The
multi-billion-euro exit charge that could sink Brexit talks
A
bitter argument over money looms
From the print
edition | Britain
Feb 11th 2017 |
BRUSSELS
THE mother of
parliaments has spoken. On February 8th a large majority of MPs
backed a bill authorising the government to begin Britain’s
withdrawal from the European Union by triggering Article 50 of the EU
treaty. (A few dissenters were told off for singing “Ode to Joy”,
the EU’s anthem, in the chamber.) After approval from the Lords, it
should become law in March. But a different sort of Brexit bill is
approaching, and will be harder to manage. It could yet scupper the
whole process.
Before Britain’s
referendum last June, Leave campaigners promised voters that Brexit
would save the taxpayer £350m ($440m) a week. That pledge was always
tendentious. But officials in Brussels are drawing up a bill for
departure that could mean Britain’s contributions remain close to
its membership dues for several years after it leaves. In a new
report for the Centre for European Reform, a think-tank, Alex Barker,
a Financial Times correspondent, puts the figure at anything between
€24.5bn ($26.1bn) and €72.8bn.
The bill comprises
three main elements. All, in Brussels’s view, derive from the legal
obligations implied by Britain’s EU membership. The first, and
largest, covers the gap between payments made in the EU’s annual
budget and the larger “commitments” made under its seven-year
budgetary framework, approved by Britain and the 27 other EU
governments. This overhang has been steadily growing. Britain’s
share of what Eurocrats call the reste à liquider (or amount yet to
be paid) would be around €29.2bn, Mr Barker estimates.
The second element
covers investment commitments to be executed after Britain leaves the
EU in 2019. Most of this is “cohesion” funding for poorer
countries (think motorways in Poland). Mr Barker reckons Britain’s
share could amount to €17.4bn. The government will struggle to
explain why voters should be on the hook for payments made after
Brexit. But the European Commission will argue that Britain’s
approval of the current budget, which runs until 2020, obliges it to
cough up.
Pensions make up the
third component. The liabilities for the EU’s unfunded scheme stand
at over €60bn. Britain may be prepared to cover its own nationals.
But European officials insist that all liabilities are a joint
responsibility, as Eurocrats work for the EU, not their national
governments. This may be the fiercest row of all.
Brussels’s demand
will combine these three elements with a few miscellaneous items, and
may adjust for Britain’s share of EU assets, its budget rebate and
payments it is due from the EU (see chart).
Michel Barnier, who
will lead negotiations on behalf of the commission, is said to
consider that the bill stands between €40bn and €60bn. The upper
figure has anchored debate in Brussels, but attracts few takers in
London. Some Brexiteers believe Britain has no obligation to pay
anything at all once it leaves. If a compromise cannot be reached,
Britain might find itself hauled before the International Court of
Justice. The talks may be over almost before they have begun.
Sequencing presents
a second problem. Mr Barnier insists on settling the bill and other
divorce terms before substantial talks on the much bigger matter of a
post-Brexit settlement, including a trade deal, can begin. But
British officials want to negotiate in parallel, and perhaps to link
the departure sum to the degree of access Britain will enjoy to the
EU’s single market after it leaves. The law lends Britain half a
hand: Article 50 says that a departing country’s withdrawal
agreement shall take account of “the framework for its future
relationship” with the EU. But hardliners like France insist on
keeping the two issues apart. And with only two years to conclude an
Article 50 deal, Britain cannot waste time talking about talks.
Some British
officials note that the other EU governments can tweak Mr Barnier’s
negotiating guidelines if they find his line too tough. Britain might
seek to exploit this by offering sweeteners: defence co-operation
with the Baltics, perhaps, or infrastructure grants to Poland. The
trouble is that reducing Britain’s bill means cuts to the overall
budget, which would irk countries that do well from it, or extra
payments from the wealthier governments to make up the shortfall.
That creates an unusual alignment of interests among the 27. “If
there’s one thing net payers and net recipients agree on, it’s to
make the bill for Britain as high as possible,” says an EU
official.
Most governments do
not rule out a compromise. German officials, for example, will
consider opening trade talks before the divorce is settled, so long
as Britain accepts the principle that it has obligations that extend
beyond its departure. As for the figure itself, like all EU budgetary
negotiations it will be resolved via late-night Brussels summitry.
“It’s like buying a carpet in Morocco,” says Jean-Claude Piris,
a former head of the EU Council’s legal service. “The figures are
always negotiable.”
But there are
reasons to fear a breakdown. Theresa May, the prime minister, has
done little to prepare voters for this debate. Neither her speeches
nor the government’s white paper on Brexit have said anything about
an exit payment. A whopping financial demand will therefore inflame
Britain’s tabloids, limiting her room for manoeuvre. More
worryingly, both sides believe they hold the whip hand. British
officials think the hole Brexit blows in the EU’s budget will force
the Europeans into compromise for fear of getting nothing if the
talks derail. EU officials, for their part, are convinced that the
prospect of no withdrawal agreement, and therefore no trade deal,
will terrify Britain into submission. “They’ll be begging on
their knees at the WTO,” says one.
The EU is skilled at
brokering compromise on budgets. Perhaps that will prove true for the
Article 50 talks, too. But two things set the upcoming negotiation
aside. First, there is no precedent. Second, goodwill towards Britain
has largely evaporated; it will be negotiating with the EU as a third
country, not a partner. Informal meetings between British and
European officials have already witnessed blazing rows. About the
only thing the sides agree on is that they may be heading for
deadlock.
This article
appeared in the Britain section of the print edition under the
headline "From Brussels with love"
Independent
Scotland 'would have to apply for EU membership'
European
commission reasserts that Scotland would have no automatic right to
being part of EU if it voted to leave UK
Severin Carrell
Scotland editor
Friday 10 February
2017 06.00 GMT
A senior EU official
has cast doubt over claims that an independent Scotland could
automatically join the EU or inherit the UK’s membership after
Brexit.
Jacqueline Minor,
the European commission’s head of representation in the UK, said
Scotland would need to formally apply after leaving the UK, although
it could be fast-tracked because it already complies with EU rules
and regulations.
Speaking immediately
after Scotland’s voters backed remaining in the EU by 62% to 38% in
last June’s referendum, the former first minister Alex Salmond said
it would be a logical option for an independent Scotland to take over
the UK’s membership of the EU post-Brexit.
The former Belgian
prime minister Guy Verhofstadt, now the European parliament’s chief
Brexit negotiator, implied he was sympathetic to giving Scotland
automatic membership. “It’s wrong that Scotland might be taken
out of EU, when it voted to stay,” he tweeted after the referendum.
Scotland’s future
membership of the EU as an independent state has reemerged with
Nicola Sturgeon, the current first minister, making preparations for
a fresh referendum on leaving the UK and publishing a draft
referendum bill last year.
Despite opposition
among Scottish voters to a fast second referendum before Brexit takes
place, Sturgeon has indicated she wants to stage it before the UK
formally leaves the EU in 2019 to increase Scotland’s chances of
negotiating an unbroken transition into the EU.
She has yet to
confirm that a vote will be held, but officials in No 10 are
sketching out strategies and options with the Scottish Tory leader
Ruth Davidson in case Sturgeon calls one for 2018.
Minor said the
commission’s position on Scottish membership had not changed since
the independence referendum in 2014, when it repeatedly said Scotland
could not automatically take up separate membership just because it
was part of an existing member state.
“The position in
Scotland hasn’t changed,” Minor said. There is a clear process
for any applicant country under article 49 of the European treaties.
“That would also apply to Scotland. If Scotland became an
independent country I think article 49 is the normal starting point,”
she said.
Minor, who is the
commission’s spokeswoman in the UK, also implied that timing could
also be an issue since Jean-Claude Juncker, the president of the
commission, had said he did not want to see any more enlargement of
the EU beyond its current 28 members during his term of office.
That ends in 2020,
and there were already four east European countries queued up as
candidate members.
The Guardian's
Brexit Means... Deciphering Article 50 – Brexit means... podcast
Discussing the legal
challenges to the government’s use of Article 50, and how the EU
will interpret the Lisbon Treaty’s exit mechanism in the coming
negotiations
Listen
“There are a
number of official candidate countries – Montenegro, Serbia,
Bosnia, Herzegovina, [but] they are still quite some way away from
meeting the criteria for membership. And obviously were Scotland to
become independent, they would join that list.
“Now, it might be
easier for an independent Scotland to meet those criteria. The fact
that all your legislation has to be in alignment with existing
European rules would presumably not be too difficult for Scotland,
compared with, say, Montenegro. And that might enable them to move
faster than others.”
Scotland could also
be expected to sign up to the euro – an option the Scottish
National party has repeatedly rejected. “All member countries are
committed to eventual membership of the euro with the exception of
the opt-outs that exist for the UK and Denmark. But there is no
stipulated timeline for joining the euro,” Minor said.
Minor predicted that
the formal article 50 process for leaving the UK could be completed
quickly and signed by a majority of EU member states by the end of
2018, up to six months earlier than the two years set out in the
treaties.
She added that
agreeing new free trade deals and the other terms for the UK’s new
relationship with the EU would take far longer, and would need a
transition period while that was negotiated.
If article 50 was
agreed and signed by September 2018, that could pose significant
timing issues for Sturgeon. Observers believe she would want to allow
six months for a referendum campaign, forcing her to call the
referendum early in 2018.
Her remarks fueled a
fresh spat between Labour and the SNP, after Scottish Labour’s
Europe spokesman Lewis Macdonald said Minor had meant an independent
Scotland would need to join the queue behind the four existing
candidates.
“As the SNP was
repeatedly told during the referendum campaign, an independent
Scotland would have to apply to join the EU like any other country,”
Macdonald said.
“Alex Salmond
tried to dismiss this, despite all the evidence to the contrary. Now
it’s time for the SNP to be honest with voters – an independent
Scotland would have to join the queue.”
An SNP spokesman
said that was a “remarkably selective account” of Minor’s
views. “We are focused on protecting Scotland from the catastrophic
effects of a hard Tory Brexit which would cost 80,000 jobs in
Scotland over the next decade – meanwhile, Labour failed to secure
a single concession from the Tories on the article 50 bill, yet they
voted for it anyway. At every level, Labour’s response to the EU
referendum has been pathetic.”
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