Logo

Logo

Exit the Brits

After nine months of heat and bluster following the Brexit vote, the die has been finally cast. On 29 March…

Exit the Brits

Brexit (PHOTO: GETTY IMAGES)

After nine months of heat and bluster following the Brexit vote, the die has been finally cast. On 29 March the British Prime Minister, Theresa May, invoked Article 50 of the Lisbon Treaty in a letter to the European Council President, Donald Tusk, informing him of Britain’s decision to leave the European Union (EU). It is a momentous event in world history and has signalled the start of a negotiating process for the UK to extricate itself from the EU that must be concluded within two years of invoking Article 50. There is no precedent and no one has a clear idea of how best to proceed. The final letter of Ms May was more conciliatory than her previous postures, although she subtly reminded her EU colleagues that Britain would not mind reducing security and antiterrorism cooperation if she were to get a bad trade deal at the end of the negotiations. British tabloids accentuated that part of her letter that the Europeans interpreted as the old fashioned blackmail. It also sounded less convincing after the Westminster attack few days back, that put a hole in the British propaganda of having the best anti-terror measures in place in the whole of Europe.

Theresa May was in the ‘soft’ Remain camp during the Brexit campaign, while most of her ministers were ‘hardcore’ members of the Leave camp. One of them, the current Brexit minister, David Davis, will lead the British negotiating team in Brussels. The Foreign Minister, Boris Johnson, has been deliberately kept out of the loop because of his propensity to make reckless and tasteless jokes even on serious occasions. According to the Westminster insiders, there is still no clear unequivocal negotiating strategy on the British side. On the EU side, the negotiations will be led by Michael Barnier, a former EU commissioner and a former French Finance Minister. He expects the negotiations for British withdrawal from the EU to be completed around September 2018, and believes that new trade negotiations of Britain with the rest of EU would begin only in earnest thereafter. All the remaining 27 EU member-states seem to agree with this strategy as does the European Parliament. Once the negotiations of British exit from the EU are complete, the terms must be approved by parliaments of all the 27 EU member countries, as well as by the European Parliament. A political spectacle of historical proportion!

The first point on the agenda, as far as the EU negotiators are concerned, is the Brexit bill that the UK owes to the EU for commitments that the country signed, many of which are yet to be implemented. The amount making the rounds is 60 billion euros. EU financial experts are working round the clock to disentangle the maze of commitments to come up with the final bill. The Brexit extremists do not want to pay a single cent and are threatening the hard Brexit. The UK government is more reticent and wants to discuss the bill on condition that Britain gets a virtual free trade agreement with the EU in return. The EU, by contrast, does not even contemplate discussing any trade deal before a reasonable agreement is reached about the terms of British withdrawal from the EU. There are vexing issues like the rights of EU workers currently employed in Britain and the British citizens working in the EU. Pension liability of British workers retired after working in the EU bureaucracy is another important issue. The EU wants a status quo of EU workers employed in Britain and Britons working in the EU through an interim agreement. This may be difficult for Ms May to accept, as it involves the Polish and Romanian workers, among others, who were targeted by the Leave camp and played a major role in the ‘Leave’ vote.

Advertisement

The greatest beneficiary in the UK of the EU membership has been the City of London, which has become the world’s financial hub of the same scale as New York, and possibly larger. It was made possible by what is called “passporting”, which allows bankers working from London to perform valid financial transactions throughout the EU. With loose banking regulations in the UK and the availability of easy capital from the Middle East and many former colonies, along with off-shore facilities provided by various British isles between the coasts of England and France, the City grew at an unprecedented scale during the last four decades of British membership of the EU. Bankers from the Continent flocked to the City in droves. The EU is determined to withdraw this “passporting” right unless the movement of EU residents to the UK (and vice versa) is denied by the British government. There is huge anxiety among the investment bankers about the future. Most investment banks have already announced plans for shifting some of their staff to the Continent. This would cause a huge potential loss of taxes for the UK government. The investment banks are jittery about waiting for two years to watch the final outcome of the negotiations. They are already planning to relocate some staff to the Continent to prepare for any contingencies.

Negotiations will start in earnest only after the German election this September. The French election will be decided in early May, but the French negotiating position would not change much with the election of the new President, assuming that Marina Le Pen would be defeated in the second and final round of voting there. The German position would be somewhat more conciliatory to the British position if Merkel remains the Chancellor. Any unexpected majority by the Social Democrats in the German election would certainly harden the official German negotiating position. One country that may lose out heavily is Poland that always got unstinted support from the British in any dispute within the EU. In the European power-game, Britain always supported the Polish people for centuries.

Britain also sabotaged all plans of the core group of EU countries to have a two-tier Europe, with one group proceeding with fast political union, with the countries on the periphery left to do that at their own pace. Now there is panic in Poland that this two-speed Europe might indeed be a reality. Already the xenophobic governments of Poland and Hungary are causing huge frustration among the governments of the West European countries.

Last, but not the least, is the problem of Scotland the majority of whose inhabitants voted to remain within the EU. Fearing resurgence of the independence movement there, Theresa May has warned them against any such attempt. This has infuriated the Scottish First Minister, Nicola Sturgeon, so much that she did not even wait for the end of negotiations with the EU and announced plans for a new referendum for the independence of Scotland from the rest of the UK. Then came suddenly the issue of Gibraltar to the front of the agenda. Gibraltar was captured by the British from Spain at the beginning of the eighteenth century. It has a small land border with Spain and people there voted overwhelmingly to remain in the EU. At the same time, they voted in 2002 to remain within the United Kingdom. Now Spain sensed the chance to tighten her noose around Gibraltar when the EU member-states agreed to give veto right to Spain on whether the final result of the negotiations between the UK and the EU would also apply to Gibraltar. Any denial of Spain for easy access to her territory would cause economic havoc to Gibraltar, a small rocky territory with only 30,000 inhabitants. In return, Spain has agreed to allow an independent Scotland’s membership to the EU, which they consistently opposed till now for fear of breaking away of Catalonia from Spain. Some British ministers are even threatening to go to war with Spain, as they did over Falkland Islands with Argentina. Things are getting increasingly bizarre.

In response to Wednesday’s letter of Theresa May to Donald Tusk invoking Article 50 of the Lisbon Treaty, came the EU’s draft negotiating guidelines published by President Tusk. This is broadly how the Sunday British newspaper, The Observer, has described it. To Ms May’s request for parallel talks about terms of departure and future trade relations, the answer was an emphatic ‘“No”. Her gamble to use the rights of existing EU citizens during negotiations was also greeted with a determined “No”.

To the British Government’s proposal to give special status to the border between the Irish Republic and Northern Ireland, the answer was again “No”. On special deals for the City and car manufacturers, the starting point was a “No”. The guidelines also clearly declared that the principle of freedom of movement of EU nationals is sacrosanct and must be abided by Britain in exchange for special trading status with the EU post 2019. An ominous start of negotiations indeed.

The writer is former Dean and Emeritus Professor of Applied Mathematics, University of Twente, The Netherlands.

Advertisement