The EU will soon be on the horns of many a dilemma.
Not surprisingly, with the majority of the UK’s political focus concentrating on the final stages of the Conservative leadership election, scant attention is being given to how the EU leadership faces its own challenges that should significantly weaken its hand in dealing with Britain’s departure.
Much of our media coverage is exceedingly introverted, displaying an inverted chauvinism that likes nothing better than doing our own country down, especially suggesting the end of our world is nigh. This is counterbalanced only by patriotic sports coverage always looking for new British heroes.
This confusing concoction can give a false political perspective and a tendency to underestimate the significant influence our country has, how popular it is and how our politicians might have a better hand in any negotiations than we appreciate. When confronted by a new British prime minister – most likely to be a bullish Boris Johnson who will be thinking, let’s get the job done or I’ll be out on my ear tout suite – I expect him to highlight the EU’s own problems so the British public’s expectations can be reset.
Theresa May never made any attempt to talk up the UK’s strengths and put over the EU’s weaknesses, instead she went down the diplomatic route of pleasantries and platitudes which led inevitably to her making all the concessions on the agenda, timeline, costs and liabilities – never mind the trading arrangements. I expect the new British prime minister to be different and to expose how the EU is on the horns of many dilemmas that means co-operation with the UK will be in Brussels’ interest.
The EU desperately needs the UK’s money as it already faces huge public deficits and is bizarrely planning to increase spending. Those members that are net contributors (such as the indebted Republic of Ireland) do not wish to pay more than they have to. The proposed £39 billion separation bill will come in handy before they adjust to living without the UK’s annual net contribution of £10-£14bn – but it is not a fixed figure and is open to modification. While the UK will want to operate under the rule of law and honour past commitments, there is little in the £39bn that rests on legal agreements, meaning even going to international arbitration is highly risky for the EU.
The EU wants and needs our money, end of. It says it will not reopen negotiations on the now dead Withdrawal Treaty. These two positions are not compatible.
A recent report by City banking specialist Bob Lyddon exposed how the UK remains on the hook for at least £207bn of EU contingent liabilities, possibly rising to £441bn if Brexit is extended further, were there to be a banking and credit crisis in the eurozone. The possibility of this event coming to pass rises daily.
Lyddon identified a black hole in eurozone finances of one trillion and how “zombie” loans and misleading accounting practices keeps the bad debt from being called in. Just last week Deutsche Bank, one of the banks carrying a horrendous £74bn book of toxic assets, announced 18,000 redundancies globally, with 3,000 of those predicted in London. That will be worse than any single loss of jobs due to Brexit in the City (where recruitment has actually gone up) and betrays the falsehood of continuing CBI and Bank of England scaremongering. The EU claims it is solving the eurozone debt crisis but the debt total grows and the bad practices continue. The two positions are not compatible and our new prime minister must ensure the contingent liabilities are removed the day we leave the EU, not least because we were never members of the Eurozone anyway.
Thanks to the behind-closed-doors horse-trading at the recent council of ministers, we can also see how the EU’s democracy is a sham. Nominations for presidents of the commission, the council, the Parliament and the European Central Bank resembled musical chairs between the favoured elite rather than elections. The obvious answer is to democratise the process but that means going fully towards a federal Europe Union that has no demos – and against the reviving belief that the nation state is beautiful and optimal. The two positions are opposite and incompatible. If EU nations want “more Europe” then that’s up to them but it goes against the tide of sympathy in the UK.
If the new prime minister declares May’s Withdrawal Treaty as dead – as he should do –the solution of using GATT Article XXIV that would continue trade from Brexit Day forward without tariffs and quotas becomes more attractive than ever. True, it requires the EU to sign off an outline free trade agreement (FTA) and critics of this approach argue it will refuse. But wait – it has already offered such a deal to Great Britain (but not Northern Ireland).
Now that the Republic of Ireland has admitted there will be no customs checks at the Irish border, surely the EU’s offer of an FTA could be extended across the whole of the UK? The EU’s past offer and refusal to extend it is not compatible with the Lisbon Treaty that requires co-operation with departing members. The EU would look in the wrong to the eyes of the whole world.
If the EU refuses, it is Brussels that is moving towards a hard Brexit. Such a disrespectful and abrasive approach will play into the hands of the new prime minister, Leavers and the Brexit Party while eating away at support for remaining, finishing off any prospect of a second referendum or the need for a general election.
Thanks to all these dilemmas, the EU power brokers have fear in their eyes. Last week the normal conventions of sharing out committee chairs in the European Parliament among all political groupings was abandoned with a cordon sanitaire erected to ensure no European eurosceptics were elected as should be expected. Gentleman’s agreements were ungentlemanly torn up.
The fisheries committee anointed as president Chris Davies, a British Liberal Democrat who believes all British waters belong to the EU. Its vice-president is Dutchman, Peter van Dalen, who is responsible for ensuring electric pulse fishing continues in the North Sea.
Our new prime minister must change the media mood music by airing these EU dilemmas to put them on the back foot – and change the dynamics of the Brexit debate.
-Brian Monteith MEP is Chief Whip of the Brexit Party