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UK pins Brexit hope on EU leaders reluctant to give ground
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UK pins Brexit hope on EU leaders reluctant to give ground

5 min. 13.10.2017 From our online archive
European leaders will make clear that trade talks can’t start yet, and they will reassess in December.

(Bloomberg) The UK is pinning its hopes on European leaders throwing Prime Minister Theresa May a bone at a summit next week after the latest round of Brexit talks ended in deadlock. It’s likely to be disappointed.

There is little appetite to make any concessions for the sake of an embattled May, even at the risk she is toppled and is succeeded by a hardliner. That is the assessment of a top European official, speaking on condition of anonymity about the thinking in a major capital.

At the summit, European leaders will make clear that trade talks can’t start yet, and they will reassess in December, according to a draft of the conclusions. But they will call for "internal preparatory discussions" so that they are ready to start negotiations on trade and transition in December if they decide to. That, along with some encouraging words on progress, represents a small step forward for the UK, which had hoped to start trade talks next week.

There are plenty of good reasons to give May nothing but kind words. With a continent where economies are struggling and populism has left its mark, it would be hard to justify to a restless public opinion that the UK is being in any way let off the hook, according to the official. Money is in short supply, and no government wants to be parted with it. German Chancellor Angela Merkel is more worried about putting together a government.

And if there was to be some kind of quid pro quo on the financial settlement, it is too early in the process for the EU to cede ground, the senior official said. When March 2019 rolls by and there is no deal, the country that will fall off the much-feared cliff is the UK, so in a game of who-blinks-first the perception is that May has to be the one to capitulate first. The EU insists that progress has to be made on the divorce bill before talks can start on trade.

Transition Bid

From the perspective of British negotiators, they heard European Union negotiator Michel Barnier’s words about a disturbing "deadlock" and their interpretation was that it was an elegant cry for help to broaden his mandate so he can start talking about the future alongside the divorce.

While that may sound like wishful thinking on the part of the Brits, a person familiar with the EU’s discussions said Barnier would be open to expanding his mandate to include a transition deal for the period after the split, but member states disagree about when that should happen.

Barnier will lobby EU envoys on Friday for permission to negotiate that two-year bridging arrangement, Handelsblatt reported. Any transition would hinge on the UK agreeing to pay its exit bill -- the thorniest part of the talks so far.

Domestic Woes

Adding to May’s woes, her flagship piece of Brexit legislation risks getting bogged down in Parliament. Lawmakers had expected the EU Withdrawal Bill -- which will repeal all EU laws and enshrine them in British legislation -- would begin its parliamentary scrutiny phase next week. But it wasn’t included in the programme of work outlined for next week by Leader of the House of Commons Andrea Leadsom on Thursday.

"Some 300 amendments and 54 new clauses have been proposed -- and rightly so -- by members who have concerns about the bill," Leadsom told lawmakers when asked when the bill will be discussed. "Those proposals are being closely evaluated. That is taking a bit of time so that we give proper, thoughtful, well considered responses to them."

Former Conservative ministers including Ken Clarke, Nicky Morgan, Dominic Grieve and Anna Soubry have each put their names to more than a dozen amendments, illustrating the tricky path May must tread. She has an effective majority of just 13 lawmakers, meaning seven rebels could be enough to defeat her.

With May’s leadership in doubt at home, the last person the Europeans want to have at the opposite end of the table is Boris Johnson, who as foreign secretary has repeatedly defied May on Brexit and who is reviled in Brussels for his fiercely anti-EU articles during his stint as a journalist, and his campaigning in the referendum last year.

So while there is a genuine concern about May not lasting the course, the baseline thinking was still that it was up to the government to inform the electorate that a bill has to be settled, according to the first official.

In Britain, voters have made clear what they think and May, weakened from an electoral debacle in June, is not in a position to anger them. The latest poll showed that 70% think €30 billion is too much to pay. The initial figures touted by the EU have been around €60 billion.

While the EU27 are broadly maintaining their unified front, diplomats in Brussels say there’s a small group of countries with the closest trading ties to the UK that has long been keener to move talks on to trade. The Irish, Dutch and Danes are the most worried about Brexit, and therefore most eager to avoid a cliff edge, according to people familiar with the situation.

But another impediment to progress is that a major stakeholder, Merkel, has her mind elsewhere. She is more preoccupied with forming a new government and, straight after her return form Brussels on Friday, she will have her first full meeting with the other parties in preparation for coalition talks.

During her last meeting with May in Tallinn at the end of September, Merkel was skeptical about May’s idea of a transition period. The chancellor hankers for specifics -- transition to where -- and there is some suspicion that May is bidding for more time.

In a speech at a union meeting in Hanover on Thursday, Merkel said that her main Brexit goal is to "conduct the talks in such a way as to keep the harm for us in Germany to a minimum."

Her words also underline that in a sense, the continent was moving on: "Europe has stirred back to life after a sad decision by the Britons to leave the EU."