The yet-to-be started Brexit negotiations look to be getting off on a tit-for-tat footing. After the new Prime Minister took the provocative step of appointing Boris Johnson as Foreign Minister and David Davies as its chief negotiator, the European Commission has responded in kind by naming Michel Barnier as Chief Negotiator in charge of the Preparation and Conduct of the Negotiations with the United Kingdom under Article 50 of the TEU.
Jean-Claude Juncker, President of the European Commission, has been particularly hard-line in his posture towards the UK. For instance, at one point, he said if Cameron’s replacement was pro-Leave, he should invoke Article 50 the day he came into office, and if he was opposed, he could take a couple of more weeks. That remark illustrates the fact that Juncker isn’t all that skilled a bureaucratic infighter: he regularly overplays his hand and then gets reined in by more influential European leaders.
But the appointment of Barnier looks to be a particularly astute move. First, in contrast to the role of the EC in the Grexit talks, where it was a secondary player by virtue of not being a funding source, the Commission legitimately is one of the lead actors. Second, Barnier has extensive international experience, having been France’s minister for agriculture, then its foreign minister, and also a member of the European Parliament. He has also served two terms at the European Commission. In his second post, as head of the single market commissioner, he negotiated post-crisis reforms. The memories of the tough stance he took there has the City in fits. From the Financial Times:
The UK government’s cool response to the decision reflected heightened concerns that the commission will be an awkward negotiating partner. An official statement did not mention the Frenchman by name and was drafted to suggest that the commission was the least important of three interlocutors in the Brexit talks.
“We look forward to working with representatives from the member states, the council and the commission to ensure an orderly departure of the UK from the EU,” a UK spokesman said.
Some City financiers were even more scathing about the appointment. One chairman said: “My initial reaction was ‘Oh, God.’ It’s clearly provocative.”
“I can’t see how it could be worse,” said another senior banking industry figure, who has worked in Brussels. “It’s incredibly provocative. This is Juncker’s revenge on Britain.”
Some in the U.K. may consider Barnier’s selection to be a provocative move, or a sign that Juncker wants to reduce the influence of the City of London as part of the Brexit process. During Barnier’s time as European commissioner, the British government clashed repeatedly with the EU over issues from a cap on bankers’ bonuses to the location of clearinghouses.
He frequently had to rebuff U.K. claims that his policies were hurting London’s financial-services industry and causing a shift of business to centers in the euro area. Although the bonus cap was one of the most high-profile measures to come into force during his time in office, Barnier had favored a less radical move.
At the same time, he issued warnings that Britain had to accept EU financial regulations in exchange for access to the bloc’s single market.
His appointment is “very dispiriting news for the U.K.,” said David Buik, a market commentator at Panmure Gordon in London. “He has been very, very difficult to deal with over all financial regulation and particularly unsympathetic with the U.K. in the banking arena.”
This move is consistent with our prediction, that the Continent see Brexit as an opportunity to take a piece out of the City. Barnier apparently does not accept that London’s dominance is necessary or desirable. And years of negotiating on financial regulations means he won’t be readily snookered.
With that said, as is typical with matters European, Barnier is clearly a leading player, but there is some ambiguity as to the extent of his authority. Bloomberg notes:
Appointing Barnier is also Juncker’s opening move in a struggle for power on the Brussels side of the negotiations. While the European Commission will be asked to carry out much of the technical work, it’s for national leaders to set the parameters of the discussions.
The European Council, which represents the EU’s 28 nations, has already appointed Belgian bureaucrat Didier Seeuws, aide to former EU President Herman Van Rompuy, as its lead Brexit negotiator, and the divisions of responsibility are still to be worked out.
Seeuws is also very seasoned. From the Guardian at the time of his appointment:
A veteran Belgian diplomat with long experience of complex EU negotiations, Seeuws, 50, is described as exceptionally hard-working and combining an impressive grasp of technical detail with considerable political savvy….
Seeuws was also Belgium’s deputy ambassador to the EU and is credited with negotiating a breakthrough on the European patent system, an issue that had been deadlocked for more than 30 years….
La Libre Belgique newspaper described Seeuws as a “fine intellectual machine”, citing a Belgian source as saying he was “tactically very strong. He knows how to put himself in everyone’s shoes, and sees straight away what the chances are for a short or long-term agreement.”
Seeuws will reportedly manage the more delicate side of the talks, on the nature of Britain’s future relationship with the EU, while an “article 50 taskforce” set up and managed by the European commission will work on the more immediate, hands-on business of extricating the UK from the EU.
Seeuws is thus more conciliatory than Barnier. And we’ll see if the Guardian’s take on who does what is correct, or whether, as Bloomberg indicates, the allocation of responsibilities is in play. Given Barnier’s depth of experience in financial services, it’s almost a given that he will wind up being the key player on those parts of the talks, just as the City fears.
In the meantime, some UK papers are trying to put a happy face on this development. For instance, an editorial at the Independent, Michel Barnier will be a tough Brexit negotiator, but he’ll meet his match in David Davis, included this section:
In the “informal” period of discussion that has already begun with Theresa May’s visits to Berlin and Paris, the hope is that much groundwork will be established that Mr Barnier will not be able to undo.
The second factor is the degree to which the European side (broadly speaking) holds fast to the notion that there can be no easy access to the single market without an agreement from Britain on the free movement of labour. That is, of course, not what many British voters meant by Brexit – even though it might suit the Government well enough.
Mr Barnier has made his own view clear: Britain must accept freedom of movement “without exception or nuance” if it wants to keep its access to the single market. How far that is a mere opening gambit and how much a firm declaration of policy will become clear next year.
This is hopium. Merkel herself, as well as all of the other EU leaders, have made clear that there will be no negotiations prior to Article 50 being invoked. And they have every incentive to hang tough, since they want the UK to come to grips with what it is about to set into motion before pulling the trigger. They would clearly prefer that the UK find some way to back out of Brexit, and not making the process any easier advances that aim.
Similarly, Merkel has also repeatedly stated that having access to the single market means accepting the “four freedoms” which includes freedom of movement of EU citizens. And Merkel also said that countries that are outside the EU will have a less favorable arrangement than members. Thus all Barnier has done is make a pointed statement of his principal’s position.
As vlade said via e-mail:
For Leave to work, the UK’s diplomacy would have to be exceptional. All evidence points out that it’s exceptional-ly weak. And I don’t mean just on the trade front but in general.
British officials seem to greatly overestimate their skill as well as their bargaining leverage. This is a prescription for bad outcomes.