From left to right: Theresa May, Prime Minister of UK and Donald Tusk, President of the European Council. Shoot location: Brussels – Belgium. Shoot date: 20/10/2017. Copyright: European Union.
President Abraham Lincoln has said “when someone says it’s a matter of principles not money, then it’s a matter of money”. This famous saying was flagrantly confirmed last week in Brussels, when the 27 EU leaders – with Angela Merkel and Emmanuel Macron prominent amongst them – made it clear to Theresa May she has to pay for Brexit before everything else, including trade, is discussed. In their Summit of 19 October the 27 clarified to the British Prime Minister that she has to pay because it’s Britain asking for a divorce.
Many months ago, mainland Europeans unanimously set the agenda of the Brexit negotiations, without having consulted Britain. In this line the EU has set three issues to be decided before the future trade relations are to be negotiated. This last subject matter is of burning importance for Britain, because more than half of its foreign sales are conducted with the rest of the EU countries. So, Britain wants the exit terms and the future trade arrangement to be discussed in parallel.
Principles and money
In this regard, the future role of the financial hub of the London City is also of paramount importance for the UK. But no, the Europeans insist they won’t negotiate future relations before settling the issues pertaining to the past. Those last topics are the fate of 3 million mainland Europeans who work in Britain plus one millions Brits living and working in the mainland, the status of the Irish land border and last but not all least the divorce cost London has to pay to Brussels. Of the three questions the first two are ‘graciously’ alluded by the EU as issues of principle.
As it becomes gradually clear though the first two issues can be technically resolved, so the money question appears as the elephant in the room. The EU bureaucracy estimates this divorce cost for Britain at anything between €40 to 60 billion. Theresa May in her Florence speech clarified that the UK is to ‘honor commitments’, by being ready to pay up to €20 billion. Clearly the money problem emerges as the main difference dividing the two sides, not the principles. President Lincoln was quite right! It’s obvious by now the EU wants first an agreement on Brexit terms and of course the money and then negotiate the future trade and financial relations.
Divided Tories and country
Especially for 10 Downing Street and the governing Conservative Party, the divorce payment has become a Rubicon. Some tens of jingoistic Tory MPs loudly vie for a catastrophic no-deal Brexit, than accepting to pay anything to Brussels. On the other side of the fence, other Tory PMs support a softer exit version, including the Chancellor of the Exchequer Philip Hammond. This last group insists money has to be paid, in order for Britain to get a two years interim period, badly needed so that a cliff edge after Brexit is avoided. The deep division of the Tories and the shocking cries of the hard Brexiteers have tied May’s hands and have effectively blocked the Brexit talks. Reportedly, the British PM expected last week a positive gesture from the mainland, in order to unlock the stalemate.
In view of all that, Michel Barnier, the chief Brexit negotiator for the EU decided to make a step forward in order to break the dead end. He said he is ready to discuss the eventuality of an interim period, before the exit terms are agreed. However, according to a report from Brussels by ‘The Economist’ on line news service, “he was shot down by, among others, Germany and France”. In short, last Thursday Berlin and Paris remained adamant in denying any additional financial burden for them after the Brexit, as far as the EU budget financing is concerned,.
Down to the last cent
In other words, Merkel and Macron made it clear the UK has to pay those future expenses of the EU budget the UK has undersigned as a member of the club for more than 40 years down to the last cent. It’s about the cost of the pensions and the salaries of countless British nationals working in various EU bodies.
On top of that are the loans to Ukraine and Ireland and thousands smaller items in hundreds of EU programs and bodies, for which Britain will remain liable and also be favored by, even after leaving the EU. In this respect, Germany, France and other EU nations are adamant Britain has to pay in full, whatever the problems of the Tories. So, last week any positive gesture from mainland Europe was of cosmetic or negative value to May. Let’s see to it.
No help from Summits
The same on line news source reported, “The biggest bone thrown to Mrs May in Brussels was an agreement that the 27 will begin preparatory post-Brexit trade talks among themselves”. But this is not a help of any sort. It can actually turn out to be a hit rather than support to the UK. For example, the EU may accelerate the talks for the signing of a free trade agreement with India, before the UK does. This will constitute a severe blow to Britain, more so if the 27 EU countries agree between themselves to give India something more than London plans to do. Actually, Brussels have accelerated the relevant negotiations with New Delhi, as the European Sting reported on 11 October.
In conclusion, last week’s EU Summit of the 27+1 didn’t do anything to effectively unlock the Brexit negotiations. Indirectly acknowledging it and rather predicting a disorderly exit, Lloyd Blankfein, the head of Goldman Sachs – the largest banking group of the world – tweeted that, after Brexit he will spend more time in Frankfurt than in London. And he probably knows better than anybody else.
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