As Theresa May prepares to trigger Article 50 and begin the two years of negotiations over Britain’s exit from the European Union, we set out the positions of the UK’s negotiating partners. This collection of views from the capitals shows a variety of attitudes towards Brexit, ranging from nervousness to indifference. Several EU partners have vulnerabilities – whether in terms of citizens’ rights or economic interests – to a ‘hard’ Brexit, which the UK will no doubt seek to leverage in the negotiations. But the overall impression is that Europe seems ready to accept some damage to national interests in order to protect the European project. In this context, securing a favourable deal for Britain looks a very tall order for Ms May’s negotiating team.
VIEW FROM BERLIN
by Josef Janning
The truth is that neither economic nor demographic factors will exert much pressure on Germany in the course of negotiations.
After a phase of profound disappointment with the outcome of the British referendum, the debate in Germany has calmed almost to the point of indifference.
Occasionally business associations note the significance of the British market, or city administrations report rising numbers of British applications for German citizenship. But the truth is that neither economic nor demographic factors will exert much pressure on Germany in the course of negotiations.
Germany will certainly notice the economic impact when Britain leaves the single market. In 2015 Britain was Germany’s third largest export destination after the United States and France. But the fact that the US tops this list shows that being outside the single market is no barrier to continuing trade. A future free trade agreement with the UK would likely ease any tariff barriers created by Brexit, and non-tariff barriers should be manageable given the high regulatory convergence between the EU and the U.K.
When it comes to citizens’ rights, Germans make up less than 5 percent of the EU citizens permanently residing in the U.K. And most of the 135,000 German expats in Britain are highly skilled and will remain in demand after Brexit. Moreover, even if they were forced to (or chose to) return home, Germany’s labour market would be able to accommodate them.
Much the same could be said of the over 100,000 British citizens living in Germany. A significant number may want to take up German citizenship, but even if they did not their position in the German labour market would be no weaker than that of US citizens.
In terms of negotiations, the German debate does not focus on ways to punish the U.K. for seeking to leave but rather to control the damage this step could do. German policy makers do not advance particular interests they might have and do not want to engage in exploring special concessions as they do not wish to encourage any other EU-government to do so. Berlin is keen to keep the ball in Brussels rather than to engage in bilateral consultations. In this sense, Angela Merkel’s encounters with Theresa May were meant to alert the British Prime Minister to the consequences of a hard Brexit, but not to secure any special agreement between the two countries.
In Berlin’s view, there is very little room for British maneuver in the negotiations ahead. London may seek to leverage continued security co-operation as a bargaining chip, but the German policy community correctly notes that the UK has its own vested interest in continued partnership in this area. So if Britain wants to leave the single market and the customs union it will have to accept the consequences, including the restoration of fully functioning EU/UK borders — with all consequences that will have in places such as Northern Ireland.
Concessions Margaret Thatcher or even David Cameron could win were grounded in Britain’s membership in the EU and Germany’s strong interest in preserving the integrity of the EU. By leaving the union, Britain has lost that leverage. Downing Street may not have noticed that, yet. But the Chancellory clearly has.
VIEW FROM DUBLIN
by Andrew Gilmore
In both political and economic terms, Ireland is arguably the Member State most exposed to the risks of Brexit.
Two immediate priorities can be identified for the negotiations:
Preserving the status quo in Northern Ireland, including migratory freedom, reciprocal rights, labour mobility and the open border;
Mitigating damage to the trade relationship.
Ireland and the UK are co-guarantors of the peace agreement in Northern Ireland, but this peace remains fragile. Brexit is an unwelcome development in a region where political disagreements need little encouragement to become dangerous schisms. Preserving the status quo is a priority – but equally so is ensuring that issues related to Northern Ireland are handled in the negotiations with due sensitivity for the North’s unique circumstances.
For example, after Brexit Northern Ireland will become home to one of the highest concentrations of EU passport holders outside the EU. But this is quite distinct from the broader EU negotiation issue of migration and reciprocal rights for citizens: it is a direct consequence of the peace agreement, which extended Irish citizenship to all Northern Irish citizens.
Similarly, customs and migration controls with the UK are problematic to some degree for all member states, but the hard-won open border with the North has a deep symbolic significance. A return to the borders of the past cannot be countenanced.
Considering the singular circumstances and the high stakes, there is a growing sentiment that the Northern Irish issues must be compartmentalised, lest they fall victim to a potentially acrimonious negotiation. This will require creativity, flexibility and goodwill – but the case can certainly be made that Northern Ireland is a unique case, worthy of unique consideration.
Theresa May’s Lancaster House speech made clear what was already suspected: damage to the €1.2 billion per week UK-Ireland trading relationship is unavoidable. The only question is how severe it will be.
The UK’s departure from both the Single Market and the Customs Union raises profound questions over the future of bilateral trade between the two countries. Considering the domestic political constraints, and the EU’s own desire to enforce its rules, it may simply be impossible for Prime Minister May to negotiate the ‘associate membership’ of the customs union she has alluded to. Ireland will be caught in the middle: tariffs and non-tariff barriers to trade will be inevitable, and bring with them the potential to wipe-out many cross-border SMEs with low-margin business models.
An acute awareness that Ireland’s economic and political future lies with the EU, and not with its nearest neighbour, is likely to drive Ireland to hold the European line on these issues – but it may come at a heavy price, and the country may be forced to seek aid from the EU for hardest hit sectors.
The future relationship
For Ireland, a swift solution to the future relationship would be ideal, but given the complexity of negotiating such agreements it seems unlikely one will materialise in a rapid timeframe.
In that light, the present debate over whether the negotiations will take place in parallel or consecutively seems less important than securing satisfactory transitional arrangements for the interim period and cushioning the blow of Brexit for the island of Ireland as a whole.
VIEW FROM MADRID
by Borja Lasheras
Although there is no widespread desire to “punish” the UK, there is little appetite in Madrid for any exit concessions, either.
Spain’s overall position on Brexit has not fundamentally changed since the beginning of discussions in the wake of the referendum. Officials remain adamant that the upcoming negotiations pertain to the UK’s withdrawal from the EU (including issues such as the financial settlement, and rights and obligations of citizens), not its future relationship with Europe. The one exception to this “exit negotiations first” mantra is the status of the border in Northern Ireland, given its specific nature.
At a later stage, officials argue, if exit negotiations proceed smoothly and there is a positive assessment of the engagement of the British Government, then there might perhaps be room to initiate discussions – though not necessarily negotiations — on the terms of the future EU-UK relationship. But these terms are not expected to go much further than those offered to other trading partners such as Canada.
Spanish public opinion was strongly in favour of the UK remaining in Europe at the time of the referendum. But while there was some hope after the vote that Brexit might yet be avoided, it is now becoming clear for most Spanish policymakers that the UK and Europe are heading towards a “hard Brexit”. Although there is no widespread desire to “punish” the UK, there is a scarce appetite for any exit concessions, either – especially when it comes to fundamental tenets of the European project, such as freedom of movement.
Indeed, the impression is that further concessions to the UK might have been more likely had it chosen to remain in the union. Instead, the perception in Spain of an increasingly xenophobic, delusional and patronizing attitude of the British establishment is fast destroying any goodwill it once possessed.
Two sensitive dossiers for Spain in the Brexit negotiations are domestic tensions with Catalonia’s pro-independence government, which is looking closely at Scotland, and by the thorny issue of Gibraltar. New foreign minister Alfonso Dastis has been vocal in making the point that any provision on Gibraltar will need to be agreed by Spain. Meanwhile, opposition parties, having accepted concessions a year ago, now take a tougher position than Rajoy’s government.
For most Spaniards, then, Brexit is yet another European problem, and a big one at that, to be managed over the coming years. Some policymakers stress the opportunities for Spain in a potential new ‘EU4’ core group of Germany, France, Italy and Spain, or in deeper integration in defence, which, in their view, might progress now that the UK is unable to block such prospects. But the general view is pessimistic.
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