This from the very sober Frankfurter Allgemeine Zeitung gives voice to the real fears that Brexit will pull the EU apart.

Hendrik Kafsack, Brussels – Retrieved on 04.02.2018-20:08

Nervousness grows in the EU: Germany urges for greater unity out of fear of a drifting apart.  The interests of the 27 countries of the Union are diverging strongly from each other in part.

Previously, the 27 member states of the EU entered the talks with the United Kingdom united. Last Monday, they required just two minutes to ascertain their line on the planned transition phase after the Brexit. In light of the ongoing talks over the future relationship of the EU to the United Kingdom, however, nervousness grows amongst the 27 states that the British might yet succeed in playing the EU states against each other. Above all Germany insists that the EU should take as much time as possible to set out its position in detail – in cases of doubt, at least after the EU summit in March. So much is clear from internal papers about the debate among the EU states that have been provided to FAZ.

The EU must not relinquish its grip on the negotiations and must push for the British to express their ideas first, it says. Otherwise, there is a serious danger that the 27 countries will drift apart. In fact, the member states have in part sharply diverging interests on the question of the future relation to the UK. Poland wishes above all to uphold as much as possible free movement for its citizens. For Ireland, the safeguard of the peace – free movement between the north and the Republic – is the priority. Germany, on the other hand, has a large interest in ensuring that its Auto-industry for example, faces as few trade restrictions as possible.

Brexit must not play the EU states against one another

One hopes to prevent the British using the discussion over the future relationship between both sides to play the EU states against one another, and would like to put off the debate over this for as long as possible. In fact, the EU states wanted to formulate concrete guidelines in March. Germany, the Netherlands, and a few other states now wish to formulate vague offers, if the British are unwilling to be much more definite than previously. The March guidelines should have been as detailed as the British position allowed for, according to the papers. The EU chief negotiator, Michel Barnier, who is meeting with the British chief negotiator, David Davis, in London this Monday, has agreed to the above.

The admittedly brief timetable for the talks over the future relationships of both sides has already put the talks under pressure right from the beginning. According to the ideas of the EU, the exit of the British in March 2019 should take place over a 21 month transition period, during which the UK will essentially remain a “member without voting rights”. At the very least, this should give the UK time to introduce new economic relations. It is only sensible however, that at the end of this transition period that is at the end of 2020, for there to be clarity. The further back the beginning of concrete negotiating is pushes, the more improbable it becomes for there to be an agreement before then. Finally, negotiations over trade treaties tend to last for many years. In addition to this the talks about the exit itself and the transition phase have not yet concluded.

The EU has a hand in the fact that the British government may be under serious pressure with their economy if the negotiations do not progress quickly.

Companies and even entire industries have already threatened to take concrete steps for a consideration of relocating production and office if there is not soon going to be clarity about post-Brexit period. On the other hand, the community of states has a great interest in maintaining friendly relations after the British exit.

Reduction of Labour and Environmental Standards

The EU claims, at least in its internal papers, to have worries that the British will act to the detriment of the continent via a reduction in labour and environmental standards or even through constructing competitive tax laws. In addition to this, there is also the danger that the government in London will attempt to make Britain attractive for businesses and investors through the use of subventions. The existing international laws are insufficient to prevent this. They are not designed for dealings with the economy of a powerful neighbour.

A close tie between the British and the EU may have the following consequences for EU finances. If the British continue to pay into the budget in order to gain market access and for membership in certain programs such as the EU “Horizon” research program, then the community of states will have more fiscal room from 2021 to 2021. The Budget Commissioner Günther Oettinger has calculated deficits of up to 14 billion EURO in the budget in the event of the exit of the large contributor, the UK. In light of this, there will need to be cutbacks for agriculture and regions, he warned in an interview with the “Welt am Sonntag” this weekend. The agricultural and structural funds will need to be cut by 5 to 10 percent.

Oettinger also spoke out for new resources: money that would flow directly to the EU. Previously the EU financed itself in large part through contributions from member states. “We wager, that in future a small part of the profit that the European Central Bank makes from the distribution of banknotes, will flow into the EU budget”. The Commissioner also suggested a plastic-tax on packaging.

Source: F.A.Z.

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