The EU’s chief negotiator, Michel Barnier, took a position earlier this week that the UK accept a €60 billion breakup bill before Brexit negotiations begin.
Today, the Financial Times reported Germany and Italy back European Commission on Brexit.
Berlin and Rome are backing the European Commission’s plan to rule out starting trade talks with Britain until the UK gives assurances on a multibillion-euro Brexit bill and citizens’ rights.
German and Italian officials say they support Michel Barnier, the chief EU negotiator, in seeking progress on divorce terms as an opening step. France is uncompromising on the estimated €60bn bill, while Spain is more wary of attempts to “punish” Britain.
Such stances are preliminary since EU member states have still to take a formal position.
Christian Kern, the Austrian chancellor, confirmed the commission’s €60bn estimate. “The cheque should be around €60 billion; that’s what the European Commission has calculated and this will be part of the negotiations,” he told Bloomberg.
“We agree with the commission,” said one German official, referring to the so-called divorce clause of the EU treaty. “Any Article 50 agreement will have to include the UK’s assurances that it will honor the financial commitments it undertook as an EU member state.”
Negotiation Tactic or a Real Stance?
The article labeled the stance “preliminary”. And a recent Eurointelligence report commented: “It is a mistake to think, as some commentators do, that the EU is strong and united in its approach to Brexit. That is only apparently so because the negotiations have not yet started, so we are still in the sound-bite stage with lots of reference to “cherry-picking” and the like. We noted a recent comment from Sigmar Gabriel that the EU should not penalize the UK, which we know is also the position of Angela Merkel. Germany will be a force of moderation. Once both sides are confronted with the actual costs of Brexit, they might conclude that they want to minimize those costs. That process has not started yet.”
For a change, I mostly disagree with the Eurointelligence assessment.
For sure, there is not a united front. But France, Germany, and Italy pretty much hold the EU’s cards. Let’s also not forget that Brexit has become a religious battle.
Merkel’s statements about not wanting to punish the UK, do not align with her hardening stance that undoubtedly does punish the UK.
If the UK refuses to go along, and it won’t, what the heck will the EU do?
The answer is: it depends. On what? Elections.
- Will Marine le Pen win the French national election on May 7?
- Will Italy hold an election this year? Will Beppe Grillo’s Five Star Movement win?
- Will chancellor Merkel be around after the German national elections on September 17?
Whether or not the EU’s stance is some sort of negotiation bluff, the political makeup may be far different in December than it is today.
Until we see the results of those elections, it’s difficult to predict what is likely in the negotiation process.
Merkel Behind in Latest Poll
Source: Opinion Polling for the German 2017 Federal Election
Merkel is behind in the latest poll and three out of the last seven polls. Eurointelligence notes “Of all the polls in Germany, the ARD/DeutschlandTrend (Infratest Dimap) is probably the most noted because it is the one that is broadcast each month on Germany’s main TV channel, and because it has a fairly decent track record. And it shows that, for the first time in over ten years, the SPD is ahead of the CDU.”
French National Elections
In France, eurosceptic Marine Le Pen is the leader in round one and is moving up against possible matchups in round two. I believe she will win if her opponent is Francois Fillon, and she may win against Macron.
Taking all of the above into consideration, it is difficult to predict how much Brexit negotiations will change in December from stances we see today.
- Brexit Fast-Track Dead: EU Insists Upon Divorce Settlement Before Trade Talks
- Le Pen Calls for “Europe of Nations”, Blasts EU as “the Problem”
- French Elections: Another “Unthinkable” Result Coming Up?
Mike “Mish” Shedlock
The EU is crazy to think Britain will pay 60B euro to leave. Britain needs to lay down the terms of the exit, then say adios. Take it or leave it. Then leave either way. EU has no,leverage.
Medex Man said:
UK already said good bye, and if the EU had any cards to play they would have already. England is just going to smile, nod and ignore everything coming from Brussels from now on.
The odds of France and Italy still being in the EU this time next year are close to zero — there won’t be any negotiations, there won’t be anyone to negotiate with.
Very strong view on things to come LOL
Most likely off by a mile or even more than that – UK will beg soon when they realize they are alone (Trump will f%$# them over)
You’ve been wrong about everything else this last year…..why stop now?
G. Scott said:
In my opinion for what it is worth the more the EU press for some sort of retribution the stronger will be the push back and the UK will walk away. Theresa May has already stated that a no deal is better than a bad deal. These idiots learn nothing.
Victor Adam Smith said:
You mean the UK may tell the EU,
“Go take a long hike off a short pier?”
Enda Kenny – awful individual (see scandal vs whistleblower) – is attempting to use possible split off Northern Ireland as a bargaining chip.
Nicolas Sturgeon the same for Scotland. EU will look to use as leverage.
The Czech PM has given some info away, a plan by the EU to split up Britain by offering NI, Scotland deals.
It can easily become very aggressive. Terrorism in NI could rise up again.
They have 2 years and thereafter UK is out and tariffs are reciprocal. However, Germany is squirelling away cash so they can punish but cope with any blow-back.
“The Treaties shall cease to apply to the State in question from the date of entry into force of the withdrawal agreement or, failing that, two years after the notification referred to in paragraph 2,”
This why they want a bill agreement first.
Donald Last said:
Britain is an essential element in Europe’s defence with its nuclear Trident, along with France, the other nuclear power. To suggest that Britain and France could be at loggerheads just does not make sense. Too much at stake. More aband of brothers.
Britain is also the second biggest market in Europe after Germany and does not have the same debt stress many of them have, bar Germany, the paymaster.
Half of Britain’s trade is non-EU and it has a much smaller balance of payments deficit there than with EU trade.
My guess is the British government will play possum – we hear you – and do nothing.
I hope UK leadership has figured out how to feed their people, more than 25% of their food needs comes from the EU, https://qz.com/716156/the-british-import-a-quarter-of-their-food-from-the-eu-and-thats-a-problem/
Concerning nuclear, Germany will get the bomb and that will create a LOT of Angst (source Spiegel) Military spending is already going through the roof to get it to the 2% – watch Germany’s defense minister – possible successor to Angela.
that was actually the BBC… he actually made the Nazi salute… and it was only the nineties!
what has the world come to. anyways, thanks for sharing
War drums beating already? Only a matter of time after unification.
Churchill was right.
Let’s hope UK ready this time and Russia joins in immediately rather than wating.
Nothing but smoke and dust in Europe in about 3 days.
The EU will lead to conflict but not Franco-German this time.
UK upgrading nuclear fleet to be prepared but would be toast quickly but with big retaliation capability.
No worries mon. U.S. got lots of surplus, cheap food………
so… ithe “position” of the current crop of European negotitors is that ANY country choosing to leave should pay 4 years worth of one countries’ contributions to the EU budget?
once the current crop are voted out, this will have established precedent that binds all countries that seek to leave the EU.
given that all Europeans countries are tecnically bankrupt, including the UK, this “position” is akin to a other poker players seeking to collect chips from an exiting poker player.
still, given the parlous state of the caliber of British politicians, all of which have no concept of the evils of accumulating debt via constant fiscal deficits, the UK should pay the 60 billion. after all it paid China the value of the Hong KOng Governments Exchange Fund when the UK ceded back the territory to China in 1997 – worth thr odd 200 billion US dollars.
the UK can print gilts to pay for it, attached to a currency swap. (rolls my eyes).
don’t forget that the EU is a construct based entirely on fiat, not reality.
How about paying the EU in Zimbabwe $100 trillion notes? If the EU rejects them, they would obviously be Racist!
It is about setting precedent too. Article 50 was never supposed to be used and it is very loosely written.
Maltese PM (current council lead) keeps saying there should be some benefit to being “in” so Britain should suffer for being “out”. Why not make being “in” more attractive?
It will become very messy and I hope the UK leadership can hold the country together.
Schauble has said the bill should be so high the British think twice and reverse their decision. Others thinking along the same lines including some UK traitors.
If walking with no deal costs < 60Bn then it's obvious what to do because that's a bad deal.
The EU are also looking to use the "cliff-edge" as a threat – sudden border issues in EU and Non-tariff barriers after 2 years if no deal.
Al Tinfoil said:
“Welcome to the Hotel California…You can check any time you like, but you can never leave…”
– The Eagles.
The EU performances are great entertainment. Like watching the monkeys at the zoo – lots of screaming and swinging around, some grooming of the Alphas, and much begging through the bars of the cage.
Quite hilarious, really! The monkeys keep screaming for more bananas and throwing poop at the spectators…..who can just walk away.
Barnier has demanded all negotiations in French.
EU want it in Brussells. Switzerland (neutral) would be better.
The interesting bit is that the EU has to negotiate – it doesn’t mention the leaver needs to negotiate anything. The leaver could issue Article 50, wait 2 years, then go. When you are a NET customer of the EU this does offer some leverage. This is why Germany are saving up for the lost business potential to cope and reduce dependency.
2. A Member State which decides to withdraw shall notify the European Council of its intention. In the light of the guidelines provided by the European Council, THE UNION SHALL NEGOTIATE and conclude an agreement with that State, setting out the arrangements for its withdrawal, taking account of the framework for its future relationship with the Union. That agreement shall be negotiated in accordance with Article 218(3) of the Treaty on the Functioning of the European Union. It shall be concluded on behalf of the Union by the Council, acting by a qualified majority, after obtaining the consent of the European Parliament.
Prediction – Global trade will be hit for a while.
Less trade at higher cost. Ramifications could be enough to trigger multinational recession.
Also – predict a new Common Wealth Trading Block. Done properly it could help some poorer nations lift themselves up through trade and be a force for good globally.
Mish – please read this as examples of developing nations coping with EU tactics. Trade is the best way to help poorer nations and help prevent mass migration.
The EU’s idea of free trade has always been “You’re free to trade within the EU as long as you follow these 60 billion pages of rules.”
The EU has never ever been in favor of free trade and people are only now wising up to the old propaganda and that having millions of rules is the exact opposite of free trade.
Why do they bitch about what it will cost Britain to leave when it is costing them even more to force Greece to stay?
Good point. It’s because the budget shortfall threatens existence.
Germany would have to pay more – unpopular
Others would have to contribute – unpopular
Some receiving handouts would receive less or none – very unpopular
HORROR – Brussels would have to stop wasting money at HQ
Receiving handouts keeps smaller countries interested in being “in”.
As soon as doling out the money stops they have a problem.
I hope Ireland sees it’s tax rates rise under command of the EU and it has to start to pay in at the same time it’s business with the UK implodes. Justice?
I probably answered my own question. The EU knows it’ll never get the money from Greece, so they’re trying to get as much of it as they can from UK.
Lastly, what is not immediately obvious is a German push for financial services domination.
Frankfurt will hold London Stock Exchange HQ after Deutsche Borse finish acquisition.
Banks being encouraged to move to Frankfurt – http://www.cityam.com/259770/german-central-bank-chief-renews-efforts-woo-british-banks
Gold deposits shifted to Frankfurt.
There will be total European domination by Germany in industry and finance.
Not a shot fired.
I always wonder about those type of acquisitions. What did they actually acquire besides a bunch of office furniture, a client list, and excessively valued goodwill? The clients will jump to a start-up exchange whenever it’s feasible. The banks that will move will likely be the least solvent ones. Basically, Germany is just trying to attract refugees of a different stripe.
From the article: the UK will withdraw from the Single Market, membership of which currently allows London-based banks to trade across the entire EU without seeking a regulatory licence from operators in each country.
As you stated elsewhere, instead of paying licence to each country, you wind up paying more in total for the EU/ECB licence. It isn’t attractive to stay anymore. What EU country other than Germany is healthy enough to make it worth paying for license to all the other unhealthy ones? And the EU companies will be forced to either give up the UK market (which is still healthy enough) or pay licence for access. Those that won’t pay licence won’t because they’re too insolvent to afford it.
Germany may win some early battles but they’ll likely lose the war. Again. And not a shot fired.
Exactly – everything else wouid be soo stupid by the Germans. Germany won WWIII – finally.
Three times is a charm.
Medex Man said:
100% chance that France and Italy will leave the EU before any Brexit “negotiations” conclude; easily 95% chance of Frexit and Ita-leave before Brexit “negotiations” start.
Even if those countries straggle along… there isn’t a thing the EU can do to England, and everyone knows it. If the EU held any actual cards (not bluffs), they would have played them already.
Mission Accomplished said:
Tell ya what
Let’s just us return the migrants and call it even
Aloha friends…with All the Financial ‘Hocus Pocus’,Skullduggery and ‘Monkey Business’ done in London and by the City of London Corporation…does anyone truly think that they are going to cough-up 60 Billion Bananas to the EU….?!!? lololol
The UK automatically loses if it enters negotiations. How seriously can the UK be if it has to ask for its sovereignty?
In 20 days, there is a Dutch election, with Gert Wilders as a srious challenger. If he wins, Brussels will get another nail in its coffin, and Brexit negotiations will be impacted.
At some point, the oligarchy in Brussels has no democrativ legitimacy, and Theresa may will give them the Middle Finger, with no additional negotiations needed.
As fro getting 60B as a prerequisite to something, the Brusselocrats who count on this can brace themselves, tere is a snowball’s chance in hell thta happens.
I think the Brits (no not the remainers) would skin Theresa May alive if she accepted a deal like that! With Trump in the White House and Brit having a trade deal with its former colonies (US, Canada, Australian, New Zealand, India, etc), I don’t see Britain accepting anywhere near this amount. They might agree to continue EU payments for 5 years and that’s the BREXIT. Within a few years the EU will have its hands full with referendums of countries who want to leave the EU and the Euro. Netherlands, France, Italy, Greece, etc. If EU and Euro are stubborn Germans wanting their money they will wind up with a Euro collapse. Europe is far to diverse for a strong Federalism. The EU needs to be a confederacy where each nation maintains its sovereignty and EU law is limited and has opt-out clauses. No every nation wants Swedens and Germanys and Frances immigration insanity.
UK will present EU with its bill for health care and dole for EU immigrants in the UK. EU and UK will refuse to pay each other’s bills. No money will change hands. Immigrants from EU will get the boot from UK unless they are paying more in taxes than receiving in benefits, and EU will be stuck welcoming back the dole collectors to join the millions of Islamic refugees in its socialist workers paradise.
Trump and Brexit go together well, and UK will have trade agreement with USA before the year is out. UK can be in EU trade union until booted out and simultaneously enter into new trade agreements with USA and others. EU has no army to go to war against UK, in contrast to 1920s when France and others could invade Germany for Versailles Treaty debt collection issues. If UK were attacked by an EU debt-collection army, NATO countries would have to come to UK’s aid and go to war against themselves. Lewis Carroll logic.
In short, UK will do what is in the best interests of the UK and EU will be left squabbling internally and move onto the next exiting country.