European Union Closes Ranks on Brexit

Breaking up is hard to do. And the European Union is making it clear that it wants Britain to learn this lesson.

Draft guidelines for the EU negotiating position, currently in preparation in Brussels, have hardened in recent weeks. The guidelines, which Handelsblatt has seen, are expected to be finalized this week and approved by a summit of EU heads of government next weekend.

British government hopes of exploiting divisions among other EU countries seem not to have materialized. British prime minister Theresa May and her Brexit minister David Davis had aimed to isolate countries like Poland and enlist their help in gaining a better exit deal.

But  remaining 27 European Union member states, often known as the EU-27, are increasingly united in setting hardline terms for Brexit negotiations.

Finland’s finance minister Petteri Orpo said last week Brexit “is inevitably going to be so painful that no one will want to feel it for themselves.”

And this appears to be the sentiment driving the EU.

The guidelines indicate that negotiations for a new trade deal will begin only after a withdrawal agreement has been hammered out. The withdrawal agreement will primarily deal with duties the UK government has agreed to over its 40 years of EU membership and that list of obligations is steadily growing longer. The latest draft guidelines state that: “The withdrawal agreement should address further areas of cooperation, including security.”

In practice, that means Britain must give some kind of guarantee that military and anti-terrorism cooperation will continue after Brexit. There have been threats made in British political circles to end security cooperation – but the EU-27 wants to rule this out.

There is also growing determination on the EU side to hold London to its financial commitments. Originally, the EU Brexit negotiating guidelines had spoken of Britain needing to fulfill its “legal and budgetary obligations.” Under pressure from the German government, this has been rephrased as “all financial obligations,” removing any possible ambiguity.

The EU-27 want Britain to pay a total of around €60 billion ($65 billion) when negotiations conclud. This primarily includes British contributions to the pensions of EU staff, as well as money for ongoing aid projects that Britain has already agreed to support.

Specifics on Britain’s financial obligations have now been established by the European Commission, outlined in a working paper seen by Handelsblatt. The paper defines the elements adding up to “the total which Britain must pay,” suggests a “timetable for payments” and outlines powers for the European Court of Justice to enforce payment.

The EU-27 also wants the withdrawal agreement to settle questions relating to Britain’s withdrawal from the European Investment Bank, the European Central Bank and the European Development Fund.

The guidelines additionally contain a warning for the British government – after leaving the EU, they should not attempt to use tax dumping or loose financial regulations to undermine a stricter EU regime. Any post-Brexit free trade agreement must ensure that “the financial stability of the EU will not be endangered,” says paragraph 20 of the guidelines. The German government is said to have pushed hard to include both EU institutions and financial rules in the negotiation guidelines.

The EU-27’s draft negotiating position makes clear that Britain should continue to respect the jurisdiction of the European Court of Justice during the transitional period before a new free trade agreement. They are also clear on the question of EU citizens currently living in the United Kingdom, stating that London must guarantee to “preserve” their existing legal status in the country.

The new guidelines will form the background to European Commission President Jean-Claude Juncker’s visit to London on Wednesday. It promises to be a tense event. Europe’s Brexit negotiation positions have drawn scorn from Euroskeptic British politicians, now stronger than ever in Britain’s domestic politics.

Referring to the negotiating demands, Conservative MP Peter Bone said: “The EU is in cloud-cuckoo land.” His party colleague William Cash, a veteran Euroskeptic, said it would be “completely impossible” for Theresa May to accede to these demands.

Responses from the British government has been more relaxed. Officially they are saying nothing: the prime minister’s office declined to comment on the Brussels guidelines. Unofficially, the government played down tensions. The guidelines are only a draft, said one government figure to Handelsblatt: “We’ll see what comes out in the end.”

Experts said the new guidelines could be about jockeying for position as much as hardening attitudes. “Negotiations have not yet begun,” EU expert Jill Rutter told Handelsblatt. “We’ll see more clearly in the coming weeks where there is room for maneuver,” she added.

Ms. Rutter suggested there would be little flexibility on the British side on the question of the European Court of Justice. Ms. May has regularly expressed her wish to cut links to the court, saying her country “would not really being leaving the EU if we do not control our own laws.” Ms. Rutter said the legal point could prove a difficult one in the talks.

“The negotiating demands show the EU is in cloud-cuckoo land.”

By contrast, she suggested, financial questions may prove easier to solve. The British side has already said it intends to meet its financial obligations: “we’ll find out what that means in the negotiations,” said Ms. Rutter.

European advisers to the 27 EU heads of government will meet today in Brussels to agree the final form of the guidelines, which will be approved at this weekend’s summit meeting. Then things get serious, with direct Brexit negotiations set to begin in the second half of May.

The latest EU guidelines contain a stern warning against underestimating the difficulty and cost of Brexit: “All national authorities, companies and any other stakeholders must now take steps toward preparing for the consequences of British withdrawal.”

 Ruth Berschens heads Handelsblatt’s Brussels office, leading coverage of European policy. Kerstin Leitel is a correspondent for Handelsblatt in London. To contact the authors: [email protected], [email protected]

https://global.handelsblatt.com/politics/european-union-closes-ranks-on-brexit-753165