Significant progress. Concrete progress. Every kind of progress in the Brexit negotiations, it seems, but not the all-important “sufficient progress.”
With EU27 leaders poised to affirm at their summit on Friday that the Brexit talks cannot yet move to phase 2, the bloc is already eyeing its December meeting as the opportunity for a major breakthrough.
Many stumbling blocks remain on the three core divorce issues – citizens’ rights, the Northern Irish border and, especially, the U.K.’s financial settlement — so getting agreement amongst the 27 to move on to discussions of a transition and future trade deal may still be a long shot. But in interviews with POLITICO, senior EU officials, diplomats and others close to the Brexit process said they saw a clear path to clinching “sufficient progress” before the end of the year.
The statement in the European Council’s draft summit conclusions authorizing the start of internal preparations for phase 2 of the talks was not just a feel-good gesture, one senior official said, but a serious pitch to London to bridge some crucial gaps.
“That’s, of course, a political signal that something is happening, it’s not a complete standstill or deadlock,” the official said, “and also in practical terms this may pave the way for something more substantial in December — provided again, that they move in particular on the budgetary settlement.”
If the U.K. was willing to offer more specific guarantees — clarifying the financial commitments that Prime Minister Theresa May said in her speech in Florence that Britain was prepared to honor — the EU side in return would make a firm commitment to a transition that would prevent the U.K. from hurtling off the so-called “cliff edge.”
“The EU’s weakness is the money, but they see the U.K.’s potential weakness as uncertainty” — Syed Kamall
If London moves on the money, “then we will also be in a position to say something quite specific … on transition,” the senior official said. “And if we do that at the same time, maybe we are able to square the circle.
“We have been saying, from the outset … ‘no, we have two phases and this is really about trust, to be sure that you live up to your commitments, and once you have done that then we can start building a new relationship,'” the official said.
“In December,” the official said. “There is a chance of those two things flowing together, and there we might be able to, as it were, jump at the same time, without any of us compromising our positions.”
No foregone conclusion
Not everyone in Brussels, or throughout the EU27, is so optimistic though.
When asked what gave leaders confidence that sufficient progress would be achieved in December, another senior EU official shot back: “We’re not confident. We’re hopeful. So it’s not a foregone conclusion.”
Dutch Prime Minister Mark Rutte made a similar comment as he arrived at the European Council in Brussels. He urged May “to come up with more clarity on what she meant with ‘other commitments’ in her Florence speech.”
Dutch PM Mark Rutte and Commission President Jean-Claude Juncker talk during the summit | European Council
“I phoned her last week and tried to encouraged her to do that but so far she hasn’t,” Rutte said.
Germany’s Chancellor Angela Merkel managed a slightly more upbeat note on her way in. “From where we are now, it [progress] is not sufficient enough to enter the second phase, but it is encouraging to move on with the work so that we can reach the second phase in December,” she told reporters.
Leaders, in particular, are hopeful that May is finally coming to terms with the ironclad unity among the 27 in viewing Brexit as largely a British problem — and not one that they feel particularly compelled to help May solve.
Syed Kamall, the pro-Brexit British MEP and co-leader of the European Conservatives and Reformists group, said that he sensed “important” signals were being sent from EU27 leaders about discussing the future. But he said he expected EU negotiators to use time to their advantage, and try to put pressure on London as anxiety rises over the potential failure of the talks.
“The EU’s weakness is the money, but they see the U.K.’s potential weakness as uncertainty,” Kamall said. “So keep the talks going for as long as possible to create uncertainty in the U.K. so companies and individuals go to the British government and say ‘sign a deal whatever it is, we want certainty.’”
He also said that some trade issues were already quietly coming up in conversations between negotiators.
“I think things are happening in discussions behind the scenes,” Kamall said. “Of course, we already know that some of the trade stuff is being talked about … They are technical details but it means trade is being talked about.”
U.K. MEP Syed Kamall and Juncker speak during the plenary session of the European Parliament in Strasbourg | Patrick Seeger/EPA
While EU chief negotiator Michel Barnier is tightly constrained by his negotiating guidelines in terms of what he can discuss with the U.K., that has not stopped him from preparing for the eventual shift in focus of the talks. In fact, he has been doing so for many months.
In recent staff appointments, the Commission’s Brexit task force has enlisted specialists on trade, defense and home affairs as well as several economists — all reflecting issues up for discussion in phase 2.
Several Commission staffers also told POLITICO that Barnier’s team has been picking the brains of officials throughout the Commission’s ranks for a year on the technicalities that a transition would entail, and on the future relationship.
One goal, a Commission official said, is “to screen all EU legislation in place affected by Brexit but also everything in the legislative pipeline that would be affected by Brexit.”
Two famous sentences
While EU officials have purposely left vague exactly what “sufficient progress” might look like, they have also been clear that it does not require a 100 percent agreement on the three divorce issues, but rather a broad political consensus that an ultimate agreement is within reach.
Most important will be the money. “They put on the table these famous two sentences,” the first senior official said, referring to May’s speech in Florence.
“Just as in a divorce, the Union has to be able to get on with its life. It cannot continue to spend so much energy on its ex” — Senior official
In that address, May said: “I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The U.K. will honor commitments we have made during the period of our membership.”
Brussels has analyzed those remarks closely. What London has confirmed is that May had committed to keep whole the EU’s current long-term budget, which runs through to 2020, but not any further guarantees.
“The first sentence is worth in the order of €20 billion,” the official said, “but then the second sentence — that remains so far rather vague … that needs to be substantiated more.”
Several officials have said that Brussels is essentially focused on two broad categories of obligations: the so-called reste à liquider, or commitments to ongoing projects that are financed over multiple long-term budgets, and separately, long-term liabilities, particularly pensions. On pensions, the EU expects Britain not only to pay its share, but also to cover a portion of what is effectively a multibillion bailout of the bloc’s pension system, which is not fully funded.
“The U.K. will honor commitments we have made during the period of our membership,” May said during her speech in Florence | Pool photo by Maurizio degl’Innocenti/EPA
If Britain gives ground at least in principle on those points — potentially bringing its total commitment to €60 billion or more — the European Council would permit a shift to talks on a transition period after Brexit — sparing U.K. citizens and businesses a potentially perilous plunge off the cliff. In the words of one official, it would be “rather substantive guidelines by the European Council setting out our position on the second phase, and in that context, I suppose being relatively direct and explicit on transition, which so far we have not been.”
If the talks falter, and sufficient progress is not reached in December, some officials said there was a risk of a serious breakdown — as leaders look to focus on other priorities.
“Just as in a divorce,” one senior official said, “the Union has to be able to get on with its life. It cannot continue to spend so much energy on its ex.”