Before resigning his job in January, Sir Ivan Rogers, the then British ambassador to the EU, confided to friends a nagging anxiety. It was not that the rest of the EU believed that striking a free-trade deal with the UK would take upwards of a decade of talks, or that the ultimate outcome would leave Britain poorer. His greatest worry was that the most important negotiations in the UK’s recent history could collapse within weeks of them starting. And, as with many a nasty divorce, the destructive issue would be money or, to use the common shorthand term disliked by the EU’s chief negotiator Michel Barnier, Britain’s “divorce bill”. Last week will not have offered Rogers much reassurance.
It had never been the European commission’s intention for large numbers to get aired in public, for fear of frightening the British horses. The hope had been to keep it “dry, dry, dry”, according to one senior EU source. “We will bring in the accountants, come up with an algorithm and keep it out of the headlines.” That was always a rather naive aspiration.
In recent months figures of €60bn or more have been aired in meetings of the 27 member states’ permanent representatives, and then inevitably in the newspapers. This was not a fine or a punishment, but the cash that the UK had promised as a member state to cover the pension costs of officials and, more significantly, to fund EU projects across the continent up to and including the year 2023. Sources said the member states were feeling hawkish on the matter; the Dutch were among the strongest, insisting they would not spend an extra euro to cover the gaping hole resulting from Britain’s exit.
Britain, meanwhile, had irritated all and sundry by blocking a mid-term review of the EU’s budget, which would have allowed the commission to shuffle more than €800m to fund efforts to tackle the migration crisis, among other changes. In an explanation that fell flat in Brussels, the UK claimed it could not support the review as there was a general election under way and under the purdah convention its ministers should not tie the hands of the next administration.
It was to this fractious background that European commission president Jean-Claude Juncker arrived in Downing Street on Wednesday 26 April with his team for an informal dinner. A period of phoney war, which has reigned between the parties since the UK’s referendum, was soon to break out into open and savage hostilities.
The initial briefings from the commission had been low key and positive. The commission’s chief spokesman, Margaritis Schinas, described the dinner as “constructive” during his daily press conference in the basement of the Berlaymont building, the cross-shaped 1960s tower that is home to the EU’s executive. EU officials said they believed attitudes had changed in Downing Street. They noted that Theresa May, the prime minister, had dropped a pledge, made in January, that “no deal is better than a bad deal for Britain”. “We are convinced that no deal is in no one’s interest,” the official said. “We appreciate the fact that the tone of the debate in the UK on this issue has changed.”
Rumours, however, had started swirling two days after the dinner that actually perhaps all had not gone to plan in London. By last Saturday – at a summit where the EU member states formally signed off on their opening stance, including the demand that money and citizens need to be settled before trade talks can begin – Juncker was asked what had happened. “The meeting we had, the prime minister and myself, was a very constructive meeting, a friendly atmosphere,” he said. “Privately, everything went well but in fact we have a problem because the British want to leave the European Union and it’s not feasible that this can be done just like that. It will take time and we have to discuss a certain number of the elements we have to address in the next coming months. It was excellent.” Within 24 hours that position had unravelled.
The Frankfurter Allgemeine Sonntagszeitung is a favourite paper of European commission briefers. The German broadsheet has a friendly line on the EU and its profiles are generous. “It’s bloody Pravda,” one EU official said with a smile. The newspaper’s detailed account of the truth of the dinner with May was devastating. The prime minister had suggested that the UK did not owe “a penny” under the treaties. Juncker had responded that the UK had entered into commitments with every passed budget and the bloc was not a golf club that could be easily joined or left. The EU, he said, was like a family, and Brexit should be treated as a divorce. David Davis, the secretary of state for exiting the EU, was said to have retorted that the rest of the EU could not do anything about the financial demands once the UK had left because it would no longer answer to the rulings of the European court of justice. The whole exit process would change then, Juncker is said to have spat back. “Let us make Brexit a success,” May beseeched the commission president. “Brexit cannot be a success,” was the response. Juncker added: “I’m leaving Downing Street 10 times more sceptical than I was before.”
The newspaper reported that the next morning the commission president called the German chancellor, Angela Merkel, on his mobile phone, and 90 minutes later she had reiterated in a speech to the Bundestag that Britain would have to agree on the money before trade could be discussed and life outside the EU would be poorer than inside. “Dear colleagues, maybe you think that these points should be taken for granted,” she said. “But unfortunately I have to spell it out here clearly, because I have the feeling that there are some in Great Britain who cherish illusions about this, which would be a waste of time.”
With local and mayoral elections just days away, May had two possible ways of reacting to the account, and the suggestion that Juncker and Merkel were in cahoots. The first was to dismiss it all as unsourced “Brussels gossip” and remain above the fray. And that was, broadly, the approach that she and her ministers initially adopted. Davis, referring to noises off from Brussels, said last Monday that a deal on the UK’s eventual exit would be sought “in the negotiating room, not by negotiating with a megaphone”.
But when the initial leaks were followed by Barnier’s claim that the divorce bill would be “incontestable”, along with a report from the Financial Times suggesting that, at the prompting of the French and Germans, the divorce bill was more likely to be around €100bn, attitudes hardened. The alternative option of returning fire with interest became more appealing.
In their local election campaign, the Tories were targeting huge numbers of Ukip and Labour voters who had backed Leave last June and wanted to know the country would not be cowed by threats from Brussels. The idea of ditching the lofty, diplomatic tone for a more aggressive, indignant and patriotic one was discussed in early morning meetings in Downing Street last Wednesday. It was decided that after May had been to Buckingham Palace later that day to discuss the dissolution of parliament she would shift up the gears. In grave tones, from behind a lecturn outside No 10, her tone would not have been out of place on the eve of war. “The European commission’s negotiating stance has hardened,” she said. “Threats against Britain have been issued by European politicians and officials. All of these acts have been deliberately timed to affect the result of the general election which will take place on 8 June.” In the short term May’s decision to strike a Thatcherite pose seemed to have worked. The Tories’ gains in Thursday’s local elections, coupled with Ukip’s virtual wipeout and disastrous losses for Labour, suggests her approach strengthened her appeal across a wide spectrum of UK voters.
A senior Tory who backed Remain said even those who had supported staying in the EU now backed May in large numbers. “While we may be fired up by the issue, out on the doorsteps the anger has gone. There is no anger any more. Remainers accept we are leaving and most of them see Theresa May as the leader who is strong enough to make sure we get the best possible deal. I have not heard one person say one thing that is critical of Theresa May.” How the bombastic tone plays out in the longer term, and across the Channel, is less clear.
The Brexit negotiations are set to start in earnest in mid-June. There had been plans for pre-talk talks between Barnier and Davis to discuss logistics, but in response to Britain’s block on the budget review, Juncker’s chief of staff, Martin Selmayr, who has been widely accused of leaking the account of the Downing Street meeting, had an uncompromising message. “Now, we’ll have to apply FULL PURDAH RECIPROCITY,” he tweeted. “Talks with UK, formal or informal, will start only after 8 June.”
One senior EU official warned: “A real weather vane of how nasty this is going to get may well be whether the UK lifts the block on the budget review on 9 June. They would be mad not to but who knows.” The source added: “On the other hand, the commission doesn’t want to come across as being unreasonable and pushing the UK to the edge because some member states in time could split away from the unified approach and seek to rein them in. They want a deal, after all.”
On Thursday, the European council president Donald Tusk, whose institution represents the member states, certainly felt concerned enough about the mood music to call for both sides to show “moderation, mutual respect and discretion” for the sake of the millions caught in the crossfire. If emotions continued to run wild the talks would be “impossible”, he said in an intervention seen as a reprimand both to the prime minister for her bellicose stance and Juncker’s team for its loose lips.
Syed Kamall, the Tory MEP who leads the European Conservatives and Reformists Group in the European parliament, said he believed the move illustrated a willingness among the member states to rein in the commission, which could be important further down the line. “I think we will look back at this week and just write it off as pre-negotiations and an electoral campaign,” he said. “I think if it gets bogged down you will see individual countries exerting themselves on the commission, saying: ‘Come on guys, we want a deal, we don’t want to be left on a cliff edge in two years.’ The commission has the time to focus on Brexit at the moment while individual governments are running countries but ministers will start getting irritated if they think the commission is being silly about it.”
Richard Corbett, a Labour MEP, who was spokesman to the previous European council president, Herman Van Rompuy, said, however, that the future felt precarious: “Everybody would prefer a deal. That is best for everyone. But these negotiations are under time pressure and we have this brinkmanship [on the money]. Each is waiting for other side to blink and with all the various issues outstanding you can see the danger.”
Andrew Duff, the former Liberal Democrat MEP who is a visiting fellow of the European Policy Centre thinktank, said: “I think the chances of a deal being struck have been bruised. Of course [last week’s events] matter. If we are going to have an agreement in my experience it does help to be charming. And the prime minister in full nationalistic mode outside No 10 is not helpful. But it is not too late to recover from the bruises. We just have to get on with it.”
The German MEP David McAllister, a member of Merkel’s Christian Democrats, urged both negotiating parties not to be distracted by the week’s events. He added: “Just keep calm and carry on.”
