EU MAY BE SOFTENING ITS NEGOTIATING POSITION: GERMAN FINANCIAL STRONGMAN CALLS FOR SOFT BREXIT TO ‘MINIMIZE DAMAGE’




Robert Harneis-TDO-(FRANCE) A ‘soft Brexit’ would be the best way to minimize damage to Britain and the European Union, Germany's outgoing finance minister Wolfgang Schaeuble said on Thursday in the sidelines of an International Monetary Fund meeting in Washington, Reuters reported. Remaining in or close to the EU's single market, and keeping many of the trade and business benefits it had as a member, would be preferable, he added. As Europe’s biggest financial contributor, German views matter.

It is no coincidence therefore that at the same time a new draft joint statement of the EU27 says, ‘At its next session in December, the European Council will reassess the state of progress in Brexit negotiations with a view to determining whether sufficient progress has been achieved, and, if so, adopt additional guidelines in relation to the framework for the future relationship and on possible transitional arrangements…In order to be fully ready for such a scenario, the European Council invites the Commission together with the Union negotiator to start internal preparatory discussions.’

Meanwhile, speaking separately at a press conference at the close of negotiations yesterday, Michel Barnier, the EU’s chief Brexit negotiator maintained a hard line. He said ‘no great step forward’ had been made in talks. He added that he would not propose opening discussions on a future UK-EU relationship at a meeting of the EU27 next week as ‘sufficient progress’ had not been reached on withdrawal arrangements. On the question of the financial settlement, he said, ‘We have reached a state of deadlock, which is very disturbing.’ He stressed, ‘Trust is needed between us if this future relationship is to be solid, ambitious and long-lasting. This trust will come with clarity and the respect of all commitments made together.’ At the same time, he said that he remained ‘convinced today that with political will, decisive progress is within our grasp in the next two months.’ Like Schaeuble Barnier also warned that a ‘no-deal’ scenario would be ‘a very bad deal’, adding, ‘To be clear, on our side we will be ready to face any eventualities and all the eventualities.’ British politicians have made similar hardline statements. The EU has a strong interest in not making withdrawal seem too easy for fear of encouraging other dissatisfied member states to imitate the UK.

Speaking at the same conference, Brexit Secretary David Davis said discussions on the financial settlement are ‘not a process of agreeing specific commitments – we have been clear this can only come later.’  Davis argued, ‘To provide certainty we must talk about the future. The Prime Minister’s speech…laid out the case for a simple clear and time-limited period of implementation. I hope leaders of the EU27 will provide Michel Barnier with the means to explore ways forward with us on that.’

The draft EU document by the 27 member states indicates that the British calls for discussions about the future relationship alongside discussion of the final separation bill are being listened to. Without such parallel discussions there will be deadlock, leading inevitably to a mutually damaging hard Brexit.

The Germans in particular are worried about their substantial car exports to Britain. The City of London is concerned about its important market in financial services in the EU. But if push comes to shove the British have less to lose than the EU or at least the Germans. Imported German cars can be replaced by other makes and financial services can be sold worldwide. For the German car makers in particular any loss of market share is likely to be permanent. They are already suffering from losses in Russia thanks to sanctions.