Bottom-Line Brexit – part III

What business needs to know about how Brussels sees the process of Britain leaving the European Union, as related to BCW by senior EU sources.        

“No way, Geoffrey”

This was the week Geoffrey Cox, the UK attorney-general, finally spelled out his idea to EU negotiators on how they could persuade him to advise the British parliament that Britain would not risk being trapped forever in an invidious “backstop” customs union with the bloc if it signs up to the Withdrawal Agreement. And the EU said “Non”. Firmly. The mere presentation of a UK proposal was welcome in Brussels after weeks of asking and a drip feed of leaks that the British were walking back from some of their demands on the Irish border. But dinner turned sour when EU negotiator Michel Barnier heard exactly what Cox wanted. The Frenchman said it was effectively a unilateral opt-out and sent him packing to London, to come up with another idea by the weekend. It will take some improbably dramatic turn to save Prime Minister Theresa May from seeing her Brexit deal roundly rejected for a second time by the House of Commons on Tuesday. By then there will be just 17 days until Britain is due to leave the EU, deal or no deal. Expect the temperature to rise before, during and after a March 21-22 Brussels summit.

Mini minor

In as few words as it takes to explain the issue without your eyes glazing over, Cox is proposing a “mini-backstop” that London could trigger without the EU having an appeal to the Court of Justice in Luxembourg; if Britain persuaded a joint panel it had done all it could to square the circle of different economic rulebooks between Northern Ireland and Ireland without checks on the EU-UK land border, then London could avoid the full customs union obligations of the current backstop and just impose discreet, remote checks for some key sectors, such as for food safety and gun-running. Dublin and Brussels are simply not buying that right now.

 Extend and pretend?

As we’ve said before, there seems no way Brexit will happen on March 29. May has yielded to parliamentary pressure to extend the deadline if there’s no deal. And she has already indicated to Brussels that, even if she does win parliament over this month, she will also need a few more weeks to finish off the legislative process. But if there’s no deal, the length of extension may be another battleground.

The EU would like Britain out before it elects a new European Parliament on May 26, or at the latest before that new legislature convenes on July 2. But if leaders think May is just pretending that she can clinch a deal by then, some in Brussels are tempted to push her to accept a long delay, to the end of the year. That could offer a chance of reworking the deal. It could also kill off May’s premiership if it ignites Brexiteer rage. And give time for a second referendum that no longer tempts many in Europe, who are fed up and no longer really want a divided and chaotic UK to stay.

Blame game

As the crunch approaches, word of the month in Brussels is “blame”. Who will be accused of causing massive economic disruption if Britain is dumped out, deal-less? Some here fear this is Mrs. May’s game. Playing for time, hoping the EU will blink first. “British blackmail,” is how one diplomat described the tactic. There is growing awareness that, deal or no deal, the two sides will have to sit down and find solutions for the Irish border and a free trade agreement anyway. To do so amid the chaos facing business if there’s no deal, would be a poor start. Is it worth walking away from an otherwise orderly settlement over for what to many of the EU’s critics in London is an obscure detail like the Irish backstop? Expect both sides to up the ante on moral pressure this month.

 

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