Brexit Negotiations: Why Bother?

I keep asking the same question on Brexit and keep coming up with the same answer: Why bother?

by Mish

There is absolutely no reason the UK should start a negotiation given the repeated EU demands. Once again, on Thursday, German Chancellor Angela Merkel repeated the EU’s “not reversible” position.

In a statement to German federal parliament on Thursday, German Chancellor Angela Merkel said she supported the EU’s proposed line of negotiations to not address future relations between the EU and Britain before the Brexit conditions are clarified.
Ahead of the first European Union (EU) Brexit summit on April 29, Merkel outlined the conditions for Britain’s withdrawal from the EU. One such condition is the issue of pending financial obligations by Britain towards the EU which has to be resolved before any other framework for future relations can be discussed. The order in which these important issues need to be settled is “not reversible,” Merkel said.
Merkel also stated that she feels many people in Britain are “under the illusion” that Britain, as third party, would retain the rights of a member state. British Brexit supporters have advertised the withdrawal from the EU, suggesting it would be possible to remove obligations while still profiting from the union.
The 27 heads of state and government of the remaining EU member states will decide on a regulatory guideline concerning the Brexit negotiations this Saturday. This will be used as a basis for the negotiating mandate that the 27 states will give the European Commission, according to Merkel.

Britons Expect Too Much From Brexit Talks

The Wall Street Journal reports Merkel Says Some Britons Expect Too Much From Brexit Talks.

German Chancellor Angela Merkel warned that the U.K. risked “wasted time” because some people in the country suffered illusions over how well Britain could fare in talks about the country’s exit from the European Union.
“A third country—and that is what Great Britain will be—cannot and will not have the same rights, or perhaps even be better off, than a member of the European Union,” Ms. Merkel said in a speech Thursday to Germany’s lower house of parliament outlining her position on Brexit. “I must unfortunately say this so clearly here because I have the feeling that some in Great Britain still have illusions about this. But this would be wasted time.”
She also echoed the stance of EU officials and capitals that there would need to be an agreement in principle on the U.K. accepting its financial obligations to the bloc—the so-called divorce bill—before the EU could start discussing a future trade agreement with the U.K.

Optimism? Why?

I have read many articles in the Financial Times and on Eurointelligence expressing optimism on these talks. I fail to see why.

Sure, we have been through countless 11th-hour deals with Greece. But the UK is not Greece.

In regards to NAFTA, a reader on my blog commented the other day “You would be surprised at how often parties could have reached a win-win agreement only to part ways fighting instead.”

I responded “I agree with you fully. A critical Brexit opportunity is coming up and I expect it to fail. There is an easy win-win compromise but the desire to punish the UK and set rules in the name of solidarity is too great.”

The EU’s first position is the UK has more to lose. The EU’s second position is that the time factor is on the EU’s side. Both are Fantasyland positions.

This is not a divorce where a one-sided judge sets alimony. This is a treaty that can be canceled at any time by walking away. Unless and until Theresa May lets it be known she will walk away, the EU has the upper hand.

The proper response from UK prime minister Theresa May is to inform the EU there will be no discussion as long as the EU insists on a divorce bill negotiated first.

Only by walking away – showing a willingness to let time expire – does the UK have a chance at reasonable negotiations. Even then, I am not sure what the chance is because the “EU’s desire to punish the UK and set rules in the name of solidarity” likely exceeds the desire to walk away with a win-win situation.

Mike “Mish” Shedlock

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