by Mish

Today, the Financial Times reported Germany and Italy back European Commission on Brexit.

Berlin and Rome are backing the European Commission’s plan to rule out starting trade talks with Britain until the UK gives assurances on a multibillion-euro Brexit bill and citizens’ rights.
German and Italian officials say they support Michel Barnier, the chief EU negotiator, in seeking progress on divorce terms as an opening step. France is uncompromising on the estimated €60bn bill, while Spain is more wary of attempts to “punish” Britain.
Such stances are preliminary since EU member states have still to take a formal position.
Christian Kern, the Austrian chancellor, confirmed the commission’s €60bn estimate. “The cheque should be around €60 billion; that’s what the European Commission has calculated and this will be part of the negotiations,” he told Bloomberg.
“We agree with the commission,” said one German official, referring to the so-called divorce clause of the EU treaty. “Any Article 50 agreement will have to include the UK’s assurances that it will honor the financial commitments it undertook as an EU member state.”

Negotiation Tactic or a Real Stance?

The article labeled the stance “preliminary”. And a recent Eurointelligence report commented: “It is a mistake to think, as some commentators do, that the EU is strong and united in its approach to Brexit. That is only apparently so because the negotiations have not yet started, so we are still in the sound-bite stage with lots of reference to “cherry-picking” and the like. We noted a recent comment from Sigmar Gabriel that the EU should not penalize the UK, which we know is also the position of Angela Merkel. Germany will be a force of moderation. Once both sides are confronted with the actual costs of Brexit, they might conclude that they want to minimize those costs. That process has not started yet.”

For a change, I mostly disagree with the Eurointelligence assessment.

For sure, there is not a united front. But France, Germany, and Italy pretty much hold the EU’s cards. Let’s also not forget that Brexit has become a religious battle.

Merkel Contradictions

Merkel’s statements about not wanting to punish the UK, do not align with her hardening stance that undoubtedly does punish the UK.

If the UK refuses to go along, and it won’t, what the heck will the EU do?

The answer is: it depends. On what? Elections.

Election Wildcards

  1. Will Marine le Pen win the French national election on May 7?
  2. Will Italy hold an election this year? Will Beppe Grillo’s Five Star Movement win?
  3. Will chancellor Merkel be around after the German national elections on September 17?

Whether or not the EU’s stance is some sort of negotiation bluff, the political makeup may be far different in December than it is today.

Until we see the results of those elections, it’s difficult to predict what is likely in the negotiation process.

Source: Opinion Polling for the German 2017 Federal Election

Merkel is behind in the latest poll and three out of the last seven polls. Eurointelligence notes “Of all the polls in Germany, the ARD/DeutschlandTrend (Infratest Dimap) is probably the most noted because it is the one that is broadcast each month on Germany’s main TV channel, and because it has a fairly decent track record. And it shows that, for the first time in over ten years, the SPD is ahead of the CDU.

French National Elections

In France, eurosceptic Marine Le Pen is the leader in round one and is moving up against possible matchups in round two. I believe she will win if her opponent is Francois Fillon, and she may win against Macron.

Taking all of the above into consideration, it is difficult to predict how much Brexit negotiations will change in December from stances we see today.

Mike “Mish” Shedlock

Brexit Negotiations: Why Bother?

I keep asking the same question on Brexit and keep coming up with the same answer: Why bother?

Brexit Blackmail Irony: EU Threatens UK with Queues and Shortages

THE key obstacle to a reasonable Brexit negotiation is Michel Barnier, the EU’s Brexit negotiator.

EU Buffoonery: Brexit Divorce Bill Upped to €100 Billion

The laugh of the day is a move by the EU to up Brexit divorce settlement to €100 billion from €60 billion.

Brexit Fast-Track Dead: EU Insists Upon Divorce Settlement Before Trade Talks

Before the EU is willing to enter trade talks with the UK, it wants an upfront divorce settlement of €60 billion in exit bill claims along with guaranteed rights for expatriate citizens.

Secret Brexit Negotiations in the "Tunnel" to Begin

The British Pound is up again on news of pending Brexit negotiation talks between the UK and EU.

EU Doesn’t Want Brexit “Negotiations”, the EU Wants “Blood Revenge”

It is becoming increasingly apparent there is actually no reason for the UK to show up at the Brexit “negotiations”.

Brexit is a Religious Battle (And You Can’t Negotiate Religion)

Lost in the entire debate about when Theresa May should file article 50, and constant bickering about how long Brexit discussions will take, is one simple fact: Brexit is now a religious battle.

Let's Discuss Brexit (and How the EU Bragged, on Film, About Screwing the UK)

Michel Barnier, the EU's Brexit negotiator, admits on film, that he sought to trap the UK in a permanent customs union.

Zumutungen! Buyer’s Remorse in France, Impossible Situation for Germany

Now that the cheering over the French election has died down, reality will strike France and Germany like a cold bucket of water thrown in one’s face on a Winter’s day.