The 2017 British general election is over, and contrary to expectations, it concluded with a hung parliament and a weakened prime minister. Theresa May’s intention behind the snap poll was to give herself enough room for maneuver in the talks due to start on June 19 on Britain’s exit from the EU. It was unclear when she called the election whether she would favor a hard Brexit that would exclude the UK from the EU’s single market and customs union or a softer outcome that would leave the country closer to current arrangements. If anything, the election result has increased that uncertainty. In particular, it leaves open the questions of the UK government’s intentions on how to handle the Brexit talks and the new parliament’s position on this issue.
What has also changed since the election is the political atmosphere between London and Brussels. A destabilized Britain is in need of a strategy, while an increasingly skeptical EU is in search of a negotiating partner. Brexit talks already looked bleak before the election, as both sides were working on parallel tracks without much sign of reconciliation. The result brings little hope of improvement. If a breakdown is to be avoided, both sides must seize the opportunity to get back to reality and take the necessary steps to avoid a cliff edge.
Growing Confrontation
Formally, the launch of the first round of the UK’s EU exit negotiations as set out in Article 50 of the Treaty on European Union is set for June 19. So far, neither side has asked for a postponement, which would only waste time as the clock cannot be stopped and the two-year exit period that began when the UK triggered Article 50 in March 2017 is running. The purpose of this first round is to start the process that will lead to the final arrangements for the British departure from the EU. A subsequent round of talks would determine the UK’s future relationship with the union.This sequence is in line with the intention expressed by the UK prime minister in her March letter to the EU institutions. Legal formalities have therefore unfolded so far without much of a problem, although the use of Article 50 is unprecedented and represents uncharted territory for negotiators. Yet even if legally sound, this preparation has been moving against a backdrop of rancor and bad temper, which, little by little, has generated an overall mood of confrontation.
This polarization was not a foregone conclusion. It was far from certain that the 27 remaining EU member states (the EU 27) were bound from the outset to openly confront the UK. The EU’s first reactions after the June 2016 referendum in which Britons voted to leave the union reflected more hesitation than a desire to punish Britain. With the prime minister’s claim even before she entered 10 Downing Street in July 2016 that “Brexit means Brexit,” EU leaders started to recognize there would be no second vote. This gave the 27 welcome clarity on the direction of travel but little indication of what sort of Brexit the government favored.
Inconveniently for the UK, the prime minister’s outreach to her EU partners had the additional effect of progressively convincing them that her priority was to keep internal divisions in the Conservative Party under control rather than to look for mutually beneficial arrangements with her EU counterparts. The outcome of the June 2017 snap election does not fundamentally change that analysis.
The UK’s Hardening Position
From the EU’s perspective, the UK has sent contradictory signals during the last year of preparations for the talks. From the constructive approach in May’s Lancaster House address in January 2017 or her March letter of intent to the much more confrontational style adopted during the general election campaign, a confused image of British intentions emerged. That cast doubt on what exactly the prime minister stood for and where the country was heading in the impending negotiations.
Two particularly striking assertions have caught the attention of the EU 27 in recent weeks. One relates to the often-heard statement that the UK government prefers no Brexit deal at all to a bad deal. This could be seen as an understandable tactical ploy in advance of the first round of talks. It nonetheless gave reason for concern, as the no deal option—under which a post-Brexit Britain would have no formal arrangement with the EU and would revert to World Trade Organization trading rules—lacks credibility from the EU’s viewpoint.
Without a contingency plan to at least mitigate the direst consequences of such a crash, both sides would suffer badly from a situation in which bilateral business relations would be in turmoil and the political consequences would undermine any effort to renew cooperation for years to come. EU observers tend to think such an option would be more detrimental to Britain’s interests than to the EU’s. They conclude that the UK’s insistence on the possibility of a breakdown sounds defiant, if not in denial of reality.
The second worrying line involves accusations that continental Europe is bent on punishing the UK population for its decision to leave the EU. Accurate or not, this argument misses the point that many EU leaders in their own countries face rising populist movements eager to promote further Brexit-style divorces across the union.
Moreover, the EU 27 have a built-in interest in not brokering with Britain too conciliatory a deal that could undermine their coherence and induce some European governments to follow the British path. The UK government may be right in openly blaming Europe for its punishing bias, but for the time being, airing such a view only further unites Britain’s European partners, as populations in the EU 27 neither understand nor support the UK referendum result.
Protecting the EU’s Interests
On the EU side, the trend has been very much in the same direction of growing confrontation. In its own way, the EU’s attitude mirrors the British government’s hardening position, but with a different logic.
The toughness of the 27 has less to do with a desire to punish British voters than with the financial and political necessities of the rest of the EU. Once Britain leaves the bloc, the EU budget will face a net loss of approximately €10 billion ($11 billion) per year, according to one study. No member state wants to pay more, and each expects to receive as much as it was scheduled to do before Brexit.
The easy way out for the EU 27 is to ask Britain to pay all its present budgetary commitments up to 2020, when the EU’s current multiyear budget ends. Not only does this option sound easy to explain (“You voted for it, you pay for it”), but it also has the advantage of postponing a painful discussion among the EU 27 on the future of the union’s policies. Europe’s unity on the Brexit process is fundamentally artificial. It is an expedient placeholder while the bloc awaits the perilous financial debates ahead.
The state of play after the UK’s June 8 election leaves little ground for optimism. Calls for unity and determination are heard from all quarters of the EU 27. Attempts by the UK prime minister to appeal directly to some of her counterparts to soften their positions have so far led nowhere, and her political clout is now weaker than before.
Member states have agreed on three issues they consider the most crucial for their interests: the future rights of British and EU citizens living outside their home country, the financial bill that Britain will have to pay on its departure, and the border arrangements between Northern Ireland and the Irish Republic. For the EU 27, these matters should be negotiated with the UK as a priority, and solutions must be found before moving on to any other issue.
As the 27 countries share a common interest in getting the most out of Britain, agreement between them on the mandate for this first stage of the talks went smoothly. Michel Barnier, the head of the EU negotiating team, has a clear road map. But it is also unrealistic, reflecting as it does what the EU 27 could easily agree on rather than what they can realistically hope to accomplish in the forthcoming negotiations. The inflexibility of the negotiation mandate has been compounded by an uncompromising negotiating sequence—that the terms of Britain’s departure must be finalized before the arrangements for any future relationship—and the EU’s usual heavily structured working methods for the discussions.
Set for More Intransigence
The UK government, for its part, is talking equally tough, with some well-founded arguments. London disagrees with the negotiating sequence proposed by the EU and insists—as a matter of common sense and orderly management—on discussing follow-on arrangements in parallel to the divorce. Britain also considers the EU’s financial demands to be far too high and is openly trying to take advantage of the situation. Indeed, some additional EU requests, related in particular to property assets and based on loose argumentation, give credit to this British assertion.
Finally, Britain has set up firm redlines by opposing any involvement of the European Court of Justice or European Commission rules once it has left the union and by dropping any hope of staying in the customs union. While clearly shaped to reassure the hard core of the Brexit camp in the UK, these principles leave little room for compromise.
Neither side sounds conciliatory at this stage. To add to this gloomy picture, leaked reports about a frosty dinner in London in April 2017 between May and European Commission President Jean-Claude Juncker only embittered relations. Additionally, the decision by the commission to put on its website all documents related to the negotiation process has been poorly received in London, giving rise to accusations that the EU institutions are using all means to complicate the negotiation process and thwart confidential back-channel discussions. Such is the mistrust between the two parties that the transparency advocated by one side is perceived as a show of inflexibility by the other.
Moving Back From the Brink
It would be foolish to pretend that putting the Brexit talks back on the right track will be easy. Attitudes die hard—all the more so as confrontations have put both sides in a prickly, defensive mood. It is time for both parties to come back to reality, start engaging in a more positive narrative, cut back on unrealistic expectations, and drop some if not all of their many provocative statements. In summary, both Brussels and London need to return to a public debate freed from excessive posturing and focused on the crucial issues.
From that perspective, the two parties need to address four main points to rectify the public perception of the issues involved and show a genuine willingness to make mutual concessions.
Reject the No Deal Option
To go on repeating, as was done during the UK election campaign, that no post-Brexit deal at all is preferable to a bad deal makes very little sense. The no deal option is not an option. For the business communities on both sides, a breakdown in talks would probably be the worst-case scenario, as chaos would prevail in all sectors in the absence of any contingency planning, notably on trade duties and proof of origin.
For Britain, the no deal option sets up a situation for the day after talks end in which the British government would face unilateral decisions from the EU without any transitional arrangements. This would impose unacceptable costs on British businesses and unduly complicate life for ordinary Britons wishing to travel, study, or live in the EU. For the EU 27, the absence of an agreement would open the door to hazardous internal discussions on the readjustment of EU policies. And it would force the 27 member states to spend much time and energy on these short-term issues instead of looking at the future of Europe.
Since the UK election, the no deal option has taken on a new momentum on both sides. In Britain, Leavers argue the hung parliament will offer no safe pair of hands for managing the Brexit process, making it a long, protracted muddling through with no final result. Remainers, on the contrary, hope that the foreseeable prospect of a total crash will at some point bring about a new referendum that could reverse the popular vote of 2016. As for the EU side, skepticism is growing, with the feeling that whoever heads the UK government will be under too many constraints to impose a safe and clear path to a successful outcome.
Yet rekindling the no deal scenario sends the wrong signal about negotiators’ readiness to engage seriously. The incalculable consequences of any breakdown should encourage both parties to sideline this option, at least for the time being, and focus instead on more realistic alternatives. Unless negotiators are looking for a breakdown right from the start of the talks, a no deal option should be treated as a last resort when all other approaches have failed, not as the most plausible scenario.
Clarify the Negotiation Sequencing
The EU 27 will not move away from their preference for discussing their three priorities first. The British government has little leverage to convince them to change their minds. But it could argue for a clear and public understanding of how the EU sees the talks unfolding after the launch of the first round. More pointedly, the UK would be in its rights to ask the EU side for clarity on when and how long-term issues concerning future relations between Britain and the EU will be discussed.
The current EU position on sequencing the talks has its own weakness: no one can realistically imagine that the three questions the Europeans want to debate first will be settled quickly. They will require laborious work at the level of experts, probably through technical working groups that will report later to the negotiators’ plenary session. While these groups are away, room should be made at the negotiating table for the more political discussions that the UK has been asking for.
The testing moment will be on proceeding from one stage to another. The EU 27 guidelines refer to “sufficient progress,” the definition of which will be left to the EU leaders. This calls for a clear understanding between the two negotiating teams at an early stage about what “sufficient progress” means and what is required from Britain on mutually agreed principles conducive to solving the three priorities before moving on to the next phase. A breakthrough along these lines could help soothe the atmosphere between the two parties.
Consider a Transition Period
Neither of the two sides has so far been ready to raise openly and directly the issue of a transition period between the end of the two-year window set out in Article 50 for finalizing divorce arrangements and the conclusion of a final agreement on all other long-term matters. Britain knows that this is where some of the most painstaking challenges to its interests and high-profile positions are likely to surface. It is on the issue of a transition period that UK opposition to any involvement of the European Court of Justice or to European Commission rules will be most severely tested.
Moreover, acceptance by the UK government of a transition period could raise doubts about London’s determination to leave the EU, as transitions tend to endure. But in her letter of intent, May mentioned the possibility of a “staged implementation” of a new relationship with the EU 27, hinting at possible arrangements that would allow for a gradual Brexit.
The EU may have identical reservations: transition means flexibility, while EU leaders are looking for firmness. Yet the Europeans have not minced their words in emphasizing that more than the two-year timeframe of Article 50 will be needed if both sides wish to agree on any of the long-term arrangements they are looking for. The EU cannot easily dismiss the rationality of transition.
Both sides will therefore need at some point to check their own interests. They will find that a transition period would make sense for both of them. It would allow enough time to define the details of any future partnership between the UK and the EU on trade and security, for instance, and provide for a progressive exit from the union’s single market rules. On the issue of finances, a transition period up to the end of 2020, coinciding with the closure of the EU’s current multiyear budget, would facilitate a deal by making British payments appear an orderly consequence of the budget process.
Neither side will be ready to come out too soon in support of this sensitive solution. For Britain, a transition would imply difficult concessions, as any prolonged connection to the single market requires the respect of all EU rules: the jurisdiction of the European Court of Justice; freedom of movement for capital, goods, labor, and services; and the primacy of EU legislation. For the EU 27, a transition would mean a painful awakening in admitting their current uncompromising position should give way to a more flexible attitude.
Yet both sides should come to the conclusion they have a common interest in reducing the negative fallout of Brexit. A tacit understanding early on about the inescapable need for a transition period can help talks flow more seamlessly.
Broach Arrangements for a Future UK-EU Partnership
If not properly resolved at an early stage, the lack of a long-term vision will seriously damage the whole Brexit process. Britain and the EU have a common interest in engaging soon in an open discussion about how they see their future partnership once the divorce is settled. At a time of confusion and unpredictability with unprecedented challenges facing the world economic and security order, the definition of renewed and mutually beneficial cooperation between Britain and the EU seems a more credible option than for both sides to drift apart.
Since the Brexit referendum, the UK prime minister has set the overall framework for such a partnership. Britain will not remain in the EU single market or customs union. Rather, it will seek a combination of, on the one hand, a free-trade agreement modeled on existing treaties with European Economic Area (EEA) nations but with tailor-made provisions for the UK and, on the other, ad hoc arrangements for all other fields where Britain may have an interest in partnering with Europe. If the UK government intends to stick to this line, it provides a proper road map that should allow negotiators not to waste too much time before starting detailed discussions on institutional and operational arrangements.
More precisely, such talks will have to assess the scope of this future relationship and the range of sectors that should be covered either by the free-trade agreement or by a case-by-case approach. As underlined by the prime minister in her letter of intent, security seems a natural area for cooperation, with a particular emphasis on the fight against terrorism. But other possibilities come to mind, such as fisheries, air transportation, police, and immigration. On these issues, negotiators will address the uncommon task of tailoring practical provisions between the EU and post-Brexit Britain, which will be a former member state. It will be about defining opt-ins instead of the UK looking for opt-outs, as in the past.
This approach could entail innovations that benefit other third partners and set up a new circle of friends for EU external relations. It could even pave the way to a more explicit and rationalized relationship with European third countries and progressively shape a renewed EU architecture with different degrees of integration, from the single market at the top to association agreements of various types at the bottom.
This dimension of the Brexit negotiations will be all the more complex as the EU could be moving in new directions as the debate continues about the union’s future integration. Some of the concerns raised by the British government on aspects of European integration—the lack of a level playing field in the single market, economic incoherence in the eurozone, and the goal of an ever-closer union—are increasingly shared by other EU partners. The EU 27 have divergent positions when it comes to discussing new arrangements on detached workers, implementing controversial burden-sharing provisions related to migration, or promoting reciprocity in international trade. As fresh thinking emerges on how to implement free movement, reciprocity, or solidarity and the European Commission calls for public debate and bottom-up consultations, the EU’s evolving integration looks set to shape the Brexit talks.
Ironically enough, the Brexit process could therefore end up more immersed in current discussions on the future of Europe than foreseen. Without questioning Britain’s decision to leave the union, a more open frame of mind in discussing the country’s divorce from the EU could benefit both parties by broadening the scope of the negotiations, leading to much more rewarding results.
Time Is of the Essence
Brexit is making for an uncomfortable political agenda for governments on both sides. And the UK’s June 2017 election result did not improve this reality. The divorce decision is here to stay, with both parties entrenched in their intention to prove the other wrong. As the EU regains some optimism for a brighter future, it sees no reason to ease the British withdrawal. Meanwhile, a majority of people in Britain remain convinced they have made the right choice and will be better off out of the EU. If one admits that for the time being these two points of view are irreconcilable, the only remaining question is how to find common ground for a mutually satisfactory separation. After all, this is what divorces are usually all about.
Because of the staunch attitudes adopted so far, one cannot expect a swift change of mind-set, much less a brisk shift of narrative from either Britain or the EU. Dropping the no deal option, defining a more balanced negotiating sequence, admitting the need for a transition period, and addressing a future long-term EU-UK partnership all require time and patience. One possible way to proceed could be for both sides to move away from some of their most controversial statements, then cautiously test new ideas while allowing negotiators to verify the goodwill of the opposite side. The purpose of such a pattern would be to slowly abandon the existing confrontational mood and focus on real issues. What is missing from both sides is a clear understanding of the negotiating obstacles, a firm definition of the end goal, and a strong dedication to complete the process.
Hopefully, by cleaning their slates, Britain and the EU can shift the current mind-set from distrust and recrimination to a more rewarding partnership between a renovated union and a post-Brexit UK. Raising their ambitions is probably the best if not the only way for Brussels and London to achieve success in the Brexit talks. It is time for both sides to engage steadfastly on that path.
