The following is a guest post from my law colleague, Rob Ogilvie. Rob specializes in negotiation advice and strategy. At a Harvard course in negotiation many years ago, Trump cases were used to explore and illustrate successful negotiation approaches.  So to our astonishment early in Trump’s campaign Rob warned against dismissing his chances. Rob later won wagers taken when it still seemed inconceivable that Trump could become President.

Like many I lazily assumed National had it in the bag until their recent press conferences.  Then the faces showed they have had their “Oh Sh-t” moment.  To woo the elusive Mr Peters Mr English has already told David Seymour to scram, and both Ms Bennett (National) and Mr Davis (Labour) have offered to step aside from deputy leadership. Mr Joyce has said he really can be best friends, honest.  Both parties have made it clear that cherished policies are up for grabs.  Have whatever cabinet seats you like.  And that is just their opening positions.  The negotiations apparently haven’t even started.

The art and science of negotiation means Winston could be our next PM, or at least a newly constructed position more influential than Deputy PM.  If he really wants the job.

He has been working towards these two weeks all his life.  He is the longest serving MP and party leader, and has replayed these sort of negotiations many times.  He is in a position where he can trade two feasible potential governments off against each other.  Why wouldn’t he back himself for the top job?

To do so, he just needs to satisfy three simple negotiating conditions:

• Be alive;
• Hold the balance of power in MPs in Parliament;
• Be credible dealing with Labour.

The reason this may translate into PM, despite NZ First only having 7% of the total MPs is simple:  BATNA.

Lots of factors will influence the negotiations over the next couple of weeks between NZ First, National and Labour – the numbers, policy preferences, personalities, perceived moral authority, misunderstandings, error.  We can only make assumptions.  But above all, what will drive the participants is what they think will happen to them if they don’t reach a deal: their Best Alternatives to a Negotiated Agreement, or BATNAs.  Analysing BATNAs is fundamental to understanding all negotiations.

BATNAs are a better guide than just listing what you want and arguing as to why the other side is morally bound to agree with your just cause.   Everyone with a place at the table thinks they are in the right.  And persuasive ability, experience and tactics can help to get the deal you want.  All the players in this political drama have that, especially Winston.  But these factors aren’t enough.

What the science of negotiation teaches is, paradoxically, that what matters most is what the other side perceives as their next best alternative.   In a negotiation your key job is to enhance your own real BATNA and diminish your opponent’s perception of their own BATNA.  And then, encourage your opponent to an agreement just slightly better than their own, diminished, BATNA.

For example, a simplified outline of each participant’s BATNA might start like this:

• Labour:  at least another 3 years of the same boring opposition stuff. But room to complete a renewal.
• National:  Lose all the baubles of office, likely for at least 6 years.  Abrupt reversal of many policy gains.  But preserve their integrity and avoid responsibility for the next market crash.  A bit like the Greens.
• NZ First:  OK going with either.  Policy pluses and minuses largely balance out, likewise electoral outrage at a deal. Both will deliver the cabinet posts necessary to ensure the party could endure. If with Labour, Mr Peters may get the PM’s job but in a flakey weak Government.  If with National, only get deputy PM but in a more stable, effective Government.  But if fail to form a government at all, severe backlash from voters, and Mr Peters loses his last chance.

A BATNA analysis says that any deal better than this could be worth doing. There are many reasons that may not happen, and in particular both Labour and National have long term interests to consider which make some otherwise sensible deals unrealistic.  They may also have different perceptions of the longevity of a coalition deal with Winston.

On international comparisons there are really only thin policy differences between National and Labour (as evidenced by the fact Winston could credibly deal with either).  If NZ had a different political tradition, there could even be room for a “grand coalition” excluding NZ First.  But Labour and National can’t ignore their tribal differences. They define them and increasingly voters and supporters may be using and exaggerating those differences to define themselves. The way religion once did.

It makes all the difference that NZ First can credibly deal with Labour, especially if specials change a couple of seats to make that coalition more secure.  Without that, National’s BATNA would have been going back to the polls now and the likelihood of voters favouring stability and punishing NZ First.  So they could confidently drive a very hard bargain.  But now their BATNA is the wilderness and hoping for a weak Lab/NZ First coalition lasting only one term or less. And, for those in the negotiating team, the likely end of their political careers.

It makes a big difference that the Greens have such a poor handle on negotiation 101.  They could easily be in NZ First’s position had they just warmed up their base for a deal with National over the last several years.  Then the BATNAs of all participants would have been very different, and NZ First would have had a snowball’s chance at the top job.  But the current Greens’ self respect (as virtuous in a world of sinful humans) has depended on demonizing National and dismissing existing levels of NZ sacrifice to environmental visions. So the Green party treats democracy’s unavoidable negotiation and compromise as moral deficiency. By therefore minimising their leverage, they have ensured their voters can be taken for granted. Their best hope now is as a very junior partner in a three way coalition.

Bill English’s strong finishing performance makes it unlikely, but not impossible, that Mr Peters could get the top job (or a constructed close substitute such as “First Minister”) in a National/NZ First coalition.  Of course it is unthinkable this week.  But next?

So far, all Mr Peters has done is muddy the waters with a long list of negotiable “bottom lines” and making it clear he has all the time in the world.  He cares, but not T-H-A-T much.  (Master negotiator Herb Cohen 2003).  On the other hand, both Labour and National have already offered the deputy PM slot, cabinet positions, policy workarounds and NZ First’s choice of sacrificial lambs.  National has even started sacrificing their lambs already.  And that’s just their opener, before negotiations have started. We’ll see how far they’ll go when the grim reality of the BATNAs sink in.

We can already see National laying out the fine trails of silk, feigning confidence that they will ensnare Winston in the process.  Perhaps they will.  He needs a deal.  But Labour have nothing to lose, and can more easily offer the biggest prize.  And of all the participants, Winston has played this game many times before.  He knows what works and what doesn’t.  Maybe he doesn’t want the top job.  Maybe he will settle for good cabinet posts and some legacy policies.  But given that is each of Labour’s and National’s opening offer, why wouldn’t he play one off against the other to go for more?  It’s not as if he’s constrained by policy – he’s announced enough bottom lines to give everyone lots of options.

One reason is that this is a representative negotiation.  There are major agency risks for all participants.  Put bluntly, what really matters to the negotiators personally may not matter to their party and vice versa.  So for example, 3 years out of Government might well suit Jacinda, but might not suit the stern leaders of the Labour party.  Likewise NZ First might be better off trading PM for more solid cabinet spots in a stable government, and a deal on a safe seat for the next election, but Winston might not be. And some National backbenchers might prefer the opportunities that defeat and renewal could bring, but they won’t be in the room to decide on the deal.

The suggestion this morning by ex NZ First MP Tuariki Delamere that Ms Ardern offer Mr Peters a shared PM position now is premature.  A good negotiator never opens with their best offer – because that leaves no room for the major concessions the other side will expect to win off you before agreeing the deal.

Rob Ogilvie is a principal in Wellington boutique public and commercial law firm Franks Ogilvie and a specialist in commercial negotiation.