Henry Newman is Director of Open Europe.
During the Brexit Referendum, the Vote Leave campaign was desperate to get hold of lurid details of the latest Brussels white elephant – the Europa building that was then under construction, with its thousands of recycled window frames gathered from all 28 EU members and a garishly technicolour chamber housed in an egg-shaped dome.
Despite various efforts, the plans were largely kept under wraps. No one then could have imagined that, ahead of a Brexit discussion over dinner at the European Council, that ‘Space Egg’ building would have to be evacuated because of fumes leaking from the kitchens. Dalia Grybauskaitė, Lithuania’s President, joked on Twitter that the lesson was that “fuming over Brexit must not become toxic”.
The Council meeting itself was somewhat less farcical than these events in its designated venue. Following weeks of headlines of stalled Brexit negotiations, Donald Tusk slapped down the idea of a deadlock. But, as expected, the gathered heads of European governments agreed with Brussels’s Brexit lead, Michel Barnier, that the UK had not yet gone far enough in dealing with withdrawal issues to have made the “sufficient progress” required to talk trade.
The Council conclusions did note that progress had been made in all three initial areas. On EU citizens’ rights, the Council welcomed developments. On Ireland and Northern Ireland, there was “some progress”. But on money there remains the greatest distance, with the conclusions noting that although the UK has stated that it would “honour its financial obligations”, this has not yet been translated into a firm and concrete commitment from the UK to settle all of them. Emmanuel Macron was tougher, saying that the UK was far from agreeing the financial settlement.
There’s legitimate irritation on the UK side that Brussels has chosen to separate out the financial issue in this clumsy way. The EU probably would have ended up getting much more cash out of the UK if they had talked trade at the same time as financial obligations. They could have dangled a ready-to-sign trade deal in front of the UK and a price tag to go with it. In the elation of a shiny new FTA, a large payment could have been quickly forgotten.
What does the EU want on money? It has published a technical paper, but is not saying exactly what number it has in mind (although various numbers have circulated in the media. Back in March, there was a bizarre Lunch with the FT between Jean-Claude Juncker and that paper’s editor, Lionel Barber. In between discussing the “eroticism of power” and comparing David Cameron to Gorbachev as “big destroyers” (arguably meaning that Juncker himself was comparing the EU to the USSR), Juncker said the bill would be at least €60 billion.
The EU is claiming that it doesn’t want to agree a number now, only the methodology. But the UK side has seen that one coming. If you agree the calculations, you might as well agree the sum. At Florence, May committed that UK to ensure that every member would pay no more, and receive no less during the current budget period. She also said that the UK will honour its commitments, and floated her desire to remain in (and pay for) joint educational, scientific and cultural programmes, in the future. When added to UK commitments to joint development funding, there’s plenty of cash on the table. And anyway, May has already said that Florence wasn’t the final word on financial matters.
However, she has limited room to manoeuvre in today’s difficult political climate. That’s a view that is shared by some EU embassies in London. In the UK, former ministers and Conservative grandees have been advocating marching out of the negotiations, and talking up the advantages of a no deal exit. Rumours are spiralling that the interventions pressing May on no deal are more coordinated than they might appear. If so, it’s a sign that the UK is getting better at using outliers to float ideas that can be ‘knocked down’ by ministers.
No deal should be no one’s first choice. Leaving with no deal would come with significant costs and disruption not only for the UK, but also for the EU. Yet – in negotiation terms – it makes sense to have a fall-back position, something that Mervyn King, the former Governor of the Bank of England, has advocated. Given that the UK has committed to leaving the Customs Union, it’s high time that the Government got on with accelerating its plans to upgrade customs systems, and so on. We should be planning for no deal – not least because being seen to do so makes a deal more likely.
During my conversations in Brussels this week with various officials, journalists and politicians there’s was little sense of a serious crisis. But there’s more than a hint in the air that the EU27 and Commission are happy to let the talks get sticky. They are content precisely because they want more of the sort of tweets, we saw from Lloyd Blankfein, the Chief Executive of Goldman Sachs, who said he’ll be spending more time in Frankfurt. Sending the Prime Minister home from Brussels this weekend with a flea in her ear fits precisely into that plan.