Closing the Deal in Negotiations

Lessons from David Cameron’s failed efforts to prevent a Brexit vote.

By — on / International Negotiation

business negotiations

In dealmaking, we typically devote significant time to trying to convince a counterpart of the logic and appeal of our proposals. But sometimes our role becomes a more defensive one, as our negotiation behaviors focus on trying to dissuade others from pursuing a route that we believe could be disastrous.

That was the task outgoing United Kingdom (UK) prime minister David Cameron faced as he tried to convince members of his own political party and then the British public of the merits of remaining in the European Union (EU). The decision of a narrow majority of voters on June 23, 2016, for Britain to exit the EU (a process referred to as Brexit) triggered Cameron’s resignation, created turmoil in the global financial markets, and left the British confronting an unpredictable future.

The limits of remain or leave

As the eurozone struggled to emerge from the global recession in the years after 2008, many in Britain began looking for a way to distance the UK from the European economy.

In 2012, Cameron, prime minister since 2010, faced pressure from the right wing of his Conservative Party to hold a national referendum that would allow British voters to decide whether to remain in the EU. Hoping to keep that lobby in check, at an EU summit in Brussels, Cameron engaged in diplomacy techniques to secure commitments aimed at protecting the British economy from the euro’s problems, as reported by the Guardian.

Back in London, Cameron rejected the idea of an “in or out” referendum, saying a referendum offered citizens only two limited choices: remain or leave. EU membership, he argued, enabled the UK to be a full negotiating partner within the EU. 

The prime minister gives in

But by January 2013, Cameron was facing strong pressure to hold a referendum on the question of EU membership from Conservative members of Parliament and from the right-wing UK Independent Party, which objected to the influx of migrants across the EU’s open borders into Britain.

Cameron announced that his government, if reelected in 2015, would first negotiate with the EU for new commitments to address rising UK concerns about immigration, sovereignty, EU bureaucracy, and other issues. After that diplomatic negotiation, Cameron said, the UK would hold an in-out referendum on EU membership by the end of 2017.

Following the Conservative Party’s victory in the May 2015 general election, Cameron announced a referendum date of June 23, even as he actively campaigned for Britain to remain in the EU. 

Concessions and compromise

Emboldened by his decisive reelection in May 2015, Cameron visited 20 EU member states to lay the groundwork for his formal dealmaking with the EU.

Hoping to entice British voters to stay in the Union, EU leaders agreed to demands they could easily meet and negotiated for concessions on others. Britain secured new economic protections and a commitment to be excluded from official references to the EU’s goal of building a European “superstate.” In addition, EU leaders agreed to lower taxes and bureaucratic hurdles for small and medium-sized businesses.

On the key issue of immigration, however, EU leaders said they could not cut welfare benefits for migrant workers arriving in Britain from other parts of Europe. The negotiators did, however, discuss the idea of an “emergency brake” to allow Britain to deny benefits to incoming EU workers for their first four years in the country. 

At the end of the diplomatic negotiation, Cameron, other European heads of state, and EU leaders felt confident that they had granted the UK a generous deal that he could use to propel a “remain” vote in the referendum. But in the campaign period that followed, “leave” proponents argued that Cameron had failed to adequately address the immigration issue. The vote was close, but Cameron’s campaign ultimately failed.

3 tips for mounting a successful campaign

The Brexit vote could easily have gone the other way—and almost did. Yet the result does suggest the following three precautions for negotiators who are seeking to avoid an outcome they believe would be highly damaging to themselves and others when closing the deal in negotiations:

  1. Weigh the risks of concessions. Cameron may have been overconfident in his ability to convince the British people of the virtues of remaining in the EU. In negotiation, temper your confidence with a thorough risk analysis.
  2. Anticipate the limits of negotiations with allies. Cameron negotiated strenuously with the EU for the concessions he thought he’d need to convince British voters to stay in the union. However, he failed to make headway on immigration, the issue most important to many of his citizens.
  3. Sell the deal back at home. Many UK voters were not convinced that the prime minister had gotten a great deal from the EU. Selling your agreement to your constituents is a critical but often overlooked responsibility in dealmaking.

Adapted from an article in the October 2016 issue of the Negotiation Briefings newsletter, published by the Program on Negotiation at Harvard Law School.

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