May 02, 2017
An accident waiting to happen
Despite the extraordinary events following Jean-Claude Juncker’s dinner in Downing Street last week, we remain optimistic that a Brexit deal is still possible. The road to an agreement is unlikely to be straight, however, and it may be very noisy. Clearly there is the potential for a grand failure.
The details of the dinner were leaked to Frankfurter Allgemeine Sonntagszeitung, which already tells us that they were not leaked from Downing Street, but either from Juncker himself or from the group of people he debriefed after his dinner, which included Angela Merkel. It was in response to that briefing that Merkel included a passage in her Bundestag statement saying that some people in Britain were delusional about the Brexit negotiations, a clear reference to May herself.
The paper quotes Juncker as saying that he was ten time more sceptical after the dinner than before, putting the possibility of failure at over 50%.
The areas of a disagreement are over May's insstence:
- on a parallel negotiation of a free trade agreement;
- that the UK owes nobody any money;
- that Brexit should be a success - Juncker said that this was impossible (yes, this is how FAZ puts it);
- to negotiate the rights of expats early on.
It is very clear that quite a lot of people are on a steep learning curve, including of course May. David Allen Green (@davidallengreen) made the comment that May’s home office background has made her averse to open negotiations. He also makes the point that May possibly does not grasp the complexity of the process at the EU level.
The reaction by Downing Street was muted, but this will invariably be seen as an attempt by Brussels to influence the UK elections, and that alone will have a lasting impact. The indiscretion will almost certain harden the UK’s negotiating position, and accelerate work on a credible Plan B.
In this context we noted an interview by Ambrose Evans Pritchard with Yanis Varoufakis, who came to London to launch his book on the Greek crisis, and who had some helpful advice to May. We think it is worth quoting at length because there is a more than even chance that the UK government might see things the same way
“My advice to Theresa May is to avoid negotiation at all costs. If she doesn’t do that she will fall into the trap of Alexis Tsipras, and it will end in capitulation... The parallel with Brexit is the tactic of stalling negotiations. They will get you on the sequencing. First there is the price of divorce to sort out before they will talk about free trade in the future...They will give you the EU run-around. You won’t always know exactly who to talk to and that is deliberate.”
Jochen Buchsteiner und Hendrik Kafsack write in FAZ this morning that one of the problems for the EU will be a lack of solidarity among member states. Solidarity is still holding up, but this could end once the negotiations reach the stage of a Free Trade Agreement, as the British government will do its best to split the others.