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March 22, 2018

On the state of Brexit

The Institute of Government has offered some good advice for the UK's negotiation strategy in the final phase of the talks. The big issues now to be addressed are the Northern Ireland border and the future trade relationship, which are obviously interlinked. The institute notes that different EU member states have indeed different interests. The UK needs to understand those differences but should not even try to exploit them and play countries off against one another. We fully agree. 

The first thing to note is that Brexit may be all-consuming in the UK, but that is not the case elsewhere. Most member states have strong trading relations with the UK, but their joint interest in the stability of the single market is more important. The report is correct to note that countries that are traditionally sympathetic to the UK, including the Netherlands and the Nordic states, are unlikely to diverge from the consensus in the European Council. The same goes for the Visegrad states. They want their citizens to continue to have residence rights in the UK post-Brexit but, as net recipients of EU funds, they are not in a strong position to flex their muscles in the European Council. 

We agree that the European Council has indeed done a good job keeping the member states together on this point - as it has done in the even more difficult case of sanctions against Russia where some countries were clearly tempted to break ranks. 

Charles Grant notes that the most intractable issue is Northern Ireland. The December agreement was a fudge, interpreted differently by the UK and the EU. The three options are a solution with the overall EU/UK trade agreement; a technical solution; and, if neither works, a backstop under which there would be full alignment in Northern Ireland with the EU to make a border unnecessary. Grant makes the observation that the UK interpreted the backstop alignment rules as not referring to all goods and services, but only to some. The Commission's draft agreement spelt out the EU's view of the agreement as effectively indicating that Northern Ireland would remain in the single market and customs union. That was also our own understanding. 

Grant notes that the EU's draft treaty managed the rare feat of unifying the Tory eurosceptics and pro-Europeans. Everybody was flabbergasted by the text. Grant's conclusion is that the Ireland issue has the potential to blow up the Art 50 agreement, but he says the latter cannot conceivably be in the Irish interest because it would produce the hardest of hard borders. As for the rest of the EU, they will gently encourage Ireland to accept a compromise.

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