANOTHER crucial Brexit vote in Parliament.

Her level of incompetence is such that it invokes that old punch line, “You don’t come here for the hunting, do you?”  (Yes, I am suggesting that she might be failing on purpose. )

The vote was non-binding, but it wasn’t even close:

Prime Minister Theresa May has suffered another Commons defeat after MPs voted down her approach to Brexit talks.

MPs voted by 303 to 258 – a majority of 45 – against a motion endorsing the government’s negotiating strategy.

The defeat has no legal force and Downing Street said it would not change the PM’s approach to talks with the EU.

………

The voting figures showed it was not just hardline Brexiteers that failed to support the government – a number of Tory Remainers also declined to vote, as more than a fifth of the party in the Commons failed to back the government.

Five Conservative MPs – Brexiteers Peter Bone, Sir Christopher Chope, Philip Hollobone, and Anne Marie Morris, and the pro-Remain Sarah Wollaston – even voted with Labour against the motion.

It seems that every time that Donald Trump does some remarkably stupid sh%$, Theresa May thinks, “Here, hold my beer.”

This Just In: Jeremy Corbyn Can Count

Jeremy Corbyn has been opposed to a a 2nd referendum on Brexit ever since the process started.

There have been a few motivations ascribed to to this with Corbyn’s mild Euroskepticism (true) and the suggestion that that the EU is fundamentally a neoliberal institution that is structured to dismantle the modern social safety net (also true).

Well, now we have what seems to be a more likely explanation, that Jeremy Corbyn understands the political dynamics involved.

There are two very clear data points:

As Labour Party leader, these have to be a part of his considerations.

Making Boris F%$#ing Johnson look like Ernst F%$#ing Blofeld:

I am referring, of course, to Theresa May, who didn’t just lose her Brexit vote, but did so by a margin greater than any in modern history, and it’s the first defeat of a treaty in Parliament since 1864.

Jeremy Corbyn is calling for a vote of confidence, as should be expected by the opposition in any Parliamentary Democracy:

British lawmakers defeated Prime Minister Theresa May’s Brexit divorce deal by a crushing margin on Tuesday, triggering political chaos that could lead to a disorderly exit from the EU or even to a reversal of the 2016 decision to leave.

After parliament voted 432-202 against her deal, the worst defeat in modern British history, opposition Labour Party leader Jeremy Corbyn promptly called a vote of no confidence in May’s government, to be held at 1900 GMT on Wednesday.

With the clock ticking down to March 29, the date set in law for Brexit, the United Kingdom is now ensnared in the deepest political crisis in half a century as it grapples with how, or even whether, to exit the European project that it joined in 1973.

………

More than 100 of May’s own Conservative lawmakers – both Brexit backers and supporters of EU membership – joined forces to vote down the deal. In doing so, they smashed the previous record defeat for a government, a 166-vote margin, set in 1924.

The humiliating loss, the first British parliamentary defeat of a treaty since 1864, appeared to catastrophically undermine May’s two-year strategy of forging an amicable divorce with close ties to the EU after the March 29 exit.

This is a complete clusterF%$#.

The only bright side for May is that she has left such a dogs breakfast of Brexit that none of the Tories want her job:

If there was any consolation for May, it was that her internal adversaries appeared set to fight off the attempt to topple her.

Seriously, she is making the Trump administration look like bloody geniuses.

India: 1 — Amazon and Walmart: 0

India has significant restrictions on foreign goods entering its consumer markets, and now it has ruled that Amazon and Walmart cannot buy Indian sellers to use as a pass thru for its products:

The Indian government dealt a surprise blow on Wednesday to the e-commerce ambitions of Amazon and Walmart, effectively barring the American companies from selling products supplied by affiliated companies on their Indian shopping sites and from offering their customers special discounts or exclusive products.

If strictly interpreted, the new policies could force significant changes in the India strategies of the retail giants. Amazon might have to stop competing with independent sellers and end its offerings of proprietary products like its Echo smart speakers in India, its top emerging market.

For Walmart, which spent $16 billion this year to buy 77 percent of Flipkart, India’s leading online retailer, the new rules could hamper its strategy of selling clothing and other products under its own private brands and prevent it from using its supply-chain expertise and clout with retailers to drive down prices for Indian consumers.

Or drive wages down, and local vendors and manufacturers out out of business.

And then they use their monopsony power over the labor market to turn their workplaces into freakish hellscapes.

It’s just what they do.

………

Prime Minister Narendra Modi of India initially courted foreign companies to invest more in the country after his 2014 election victory, but his administration has turned protectionist as his party’s re-election prospects have dimmed in recent months. Mr. Modi has increasingly sought to bolster Indian firms and curb foreign ones through new policies, including one that requires foreign companies like Visa, Mastercard and American Express to store all data about Indians on computers inside the country. The government has also declared its intention to impose tough new rules on the technology industry.

The new e-commerce rules seemed to be an attempt by Mr. Modi to placate small traders, who have been hurt by his tax and financial policies, ahead of national elections next May, analysts said. The changes would also help Paytm, a local payments company that operates a digital mall, and Reliance Industries, an Indian conglomerate with online retail ambitions that is controlled by Mukesh Ambani, India’s richest man and a political patron of Mr. Modi.

Under Indian law, foreign-owned retailers were already barred from selling any products directly on their own e-commerce sites. In response, Amazon and Flipkart, which has long had foreign investors, set up partially owned affiliated companies to sell products like groceries, electronics and books on their sites. The arrangements gave them more control over customer service and allowed them to sell some products at prices below those offered by independent sellers.

The new policies appear to close that loophole. They also prevent the online platforms from striking deals to sell products exclusively, which they frequently do now for hot items like new phone models.

Modi is a religious bigot and a a fascist.

Amazon and Walmart are Amazon and Walmart.

My hope is not that one or the other wins, but that somehow, both sides lose.

Lucky That No One Else Wants the Job

So Theresa May has managed to survive a vote of no confidence from fellow members of the Conservative Party.

I have to think that the members who supported her was because no one wants to take her seat on the political electric chair.

May seems to realize it as well, as she nas now stated that she will not be standing for reelection.

It really is remarkable how poorly Brexit has been managed since David Cameron promised a referendum, never expecting that it would pass.

Since that point, there has been no preparation for a hard Brexit, and the first action taken by the Tories was to cede any leverage they had by taking EU expats in the UK off of the table, and now they have a deal where they will be out, but unable to negotiate trade deals on their own, and any change must be approved by every single member of the EU.

Charles de Gaulle must be sitting in his tomb laughing.

Dropping the “A Word” on Brexit

This is rather evocative language within the context of British Politics, and what it evokes is well deserved loathing of May and her Evil Minions:

Mervyn King, the former governor of the Bank of England, has launched a stinging attack on Theresa May’s Brexit deal, likening it to the appeasement of the Nazis in the 1930s.

In a sweeping attack on No 10, the Treasury and his successor, Mark Carney, the Brexit-supporting King said the political elite was allowing the UK to become a vassal state that would be forced to accept Brussels diktats. He described the deal negotiated by the government as “incompetence of a high order”.

King’s comments came as Carney told the Treasury select committee on Tuesday that the price of food could go up by 10% if the UK left the EU with no deal and with no plans to avoid chaos at the country’s ports.

He said Britain’s ports were not ready for a shift to World Trade Organization rules for the country’s exports and imports with the EU.

King, however, slammed May’s deal as “a muddled commitment to perpetual subordination from which the UK cannot withdraw without the agreement of the EU”.

He added: “It simply beggars belief that a government could be hellbent on a deal that hands over £39bn while giving the EU both the right to impose laws on the UK indefinitely and a veto on ending this state of fiefdom.”

May’s Brexit deal is so bad that it could have been negotiated by Donald Trump.

Signs of an Upcoming Fiasco

As if Theresa May’s truly horrible Brexit deal were not bad enough, it appears that May’s weakness, even pro-Brexit forces imploding, has emboldened Spain, which is considering reasserting its claim to Gibraltar:

The Spanish government has threatened to reject Theresa May’s Brexit deal over the issue of Gibraltar, demanding that last-minute changes be made to the text ahead of a crunch summit.

The country’s foreign minister said Spain would not back the proposals at the European Council unless it received assurances that the agreement would not apply to Gibraltar.

But Downing Street said it would not exempt Gibraltar or any other British territory from the agreement – putting the two governments on a collision course ahead of the meeting this weekend.

“The negotiations between Britain and the EU have a territorial scope that does not include Gibraltar, the negotiations on the future of Gibraltar are separate discussions,” Spanish foreign minister Josep Borrell said on Monday morning in Brussels.

“This is what needs to made clear, and until it is clarified in the withdrawal agreement and in the political declaration on the future relationship, we cannot give our backing.”

Spain has long resented Britain’s claims on Gibraltar, a British overseas territory that is home to around 30,000 people, and has previously threatened to use Brexit to wrest concessions on the issue.

This a sign of just how weak the British position is.

There is no good ending for this for London.