13 Apr 2017

Hard-core EU Opposition on Brexit

Almost half of EU member states want Britain to pay a high price upon leaving the Union, a survey developed by The Economist Intelligence Unit (EIU) shows. Among the countries opposing easy negotiations and pushing for a costly bill for the UK are the oldest members of the organisation like Germany, France and Belgium, but also some of the newest members. Bulgaria and Romania, for instance, are concerned about the EU budget and the situation with their citizens who have emigrated to Britain.

The EIU report observed all the 27 member states and placed them in three different categories – “hard-core”, “hard” and “soft” according to the views of their leaders on four core issues of the negotiations: the UK exit bill, the EU benefits like movement of capital, people, services and goods, trade arrangements, tariff barriers and defence connections. The analysts also set up a degree scale from 0 to 40 where 0 is a soft reaction to Brexit and 40 is the most resistant. There are 14 countries which have a score between 25-30 and create the “hard-core” and “hard” opposition to the UK leaving, and France is leading the score with 32.5.

The Brexit Bill

According to EUI, France, Germany and Austria, which, together with the UK, have been the biggest contributors to the common budget, are expected to be uncompromising, at least in the early stages of the negotiations. Michel Barnier, the leader of the talks from the European Commission, mentioned several times that the bill will be between €40 billion and €60 billion. “The EU’s concern is that if the agreed bill is too low, it could reduce the perceived downside risk of withdrawal, encouraging anti-EU sentiment elsewhere in the bloc,” the EIU concludes. Other “practical reasons” are of concern as well. For example, Finland, one of the hard opponents, voted against the third bail-out of Greece, but now, with the UK leaving, it may have to pay for it. Countries from Eastern Europe and especially Poland, which is the largest recipient of EU funds, are afraid that if Britain is permitted a low-cost departure, it will significantly decrease the aid they are getting.

The Cherry Picking

“One cannot lead these (Brexit) negotiations based in the form of ‘cherry picking’” Angela Merkel said in January this year, indicating that the EU leaders aren’t willing to keep providing Britain with the essential Union “goodies” like free movement of capital, goods, services and people. Her words were confirmed by Donald Tusk in his response to Theresa May’s letter from 29th March and it is an issue where most of the EU members “appear to be aligned”. According to the EIU, the biggest danger to breaking the negotiations is the discussion of these topics. “Placing restrictions on EU migration is a politically important objective for the UK in the negotiations, and should be more straightforward to achieve now that the country has decided to leave the single market,” the analysts say. However, they point out that if the UK would like to achieve a compromise on trading and reach to a new agreement the EU27 will insist on softer migration politics. Potentially member states “with substantial trade and investment ties to the UK, which have the most to lose from a disorderly Brexit” could have a “soft” position and be willing to compromise. According to the report, these are: Denmark, Sweden, Slovenia and Poland.

Maintaining trade ties/low tariff barriers

It seems like when money talks even politicians are ready to listen. According to the EIU data, maintaining trading ties and settling low tariff barriers are the only topics which the EU27 are ready to be “soft” on with the UK. For some states, these are the export possibilities – Britain is the second largest export market for Ireland and Poland and third for Netherlands, Germany, Spain and Cyprus. Others have direct foreign investments in the UK and close links to its banking sector – Cyprus, France, Greece and Belgium. Additionally, a majority of the member states have a well-established trade surplus of goods and services. In countries like Hungary, the Czech Republic, Poland, the Netherlands, Germany, Portugal, Spain and the Baltic States this surplus is estimated at 1% of the GDP.

Sustaining Defence Ties

The rising aggressive foreign politics of the Russian president, Vladimir Putin, have already sent some worrying signals to EU members. The Baltic and Nordic countries, together with Poland, have expressed concerns that losing an ally like the UK can jeopardise the security guaranteed by the EU. Therefore, these countries, will be interested in keeping close co-operation with the UK, when it comes to defence organisation. “Neither Sweden nor Finland are militarily aligned, and although both countries are members of NATO’s Partnership for Peace, they depend on bilateral defence agreements, including a Nordic Defence Co-operation pact, and security protections offered by the EU,” the EIU experts point out.

Despite its general “hard-core” position on the way Britain should leave the Union, France also has an interest in retaining good relations with the UK when it comes to security matters. Once separated, France will be the only EU member of the UN Security Council and the only nuclear power and, as it is well known, “Uneasy lies the head that wears a crown”. Therefore, is expected that France will seek close ties with the UK on issues of defence and security.

Ultimate fear: the EU interrupted

As it’s clear from the EIU report, the remaining members of the EU are facing potential discord within the Union. Low-cost Brexit and compromises on the four freedoms are red lines in the negotiations, but on issues like trade, defence and investments these lines are blurred according to each state’s individual reasons. This is the potential time-bomb which can weaken the negotiating position of EU27. However, the experts are concerned that Brexit might shake the very ground of the EU. Or it will prevail. Even traditional UK-supporters like Sweden, the Netherlands, Denmark and Finland would prefer to keep the cohesion and support the general EU position.