It should come as no surprise that the European Council is getting hardnosed. What is surprising is that it has taken this long. Recall that the UK and EU were at loggerheads, with May looking terminally damaged via her inability to cow the EU with her Government’s bluster. Bizarrely, Barnier worked with May to craft an utterly unworkable fudge of Ireland that the UK press praised to the sky, as if she’d scored a tremendous victory. In fact, the European Council’s December guidelines said the Government needed to come back with a worked-out solution to Ireland by the March negotiating round, which is due to start in the next two weeks.
I was at a loss to understand why the EU, even minimally, reinforced the UK’s self-destrutive antics.
The UK is as always mule-y, refusing to advance at all after the EU rejected of some of its demands. That might be a viable tactic if the UK could afford to run out the clock, but it’s the side that has much more to lose in a “crash-out” Brexit.
I thought I would throw it out to readers what might happen later this month. Both Vlade and PlutoniumKun highlighted that the EU has drawn a line in the sand, and unlike December, when it blinked on Ireland, is sending much stronger signals than ever that the UK needs to get real. As we’ve pointed out, the deadline for getting both the exit agreement and a transition deal in final form is October. The EU27 have approval processes that are rigid. There may be some limited room to push back the date for both sides to send the text out for ratification, but it’s unwise for the UK to presume that there is much latitude. So
Specifically, as we’ve embedded at the end of the post, the General Secretariat of the European Council released its draft guidelines and European Council President Donald Tusk also made some statements to the press. The message was clear: the UK isn’t going to be cut any more slack.
Even though I am loath to resort to framing like “losing patience,” since it implies that the EU negotiators are getting emotional, if you read the draft text, it is striking how often in the first pages it underscores that the EU is having to reaffirm things the UK has already been told.
Tusk was similarly blunt. Not only did he say last week that Ireland had to be resolved first, but also that the UK’s financial services fantasies were a non-starter. We’ve said for quite a while that negotiating a pact around goods is far simpler, and could be done faster than one that included services, and therefore it was quite possible they’d be concluded separately. Tusk confirmed that reading. Per Politico:
Tusk said he had offered the U.K. a robust free-trade agreement covering goods in all sectors, with zero tariffs, but added: “Services are not about tariffs. Services are about common rules, common supervision and common enforcement to ensure a level playing field, to ensure the integrity of the single market and, ultimately, also to ensure financial stability. This is why we cannot offer the same in services as we can offer in goods. It’s also why FTAs don’t have detailed rules for financial services.”
“We should all be clear,” he said, summing up in blunt fashion: “When it comes to financial services, life will be different after Brexit.”
Tusk also pushed back hard, and directly, at U.K. Chancellor Philip Hammond, who gave a speech on Wednesday urging a deal on financial services and asserting it would also benefit the EU.
“I fully respect the chancellor’s competence in defining what’s in the U.K.’s interest,” Tusk shot back. “I would, however, ask to allow us to define what’s in the EU’s interest.”
Yet having again been told “no” in no uncertain terms to the UK’s “Of course you’ll protect the City” delusion, Hammond, on Andrew Marr’s show yesterday, prattled on about how the UK would secure a “trade deal” on financial services, with the only caveat apparently being “the question is how financial services are included.”
The question is whether the EU turning up the pressure on the UK will work, given the irreconcilable contradiction in the Tory party: neither the Remain nor Leave side is willing to give into the other, yet having Labour form a government is to be avoided at all cost. But they can’t hold on to both positions for much longer. The Government is having yet another go at its fairy tale technology solution to prevent a hard border in Ireland, even as the EU has fined the UK £2.4 billion for allowing Chinese gangs to smuggle goods in through UK ports at gross undervaluations, then move them into the EU and sell them at vastly higher market prices. The fine looks, and almost certainly is, meant to tell the UK that it doesn’t have much credibility as far as its customs practices are concerned, and any newfangled solutions will have to be demonstrably better.
That is a long-winded intro to the reader question: what will trigger the crunch, and what might happen next? As it stands, the EU isn’t willing to talk to the UK unless it presents a workable Ireland solution. The only option is the sea border which the DUP has rejected. Some readers argued in December that even with its Unionist hard line, the DUP would be unwilling to bring the Government down.
How do you game this out? Is anyone on the UK side going to blink? And if not, what happens next? Does everyone start hoarding tinned goods and dried beans in preparation for a crash out?European-council-Art.50-23-March-2018-Draft-Guidelines-1