‘Parallel Reality’ between the EU and the UK and an exit bill of €82b?

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Posted on May 3, 2017

‘Parallel Reality’ between the EU and the UK and an exit bill of €82b?

Following a dinner meeting at the tail end of last week between Prime Minister Theresa May and President of the European Commission Jean Claude Juncker, the Commission has leaked their version of how the dinner went. From an EU perspective, it appears to not have gone well.

May was accused of living in a parallel reality, where she is simplifying the EU nationals residency issue which she wants, and believes can be, sorted by summer. Junker believes this is a far more complicated issue than the UK appears to understand, noting it involves dealing with issues such as health care, pensions and social security. Further complicating matters is the fact that apparently the UK does not know which EU nationals have been residing in the country. Additionally, May expects to push for parallel trade talks early on during the Brexit negotiations and she is of the opinion that the UK should not have to pay a divorce bill, which the Commission estimates to be in the range of €82 billion.

Apparently, in a rather salutary moment, and to reinforce the time it takes for willing partners to agree a trade deal, Juncker reminded May over the dinner that it took 10 years to agree to the CETA EU-Canada trade agreement. And the UK government does not need reminding that some 60% of UK’s exports are covered by both the EU Single Market and the EU’s Free Trade Agreements.

There has been much discussion of the UK re-engaging with the Commonwealth. This move would mean engaging mainly with India, Australia and New Zealand. While there are some 32 members of the Commonwealth, most are smaller economies covered by EU FTAs, with the exception of Canada. Australia and New Zealand make up 2% of UK exports. Both Australia and India are likely to be problematic, since both have said they would like to do an FTA with the UK provided the UK can open up more immigration to their nationals, currently a red line for May.

All of this may be pre-negotiating posturing, on both sides, especially as the UK heads towards a general election. None of this is helpful in setting the tone of the negotiations. The EU’s Chief Negotiator Michel Barnier has said that before any transitional arrangements are agreed, both sides need to agree to the divorce bill, to the rights of EU nationals, and to the sticky problem of the border with Northern Ireland, the only land border between a post-Brexit UK and the EU.

There is little thinking about security coming out the other side, whether a good or bad Brexit for both the UK and the EU. Europe is not going to disappear from the map and neither is the UK. Both sides need to come out of the talks with some security. Juncker will be doing his utmost to keep the remaining Member States in line, while the UK will look for any cracks in a unified strategy. May will also be acutely aware that very close allies and partners, who collectively set up a framework of security for some 60 post-war years, are now adversaries.

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