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Yellowhammer: a taste of collapse

The – largely unmentioned – benefit of a no-deal Brexit is that since the neoliberal global economy is declining, Britain might as well get its collapse in early to avoid the rush.  That is, as the net energy available to the economy declines because of the remorseless rise in the energy cost of energy, so maintaining the complex network of supply chains that keeps the system going is going to have to break down.  Like it or not, the future will be less material and far more localised.  The only question concerns the speed at which it happens and the way in which the impacts are felt.

Despite its proponents claims to the contrary, Brexit obliges the UK economy to re-localise and de-materialise in a way that it will ultimately have to anyway.  It is, of course, not the ideal means by which de-growth could occur.  But – let’s be honest here – no government on earth is going to voluntarily de-grow; so the longer we leave it, the more catastrophic it is going to be.  Moreover, a “managed de-growth” may turn out to be as fanciful in its way as the techno-utopian belief that we can continue to grow the global economy by replacing fossil fuels with wind turbines and solar panels.

Insofar as most people think about these issues at all, they tend to imagine that the government – or at least some kind of “deep state” – actively controls everything that happens.  This being so, simply voting for a different set of politicians or employing some different technocrats is all that is required to change direction.  But complexity does not work that way.  As sociologist Joseph Tainter explained, complexity is the result of previous solutions.  And when complexity gives rise to new problems, even more complexity has to be added in order to overcome them.  It is a one-way street which requires increasing amounts of energy at every turn.  Unpicking it – for example, by leaving a trading bloc you have been part of for 40 years – can only result in disruption that, badly handled, will result in economic and societal collapse.  But societal collapse is already baked into a global economy based upon infinite growth on a finite planet anyway.  and so the real question is whether it is possible to manage the dislocation of a complex system or whether chaotic collapse is inevitable irrespective of what we do.

This is where the UK government’s “Operation Yellowhammer” paper that was released yesterday is of some interest.  The paper is an internal government planning document dealing with life-support issues that the various departments of state are likely to face in the event of a no-deal Brexit.  It does not deal with the full consequences of a no-deal Brexit.  For example, there is no mention of the anticipated disruption of air travel or even disruption at ports outside the south of England.  Broader planning is no doubt being carried out within the various department of state.  But the Yellowhammer document is limited to headline crises that will embarrass government – the purpose of civil contingencies planning of this kind is to ensure the continuity of government; to protect the state from the people rather than to protect the people themselves.

The document – dated 2 August 2019 – has a small preamble followed by 20 paragraphs setting out the main life support issues to be faced in what it refers to as a “reasonable worst case” (according to the Independent, earlier copies seen by the Scottish Government referred to the issues as a “Base Scenario”).  The anticipated problems stem from the fact that:

“No bilateral deals have been concluded with individual member states with the exception of the reciprocal arrangement on social security coordination with Ireland…”

As a result, when the UK leaves the EU on 31 October – inflicting economic disruption upon the EU27 as well as its own citizens:

“The UK reverts fully to ‘third country’ status.  The relationship between the UK and the EU as a whole is unsympathetic, with many member states (under pressure from the Commission) unwilling to engage bilaterally and implementing protections unilaterally, though some member states may be more understanding.”

The “key planning assumptions” which follow; though harsh in consequence, are standard fare in civil contingencies planning and are entirely consistent with major disruptions to the economy such as large-scale power outages, severe financial collapse, major strikes and fuel blockades.  Thus, while the hard line Brexiteers will dismiss them as just more “Project Fear,” they are consistent with emergency situations in the UK’s past or in other regions of the world.

Most of the issues in the document stem from the immediate border checks that the EU27 will impose on 31 October:

“France will impose EU mandatory controls on UK goods on Day 1 No Deal (D1ND) and have built infrastructure and IT systems to manage and process customs declarations and support a risk based control regime.  On D1ND, between 50-80% of HGVs travelling via the short Channel Straits may not be ready for French customs.  The lack of trader readiness combined with limited space in French ports to hold ‘unready’ HGVs could reduce the flow rate to 40-60% of current levels within one day as unready HGVs will fill the ports and block flow…”

Similar blockages would also mount in Kent, with knock-on consequences for smaller ports on the south and east coasts as HGVs divert to alternative ports; rapidly exhausting their limited capacity to handle the additional traffic.  According to the paper, the worst of the disruption will continue for at least three months.

The obvious impacts are on medicine and food:

“The reliance of medicines and medical products’ supply chains on the short straits crossing make them particularly vulnerable to severe extended delays; three-quarters of medicines come via the short straits.  Supply chains are also highly regulated and require transportation that meets strict Good Distribution Practices.  This can include limits on time of transit, or mean products must be transported under temperature controlled conditions.  While some products can be stockpiled, others cannot due to short shelf lives – it will also not be practical to stockpile products to cover expected delays of up to six months…”

“Certain types of fresh food supply will decrease.  Critical dependencies for the food supply chain (such as key input ingredients, chemicals and packaging) may be in shorter supply.  In combination, these two factors will not cause an overall shortage of food in the UK but will reduce availability and choice of products and will increase price, which could impact vulnerable groups… Government will not be able to fully anticipate all potential impacts to the agri-food supply chain.  There is a risk that panic buying will cause or exacerbate food supply disruption.”

Price increases feature in those areas where supply disruption is not anticipated.  For example:

“Demand for energy will be met and there will be no disruption to electricity or gas… However, there will likely be significant electricity price increases for consumers (business and domestic), with associated wider economic and political impacts.  Some participants could exit the market, thereby exacerbating the economic and political impacts.”

Given that the Operation Yellowhammer document mainly deals with life-support concerns such as food, water, electricity and gas supplies, together with various public order issues, the redacted paragraph 15 is of concern.  Since whatever it is about must be considered even more serious than major rioting and disorder caused by disrupted food supplies and a rapidly rising cost of living, we can only think about what life support issues we would have expected to be in a planning document of this kind, but which are notable by their absence.  Two spring to mind.  The impact on the banking and financial system is barely touched upon in the paper:

“Some cross-border UK financial services will be disrupted.”

And:

“A small minority of insurance payments from UK insurers into the EU may be delayed.”

Might it be that the redacted paragraph concerns the potential for a collapse of the UK banking system and/or a run on the pound?  One reason for thinking that this is not the subject of the redacted paragraph is that the Bank of England and the City of London have spent the last three years developing their own contingency plans, and are probably better prepared for what is coming than the UK government itself.  A more likely candidate for the content of the redacted paragraph can be found in paragraph 17:

“Low income groups will be disproportionately affected by any price rises in food and fuel.”

Wait a minute.  Who said anything about fuel?  The paper talks at some length about the impact on food supply chains.  But paragraph 17 is the first and only mention of fuel.  Nevertheless, the UK became a net importer of oil in 2004; and with the decline of the North Sea fields (which now produce just a third of the peak 1999 output) the UK has become increasingly dependent upon imports.  Moreover, a proportion of the crude oil that the UK still produces is exported to refineries in Europe for processing.  The refined products – including petrol and diesel supplies – will also be disrupted on 31 October; something the authors of this kind of planning paper would be fired for failing to mention.

There is good reason for wanting to hide the impact on fuel supplies.  On two occasions in the last 20 years – September 2000 and March 2012 – the UK economy has been brought within days of a cascading collapse as a result of protests that cut the supply of fuel to businesses and households.  Both events were severely exacerbated by panic buying ahead of the anticipated shortages.  In September 2000, blockades of the refineries by farmers and lorry drivers really did result in shortages of fuel.  In March 2012, however, a government announcement that fuel shortages were expected triggered panic buying on such a scale that they became a self-fulfilling prophesy.  As the BBC reported at the time:

“Queues have formed at petrol stations as demand for fuel shot up after ministers called for people to top up in case of a tanker drivers’ strike…

“Brian Madderson, chairman of independent retailers’ group RMI Petrol, accused ministers of “making a crisis out of a serious concern” and said they should have sought industry advice ‘weeks ago’ on how to avoid fuel shortages.

“It said petrol sales were up 81% on Wednesday, with diesel up 43%.

“The Petrol Retailers Association, which represents around 5,500 garages, said: “This is exactly what we didn’t want – people panic buying.”

It was the panic buying rather than a strike that failed to materialise, which caused chaos across the UK.  Little wonder, then, that government would not want to provide information that might trigger a similar crisis in the run up to a no-deal Brexit on 31 October.  The difference being, of course, that unlike 2000 and 2012, when the disruption was overcome within weeks, shortages of fuel (and food) caused by panic buying will take several months to overcome.  While increased price rises might trigger something similar to the “yellow vests” protests on the other side of the Channel.

On both occasions, but particularly in September 2000, the UK economy experienced various manifestations of an economic version of Liebig’s law of the minimum.  Justus von Liebig was a German scientist concerned with agricultural productivity, who reasoned that crop failure occurred as a result of the least available necessary input.  A farm might, for example, have plenty of water, sunlight and nitrogen, but with insufficient phosphate its crops are doomed.  A similar issue disrupts economies.  For example, in the wake of the explosions at the Fukushima nuclear plant, global car production was disrupted.  In factories around the world, lines were halted because of a shortage of black plastic bumpers.  And at the bumper factory, lines were on hold because of a shortage of the black pigment manufactured in a small factory located within the Fukushima exclusion zone.  In a similar way, BMW production was disrupted in the aftermath of the 2010 Eyjafjallajökull volcanic eruption because key machine tools that were normally delivered by air had to be transported by road instead. 

In September 2000, disrupted fuel supplies led to just ten percent of non-fuel deliveries not being made (far less than is anticipated in a no-deal Brexit).  The result was that processes across the economy failed because of their least available component.  For example, several hospitals were obliged to cancel routine operations because of a shortage of suture – a shortage that nobody had anticipated.  Similarly, plans to requisition public transport for emergency use broke down when public transport operators began to run out of fuel.  Key workers, too, were impacted as they were unable to get into work; leaving some organisations unable to operate.

This, no doubt is why much of the document is taken up with the spectre of public order crises.  It wouldn’t be the first time the unwashed masses have risen up to overthrow a government.  Moreover and despite the fantasies of the disciples of Herr Marx, every revolution we have ever witnessed began with food shortages and food riots.  This concern in the current context, however, is more a product of the paranoia of elites than experience of the real world.  That is, once the initial panic has occurred and the supermarket shelves have been emptied, people tend to enter into a disaster mentality in which they are obliged to support each other.  This is the experience of less widespread disasters around the world.  For example, in the most recent UK disaster – the Grenfell Tower fire – ordinary people and community groups self-organised the necessary support while the emergency services and the government were still navel gazing.  Indeed, the immediate risk is that a heavy-handed paramilitary police response to food and fuel shortages will actually impair the community self-organisation upon which some semblance of recovery will depend.

A week, as the saying goes, is a long time in politics; and there are six weeks before the UK is due to leave the EU.  Moreover, parliament has now tied the government’s hands by insisting that they either strike a new deal with the EU27 or ask for another Article 50 extension.  And while Boris Johnson has said he would rather die in a ditch (which I for one would be more than happy to dig for him) rather than ask for an extension; in the end he is unlikely to risk jail time for doing so.  As a result, the prospects of a no-deal Brexit are receding.  Either Johnson will sign a barely amended version of Theresa May’s deal or he will eat humble pie.

Nevertheless, the Yellowhammer paper does give a useful insight into the kind of crises that are coming our way as the combination of currency crises; net energy decline and environmental disruption accelerate.  No amount of low-net energy, non-renewable renewable energy-harvesting technologies is going to make up for the productive power that the global economy used to derive from high-net energy fossil fuels.  The result – whichever way you cut it – is that a less material and far more localised economy is the best case we can look forward to; most likely at some point in the late 2020s.  In this sense, the “reasonable worst case planning assumptions” in the Operation Yellowhammer paper merely describe an unnecessarily rapid and chaotic route to a destination that we will be forced to reach in the near future anyway.

As you made it to the end…

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