Options sought as Merkel's radio silence complicates path to soft Brexit landing

August 29, 2016 4:01 AM EDT

German Chancellor Angela Merkel talks during ARD summer-interview infront of the Reichstag in Berlin, Germany August 28, 2016. REUTERS/Stefanie Loos

Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.

By Paul Carrel

BERLIN (Reuters) - Triggering the procedure for Britain to exit the European Union is like turning off the engines on an airplane, a top European diplomat says: best only do it if you can see a landing strip. Otherwise, all parties risk a messy outcome.

When Britain makes its exit move - by invoking Article 50 of the EU's Lisbon Treaty - it will set the clock running on a two-year deadline to leave the EU. Keen to avoid a crash landing, officials on both sides are scoping out how to proceed.

Options include the 'neverland' possibility of simply not invoking Article 50, trying back channel talks to sharpen Britain's sense of what scenarios are possible, and hopping from an interim outcome to a more permanent post-Brexit landing site.

The first option is a non-starter for German Chancellor Angela Merkel, Europe's most powerful leader and the first one Theresa May met after becoming British prime minister last month.

"The EU can't accept that," said a source close to Merkel, who has no desire to see Britain leave but has a pragmatic focus on holding the rest of bloc together, and does not believe Britain will hold a second referendum on its EU membership.

Even if the British economy's resilience in the immediate aftermath of the country's June 23 vote to leave the EU eases the economic pressure on Britain to press ahead with Brexit, May herself has said "Brexit means Brexit".

She has, however, said Britain will not trigger the exit procedure this year.

For the British government, the dilemma of when and how to make a Brexit landing is complicated by a refusal on the part of EU leaders, led by Merkel, to discuss potential outcomes until Britain invokes the exit procedure.

"We won't talk beforehand," said the source close to Merkel, speaking on condition of anonymity. Another German government official stressed the strict ban in Berlin on any pre-negotiating: "We won't talk about substance."

In the absence of formal pre-negotiations, the British government must work through the second option: peering through gaps in the clouds of European officialdom to try to work out what its post-Brexit 'landing' options are.

Such back channeling could help the British work out what is realistic in order to avoid EU negotiators balking at their position, and the clock running down on the two-year deadline.

"You can only nail it down if you are in the realm of the possible," said one European official.


A likely trade-off between EU market access (which Britain would prefer) and the free movement of people (which is does not want) will probably leave a few achievable 'landing points', leaving British officials to try to identify these in informal meetings with cagey counterparts.

Here, they may yet find a way forward. There have been indications from at least one government that there may be room for discussions, rather than negotiations, in advance of Britain triggering Article 50.

German officials have also signaled they are ready to make some concessions to strike a deal with Britain. European Affairs Minister Michael Roth has held out the possibility of London achieving "special status" in its ties with the EU after Brexit.

But European leaders do not want Britain to hold the bloc hostage by horse trading on the terms of an exit before it commits to leave. So even if British officials sharpen their sense of the kind of deal they can strike, they still face a tight timeframe to clinch a post-Brexit settlement with the EU.

Behind the scenes, there has been a growing realization in Europe's capitals that the two-year window for negotiating Brexit is far too short.

This raises the third option being mooted by some European officials: an interim framework for Britain's ties with the EU, based on an existing model similar to that of Norway or Switzerland.

"That might be a temporary solution," said one.

Further talks could then result in another landing spot beyond the two-year negotiating window offered by Article 50.

A spokeswoman for May said the prime minister and her government were going for a "British deal", to get the best for the country.

The trickiest area is the crunch trade-off between market access and the free movement of people, which is sacrosanct to EU leaders. "The price on free movement for prosperity is high," the European official said.

One option to reduce the flow of people to Britain is for it to firm up rules around benefits such that only people from other EU countries with a firm job offer can move to the UK.

Merkel has cut May some breathing space to work out her negotiating position, resisting calls from Paris and Brussels - in the days immediately after the Brexit vote - for Britain to leave the EU "as soon as possible".

"There was a lot of testosterone flying around in the days after the referendum. That's when Merkel is at her best," said one British official. "She pulled it all back and said 'it's okay to take your time'."

But there is a limit to Merkel's patience. The source close to her said: "It's in everyone's interests to have clarity.

(Additional reporting by Elizabeth Piper in London Editing by Jeremy Gaunt.)

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In

Related Categories


Add Your Comment