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How the British can mishandle Brexit
[...] Mishandling Article 50 is the easy bit. The British government can continue to be shambolic. It is proving to be rather prone to cack-handed diplomacy: its decision to veto EU budgetary talks whose outcome will not affect the UK during its own election purdah period made it no friends in the Council; its decision to boycott a hearing on citizens’ rights has angered MEPs. Boris Johnson could go on trying to pick off individual EU states and divide the 27. Liam Fox could invent pre-emptive trade deals with third countries, such as Turkey. David Davis could refuse to pay what Britain owes the EU. Theresa May could try to bypass the Article 50 process by seeking to negotiate a deal herself; she could ramp up the nationalist rhetoric and return to her earlier theme of ‘no deal is better than a bad deal’; even worse, she could publish a Plan B that would seduce the far right and provoke Brussels further.
Calling an early election may help Theresa May at the end of the Brexit process, but not at the beginning. In the electoral campaign imprudent British claims are continuing to be made about unpopular European opponents. There is no easier target in a British election than an unelected Brussels bureaucrat, and a French one at that. Mrs May needs to better discipline, or sack, her ministers. She should drop the pretence that the trade deal can be wrapped up within the two year timeframe dictated by Article 50. She should prepare her party and the public to ready them for a classical EU package deal – which means dropping the cliché that no deal is better than a bad deal.
How the Europeans can mishandle Brexit
The EU side can also mishandle Article 50. As the recent indiscretions of Martin Selmayr have shown, Brussels itself is not immune from cack-handed diplomacy. The greatest risk, however, is that the impressive solidarity shown so far between the EU institutions and among the 27 member states will begin to fall apart. While the guidelines agreed by the European Council on 29 April are measured and intelligible, the situation with regard to the Commission’s negotiating directives, due to be agreed by the General Affairs Council on 22 May, is more problematic. Germany, in particular, seems unwilling to trust the Commission with charge of the Article 50 talks. Cherry-picking has started. The French want to talk about fish and the Germans about cars. Poland wants to impose tough conditions on the UK to protect the 0.92m Poles resident in Britain.
An inherent contradiction begins to emerge in the approach of the EU 27: on the one hand they insist that the UK post-Brexit will be treated like a third country, while on the other they seem to believe they can impose conditions on the UK similar to those imposed on Iceland, Norway or Switzerland. Those three countries, however, have signed agreements with the EU that were conceived as pre-accession instruments; they agree to abide by EU rules even though they have no say in making them; they pay into the EU budget; they have to accept EU immigrants; and they respect the ultimate jurisdiction of the European Court of Justice (ECJ). As things stand, none of those conditions, either individually or severally, are acceptable to the United Kingdom. As the Norwegians are the first to aver, Britain is not Norway.
On the vexed question of citizens’ rights, the EU becomes increasingly bossy. The EU is demanding that the UK preserves the same level of protection as afforded by EU law, and for the lifetime of those concerned, to EU citizens who are already resident in the UK or who come to reside in the UK before Brexit. Mr Barnier is being expected to negotiate legal guarantees for effective equal treatment between EU citizens and British nationals even after Brexit, including an extension of the judicial authority of the ECJ. All this might look straightforward to the EU, but it will be nigh impossible for Mrs May to accept. British officials are talking airily of extending the right of permanent residence to any EU worker who wants it, but without promising the same residency rights for their dependents or with the conditions of social welfare that currently pertain. The risk is that the two sides slip into entrenched but simplistic, incompatible positions. London and Brussels are equally guilty of talking past each other.
A similar tendency threatens to frustrate a budgetary settlement. Some EU governments are succumbing to the temptation to pile financial demands on to the UK over and beyond the reasonable sum of €60bn first identified by the Commission and the Court of Auditors. It would be more sensible to agree that the UK stays within the EU budget for both revenue and expenditure until the current multi-annual financial framework agreement closes at the end of 2020. Such a compromise would benefit existing British recipients of EU funds, not least the farmers, universities and local government; it would induce stability, simplify the bureaucracy and lower costs for everybody. The British should be willing to meet all their contractual and legacy obligations as their contribution to closing the accounts. The UK could forgo a share of EU assets in exchange for a deal on certain liabilities, such as unfunded pensions. If the total money owed by the UK to the EU is around €60bn, that is not a large sum in real terms, at 3% of GDP. Despite Mr Barnier’s insistence on there being a single bill, its payment will be spread over many years. But it seems that anything much less than a total of €60bn would mean leaving the 27 badly out of pocket – with the inevitable result that their negotiating stance will harden.
A time for dispassion
One must hope that the European side does not become obsessive over the sequencing of the talks and resists the temptation to over-elaborate the Commission’s mandate. Mr Tusk and Mr Juncker should keep a firm grip on the process, including asserting themselves over any waywardness on the part of the Maltese presidency of the General Affairs Council heaping up unreasonable demands on its ex-colonial masters. (The Estonians who take over the rotating presidency of the Council in July should be more reliable.)
To avoid the Article 50 negotiations stalling at the start, all parties need to recall that the outcome of the negotiation will be a compromise or it will not be. Both sides would do well to be dispassionate. Just as the UK will be a third country as far as the EU is concerned, so the EU bloc will end up as a third country as far as the UK is concerned. Whether we like it or not, a clean and healthy detachment of the UK from the EU is a better basis for building good future relations across the Channel than a botched withdrawal followed by years of costly litigation and bitter political recrimination.
Theresa May’s first meeting of the European Council after the election will be on 22 June. Her speech to fellow heads of government needs to be a good one and emollient. Having won a significant electoral victory, she could confidently drop the distasteful nationalistic tone of her election campaign. She must make it clear that, while she resists colonial status for post-Brexit Britain, she is willing to develop efficient institutional arrangements on a joint basis to manage the future relationship. She might emphasise that, although determined to free the UK from the direct jurisdiction of the European Court of Justice, she understands the need to continue to respect the jurisprudence of the EU Court in matters germane to trade, data protection and citizens’ rights. She could offer to fulfil all Britain’s budgetary commitments (but not a penny more).
The prime minister should press for an early conclusion of the first phase of the talks on the self-evident grounds that trust between the two sides will only surface once the framework for Britain’s future relationship with the EU is defined. A quick passage to the second phase is also in the EU’s interest. Mr Barnier will soon discover that it is impossible to tie the British down to a single financial settlement without agreeing on the nature of its association post-Brexit. Continued British participation in the EU’s science and innovation programmes, for example, which everyone wants, will require the UK to make significant pledges of down-payments that will affect beneficially the negotiation by the EU 27 of its new medium-term financial planning for 2021 onwards. Similarly, it is highly unlikely that there can be an agreement on how to deal with the Ulster border issues outwith the context of a new deeply political and inevitably delicate Anglo-Irish settlement.
According to the EU’s self-imposed guidelines, the decision to move forward to phase two of the Article 50 process will be taken by the European Council when it judges that significant progress has been made on the first phase items of citizens, money and Ireland. ‘Significant’ here may mean substantial but it cannot mean final. The European Council will need to grant itself some latitude as it approaches that critical decision, hopefully as early as its meeting on 19-20 October.
Only once phase two is triggered will Mrs May be able to turn her earlier words about a ‘deep and special partnership’ into a serious proposal, and only then will the EU side be able to commit itself to designing the wherewithal for a decent, common-sense transition period, managed by a novel authoritative joint EU-UK body. [...]
Full opinion piece on Policy Network