01. November 2018
Lesung: „Bittere Schokolade“
Some thoughts on the hundred zillion Brexit bill
The FT reports that the Commission has re-estimated the UK’s Brexit bill. It is now going to be € 100 bn or even € 120 bn. Before, the figure was around € 60 bn. Some commentators conclude that the EU has decided to use Britain as a „cash piñata“ and that this is a kind of extortion scheme where 27 greedy countries gang up on one poor Sceptered Isle that might soon have to pawn the sceptre.
I do not think that’s the case. The € 100 bn are a negotiation tool. Works like this: Every time during the negotiations when the EU needs to make a concession to May, it will offer to shave off a couple of billions. In every quid pro quo, Commission negotiator Barnier will throw in an amount of fiat money (in the truest sense of the word). It’s bargaining chips that cost him nothing.
This is the classic from every negotiation playbook: Make extreme demands followed up by small, slow concessions.
Which means that the UK’s negotiators cannot – must not – accept any Brexit bill figure to be set at the start of the process. It does not matter whether the tally is a hundred or fifty billion. It’s a goddamn trap, either way.
When the FAZ reported on the disaster dinner where May said she wouldn’t pay anything before a trade deal was reached, my first thought was: the woman is delirious. But now I think she saw this coming. The Commission argues that everyone should agree what the two parties‘ liabilities are before the negotiations start. This is bullshit, because the negotiations are about the liabilities (financial ones and others).
May will never agree to be boxed in from the start. Or will she?
It might appear that the EU is daring May to go for hard Brexit to get it over with quickly. I do not think they are, though. This is just another spiel from the negotiating playbook: The good old take-it-or-leave-it offer. It even might work, because coughing up a hundred billion might sound bad, but compared to the alternative, it really isn’t.
The concessions the UK really wants, really needs have got nothing to do with cash, but with tariffs, regulations, passporting etc. The UK’s trade volume with the EU is roughly three times the likely Brexit bill every year. Britain’s annual GDP is around € 2500 bn. So any Brexit bill pales in significance to the effects of a favorable or unfavorable trade deal which will be in effect for decades.
We’ll see who flinches first.
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