Monday 17 December 2018

Negotiating with the EU: A practical guide

Following Theresa May’s abortive efforts to persuade the EU to change its mind with regard to offering some form of Brexit concessions, and as the Italian government’s spat with the European Commission continues, it seems like an opportune moment to reflect on how to negotiate with the EU. Based on a recent article by the Neue Zürcher Zeitung, which looked at the lessons Switzerland could take away from its EU negotiations, I set out a framework for the likes of Poland and Hungary, who might soon find themselves on the wrong end of the Commission’s wrath, based on the past experiences of Greece, Italy and the UK. 

1) Know what you are trying to achieve 

The British clearly failed on this score. The referendum result merely expressed a wish to leave the EU, not how it should be implemented. Nine months after the referendum, the UK invoked the two year Article 50 procedure without any clear objective in mind other than to leave the EU. Without having done any preparatory work beforehand the British started their negotiations from a position of weakness and things never got any better. As a consequence, the British have spent more time arguing amongst themselves than engaging constructively with the EU. Last week, when Theresa May went back to Brussels to plead for more concessions in order to raise the chances of the Withdrawal Agreement passing through parliament, she was repeatedly asked to specify what she wanted. And she could not do so.

2) Everyone has their own domestic policies 

Many of those members who get into difficulties with the EU often find that they ignore the domestic sensibilities of other members. When faced with the Troika’s proposals to allocate more funds to Greece in the summer of 2015, the Greek government called a referendum in which the Troika’s terms were rejected by a majority of 61% to 39%. But EU member governments were having none of it and offered liquidity on the same terms, which the Greek government was subsequently humiliatingly forced to accept. The tactic employed in parts of the Greek press of portraying Angela Merkel in terms of a previous, less enlightened, German Chancellor clearly did not play well in Germany and hardened the resolve of the EU. The UK finds itself with similar difficulties: It cannot continue to ask for exemptions from the EU rules that everyone else has to abide by. At some point, someone is going to cry foul. 

3) Don’t paint your red lines too deeply 

One reason why Theresa May finds herself in her current position is that she set red lines on issues such as immigration, ECJ involvement and leaving the customs union without accounting for the consequences of her actions. As a result when faced with the draft Withdrawal Agreement, both Leavers and Remainers can rightly argue that she has not reached an agreement that anyone can sign up to because the PM has been forced to compromise so much. The Italians find themselves in a similar position today. Having refused to countenance any cuts to outlays, the European Commission instituted excessive deficit proceedings in an action that was totally avoidable. If nothing else, the EU is built on compromises and it is normally possible to find some form of accommodation – so long as you don’t paint yourself in a corner to start with. 

4) Don’t mess with the family 

It was (rightly) argued long before the Brexit referendum that the EU had no interest in giving a generous deal to the UK. Its primary interest was to defend the interests of its members and ensure that no country could leave on favourable terms in case others decided that they also wanted to depart. The EU27 have thus closed ranks and spoken with one voice regarding the terms on which the UK could leave. Like any family, the EU is quite capable of quarrels – even feuds – but when the chips are down it usually pulls together. Ironically, Britain has never really felt like one of the family. It was twice refused membership in the 1960s thanks to President de Gaulle’s view that the UK was a Trojan horse for US interests and would undermine the vision that many members shared for the EU. De Gaulle may not have been wholly right but he was not totally wrong either and sometimes the UK has felt more like a lodger than a full family member. 

5) Might is right 

It is unfortunately one of the rules of life that larger and more powerful nations dictate terms to the smaller ones.  This is not new: Larger tribes have been pushing the smaller ones around since ancient times, but at least the EU is underpinned by a series of rules that afford some rights to the smaller members. However, the Greeks learned to their cost in 2015 that it was impossible for a nation of 11 million people to go against an economic superpower of 314 million, particularly when their case is relatively weak. Greece reckoned that ultimately the EU would cave in and offer more favourable terms but the Germans, particularly Finance Minister Wolfgang Schäuble, were adamant that the only choice Greece faced was take the terms or leave. They took the terms! The Irish can tell a similar story about how they were forced to accept the terms of the EU bailout, which many claim even now was primarily designed to support the EU banking system rather than Ireland. So when the UK goes into the conference chamber as one government facing 27 others, with Germany and France arraigned on the other side of the table, you don’t have a strong negotiating position.

The UK, like Greece before it, has failed to understand the basis of its negotiating position vis-à-vis the EU which goes a long way towards explaining its current predicament. However, many of these pitfalls were avoidable and it speaks volumes that the British tried to placate domestic opinion rather than that of its EU negotiating partners. I would like to think that Polish and Hungarian officials have taken these lessons on board as they brace for heightened tensions with Brussels. But somehow I have my doubts.

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