Into Phase II: how the EU27 see the outcome of the December European Council

Seen from the UK, the reaction to last week’s European Council followed a familiar pattern. In their initial response, ministers, backbenchers and Eurosceptic newspapers welcomed news of the announcement. Heralding it as the latest in a series of victories for the UK over the EU, they showered Prime Minister Theresa May with lavish praise. Within a matter of hours, however, disharmony had broken out again.

As a consequence, the reaction from other European capitals was overlooked. Yet the content of the text is crucial, and how the 27 EU member states approach the negotiations, in particular the terms of the mandate they define for the EU negotiator Michel Barnier for the next phase, will be key to the outcome. They will largely shape the UK’s future relationship with the EU.

We looked at the European Council’s text, and polled opinion from the network of correspondents that our Brexit priority grant, “Negotiating Brexit”, has brought together to monitor progress and to build up a better understanding of how Article 50 has moved towards a final deal. Here is how the results of the European Council were regarded across the EU.

View from Brussels (Hussein Kassim)

Leading up to the European Council, the progress signalled by the Joint Report between European Commission President Jean-Claude Juncker and Theresa May was almost immediately undermined by the comments of prominent ministers, including the UK’s lead negotiator David Davis. The European Council’s 15 December text underlined that all commitments undertaken during the first phase should be respected in full, and translated into legal terms as quickly as possible – a message also affirmed by the European Parliament.

The European Council’s text also highlighted the importance of moving to conclude the Withdrawal Agreement. In a telegraphic style that has been a feature of the EU’s approach to the UK since the June 2016 referendum, the text also spells out carefully the sequencing of steps and conditions that need to be fulfilled for progress.

Similarly, EU negotiator Michel Barnier reiterated the EU’s key positions since June 2016: although the EU regrets the UK’s departure, there is no reason for “our values and principles to be damaged as a result”; discussions on separation must be concluded before those on the future relationship can begin; and there will be no ‘cherry picking’ that mixes elements of existing models, such as Norway’s access to the single market with Canada’s free trade deal, and no special deal for financial services – points underlined by his chief adviser, Stefaan De Rynck, in an intervention in London on 18 December.

In their comments after the summit, the Presidents of the European Council and the European Commission, Donald Tusk and Jean-Claude Juncker, each highlighted the importance of continued unity among the EU27. Praising the unity demonstrated throughout phase 1, they called for similar singularity of purpose in phase 2. Tusk, moreover, called for more clarity from the UK on its vision.

View from Berlin (Eva Heidbreder)

Any remotely well-informed citizen on the continent puts on a disbelieving smile when contemplating the prospect of a “no deal” Brexit. A cliff-edge is likely to create a destabilised and desperate great country right across the channel – not really an option. The step towards the second phase was therefore inevitable, to prevent businesses from activating their contingency plans as early as January 2018. The formula agreed by the European Council does this symbolic job.

The text adopted on 15 December points in the only possible direction. If taken literally the agreement would keep at least Northern Ireland, if not the whole UK, inside the customs union. This is not sufficiently accepted or understood in the UK. Hence, the agreement opens with the caveat that “nothing is agreed until everything is agreed”; in other words, “we may have opened the second phase and have formulated a template that may work, but we cannot be sure that we have yet made it beyond the first square”.

The German chancellor, currently merely the head of an acting government, does not feel able to make any elaborate government declaration. Arguably, this silence is in keeping with the government’s careful position on the Brexit agreement, which it hopes will be “a step forward” that will lead to the next negotiating mandate for Mr Barnier.

View from Warsaw (Natasza Styczyńska)

The December summit was not much discussed in Poland, where all eyes were on the government reshuffle. The new prime minister, Mateusz Morawiecki and his cabinet were sworn in on 11 December, so the European Council meeting three days later was Morawiecki’s first foreign visit. There was not much discussion about Poland’s views on the Article 50 negotiations, besides reassurance the UK will remain Poland’s most important allay and that Warsaw is mainly interested in securing the fundamental rights of Polish citizens living in the UK.

On the first day of the summit, Mateusz Morawiecki held a short private meeting with May. According to the statement later released by his press office “strategic relations and partnership between Poland and the UK were confirmed”. Morawiecki also stated that Poland is awaiting more detailed discussion about the EU budget post-Brexit.

The European Commission’s plans to start Article 7 proceedings against Poland – perhaps as soon as the following week – was a key topic in the Polish media. The main subject was Morawiecki’s earlier departure from Brussels, meaning that he would miss the part when the EU leaders agreed to move on to the second phase of the Article 50 negotiation. The reason for his attenuated stay – the PM was heading off to the Christmas meeting of Law and Justice party in Warsaw – was interpreted by some commentators as a symbolic gesture, reflecting the Polish government’s attitude towards the European Union.

 View from Rome (Vincent della Sala)

 The Italian government, led by Prime Minister Paolo Gentiloni and European Affairs Minister Sandro Gozi, have emerged as one of the strongest supporters of a “bespoke model” Brexit agreement. Gentiloni, in a series of interviews following the breakthrough deal on 8 December, re-affirmed Italy’s position that the country’s red lines in the negotiations – those adopted by the Council – remained firm.

He saw the agreement on financial compensation and rights for EU nationals as important steps that satisfied Italy’s major demands. However, the Italian position has been all along that a hard Brexit was not an attractive option and that all options, not just Norway and Canada+, should be on the table.

On the eve of the Council Gozi stated that Italy saw the 8 December agreement as a major step forward, and binding. The Italian government’s attention was focused on the immigration question at this week’s Council but it did welcome the decision to move forward to phase II of the negotiations.

Both Gentiloni and Gozi, while stressing the need for flexibility to arrive at a deal, reiterated that they foresaw a difficult period ahead for both the UK and EU27: one with great uncertainty generated by British politics, which would test but ultimately unite the EU27.

View from Madrid (Salvador Llaudes)

The good news is that, after the Joint Report was agreed between the European Commission and the UK, the European Council at EU27 gave the green light to open the second phase of Article 50 negotiations. The bad news is that the first phase has shown how difficult the process may become. Most important, however, the UK side needs to finally understand that this is not a negotiation between equals. Almost every single request the EU has made so far has been accepted by the UK after considerable fuss, objection and denial.

The second phase of the negotiations will be no different. Spain fully endorses the Commission in its negotiation strategy and is happy with the results achieved so far. While it advocates a strong future relationship with the UK, Spain considers integration to be of the utmost importance and will never put that commitment ahead of good relations with the UK.

The ideal scenario for Madrid would be a quick negotiation regarding the divorce – no later than October-November 2018, including agreement on a transition period of at least two years. However, the question of Gibraltar may cause problems if the British side does not come with a proposal that is acceptable to Spain.

View from Vilnius (Ramūnas Vilpišauskas)

According to President Dalia Grybauskaitė, the intermediate agreement between the EU and the UK has secured Lithuania’s key objectives: the protection of the rights of Lithuanian citizens residing in the UK, and upholding the UK’s financial commitments. Like most heads of EU states, she stressed that the most complex phases of the negotiations are still to come.

Despite its tactical manoeuvring to help the UK Prime Minister secure a deal on the three key issues in the first phase of negotiations, the EU has secured most of its preferences on citizens’ rights and, in particular, on the financial settlement. The Irish border issue, however, has been phrased in such a way that virtually any outcome is possible and there might be a rather long transition period while the UK remains part of the single market.

This would be in line with countries like Lithuania, who would prefer to maintain close relations in trade and defence with the UK, even if it is at odds with the UK government’s declared aim of leaving the single market and customs union.

The strong sense from the national capitals surveyed is that the UK’s decision to leave the EU remains a source of regret. Governments are firmly behind the EU’s strategy and goals, and do not support any future arrangement that would dilute the Union. Negotiations in the first phase have undoubtedly been testing. The UK side has been slow to recognize the realities of its negotiating position, and deep tensions within the governing Conservative Party over the most desirable outcome have not helped.

Yet the second phase promises to be even more difficult. The EU27 have displayed remarkable solidarity so far, and, from the views reported above, unity is likely to continue despite the very varied relationships that the remaining member states enjoy with the UK.

Only in Italy, where Prime Minister Gentiloni and European Affairs Minister Sandro Gozi have championed a bespoke deal for the UK, and where opinion has taken a Eurosceptic turn, does there appear to be the suggestion of a fault line. As yet, however, it is unclear whether Rome will ultimately fall into line with the other EU27 or step up its opposition to a hard Brexit.

By Professor Hussein Kassim, research leader and Dr Simon Usherwood, research investigator at The UK in a Changing Europe.

Disclaimer:
The views expressed in this analysis post are those of the authors and not necessarily those of the UK in a Changing Europe initiative.

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