U.K. Prime Minister Theresa May\u2019s vision for Brexit is antagonizing European Union governments, raising the risk that negotiations deteriorate into a bust-up even worse than first expected.<\/p>\n
May\u2019s initial demands \u2013- and warnings over what she will do with taxes or security if she doesn\u2019t get her way -\u2013 are elevating the likelihood that the U.K. leaves the bloc in 2019 without an exit deal, let alone the sweeping trade pact it seeks, according to five Brussels-based diplomats who spoke on condition of anonymity.<\/p>\n
The decline in sentiment comes less than two months before May plans to open discussions by invoking Article 50 of the Lisbon Treaty and suggests she may need to modify her approach to ensure the breakup doesn\u2019t end up hurting both economies. <\/p>\n
\u201cIt\u2019s going to be very complicated, very messy,\u201d former Finnish Prime Minister Alexander Stubb told Bloomberg Television this week. \u201cWhen you\u2019re negotiating Article 50, you\u2019re talking about 200,000 pages of secondary legislation — it\u2019s not going to be easy to just get out.\u201d<\/p>\n
The messages from the diplomats are that EU governments are preparing to enforce their line that the U.K. can\u2019t be better off outside the bloc than inside it and that they value safeguarding their own interests and regional stability above the need to maintain good relations with the U.K.<\/p>\n
While the diplomats acknowledged there is likely to be a long back-and-forth and that May has merely made an opening gambit, they said officials have been surprised by how combative the U.K. has been so far.<\/p>\n
\u201cThe EU faces an existential crisis,\u201d said Malcolm Barr, an economist at JPMorgan Chase & Co. \u201cIt will prioritize a deal which fosters coherence among the 27 and which demonstrates to all the disadvantages of leaving, even if that comes at a short-run economic cost to itself.\u201d<\/p>\n
Large Sums<\/strong><\/p>\n May outlined her strategy in a January speech and formally published it last week. She aims to leave the single market for goods and services, quit sending large sums of money to Brussels, clamp down on immigration and recapture law-making powers. As for trade, she wants a \u201cbold and ambitious\u2019\u2019 commercial relationship with the EU but also the freedom to negotiate accords with other countries.<\/p>\n She argues the relationship she envisages would benefit the EU too by ensuring easy trade across the English Channel and warns both economies would suffer if a pact can\u2019t be struck. \u201cIt is in everybody\u2019s interest to find an arrangement, to find a partnership between us that actually meets the needs on both sides,\u2019\u2019 May told the New Statesman magazine this week. \u201cI don\u2019t feel I have a weak hand.\u2019\u2019<\/p>\n Still, governments couldn\u2019t avoid noticing that May\u2019s pitch was laced with menace, the diplomats said. She suggested failure to land a deal could prompt the U.K. to cut taxes to maintain competitiveness and also hinted it could withhold security cooperation from its neighbors. Her willingness to engage with U.S. President Donald Trump also raised eyebrows.<\/p>\n \u201cShe\u2019s taken this huge strategic decision to ally herself with Donald Trump which has ruffled a lot of feathers,\u201d former U.K. Deputy Prime Minister Nick Clegg said in an interview with Bloomberg Television on Friday. Diplomats across the EU \u201care mystified as to why she hasn\u2019t tried to create more space to come to a more workable, a more moderate accommodation.\u201d<\/p>\n Hardening Positions<\/strong><\/p>\n British efforts to find allies among the other 27 EU states and undercut the European Commission in Brussels would risk hardening positions, the diplomats said.<\/p>\n The U.K. has already started bulking up the status of embassies in central and eastern Europe. It has also yet to guarantee the rights of EU citizens currently living in the U.K., which outnumber Britons on the continent.<\/p>\n How the talks will actually fare may be evident early on. An immediate flashpoint is set to be the haggling over Britain\u2019s exit bill. Running to an estimated 60 billion euros ($64 billion), it comprises various financial commitments, such as pension obligations to EU officials and past pledges to the bloc\u2019s budget and projects.<\/p>\n Strategic Priorities<\/strong><\/p>\n U.K. Trade Secretary Liam Fox last week called the idea of such a bill \u201cabsurd\u201d and the government has said it won\u2019t pay for any EU projects signed after last November unless they \u201cprovide strong value for money and are in line with domestic strategic priorities.\u201d The European Commission this week reiterated that Britain\u2019s financial commitments \u201cshould be honored in full.\u2019\u2019<\/p>\n The structure of the talks will also prove nettlesome even as both sides agree they need to wrap up around October 2018 so as to give the British and European parliaments time to debate the draft plans.<\/p>\n EU negotiator Michel Barnier maintains that settling the terms of divorce must come before discussions about a future relationship. That would put paid to May\u2019s hopes of striking a new trade deal within two years, although European Parliament point-person Guy Verhofstadt recently said parallel discussions should be possible.<\/p>\n While British businesses and London-based banks are also keen for there to be a transitional period after the day of Brexit to acclimatize, Barnier says that will be a matter for deep into the discussions. That could be a problem for May as an agreement could come too late to stop jobs and operations moving overseas.<\/p>\n Recent evidence suggests May will struggle to divide and conquer the EU. The bloc has broadly stuck to its commitment not to hold even informal talks with the British until Article 50 is activated, while all its leaders say the U.K. will be unable to \u201ccherry pick\u2019\u2019 the best bits of EU membership.<\/p>\n \u2018Situation Outside\u2019<\/strong><\/p>\n \u201cBritain\u2019s situation outside must be less favorable than the situation it\u2019s had inside,\u201d EU Economics Commissioner Pierre Moscovici said in an interview in Belgium\u2019s Le Soir newspaper on Friday. \u201cMrs. May will negotiate for British interests; we will negotiate for the interests of Europe at 27.\u201d<\/p>\n Instead of fracturing, the EU\u2019s other 27 nations have used the time to carry out intensive preparations among themselves. National officials spent the past weeks lobbying Barnier and his team in Brussels to ensure pet causes such as Ireland\u2019s border with the U.K. and which waters French fishermen can access aren\u2019t ignored when the talks start.<\/p>\n Barnier now has about 25 members of various European nationalities, drawing expertise mainly from the European Commission in differing policy areas, including specialists in financial services, the budget, trade and law.<\/p>\n \u201cThe British may over-estimate the strength of the cards they hold,\u201d Charles Grant, director of the Centre for European Reform, said in a note. \u201cThat means that May and her ministers should conduct the talks in a sober, courteous and modest manner.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" U.K. Prime Minister Theresa May\u2019s vision for Brexit is antagonizing European Union governments, raising the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-511","post","type-post","status-publish","format-standard","hentry","category-news"],"yoast_head":"\n