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EU Leaders Counter U.K.’s Stance on Brexit

Posted by hkarner - 9. Oktober 2016

Date: 08-10-2016
Source: The Wall Street Journal

The wait-and-see approach that EU leaders have maintained for months melted away this week

Juncker_(2006)Foto Martin Möller  Wikimedia (CC BY-SA 2.0 Mr. Juncker said the U.K. can’t be inside and outside the EU at the same time.

Europe’s leaders sharpened their response to the U.K.’s plans to leave the European Union after British Prime Minister Theresa May adopted a hard line for negotiating the country’s exit from the bloc.

The wait-and-see approach that EU leaders have maintained for months melted away this week after Mrs. May on Sunday laid out a timetable for the U.K.’s exit, or Brexit, pledging a crackdown on immigration that would effectively end British compliance with a key EU rule: freedom of movement.

Her salvo has emboldened European leaders, including German Chancellor Angela Merkel, who this week warned that London stands to lose access to the bloc’s single market for goods and services if it reneges on freedom of movement.“You can’t have one foot inside, one outside,” Jean-Claude Juncker, head of the EU’s executive arm, said Friday. “On this point, we must be intransigent.”

Mr. Junker was speaking at a Paris conference on the future of Europe, where French President François Hollande on Thursday evening escalated tensions by saying Britain must be punished for its decision to leave the bloc.

“The U.K. wants to leave but pay nothing. That’s not possible,” Mr. Hollande said at a conference Thursday evening. “There needs to be a threat, there needs to be a risk, there needs to be a price.”

A Downing Street spokesman declined to comment.

The strong rhetoric indicates European governments are bracing for yet another round of brinkmanship after their struggles with Greece.

Officials in Paris and Berlin—the Continent’s most powerful capitals—say time is on their side because the bloc’s treaties provide a two-year clock for exit negotiations. That means more unity among the remaining 27 member states than in previous crises.

Economies across the Continent would take a hit if Britain crashes out of the bloc, but European officials believe the U.K. economy has much more to lose from a disorderly exit.

“It must be clear that this is not about friendship,” one German official said of the looming Brexit talks. “If there is uncertainty, then the British will have much bigger problems than we do.”

French and German officials also say the political cost of breaking European rules outweighs the economic cost of disrupted trade with the U.K. European officials want to make it clear rules can’t be bent for Britain because it would push other countries to seek special deals, threatening the integrity of the bloc.

“Mrs. May is trying to move people from denial to reality. We are doing the same thing,” a French official said.

German officials have avoided Mr. Hollande’s talk of punishing the U.K., arguing that the bloc’s attractiveness shouldn’t be based on the dire consequences of leaving it. Nevertheless, they have made it clear that they see a tough negotiating stance to be in Germany’s best interest, in part because the country’s exporters depend on uniform rules governing access to the entire European single market.

For Germans, a key rule is the free movement of labor, part of the EU’s “four freedoms.” Ms. Merkel and other senior officials in Berlin signaled a willingness to strike a deal with the U.K. in the wake of the Brexit vote if London agreed to a liberal migration regime. However, Mrs. May’s speech on Sunday, promising a hard line on immigration, suggested London wasn’t willing to make the compromises necessary to remain part of the single market, according to a German official.

“If we don’t say that full access to the internal market is connected to complete acceptance of the four basic principles, then a process will unfold in Europe where everyone does and is allowed to do what they want,” Ms. Merkel said Thursday.

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