EU Negotiating Positions

The Torygraph is, perhaps optimistically, reporting that the European Union may be about to reorganise its stance on negotiating Brexit.

Broadly, and based on my understanding, negotiations since Article 50 was triggered in April have gone as follows:

  • Britain took the view that a contribution to the EU budget and ongoing costs was part of the final settlement and future relationship.
  • Whereas the EU took the view that the contribution to the EU budget and ongoing costs is part of past commitments and the final settlement is part of the future, so will be discussed in the future once the past has been straightened out.
  • So the Government decided to prove that the Prime Minister was about to be really really popular and win a huge Parliamentary majority for her negotiating position in a snap election, thus showing that Europe had to do what she wanted. Of course she then lost her overall majority, and made her Government look really not very brilliant by leaving a distinct air that the only reason she stayed in post was because nobody else in Parliament would be any better at the job. Evidently Tony Blair’s legacy to politics (not a career choice for anyone who knows how to make a difference, or do anything at all, with perhaps a couple of exceptions who are keeping their heads down) is ongoing.
  • Meanwhile the British position was compared to membership of a golf club, where members can resign their subscription and make no further contribution to the new clubhouse and revised green mowing arrangements (and play golf however they like).
  • Whereas the EU preferred the concept of a highly emotional and rancorous divorce, with alimony to be paid on an ongoing basis.
  • Britain made a very quiet and unspoken move towards the EU position that the divorce bill would be discussed first, followed (if the bill went well enough by, say, September 2017) by discussing the future relationship.
  • Britain then raised the suggestion of a transitional arrangement of some point for three years.
  • Whereas the EU began talking of a £100billion payout towards the hole left in the remainder of the 5-year budget (that Britain agreed to) as a result of Britain going.

It is the transitional arrangement which has become rather fun in all this. The transitional arrangement would of course involve paying the EU something, which obviously would most sensibly be what we would have paid anyway in exchange for most of the benefits of being inside plus most of the benefits of being outside. This would be a temporary semi-informal cake-and-eat-it scenario, with no immediate attractions for other members because a) it would largely be so they can have our money, and therefore unlikely to be repeated for Italy because the immediate cash savings following formal withdrawal would rather appeal to the EU; and b) after the three years we would be Out, without the benefits of being inside.

But if we’re going to pay what we would have paid anyway over those three years, we meet our commitments to the EU Budget and so there is no lump sum divorce bill.

This of course means the lump sum divorce bill is not relevant until it is decided there is no transitional period, but the transitional period is a technical affair that will lead from the In state to the Out state and the Out state has to be established before the transitional period can be properly considered. Thus the transitional period’s relevance doesn’t arise for some time, and the lump sum comes up when that has failed.

Perhaps more seriously, the lump sum has been progressively rising as the EU finds more and more costs that the UK will not be paying after April 2019. One major question which arises from this growing lump sum is whether the EU can afford the UK’s departure. Some months ago a bunch of Euro politicians were happily banging on about all the things they can do now the UK is off, overlooking that standing armies, worldwide diplomatic missions and proper integrated financial regulation are extremely expensive. If they are to be £100billion short of current spending in the 2020 Budget, the attitude should be towards retrenchment and lining up gigantic programme cuts that will make Tory austerity look like the insignificant fiddling of small but painful slashes that it is – not expansion of the Imperial power.

Britain meanwhile has been querying the lump sum and asking to see an itemised bill. From the response, it seems that people on the Continent are very honest. When you get your house rebuilt in, say, Belgium, it appears the builder will simply present you with a bill for €9000 and you simply sign the cheque, without asking the builder to point out what’s been done. In this country it would be called an excuse for embezzlement.

The problem for the EU is if at the end of September the view remains “No lump sum agreement by September = no deal”. Because if there is no deal, that includes no lump sum payment. By the end of this month, the EU would have committed to a position where in April 2019 we simply withdraw from the EU and begin the lengthy process of deporting the unattached EU citizens who, owing to the absence of a citizenship deal, no longer have any right of residence in the UK.

And the EU? Is, by its own maths, some £100billion out of pocket.

That’s not a good position for a bunch of supposedly brilliant negotiators to find themselves in – negotiating the other side into not paying you anything.

How you sell to your population that they are now £100billion poorer because you thought being paid by instalments over an extended period was an unacceptable compromise is an interesting question.

The solution is very simple – to forget the £100billion lump sum and focus on getting a transitional arrangement which will result in Britain paying that over a three-year period, very quietly and with obvious benefits to both sides. And, of course, with a recollection that this makes David Davis’s job much easier because he can go home and say “I got rid of that stupid bill today,” and after that can agree more or less any rubbish wanted.

It looks like some portions of the EU may be realising this. It would have helped of course if someone had suggested it more loudly at the outset.

EuroParl Strasbourg 1 JPG.jpg The European Parliament building in Strasbourg, showing the immense interest displayed by the citizens of Europe in their unified democratic institution. (At least, the interest displayed on a Thursday afternoon in September.)

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