E.U. Summit

Brexit Deal Hangs on Knife-Edge

epa05168728 Great Britain's Prime Minister David Cameron (L) chats with German Federal Chancellor Angela Merkel (R) during the extraordinary two days EU summit at EU headquarters in Brussels, Belgium, 18 February 2016. EU leaders were set Thursday to try to thrash out an agreement with Britain on reforms, amid hopes that they can seal a deal which will convince the country to stay in their bloc. Fears are rife that Britons might vote to leave the European Union in a referendum that Prime Minister David Cameron has promised to hold by the end of 2017, but that is widely expected this year already. The turmoil over Brexit - the buzzword for Britain's possible departure from the EU after more than 40 years of half-hearted membership - comes at a time when the bloc is already struggling with a severe migration crisis and enduring economic woes. EPA/STEPHANIE LECOCQ +++(c) dpa - Bildfunk+++
David Cameron and Angela Merkel.
  • Why it matters

    Why it matters

    The European Union is facing multiple strains including the possibility of a Brexit and the dissolution of the Schengen Agreement over the refugee crisis.

  • Facts

    Facts

    • The E.U. summit went into its second day with no deal done on the issue of Brexit.
    • British Prime Minister David Cameron needs a convincing deal to back a “yes” vote in a forthcoming referendum on E.U. membership.
    • The European Union will hold a migration summit in March with Turkey.
  • Audio

    Audio

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Europe’s tradition of make-or-break late-night Brussels summits continues.

At their latest round that began Thursday, European Union leaders are facing the twin challenges of keeping Great Britain in the fold, while also maintaining the continent’s borderless Schengen zone in the face of the massive influx of refugees.

After hours of fraught talks on both issues, most of the 28 weary leaders only got to bed on the cusp of dawn on Friday morning. Hopes of a conclusive deal over an “English Breakfast” on Friday quickly became hopes of a deal over brunch, then lunch, and well beyond.

And while the absence of Turkey meant that talks on the refugee crisis were never going to be conclusive, the Brexit drama is being depicted as a “now or never” moment.

Playing as much to the home crowd as his E.U. partners, the British prime minister, David Cameron, had arrived in Brussels on Thursday saying he was “battling for Britain.”

Mr. Cameron, who has promised to hold a referendum on his country’s E.U. membership by the end of 2017, is looking to renegotiate Britain’s relationship with the bloc before he can recommend a “yes” vote.

On Friday morning he arrived back at the negotiating table determined to secure some movement. “I was here until 5 o’clock working through this and we’ve made some progress, but there’s still no deal and as I’ve said I’ll do a deal if we get what Britain needs,” the British leader said. “So we are going to get back in there, we are going to do some more work, and I’ll do what I can.”

Yet a deal is far from done, with many member states objecting to some of Britain’s key demands.

“I’m always confident but a bit less optimistic than when I arrived,” Italian Prime Minister Matteo Renzi said on Thursday night.

“It’s the European Union being called into question, not merely a country in the European Union.”

Francois Hollande, French President

At 2:30 a.m. on Friday as the meeting of all 28 concluded, a tired-looking Donald Tusk, president of the European Council and chair of the meetings, said: “We have made some progress but a lot still remains to be done.”

He then headed into a bilateral meeting with Mr. Cameron and the president of the European Commission, Jean-Claude Juncker. They were later joined by the French, Belgian and Czech leaders before finally ending their meeting at 5:30 a.m.

After snatching a few hours’ sleep many of the leaders held more bilateral meetings ahead of a working lunch of all 28.

Mr. Cameron needs to come back from Brussels with a win.

He is facing a sizeable number of euroskeptics in his own Conservative Party, including a number of ministers who will likely campaign for a Brexit, as well as a press largely hostile to Europe and a country almost evenly split between those who say they want to stay and those who want to leave.

If he can get a deal, he has pledged to hold the referendum in the European Union’s second largest economy as early as this June.

Mr. Cameron’s list of demands going to the summit included a so-called “emergency brake” on in-work benefits for E.U. migrants, limits on child benefits of E.U. migrants whose children are not living in Britain, and an opt-out from the goal of “ever closer union,” enshrined in the European treaties, as well as protections for countries like Britain that are not part of the euro zone.

While these measures are perhaps less than the fundamental redrawing of the British relationship with Europe that he once promised, they still face opposition from many quarters.

 

How Business Sees Brexit-01

 

Although his 27 counterparts have said they want to keep Britain in the bloc, they have insisted that this would not be at any price.

Eastern European member states are wary of benefit cuts for their citizens working in Great Britain and were irritated by the fact that Mr. Cameron seemed to up the stakes even further by demanding a 13-year period to freeze benefits, rather than a draft proposal of seven years.

Poland in particular wants to make sure that any new rules only apply to new arrivals, not people already living and working in Britain, and that they cannot be extended to other member states.

The French and Belgians meanwhile are worried that giving in to British demands will water down the European project. Paris is wary that it could allow the U.K. to create favorable conditions for the City of London as a financial center.

“We want to create the conditions for Britain to remain in the E.U.”

Angela Merkel, German Chancellor

“It’s the European Union being called into question, not merely a country in the European Union,” said French President Francois Hollande. He warned that any deal with the British must adhere to the fundamental principles. “Otherwise other nations will demand other exceptions.”

Mr. Cameron said that the talks were an “opportunity to move to a fundamentally different approach to our relationship with the E.U, what some might call a ‘live and let live’ reflecting that those states who wish to integrate further can do so while those of us that don’t can be reassured that their interests will be protected and will not need to fight these at every turn on a case-by-case event-by-event issue.”

Chancellor Merkel, who is sympathetic to Mr. Cameron’s situation, told reporters on Friday morning: “We want to create the conditions for Britain to remain in the E.U.”

Germany wants to keep Britain in the bloc, both as a counterweight to France, and so as not set the precedent of a country leaving the European Union. On Wednesday Ms. Merkel had told the German parliament that the British demands were in many cases “justified and understandable.”

On Friday morning, the chancellor said that she was still confidant a deal could be reached despite the disagreements: “It’s clear that this isn’t easy for some, but the will to get this done is there,” she said, adding: “We are ready to compromise because advantages are greater than disadvantages when there is Brexit.”

Yet the Brexit headache is undoubtedly a distraction from what Germany regards as the much more urgent need to find a solution to the refugee issue.

 

Cameron-Juncker-AP
David Cameron has held a number of bilaterals with E.U. leaders. Source: AP

 

The refugee crisis is an issue that has cost Ms. Merkel considerable political support at home while isolating her within the European Union.

She had been banking on coming up with a deal with Turkey ahead of the summit, but the deadly car bomb that rocked Ankara on Wednesday killing dozens of people, put paid to that plan.

The attack caused the Turkish, Ahmet Davutoglu, to cancel a scheduled meeting on Thursday with leaders of 11 E.U. member states in Brussels.

For Ms. Merkel, who is counting on Turkey to help stem the flow of asylum seekers into Germany and bolster her chances of reelection in 2017, it was a harsh blow.

Ms. Merkel and other European leaders had planned to discuss Ankara’s role in securing the European Union’s external borders, by stopping refugees from entering the European Union illegally through Greece by crossing the Aegean Sea.

The European Union has committed €3 billion, or $3.3 billion, to help improve living conditions for more than 2.5 million refugees – mostly Syrian – who have fled into Turkey, above all by improving access to health care and education.

In exchange, Turkey has been assured that frozen talks on its bid for E.U. membership will be revived.

Chancellor Merkel said on Friday morning that the leaders had voiced their support for the joint action plan with Turkey.

“The important statement for me today is that we have not only reaffirmed the E.U.-Turkey action plan, but we have said it is our priority,” she told reporters. “In Europe, we are all always partners.”

The European Council echoed Ms. Merkel’s comments in a statement in which it called for “full and speedy implementation of the E.U.-Turkey Action Plan” and noted Turkey’s progress “regards access by Syrian refugees to Turkey’s labor market and data sharing with the E.U.”

European Council president, Mr. Tusk, said that another summit in early March, to which Turkey is invited, would focus on the issue.

 

Refugeesbarbed wire DPA
The refugee crisis took a back seat to the Brexit debate at this week’s E.U. summit. Source: DPA

 

Meanwhile, the way that some European countries have disregarded the Schengen agreement was cause for friction on Thursday night. Europe’s 30-year-old, 26-nation open-border Schengen agreement has come under increased pressure as countries opt to close borders to stem the flow of refugees.

Sweden, Austria and other E.U. member states have already re-established internal borders within the Schengen zone. Germany also has erected temporary controls on its borders, especially Bavaria’s border with Austria.

Meanwhile, the Visegrad group of Eastern European member states – Poland, Hungary, Czech Republic and Slovenia – want to seal off borders with Bulgaria and Greece’s border with non-E.U. member Macedonia to block migration north via the Balkan route.

During the working dinner on Thursday night that turned into a six-hour debate, Austria in particular was fiercely criticized for its decision to cap the number of asylum seekers it would accept to 37,500 a year.

Starting Friday, the country is also limiting the number of those allowed to enter the country to 80 a day.

The E.U. migration commissioner, Dimitris Avramopoulos, told Vienna its decision to limit the number of asylum applications was illegal and “plainly incompatible with Austria’s obligations” under European and international law.

Chancellor Merkel, however, dismissed talk of a rift with Vienna. The Austrian government’s move to impose daily caps “reminded us how urgent it is for us to find solutions.”

 

Siobhán Dowling covers European politics for Handelsblatt Global Edition, Thomas Ludwig is a Handelsblatt correspondent in Brussels,  Garrett Hering, an editor at Handelsblatt Global Edition, contributed to this piece. To contact the authors: dowling@handelsblatt.com and ludwig@handelsblatt.com

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