Brexit quest enters ‘phoney war’

Britain’s diplomatic quest for Brexit is entering a “phoney war” for up to a year or more, as London and Brussels confront the complexity of divorce talks and the minefield of European elections through 2017.

Senior figures on both sides say they have only just begun preparing for a protracted negotiation whose timetable could easily slip so that formal, face-to-face talks on substance do not begin until autumn 2017 or even 2018.

The formidable political obstacles ahead may leave little certainty for business on the shape of future UK-EU relations over the coming year.

These challenges include Westminster agreeing demands and triggering divorce talks; a three to six-month period afterwards for the EU to set a formal negotiating position; and the political assault course of Dutch, French and German elections during 2017

One senior European figure involved in the talks said: “We’ve not even worked out what all the questions are, let alone found the potential answers.”

Another said they “did not expect much progress in 2017”, especially given elections and the fact Britain was “nowhere” in deciding its position.

A third senior official compared the current period of preparations to the eight-month “phoney” conflict after the start of the second world war. “For all sorts of reasons we will want to finish this all before the June 2019 elections [for the European Parliament]. But that will be very, very tight. The complexity is vastly underestimated unless you want to be brutal and cut off ties.”

One EU diplomat at the heart of preparations said: “They have to sort themselves out. They come from London and they don’t know what they want. They don’t know what their government wants, what their parliament wants. They have not prepared.”

Opting for the Brexit long game may improve the chances of finding a diplomatic sweet-spot for a deal, but it would risk enraging hardline Brexiters in Britain and impatient European politicians.

Theresa May will come under strong pressure from Tory Eurosceptic MPs to activate Article 50 early in 2017, amid fears that any delay could weaken the government’s resolve to negotiate a “hard” Brexit deal. The new prime minister has a working House of Commons majority of just 17.

On a visit to the US last month, Liam Fox, Britain’s international trade minister and a hardline supporter of Brexit, suggested Britain would leave the EU in early 2019, suggesting the formal two-year negotiations should start early next year.

“We can’t negotiate any new trade deals as long as we’re part of the European Union, which of course we will be for probably the next two years with an exit in early 2019,” he said.

But Mrs May also has a dilemma over the political timetable. She has spoken of invoking the formal Article 50 divorce clause next year. Senior Whitehall figures say moving in January or February may be too soon for her to forge a political consensus on Brexit options.

Mrs May will almost certainly not be in a position to lay out her Brexit policy at the Conservative party’s annual conference in October and in any case she may prefer to use that occasion to lay out her other priorities for government.

London is also concerned that even the fast-track timetable puts them within weeks of the Dutch elections in March, and the rolling series of French presidential votes in April and May and legislative elections in June — raising the danger of Britain’s demands being immediately shot down. Germany’s federal elections are in the autumn.

At the other end of timetable, if Article 50 Brexit talks take only two years, it would potentially leave any draft deal vulnerable to being overturned in the campaign for European Parliament elections in June 2019, where a new assembly will be elected with the power to veto Britain’s exit terms. Britain’s general election also looms in 2020, raising questions about the authority of a final-year government to close one of Britain’s most important postwar agreements.

Before entering government Mr Fox argued the case for only starting formal divorce talks after French and German elections had passed and the political landscape in Europe was clearer.

The senior EU diplomat agreed that “from a tactical perspective” it may be smart for Mrs May to wait until late 2017. One reason is that the EU will only begin talks on its negotiating mandate after Britain has triggered Article 50, setting an initial two-year deadline on Brexit negotiations.

“There is one thing Britain knowing what it wants. Then the 27 must agree their position by unanimity,” said the senior EU diplomat. “This process can be prepared but will perhaps take three, four, perhaps even six months. I would wish that to be sooner. Faster. But the two years are ticking.”

EU leaders have stated there will be “no negotiations” with Britain until Article 50 is invoked. But diplomats acknowledge detailed contacts on various levels will be inevitable — albeit short of actual dealmaking on substance.

This includes establishing a “code of conduct” with Britain on how to handle the process — including the perceived timetable, Britain’s respect of EU rules and guidelines to manage Britain’s voting powers in EU lawmaking as it prepares to leave. This could involve reaching a mutual understanding on how Britain can pursue international trade arrangements, without undermining its obligations as an EU member to stick to a common external trade policy.

Diplomats involved in preparing the process also expect there is a significant chance Mrs May will seek to start an informal discussions on free movement curbs, before starting Article 50. This could range from informal contacts with Berlin to road-test ideas on Britain’s demands, to a more structured attempt to build consensus on migration controls.

Additional reporting by George Parker in London

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