Politics Without Wings

Politics Without Wings

Introduction

Airbus today released its ‘BREXIT – Risk Assessment’.  Airbus as a company, is the most significant civil aerospace customer in the UK after Rolls Royce with 14,000 employees in the UK and supporting 110,000 jobs in the wider UK supply chain.  The main part of Airbus supply chain that is fulfilled in the UK are the design and manufacture of wings for many of its aircraft, considered by some to be a reasonably critical component on an aeroplane.

Severe Concern over Airbus UK if ‘No-Deal’ BREXIT

Airbus warns that Brexit will have “negative” effects whatever form it takes.  Furthermore, if no agreement between the UK and the EU is reached, it would “force Airbus to reconsider its footprint in the country, its investments in the UK and at large its dependency on the UK.”  This “catastrophic” outcome would result because of two effects of a ‘No-Deal BREXIT’.  Firstly, general disruption as  trade is affected by a new regime.

Secondly (and more importantly), the company site the problems associated with the UK no longer being under the jurisdiction of the European Aviation Safety Authority (EASA); “In the absence of a BREXIT agreement, UK aerospace companies will not be covered anymore under existing regulatory approvals including EASA approvals.  All UK companies will need to transfer their DOA, POA, and MOA[2] into the EU.  This means that should a single supplier not be certified, its parts cannot be installed and consequently prevent the delivery of aircraft.”

Cue the usual fevered headlines, largely indicating that Airbus will pull out of the UK because of BREXIT.

And yet, despite the fact that the company is careful not to state this explicitly, by using the language of ‘revisiting’ investment, dependence and R&D footprint in the UK it is not unreasonable to infer a clear threat here, although perhaps ‘consequence’ would be the word Michel Barnier as well as Airbus might prefer.

Impossible to be an Airbus Supplier without EASA?

However, while Airbus is careful not to say that it would be impossible for UK aerospace suppliers to get the necessary approvals to continue to supply Airbus (and indeed other EU aerospace manufacturers), it fails to say that this would in fact be perfectly possible and indeed would appear to any neutral observer eminently desirable for all concerned.

After all, one obvious question that the Airbus’ statement raises is, ‘How do suppliers from countries outside EASA currently supply Airbus?’.  Aerospace supply chains are global, with many countries from outside the EU and EASA suppling aerospace manufacturers within the EU, Morocco, Turkey, India and Canada to name but a few.

Most notably of course that other great aerospace economy, the United States, also has many suppliers who provide parts for aircraft manufacturers and engine makers in the EU.  Airbus itself has a major assembly facility in Mobile, Alabama, recently opened in 2015.  This would suggest that it is not impossible to have distributed and efficient supply chains that include both large and small suppliers from jurisdictions outside of EASA.

And, of course, this is in reality the case.  EASA publishes on its website no less than 53 agreements with other national aviation authorities to enable cooperation on safety and approvals, effectively mutual recognition agreements that are termed ‘Working Arrangements’.[3]

Planes without Wings, Wings without Engines?

Of particular relevance to Airbus’ potential problems in putting wings on its aircraft, is an agreement between the US Federal Aviation Authority (FAA) and EASA that puts the whole Joint Venture between Safran (EU) and GE Aviation (US) (called CFM International) under a single agreement.  CFM designs and manufactures a series of engines for both Airbus and Boeing and the aim of the ‘Working Arrangement’ is:

“…the joint type certification and continued airworthiness management of the CFM International engines with the objective that one programme will provide compliance with the applicable standards and requirements of both the European Union and the United States of America.”

It goes on to summarise the basis of the arrangement:

“Because the FAA and the EASA type certificates are essentially the same, manufacturing may occur under either the FAA Production Certificate or the EASA Production Organisation Approval (POA) under both TCs.  The arrangement covers procedures for certification, design changes including repair designs, and continued airworthiness.”[4]

The example of CFM is doubly relevant as it begs a further question.  Namely, that if Airbus anticipates such ‘catastrophic’ disruption as a result of disruption to its own internal supply chain for wings, what damage does it contemplate if the engines that go on those wings made in the UK by Rolls Royce could also no longer be certified and approved?

In reality, there exist multiple agreements between EASA and other aviation authorities to allow supply chains to operate smoothly.  And if a specific agreement can be made between the FAA and EASA for a joint venture, how much more straightforward would it be for Airbus to benefit from a similar arrangement between two aviation authorities (the CAA and EASA) who have worked together for decades before now?

Investors Spooked?

It is possible there is a very good reason, although (barring the influence of politics) this appears unlikely, and it is also true that Airbus is careful not to suggest that no agreement covering these aspects could be made.  However, the fact Airbus does not mention it as a possibility surely begs the question of what exactly the purpose of this ‘BREXIT Risk Assessment’ is and why it was released at this juncture.

For surely the problems posed by BREXIT would impact Airbus very deeply if what is foreseen in the Risk Assessment came to pass?  As far as investors are concerned, serious disruption has in the past had a significant impact on Airbus’ share price.  During 2015 to mid-2016 when Airbus was struggling with supply chain issues that severely impacted its A350 production schedule, the share price fell from €60 to a low of €49 in June 2016.  June 2016 saw the EU referendum in the UK; since that period, Airbus’ share price has doubled to reach a high of €104.6 last month.  Given the drastic warnings of disruption to multiple aircraft production schedules (including the A350 which is now back on track after considerable effort), hugely increased operational costs and other consequences posited within the BREXIT Risk Assessment, it is surprising that there has been no impact whatsoever on investor sentiment as far as Airbus is concerned.  As of writing, the share price is unchanged at €99 on the day.

Politics Without Wings

The description of Airbus as ‘Politics with Wings on’ is highly apt.  The German and French governments continue to hold controlling shares within the company and the Byzantine internal politics at the top of the company are legendary.  The politics referred to in that original quote by an Airbus Senior VP was primarily the strategic importance various EU governments, as well as the EU Commission itself, attributes to the giant aerospace manufacturer.  An attempt to pressure the internal politics of another nation in order to benefit its two major government shareholders would surely represent a significant departure from the kind of ‘politics’ that Airbus has hitherto engaged in.

[1] Katherine Bennett, Senior VP Airbus UK (22nd. March 2018)

[2] Design Organisation Approval (DOA), Production Organisation Approval (POA), Maintenance Organisation Approval (MOA).

[3] See: http://www.easa.europa.eu/document-library/working-arrangements

[4] ‘Working Arrangement for CFM International SA’, p.2 at http://www.easa.europa.eu/document-library/working-arrangements

Time to Come Clean

Letter sent to:

Chuka Umunna, Anna Soubry, Phillip Lees, Dominic Grieves, Ken Clarke, Phillip Hammond, Antoinette Sandbach

Image result for soubry umunna

13th. June 2018

Sir,

I am writing to you to in the aftermath of the debate over the Lord’s amendments on 12 June 2018 which I watched with interest.  It highlighted to me yet again something that I have been increasingly conscious of and, indeed, frustrated by since the start of the EU Referendum campaign which is the unwillingness, the deliberate failure of those who argue in favour of membership of the EU to put forward their real reasons for their strong convictions.

And strong they undoubtedly are!  Related to this is another source of extreme irritation is the sight of a small but prominent network of MPs, Lords and senior civil servants who have been happy to bend and compromise over all sorts of issues of no small importance over the course of their careers, including (but by no means limited to) student tuition fees, invasions of Iraq, gay marriage, suspension of habeas corpus, corruption at elections and so on.  These issues are not minor nor do they represent a list on which I necessarily have views different to those who have been happy at times to go, for whatever reason, against their principles, but the fact that then the likes of Blair, Clegg and others (I leave it to you to decide whether it is justified to include yourself on the list) acting as if the end of the world is upon us and that no decision more catastrophic for the well being of this country could be imagined than leaving the EU is, to put it tactfully, ‘perplexing’.

My simple question is why is the issue of such importance to yourselves?  Why be prepared to set your face against a clearly expressed decision in a free and fair referendum that had the highest turnout and electoral engagement in decades?  Why be prepared to throw all party loyalty and government cohesion to the wind?  Why be so certain in attempting to engineer an outcome that will result in the abject humiliation of this country and its institutions, both abroad and at home, a humiliation that will impact this country for many years?

The fact is that the most often deployed arguments by yourselves are short-term and economic.  In other words, our economy has been so integrated into the single market that the destruction caused by leaving would cause significant economic damage.

And yet I know of few people (Leavers or Remainers) who disagree that there will be short-term damage and that this will mean an economic loss.  These are clearly not the reasons that animate such a strong and desperate reaction against the idea of leaving the EU.  It is, I grant you, possibly the only effective political argument that might be likely to gain traction.  This is not new, however. ‘Project Fear’ was much derided, but it was arguably responsible NOT for the Remainer side losing the referendum in the absence of a more positive campaign as was argued by some, but in my judgement was probably responsible for making the referendum result as close as it was.  Put simply, the fabled ‘48%’ is not made up of convinced EU supporters but contains within it a substantial number of people who are as hostile to the EU as those who voted Leave, yet were fearful of the near-term economic consequences, subsequently seen to be so overblown that now nobody no longer believes Treasury estimates on any potential impact of Brexit, and I suspect that includes you.

So my plea is, amid all the continued complaints about the Leave campaign’s so-called ‘lies’, amid all the calls that so complex an issue as EU membership was not properly debated in all its ramifications and amid the dread warnings of the immediate impact of leaving the single market, that you and your fellow campaigners actually make the argument for EU membership as far as it positively impacts almost every aspect of the life of member states.  There are a number of reasons I can plausibly think of that would explain so committed an attachment to EU membership and why someone like yourself would see it us so unutterably vital to the continuation of civilised society.  They would include:

  1. Strategic – Making use of that happy phrase, we are ‘better together’ in the current and foreseeable global environment.
  2. Legal – The EU is a guarantee of human rights that otherwise cannot be trusted to the British electorate and the representatives they choose.
  3. Social – The EU guarantees social and workplace rights, again because the British people cannot be trusted.
  4. Legal – A civil law system is superior to common law, the ECHR preferable to Parliament as the highest court.
  5. International – Nation states are not viable, frankly dangerous and international institutions are a better guarantor of peace and individual rights than nations are.
  6. Economic – A large, protected single market is vital in an age of global trading blocks. (This, as you know, ultimately suggests the need for a single currency as well as a single tax regime, but I will mention this just in passing as an objection that you would not even contemplate discussing in public at this current time let alone support. Nevertheless, the logic is plain.)
  7. Historical – The EU has been responsible for peace in Europe for the last 50 years and has made war between European nations unthinkable.

These are just some, or possibly all, of the reasons you are so anxious to avoid the UK leaving the EU.  They are all decent arguments, though all of them are in my view eminently contestable.  But even adherence to just one of them would be explanation enough for commitment, diligence, intrigue and personal investment you display in the cause of the UK’s continued membership of the EU.

So why don’t you say so?!  Why can’t we have a proper debate?  The Leave campaign, whatever you might think of its tactics and simplifications, at least addresses the impact of the EU on all the aspects of our national life as well as the fact that the EU is not a static process but has ‘ever increasing union’ as its guiding principle.  Why cannot those by whose actions suggest that leaving the EU is the most catastrophic thing they can contemplate in the life of this country do the same, treat the principles behind the EU as something dynamic and not static, and address the real reasons underlying their attachment to the EU ideal?

If you continue to fail to do so, is it unreasonable that people get more and more frustrated with this mendacity, this deliberate obfuscation?  And it is indeed unfortunate that the political language in this period has deteriorated to such a degree.  But my point is it is as much to do with the attitude of Remainers and in particular their failure to articulate a reason to stay in the EU aside from trying to scare the electorate by focussing on near-term economic disruption.  Everyone knows there must be more going on underneath, dark mutterings about the profound consequences of leaving the EU etc. etc., but unless they are aired the frustration will build, and if you are successful in your aim of thwarting Brexit that frustration will reach a point that will have profound consequences for our politics and institutions for decades, either through direct action or, perhaps worse, the melting away of trust and participation in all aspects of political life.

Please remember; trust in politicians and the political process was very low prior to the EU Referendum.  Trust in political parties and institutions is under severe strain across most of the EU member states.  We had a vote that saw the highest turnout in decades and over 2 million non-voters bothering to turn out.  If the result of that electoral process is significantly fudged, overturned or ignored and it is done without the true motivations of those who engineer it continuing to be left unarticulated, I leave it to you to contemplate the consequences in the long-term.

I end on a personal note.  I was open to real discussion and debate at the start and throughout the course of the Referendum campaign.  I was waiting  for an articulation of why those in favour of Remain were really so in favour of further pooling of national sovereignty, why remaining in a single market that is not a single market for services which is of most value to our economy was an advantage, in what concrete ways EU membership boosts our influence in the wider world, why our rights as British citizens can only be achieved at the EU level and not at the national level and why it was better to be part of a system where democratic accountability and transparency is frankly a joke rather than trust to our own well tested and resilient institutions.  The answer never arrived.  I have never heard it before, I have still not heard it since.  I am still waiting.  Ultimately, I have 4 young children and I though about how I would explain to them when one day they come to me later in life, angry at some decision taken at the EU level (by then EU jurisdiction would likely have extended into more and more areas) and I had to look at them and explain that all that stuff I taught them about the importance of voting, consent, the value of parliament the history of this country etc. etc. was not actually true because we decided to give more and more of our sovereignty away.  Real decisions are made elsewhere, we have little or no control and they are not interested in our consent.  I could not do that.  I voted Leave.

 

Yours faithfully,

The Cavalier Puritan