Brexit Negotiations

EU Sees Glimmer of Hope on Budget Deal

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Resolution of Britain's budget payments to EU may be within our grasp. Source: Reuters

Not quite light at the end of the tunnel, but the European Union’s chief negotiator for Britain’s exit from the bloc offered a glimmer of hope that a budget deal can be reached by the end of the year, allowing talks about life after Brexit to proceed.

Michel Barnier, a former foreign minister for France, said that since Prime Minister Theresa May’s declaration last month that Britain would fulfill all its budgetary obligations to the EU “there is a positive dynamic” in the talks, which he would like to maintain. But the devil is in the detail.

Ms. May agreed to pay Britain’s share of the budget through the current financial framework period ending in 2020, and to honor all other financial commitments made by the country. The latter is the one that now needs closer scrutiny, Mr. Barnier said in an interview with Handelsblatt and four other European newspapers.

“It concerns the stability of the continent.”

Michel Barnier, EU chief negotiator for Brexit

For example, some of the projects financed by the EU structural fund can last up to three years beyond 2020. Britain took part in the agreement for these projects, and Ms. May must acknowledge her country’s responsibility for them, the EU negotiator said. Altogether, Britain is said to owe the European Union at least €60 billion

The other two questions Brussels wants answered at least in principle before discussing post-Brexit links are the rights of EU citizens in Britain and the border between Northern Ireland, which is part of the United Kingdom, and the Republic of Ireland, which will remain in the EU.

It is above all clarity on a budget accord that will permit talks to go forward to the next phase, Mr. Barnier said – just what kind of relationship Britain will have with the EU after it leaves. There is a consensus that these talks will probably extend past the March 29, 2019 deadline for Britain to leave, so there will need to be a transition period. EU leaders agreed at their summit last week to allow a short, well-defined period to finish the talks.

For Mr. Barnier, a logical deadline would be the current budget framework period running until the end of 2020. During that short transition period, Britain would be bound by EU laws, including those governing the internal market. That would mean “maintaining the economic status quo” for a short period after the formal exit, Mr. Barnier said.

It is possible, the EU negotiator said, that sufficient progress could be made by the time of the December summit to reach agreement on proceeding to the next phase. “The window is open, everyone is trying hard and for that reason I believe it is possible,” Mr. Barnier said. A clearly defined transition agreement must be part of any exit treaty, he said, but a draft could be ready by next spring, he said.

Despite this optimism, Mr. Barnier painted a dark picture of what would happen if there was a hard Brexit without any agreement. Britain would no longer be part of the unified European airspace, for instance, and would lose all start and landing rights. It would no longer be part of Euratom and could not obtain nuclear material for hospitals or nuclear plants from EU sources. There would even be severe problems supplying food to Britain, Mr. Barnier said.

By the same token, however, partnership with Britain is of strategic importance to the rest of the EU. “It concerns the stability of the continent,” Mr. Barnier said, noting that Britain was a big country with strong security authorities, a large army, and important diplomatic connections.

Handelsblatt reporters Ruth Berschens and Till Hoppe conducted the interview along with journalists from four other European newspapers. Darrell Delamaide wrote the article for Handelsblatt Global. To contact the authors: berschens@handelsblatt.com, hoppe@handelsblatt.com, and d.delamaide@extern.handelsblat.com.

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