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Analysis
Hard Brexit threatens EU project

Hard Brexit threatens EU project

No deal hurts peripheral states most

by Brian Reading in London

Fri 28 Apr 2017

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Most of the leading European Union representatives in the forthcoming Brexit negotiations come from the founder countries. Their negotiating strategy asks for unconditional UK surrender, which Prime Minister Theresa May cannot endure in the light of last June’s referendum. The 52% of the turnout which voted to leave the union will not give up its positions on immigration, the European Court of Justice and other EU laws. However, for most of the remaining member states outside the founding six (in particular those who are not part of economic and monetary union) the prospect of not reaching a deal is the worst possible outcome.

May is willing to compromise to bring moderate Remainers (as she was in the lead up to the referendum) and moderate Leavers together in support of a constructive deal. The EU establishment, however, is not open to compromise. EU negotiators are less representative than the prime minister, and their red lines are much tougher than May’s.

The main EU actors are Jean-Claude Juncker, the European Commission president from Luxembourg, and Michel Barnier, the French chief negotiator for the Commission. Their deputies are Sabine Weyand, a senior German trade official, and Cecilia Malmström from Sweden. Juncker is supported by Martin Selmayr, his German chief of staff. Donald Tusk, president of the European Council and former prime minister of Poland, backs the guiding EU principle of ‘ever closer union’. The point is not that these individuals may act in their countries’ interests, but that they are unrepresentative of the whole EU. May, on the other hand, will represent those seeking a moderate deal, assuming she wins that mandate in the 8 June UK general election.

Guy Verhofstadt, the chief European Parliament negotiator, wrote last week that a triumph for May in the election would not improve her negotiating position. ‘Many in Brussels remain concerned that the chances of a deal were being eroded by the prime minister’s tough negotiating red lines and her lack of room for manoeuvre domestically, yet there is no guarantee that a sprinkling of additional Conservative members of parliament on the backbenches will provide this,’ Verhofstadt said.

It is possible that May and her government will disappoint in the election. The Conservative party is expected to increase, by a large margin, its majority in parliament – anything less will be considered a failure. Should this happen, the UK’s willingness to compromise with the EU will increase.

However, the European institutions have the final say on how negotiations will close. The combination of qualified and simply majority voting systems in the European Council and Parliament means the largest (and mostly founding) member countries wield the most influence. Therefore, the likelihood of the EU endorsing a ‘hard deal’ for Britain, which May will be forced to decline, is greatly increased. It is what the signatories to the Treaty of Rome, the agreement that presaged the founding of the EU, want.

The consequences of failing to reach a deal would be more damaging to the EU project than the UK. The absence of an agreement threatens smaller EU states, which would be compelled to comply with the wishes of the larger countries – to do otherwise would risk being ousted from the union with as poor a deal as Britain is offered. This would further antagonise peripheral countries like Greece and Portugal, which may allege that the core members like Germany and France allowed their self-interest to prevail in negotiations. Popular opinion against an allegedly ‘undemocratic’ union would be enforced.

Brian Reading was an Economic Adviser to Prime Minister Edward Heath and is a Member of the OMFIF Advisory Board.

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