Hammond puzzles EU with his Berlin speech

by John Wyles | 11.01.2018

Indecision, naivety or strategic positioning? All three interpretations of Britain’s approach to the Brexit negotiations are debated in Brussels by officials struggling to understand why London does not appear to understand the process in which it is entangled.

Philip Hammond’s speech in Berlin on Wednesday evening is merely the latest utterance from the British government to compound the confusion and uncertainty on the Continent about the direction of UK policy.  On the one hand, the Chancellor acknowledged that the government has still not set out its view of the future relationship it wants with the EU; on the other, he  begged the EU27 to offer a few views of their own.

And did he really believe that asking Brussels to drop any desire to “punish” the UK for Brexit would restore any of the goodwill that has already been forfeited in Brussels? Punishment has never been a driving objective for the EU, even though it is now an explanation for Brussels’ alleged intransigence favoured by Tory eurosceptics. They do not want to see that Britain’s relations with the EU as a third country will not be as advantageous as those of a member state.

Anxiety is running high in Brussels, Paris and Berlin about the disruptive and illiberal policies pursued in Poland and the Hungary. Any deal with the UK which minimises the costs of exit would feed the appetite of those in Warsaw and Budapest arguing for loosening the bonds of Union.  In a recent interview, Donald Tusk, admittedly no friend of the present Polish government, asserted that the governing PiS party would like “to free Polish politics from the burden of the EU.”

Meanwhile, Michel Barnier is doing his best to emphasise publicly that Theresa May’s red lines rejecting customs union, single market and the authority of the European Court of Justice inevitably limit the options for any future relationship to Canada-type free trade deals without much if anything on services.

David Davis and Theresa May believe this hard line defies the “common sense” of striking a special and deep relationship that would be mutually beneficial for both parties. Hammond did drape a few “nice to haves” on the hoped for beneficial partnership including “high levels” of access for goods and services, continued close cooperation on security and defence, in education , science, technology and culture.  London may eventually secure something in some of these areas if it is prepared to pay into the EU budget and erase bits of red line here and there.

Is Hammond betraying a naïve belief that the EU will eventually be persuaded, cajoled or pushed into agreeing bespoke deals on trade and other matters, including regulatory cooperation? Or does he really want Barnier and the EU 27 to stand firm so that the choice for evangelical Brexiters in the government is between a transition period after March 29 2019 that will amount to de facto continued membership, or “no deal” and over the cliff edge?

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Edited by Hugo Dixon