EU Referendum


Brexit: standstill is the logical consequence


29/08/2017




Despite Labour's distraction on the Single Market still filling media space, attention has turned to the start of the third round of Brexit negotiations in Brussels, although yesterday turned out to be a non-negotiation.

British officials turned up on the Bank Holiday Monday, but they were denied any action as the negotiating groups were not scheduled to meet until today. With Thursday reserved for a "closing plenary" and a press briefing, this means that face-to-face contact between officials for this month is limited to two days.

All we saw yesterday was a Principal's meeting, starting with a joint press briefing that had Barnier demanding that the UK "start negotiating seriously". He also reminded Davis that the European Council had given him a very specific mandate, requiring him to deal with what he is now calling the "separation issues".

Furthermore, said Barnier, "the EU27 and the European Parliament stand united. They will not accept that separation issues are not addressed properly. I am ready. I am ready to intensify negotiations over the coming weeks in order to advance".

Short of beating Davis over the head, Barnier could not have been more direct. "To be honest", he said, "I am concerned. Time passes quickly", then adding his barb about negotiating seriously.

Just as pointed, he then went on to remark that Brussels needed UK papers that are clear in order to have constructive negotiations. "The sooner we remove the ambiguity, the sooner we will be in a position to be able to discuss the future relationship and a transition period", he said.

Davis was left, rather huffily, to say that Britain was ready to "roll up its sleeves" to get a deal, calling for more "flexibility and imagination" from the EU's negotiating team. He rejected Barnier's comments and later described them as "an ill-judged and unhelpful attack" on the UK.

As to the position papers submitted, Davis insists that they are "sufficiently detailed", declaring that: "They are the products of hard work and detailed thinking that has been going on behind the scenes not just the last few weeks, but for the last 12 months and should form the basis of what I hope will be a constructive week of talks".  

Apart from the fact that he' not getting a full week of talks, Davis has himself only met Barnier for an hour, before returning to London, leaving his officials to proceed with the talks. In so doing, he has ensured there will be no progress as he has refused to table a position paper on the financial settlement. 

Indicative of how much the "Ultras" are dictating UK responses, a diplomat told the Guardian that: "The UK government does not want to be too clear because they are afraid of the hard Brexiteers".

EU officials had said they were looking forward to hearing the UK team's legal analysis on the Brexit bill but voiced their frustration. "We are not yet in a situation where lack of time would prevent us from advancing, so far it is a lack of substance", said one official.

Nothing of this suggests two sides preparing to get down to work and deliver a result. The Financial Times is quick to remind us that concerns are growing across the EU's remaining 27 member states that a stand-off over Britain’s exit bill will mean insufficient progress will be made by October to allow trade talks to begin, as both sides had hoped.

Given Britain’s reluctance to discuss financial issues, some French diplomats expect December to be a more realistic turning point in talks. "We need serious and tangible signals from Theresa May on the budget in October to be able to say, let’s try to wrap this first phase up in December", a French diplomat said. "We need to sort out the past first. The past comes before the future".

Another senior EU official, we are told, said if Britain delays any concessions on the financial settlement until after the Conservative party conference, in early October, it may leave too little time for the EU to agree a positive response.

And, in an entertaining aside, French officials dismissed claims by The Daily Telegraph that they were willing to compromise on money in order to quickly progress to trade talks. "Allegations that Paris wants to start trade talks with UK are baseless and hold no truth", said an Elysee official. 

Another source said the allegations in the Telegraph "were not based on anything and did not correspond to reality". France, he said, "fully supports" the mandate that EU leaders had given to Barnier.

Doubtless, the original report represented a sustained attempt by the newspaper to suggest that the "colleagues" are less united that their current stance indicates – thus reinforcing earlier reports that Davis was to attempt driving a wedge between Member States and the Commission, in the hope of forcing a new mandate on Barnier which would have him side-stepping the sequencing.

But if there was any hope that Angela Merkel, in the throes of electioneering, was going to buckle, then her latest intervention but dispel that. Over the weekend she used a podcast to make clear the UK must pay up. "This is about obligations that Great Britain has entered into and that naturally must remain on the books", she said. "It's not about the cost of divorce - that makes it sound like fines. We're still at the very start of these negotiations".

According to the FT, British and EU diplomats have privately acknowledge that a solution to Britain's exit bill will partly come from a transition arrangement, which would effectively continue UK budget contributions. However, neither side is yet willing to initiate talks on the issue.

French diplomats are giving no sign whatsoever of a schism and are telling their counterparts that they are "dismayed" by the UK’s summer initiatives - dismissing our government's position papers as "off topic", "confused" and "poor on substance".

Berlin isn't being particularly helpful either. Their diplomats see the UK's ideas on a future customs arrangement as an attempt to draw the benefits of EU membership while leaving the union. "The problem is the lack of clarity", said one eurozone diplomat involved in Brexit. "We are asking ourselves: 'What do they want?'"

The Irish Minister for Foreign Affairs, Simon Coveney, had his own view on this, declaring that the current position of the British government was "unsustainable". The British government, he said, "is seeking to stay in the single market and the customs union and at the same time do trade deals of its own". "Essentially it is seeking shelter from the European Union and the sunshine on the outside. It wants the best of both worlds, and that is not going to work".

"Britain", he added , "is trying to sell the notion that it is reclaiming its sovereignty and securing trade advantages while insisting its economy is so important to other EU countries that it requires free trade. The two positions are not compatible".

Back in Germany, we saw an intervention from Dieter Kempf, president of the BDI German industry association. He told London that it still lacks a "clear line" on Brexit. "Despite the declarations of unity of government members you cannot recognise an agreed position", he said. "These are bad starting conditions for the third round of negotiations. Significant progress is hardly to be expected".

Martin Wansleben, head of the German Chambers of Commerce (DIHK), was then in the Guardian telling us, "The terms of exit are still completely unclear". There are hundreds of practical and technical issues, including customs arrangements and tax procedures, that need to be resolved during later stages of the negotiations. Businesses in both the UK and Germany want to see talks move on to these issues, customs in particular, as soon as possible.

Many of DIHK members are reporting that they are already shifting investments away from the UK in anticipation of new barriers to trade emerging. Wansleben notes that German exports to the UK were down three percent in the first half of this year on a year earlier; while exports to the rest of the EU rose six percent.

The uncertainty is reflected in a commentary in Spiegel, which has an "experienced diplomat" stating that, "It is noticeable that the highly professional British civil servants do not have any clear guidelines from the politicians".

The crucial message of the position papers, Spiegel says, is not so much their precise content as the subject matter itself. Although they initially agreed with the negotiating sequence proposed by the EU, the British are apparently no longer willing to discuss the divorce procedures first.

On Davis's call for more "flexibility and imagination" to Michel Barnier just before the start of the third round of talks, the paper wryly dismisses this as "kind of like a medicine man trying to convince a surgeon of the healing powers of his voodoo pad", just as the scalpel makes a precise incision.

And so we have an EU that wants to talk about money, civil rights and Ireland, while Davis wants to negotiate the future customs union. As long as this does not change, "standstill is the logical consequence", says Spiegel The question is now: Who has the better nerves?