07 March 2017

Financial Times: Spain and Poland plan ties with post-Brexit UK

Madrid and Warsaw have good reasons for wanting an amicable British departure from the EU. Each favours close post-Brexit relations with London. However, certain points of contention in the Brexit process may not be easy to clear up.

[...]Spanish-UK trade and investment links loom large over Brexit. Spain has a trade surplus in goods with Britain. The UK is the biggest destination for Spanish investment abroad, absorbing about 17 per cent of the total. Banks such as Santander and Banco de Sabadell play leading roles in British finance. No less prominent in the UK are Spanish companies such as FCC in construction and services, Ferrovial in airports and Telefónica in telecommunications. Meanwhile, British companies are the third-biggest foreign investors in Spain.

As Mariano Rajoy, Spain’s prime minister, told a conference in January, the UK is critically important to Spain’s tourism industry. He estimated that almost 17m Britons visited Spain in 2016 — one in five of all tourists. Moreover, some 300,000 Britons reside in Spain. Another half million or more spend part of the year there. About 137,000 Spaniards lived in the UK in 2015, according to the Migration Observatory institute.

These economic and human ties illustrate the need for a sensible Brexit deal. But there is also a political dimension. Europe’s most vocal pro-independence movements are in Scotland and Catalonia. London and Madrid share an interest in containing separatism, an objective arguably more attainable under a constructive Brexit settlement.

One awkward issue is Gibraltar, the British possession on Spain’s southern coast. Madrid has suggested “co-sovereignty” over the Rock, but knows this is a non-starter for the fervently pro-British Gibraltarians.

However, Gibraltar relies on free movement of goods and labour with the EU. “If Gibraltar wants a relationship with the EU, it will have to go through us. And that will require a bilateral agreement between Spain and the UK,” says Alfonso Dastis, Spain’s foreign minister.

In Poland’s case, the conservative nationalist Law and Justice government in Warsaw was profoundly dismayed by Britain’s vote to leave the EU. Aleks Szczerbiak, a University of Sussex professor, explains that the government viewed London as an ally in fending off criticism from Brussels over its adherence to the rule of law.

Brexit Briefing Sign up to your daily email briefing Keep up to date with the latest developments on the UK’s exit from the EU Warsaw also warmed to the British vision of an EU with some powers restored to national governments. It was reassured by the robust British attitude to Russia, which it contrasted with Moscow-friendly tendencies in Paris and Rome.

Recent high-level contacts between Poland and UK make it clear that, after Brexit, the two sides will strive to maintain close defence and security ties. However, there are potential sources of friction.

Poland receives more money than other EU states from the bloc’s regional aid budget. If Britain were to try to reduce its Brexit bill by limiting its aid commitments, this would go down badly in Warsaw. Still more important is the status of the roughly 900,000 Poles who live in the UK. The Polish government, keen to stimulate the domestic economy, would like many migrant workers to return home. It estimates that 100,000 to 200,000 will do so because of Brexit.

But any Polish government will feel compelled to defend the rights of Poles who remain in the UK. On this issue, if Britain wants Polish help in securing a good relationship with the EU, it will need to adopt an enlightened approach.

Full article on Financial Times (subscription required)

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