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Britain’s European partners take a hard line on Brexit

Posted by hkarner - 27. November 2016

Date: 26-11-2016
Source: The Economist
Subject: The views of others

The European Union is preparing to give Britain a rougher ride than many Brexiteers realise

THE debate over how to leave the European Union has been notably inward-looking: whether to go for hard or soft Brexit, when to start the Article 50 process that is the legal route to departure, how far Parliament should be involved. Yet all these pale into insignificance against the biggest issue of all: what sort of deal can Britain extract from its 27 EU partners?

Brexiteers like to say that Theresa May merely has to agree something with Germany’s Angela Merkel, who listens to carmakers that sell heavily to Britain. They claim a big trade deficit makes Europe more dependent on Britain than the other way round. They reckon that, since everyone gains from free trade, it will be simple to negotiate full access to the single market. They suggest Britain’s outsized contribution to defence and security should win the country concessions. And since the voters have spoken, the others must just accept that Britain will take back control of its borders, laws and money.Would that things were so easy. In Berlin, officials point out that Brexit does not even feature high on Mrs Merkel’s agenda. Her first priority is to preserve the EU of 27, which is in a parlous condition. That points above all to ensuring that Britain is in a worse position post-Brexit than as a member. Nor can she deliver the agreement of other EU countries, many of which export little to Britain. German industry has already accepted that, when it comes to Brexit, politics takes priority over firms’ desire to maintain British sales.

The Germans reject any idea of security as a bargaining chip. As for accepting British voters’ wishes and conceding barrier-free access to the single market, the 27 other leaders retort that they have voters too. Indeed, Mrs Merkel and her colleagues are maintaining a united front. Until Mrs May triggers Article 50, which sets a two-year deadline for Brexit, there can be no negotiations. When they start, the EU will be clear that being in the single market means accepting the four freedoms of movement of goods, services, capital and people. These are “indivisible”: if Britain rejects the fourth, it cannot keep its privileged access.

Europeans’ reading of British politics reinforces their tough approach. Charles Grant of the Centre for European Reform, a think-tank, says Brussels officials are dismayed by the apparent influence of right-wing Eurosceptics on Mrs May. The EU has also long hated Britain’s pick ’n’ mix approach. One German official says flatly that there can be no cherry-picking and opting in or out: otherwise why should Germany not choose to opt out of its huge payments to the EU budget?  The German finance minister insists that Britain will go on paying for many years, and in Brussels there is talk of an exit bill for Britain as big as €60bn ($63bn).

Forging new trade relations will also be difficult. These days free-trade deals take years to negotiate and ratify in national parliaments. That timing is bad for Britain. In Brussels, officials say the two-year timetable means that an initial Article 50 deal must be wrapped up by the summer of 2018. Hence the business interest in an interim plan to avoid falling off a cliff in early 2019 without future trade terms being concluded. Mrs May nodded to this concern at this week’s conference of the Confederation of British Industry (CBI). Yet interim deals can be as hard to do as final ones.

The broader ills of the EU and, especially, the euro, could also play badly for Mrs May. Some Brexiteers point gleefully to the rise of Eurosceptics like Marine Le Pen in France and Geert Wilders in the Netherlands, the troubles of Matteo Renzi in Italy and even Mrs Merkel’s loss of support at home. Yet as Mujtaba Rahman of the Eurasia Group, a consultancy, points out, if the 27 perceive an existential threat to their project, that will push them to be harder, not softer, on Britain.

Of course it is not surprising that, in advance, both sides should take up hardline positions. And Brexiteers are right that everybody has an interest in some free-trade deal. At the CBI conference Mrs May talked of give and take in any negotiation, pointing to room for compromise. Germany and others have been imposing rules to limit welfare benefits paid to migrants; some countries support an emergency brake against sudden surges in numbers. That Mrs May has not explicitly ruled out paying into the EU budget could help.

What is needed most in the months ahead is deft diplomacy. And here the Brexiteers are not doing well. Boris Johnson, the foreign secretary, has offended Italy by hinting that it relies on prosecco exports to Britain, and everybody else by calling the link between the single market and free movement of people “bollocks”. David Davis, the Brexit secretary, did not impress on his visit to the EU institutions this week. To get a better deal, Mrs May will have to work harder to improve relations with her European colleagues.

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