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Squaring up

Posted on 11 May 2017

Squaring up

Pro-EU Emmanuel Macron has won the election for the French Presidency with a landslide victory, obtaining two thirds of the votes in the second round. This is an important development for the integrity of the Union, following a defeat of anti-EU Geert Wilders in the Netherlands. And for the upcoming Autumn elections in Germany both of the lead candidates, Merkel and Schulz, are solidly committed to European integration.

With these three key Continental powers set to secure their commitment to Brussels, the existential threat to the Union seems to have considerably diminished, even if parts of Eastern Europe remain disenchanted with their membership.

Meanwhile, it seems likely that Theresa May’s Conservatives will win the UK election on 8 June with a comfortable majority. If so, representatives of the UK and the EU will be bolstered by their recent victories as they head into Brexit negotiations.

The recent heated exchanges between Downing Street on the one side, and the Berlaymont on the other, could be viewed as part of the psychological strategy for undermining confidence in the opponent – as we so often witness before boxing matches. Standing behind Barnier in the red corner is Commission President Juncker, 27 heads of EU member states, and most of the 750 members of the European Parliament. In the Blue corner is David Davis, and behind him is Prime Minister May a potentially large parliamentary majority in support of her strategy, and 52 percent of the British population having voted to leave the EU.

May’s behavior at “Das Dinner” suggested that she views herself, rather than Davis, as the chief negotiator, leaving Juncker and others in the red corner concerned. The Prime Minister has a reputation as a tough and capable negotiator, but negotiating Brexit will require all of her time, and it simply will not be possible to run a G7 country at the same time. Barnier is also a tough and smart opponent, and he has the further advantage of being able to dedicate more time to the negotiations.

The EU may well survive Brexit, but the prospect of two leavers was worrying. In this way, one could argue that the success of France's pro-EU candidate was necessary to sustain the Union. Statements from Merkel and the leaks from Juncker’s cabinet were very clearly directed at reaffirming the redlines to Prime Minister May, but they were also conceivably aimed at French voters. The message: you cannot leave the EU and have as good a deal as you had before you departed.

During the initial discussions:

  • Both sides must agree on the content and the order of negotiations to take place within the next two years. So far, the UK and the EU have expressed how they foresee the negotiations unfolding and there is significant disagreement. The UK wishes to start talking almost immediately about the future trade agreement, but the EU will not consider opening a discussion on this until the UK agrees to honor financial commitments made before the referendum.
  • Both sides wish to rapidly agree on citizen rights for Britons living in the EU (27) and EU citizens living in Britain. However Juncker was reportedly concerned when the Prime Minister opined that EU citizens would be treated the same as any other non-EU citizen during the dinner in Downing Street. This will not please heads of government of EU member states whose numerous citizens live and work in the UK. Given the current difference of opinion, May’s ambition of an agreement on citizen rights by the end of June, only a couple of weeks after the UK General Election, is considered unrealistic..
  • Theresa May wishes to keep negotiations as secret as possible until the talks conclude. She does not want UK positions preceding every round to be picked apart by British journalists keen to uncover a softening or backtracking from the hard Brexit stance she has taken. The EU, however, cannot agree to this. It will need to explain both UK positions and EU responses to all 27 member states and 751 Members of the European Parliament as it proceeds through the process.

A catalogue of the thousands of matters that must be resolved in the exit agreement, the future agreement and any transitional measures will have to be agreed upfront. This alone might take some time after more than 40 years of “marriage”. Of course each side has compiled their list of issues, but they might not agree about their prioritisation in the negotiations. For example, should the very thorny issue of access to UK fisheries be tackled sooner or later?

These are just some matters that must be discussed in the initial meetings between the EU and UK after the election. France has its new President, and once the UK has properly elected its Government and likely given Theresa May the mandate she requires, talks will begin. Before Summer, however, discussions are hardly likely to progress much beyond establishing the process and setting the agenda. There will be a break for the Summer holidays, which will be followed by the German elections. By then six months of the two year countdown to Brexit will have disappeared. The clock is ticking.

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