The odds of an early collapse of EU-UK Brexit negotiations are shortening by the day. And that's before talks have started. Usually circumspect analysts have concluded that Theresa May is likely to flounce out in a huff. Prime candidate for the catalyst that spurs an almighty row is a bill for €60 billion that Brussels is reported to be drawing up: the amount that Britain owes for pension liabilities and budgeted spending commitments.
Just imagine how the rabidly Eurosceptic press will react. That sum might grow if the British have to write a cheque for access to the single market during any post-2019 “transitional” arrangement.
In response, some analysts have pointed out that balance sheets have two sides and that the EU must have some assets – somewhere – that the UK should be entitled to share. If the EU were a publicly listed company this would be a relatively straightforward matter: the balance sheet would be a matter of public record. Nevertheless, the assets of any business are often “intangible’. Those of the EU are likely to be invisible.
May is committed to starting formal divorce proceedings within a few short weeks, perhaps days. The horrible phoney war is about to end.
One of the features of the yet-to-start negotiations will be qualities of the people sitting on either side of the table. Whatever happens in public, the real action will be between Angela Merkel and Wolfgang Schäuble on one side and May, Boris Johnson, David Davis and Liam Fox on the other.
On the basis of recent history, it is tempting to conclude that it will be no contest. The German chancellor and her finance minister have plenty of experience of tough talking. Three specific examples come to mind.
At various stages of the great financial crisis, the Germans came under pressure from a multitude of sources to allow the ECB to issue bonds jointly guaranteed by all countries in the EU. The monies raised would then be used to restructure the debts of financially stricken poorer countries.
Merkel said no
The European Commission unsurprisingly loved the idea – they even issued a thoughtful green paper backing the notion – as did many people in Italy and Greece.
George Soros led a chorus of commentators who called for Germany to agree to the proposals or leave the euro. Angela Merkel simply said no.
The Greeks have plenty of experience in making demands on the Germans, confident of a strong bargaining hand, only to be met with absolute inflexibility. In particular, as soon as Schäuble dropped hints about a “temporary” exit of Greece from the euro, the negotiations came to an abrupt conclusion.
Similarly, every time someone suggested that Ireland should “stand up” to the Germans during our own banking crisis we were met with a brick wall. For all the bluster about having a strong negotiating hand – something that was probably true – it turned out that the people on the other side of the table were much better at this than we were.
The British have yet to face up to the simple fact that the Germans in particular have lots of experience of setting their negotiating goals in advance; carefully thought through objectives are a vital part of any talks process. Next comes the tactics used during the negotiations: again, Germany seems to be quite good at this.
The white paper reluctantly issued by the UK government giving details of its negotiating objectives is long on aspiration (as well as containing plenty of empty white space). It is more of a wish list and puts little flesh on the original leaked goal of “having cake and eating it”.
On the money
It is tempting to conclude that “carefully thinking through things in advance” is noticeable only by its absence. Of course, it may turn out that they are keeping their cards close to their chests and will turn out to be deal-making geniuses. We will see.
Nobody pays any attention to Tony Blair these days, but his recent remarks – in possibly the best speech of his career – about Brexit were right on the money.
First, it is no longer about “hard” or “soft” Brexit, but Brexit “at any cost”. Second, the UK government is absolutely consumed by Brexit and has no bandwidth at all for anything else: the NHS, education and many of the other pressing issues are being neglected or ignored. All this is true even before the toughest negotiations in living memory have started.
May is committed to starting formal divorce proceedings within a few short weeks, perhaps days. The horrible phoney war is about to end.
Ironically, there are hints that immigration into the UK has already begun to fall: Britain is no longer quite the welcoming place that it used to be. There is data that suggests the post-Brexit resilience of the UK consumer is finally and inevitably coming to an end.
If it’s been grim so far, just wait until the shouting starts in earnest. We will find out just how weak the British government’s cards are,. Strong or weak, they are up against the toughest and most battle hardened of negotiators.
