EU Uses Sleazy Negotiating Tactics To Extort More Cash In Brexit Talks

Tyler Durden's picture

As we discussed (see here) when Brexit talks resumed this week, the EU is piling pressure on Theresa’s May’s weakened government to extort more money out of the UK in the divorce settlement – now termed “moment of clarification” in EU parlance. Despite rumours before the latest talks began, that Theresa May was prepared to increase the UK’s offer, if this was the case, the EU wasn’t impressed. In the post-talks press conference. the beleaguered Brexit Secretary, David Davis, stated that there is positive momentum in the negotiations…

There is no doubt that we have made, and continue to make significant progress across a whole range of issues. Across the board we made progress to resolving some really difficult questions. That, of course will continue, at pace, between now and December.

…and the markets seemed to believe him. Sterling caught a bid, although it probably had at least as much to do with stronger-than-expected industrial production and a narrowing in the UK’s trade deficit. Meanwhile, the EU side did its fearmongering best to give the impression that insufficient progress will be made to progress to trade talks when the European Council meets in December. Bloomberg reported on comments from EU chief negotiator, Michael Barnier.

European Union chief negotiator Michel Barnier raised the prospect of Brexit talks failing to reach a breakthrough by year-end, saying the U.K. has two weeks to come up with a better offer on the financial settlement.

 

Barnier called for “real and sincere progress” on the three divorce issues, which include the separation bill, the rights of EU citizens and the Irish border, which has erupted back onto the agenda this week.

 

“I have to present a sincere and real picture on those three subjects to the European Council and the European Parliament. If that is not the case, then we will continue, and that will put back the opening of discussions on the future,” Barnier said at a news conference in Brussels on Friday with Brexit Secretary David Davis. Little progress had been expected in this sixth round of talks, as the focus has been on whether a breakthrough will be possible by December.

Prior to the resumption of talks, Davis had toured of European capitals trying to drum up support for the UK’s position. One person he met was Poland’s European Affairs minister, Konrad Szymanski. Szymanski was the first person this morning (before Barnier) to highlight the prospect that talks to resolve the financial settlement (and the Irish border – see below) could drag on into March next year. From Bloomberg.

“I think a satisfactory deal will be reached at the very last minute,” Polish European Minister Konrad Szymanski, who met Davis this week in Warsaw, told reporters on Friday in Brussels. “It could be March but it would be better in December.”

If agreement was delayed to March 2018, Szymanski noted that it would be difficult to negotiate a trade deal before Britain is due to exit the EU in March 2019. While Davis referred to “a few outstanding, albeit important, issues”, thanks to the EU, this is no longer just about money. A new “spanner” was thrown into the works by the EU on Thursday night. This is the border agreement between the Republic and Northern Ireland after Brexit. Perhaps not fully appreciating the EU’s negotiating tactics, we sighed when we saw a Bloomberg headline (with our emphasis) “Irish Border Throws Unexpected Hurdle Into Brexit Talks”. From the article.

The future of the Irish border erupted unexpectedly into Brexit talks this week, as the European Union made new demands on Britain that risk distracting from efforts to reach a breakthrough by year-end. The EU circulated a document to diplomats that called for Northern Ireland to maintain the rules of the customs union and single market after Brexit. It says there must be no hard border on the island, meaning regulations have to be the same on each side of the line that will become the U.K.’s land frontier with the EU after Brexit.

 

The Irish issue, while one of the three divorce issues that need to be settled in the first phase of talks, had taken a back seat in recent months as the U.K. argued that it would be easier to find an agreement on the gnarly border issue once the future trading relationship was clear. Its re-emergence as an obstacle late Thursday distracted attention from what appeared to be some carefully choreographed efforts by the U.K. government to get euroskeptic critics onside as it prepares the ground for the concessions it may have to make to Europe in the next few weeks.

Late last week, Theresa May had set out the specific hour which the UK will leave the EU – 11pm GMT on 29 March 2019 – in an amendment to the EU Withdrawal Bill to please those “critics”. “There in black and white” she said, warning that she would not tolerate any attempts to block Brexit in parliament.

However, May’s attempts at “choreography” were overwhelmed by the EU’s machinations and, coincidentally (or not), comments from Lord Kerr hitting the media this morning. Lord Kerr, if you weren’t aware, is a cross-bench peer in the House of Lords who drafted Article 50, the formal procedure for leaving the EU. Kerr gave a speech in London today, leaked beforehand in the media, in which he stated that the UK electorate had been misled and the Brexit process could still be reversed. According to the BBC.

(Lord Kerr) will give a speech in London later in which he will say: "We can change our minds at any stage of the process. We are not required to withdraw just because Mrs May sent her letter (to Brussels). Actually, the country still has a free choice about whether to proceed. As new facts emerge, people are entitled to take a different view. And there's nothing in Article 50 to stop them."

Lord Kerr, it happens, is a "big time" globalist, having been a former member of the Bilderberg Steering Committee, Executive Committee member of the Trilateral Commission and Ambassador and UK Permanent Representative to the European Union.

As Bloomberg noted, it’s virtually impossible for the UK to meet the EU’s latest demands on the Irish border, which was almost certainly the point.

The EU’s demands on Ireland in the memo are all but impossible for Britain, unless the whole U.K. stays in the customs union, which Prime Minister Theresa May has ruled out. Allowing Northern Ireland to stay in the customs union could mean putting a border between it and mainland Britain. That’s unthinkable for the U.K., and more so at a time when the Conservative government is propped up by the pro-U.K. Democratic Unionist Party from Northern Ireland. The DUP would quit before accepting a border in the Irish Sea.

 

“We recognize the solutions to the unique circumstances in Northern Ireland must respect the integrity of the EU single market and customs union,” Davis’s department said in response. “But they must also respect the integrity of the United Kingdom.”

 

…Ireland has consistently argued that the U.K. remaining in the customs union would be the easiest way to avoid a new border. But May insists Britain will leave as it can’t strike trade deals around the world otherwise -- a key part of the pro-Brexit narrative.

We assume that Theresa May, David Davis and their colleagues have grown wise to the EU’s sleazy negotiating tactics and leaks to German newspapers (after Juncker has dinner with May – twice so far). Nonetheless, the ministerial resignations, party infighting and complaints from banks and the business community about the lack of clarification on the details and a transitional period are making it increasingly difficult for the UK side. However, we suspect that if the UK offers something approaching 60 billion euros, rather than the 40 billion euros it wanted to pay, the Irish border issue and others will magically melt away. May and Davis might see this as a price worth paying to stop having to be nice to the likes of Juncker and Barnier. And...the UK won’t have to cough up when a large German, French or Italian bank requires bailing out.

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Five Star's picture

The European countries not in the EU have outgrown the countries in the EU

http://thesoundingline.com/the-euro-help-or-hindrance-part-ii/

JDLLDJ's picture

collectivisation is defacto destruction of competition. The British Leyland abortion of the UK car industry sums it up nicely.. The EU is stagnating.

philipat's picture

Walk away with a middle finger in the air.

JDLLDJ's picture

Given our historic links to Europe i think 2 fingers would be more fitting. The longbow men knew that... 

Scar Bro's picture

US should break up as well. It's the only way keep from being dominated by the 2% "over achievers"

new game's picture

ussa is fractured and crumbling day by day. suddenly like an old barn it will collapse...

look around. yet the MIC budget went up 60 billion. hopeless mess is the reality of the ongoing demise.

moar war....

French Bloke's picture

Fuck Ireland - put the border back up and see how they squeal. They'd be next to leave. Win Win...

Rex Andrus's picture

Better to send the 2% and their dogs home.

Wile-E-Coyote's picture

I can see that happening, the EU doesn't want a deal that is obvious. It doesn't matter what May proposes it will never be enough.

Time to walk away, they will come running in the end.

Byte Me's picture

"...might see this as a price worth paying to stop having to be nice to the likes of Juncker and Barnier."

(Surely a bit of covert wet-work would be muuuuch cheaper, and more - uh - 'indicative')

philipat's picture

Perhaps Mr Steele could be commissioned through FusionGPS to prepare a dossier on (Drunker than) Juncker's, um habits and financial affairs following all those dodgy tax deals in Luxembourg etc? They don't have much work at present so it would come cheap...?

desirdavenir's picture

agree, time to walk away for UK. That you bring a little fun in otherwise quite dull negotiations (most of the time, nothing happens, UK negotiators come and leave empty handed, and when something ever happens, it is reneged upon later). 

OverTheHedge's picture

I personally would say "We are leaving without a deal, but if the EU has any bright ideas, we are always willing to talk".
Get THEM grovelling, so they can have some hope of covering Junker's pension plan. As it is, the EU believes it has all the cards, and we know from Greece how that will turn out.

PrivetHedge's picture

No need for a deal, WTO rules apply.

Sirius Wonderblast's picture

Ah, someone who understands how to deal with those slime.

In my experience, they will look at you will all due solemnity and earnest, and lay before you the biggest whopping pile of steaming bollocks you (or they) can imagine, and genuinely expect you to treat it seriously. They will say you must be reasonable" (oh, the times I've heard that one!).

Quite right. We should tell them with the greatest of feeling to piss right off. Let them explain to all of Europe why they may be have to pay tariffs to gain access to a key market. Never give them an inch, or an ounce of credence.

rrrr's picture

What the UK needs to do is lower their offer 20%, present it again, with the comment, "If you don't accept this, we'll just leave and not pay you anything," and then do it.

tato1969's picture

This study is made by someone that knows little of economics... Comparing the growth of countries like Poland, Czech, Romania, and so on with the growth of western countries is like saying that Mexico grows more than US because they don't use the USD...

PrivetHedge's picture

The UK owns about €100m of EU assets as part of it's club membership, the EU has been clever in suggesting the UK must pay whereas in fact the EU needs to buy the UK out of the club.

The EU, as with all large unaccountable organisations that preside over nations of falling properity and living standards has been infested with khazars and should therefore not be trusted an inch.

Expat's picture

Wow.  Fucking math genius.  UK admits it owes tens of billions to the EU.  You claim that UK owns €100 million of EU assets and therefore it's really the EU which owes the UK money.  Let's see.  €40 billion minus €100 million equals $19.25 or something like that.  Wow.  Math is tricky when you have to deal with all those zeros.

My advice to  you?  Fuck off.

JDLLDJ's picture

You seem very angry over very little. Care to explain? Did you spend time around Kevin Spacey as a child? We are here to help, not judge.

EddieLomax's picture

Actually we own a lot more than 100m in terms of infrastructure etc paid for.

My advice to you is to grow up and learn to argue reasonably, not to throw a tantrum like a petulant child when someone posts something you disagree with.

As for brexit and Article 50, the article itself says neither side shall retain any claims or obligations on the other.  So we can walk away and give nothing, and the EU can give us nothing in return.

That would be a great deal for the UK and a total nightmare for the EU.  Once American and Asian cars start flooding in at 0% tariff (due to a trade deal) while German and French have 12% tariffs their market share will be wiped out.  That is what they are worrying about.

Byte Me's picture

FFS Einstein, it's not $19.25 you intellectual giant, it's 0.0000000000000031 BTC.....

(sigh)

PrivetHedge's picture

I meant €100bn btw...

JDLLDJ's picture

As an English man who voted out this is beyond painful to watch. Our government just need to walk away. The EU 'deal' will frame our relationship with the world to come, other countries are watching. The EU is a dead stick, and we just need to walk away from it and its Soros funded ex-collaborators. The biggest shame is that the libral media and politics have jellified the spines of most brits, to such an extent that they think without the EU we will shrivel and die.. Never have i known my country to be so defeatest and scared. Once, the unknown was our realm and we drove into it without worry, this we can still do.

Wile-E-Coyote's picture

I don't think they are scared they just have to be shown to be reasonable in negotiating, the UK public will see that the EU are being intransigent arses and that will harden the sentiment amongst the public for a tougher line. I suspect there will be no deal.

Thoresen's picture

Ireland should have the sense to leave too: economics and border solved at a stroke.

Eyes Opened's picture

As an Irishman, I agree with u... Britain is our largest trading partner & despite history, we have more in common with the Brits than any other eu country. Unfortunately the majority of our asshole politicians are pro EU (of course)...

The thing is.. the EU is playing hardball in the hopes of deterring others from thinking of exiting. If Britain could cut a good deal & walk away, I am sure others would take the plunge.

The border issue is an important one & a return to a hard border would create problems for ALL parties. It should NOT be used as a bargaining chip. 

Personally I think it should NOT be dragged out, rip that plaster off & suffer the short-term pain & then move on....

SoDamnMad's picture

Don't walk RUN    Screw them in Brussels. You have the Channel. You can always fight Juncker on the beaches and in the hedgerows.

Expat's picture

I read the article.  Where are the sleazy tactics?  The €60 billion "bribe" is made up by the author and has never been uttered by the EU.

#Fake news, .  #Bullshit. #Ignorant assholes at ZH who make shit up to wank to.

reload's picture

Whatevr.....

But surely you get the point that the mono stance of `money first` then we talk about a deal is pretty sleazy,

Anybody who has spent ANY time in business knows this somple truth - Nothing is agreed untill everything is agreed.

Take that onboard and it is rather difficult to say that the EU are negotiating in good faith.

desirdavenir's picture

ok. But then, the discussion timeline was agreed upon in july. Don't you remember ? (Of course, only after weeks of swearing before God that UK will throw a tantrum on the proposed timeline, it was agreed upon in the first day of negotiations)

#holdsallthecards !

MPJones's picture

Let it be very clear: any monies we may pay fall into two categories: (1) what we have agreed to, and are legally obliged to, pay (net: what we are owed deducted); and (2) quid pro quo for future trade terms, an investment resulting in a future profit.

We do not owe any 'goodwill payment', nor will any be paid. The UK holds all the cards in these negotiations, including a good defence system and a huge trade deficit with the rump-EU. The UK government should do three things now: (1) set a fixed leaving date into law; (2) make it a firm policy to balance the trade with the rump-EU after Brexit unless favourable future trade terms are offered; and (3) walk away from the current negotiations until the EU shows considerable and constructive flexibility and willingness to reach an agreement.

JDLLDJ's picture

Agreed! I just wish our government would realise this.

JDLLDJ's picture

Thanks, i hope it made you feel better.

oneshot2shots's picture

Your gov does realize this, but as always it is the battle between globalism/satanism and nationalism/light.

So Kerr is attacking the sincere efforts of May to leave the hellish European federation behind before it sinks its tentacles any further.

desirdavenir's picture

Good for the UK to hold all the cards. But then, why complain about these sleazy european bureaucrats ? And why not leave negotiations right here, right now ? This would send eurocrats in sheer panick, wouldn't it ? 

ShabbosGoy's picture

EU is beyond dead.

Keep up those negative interest rates! Morons.

Anyone in Europe that doesn't use cryptocurrency is equally stupid for the coming collapse of the EUR.

Fireman's picture

Both aging witches at the bickering EUSSR table are livng on borrowed time. The pathetic Maggie May, that wilted English rose, is a dried out stalk too busy defending her ass from her own party to even see what the €urotrash are up to while the other Maggie, Merkel is being carefully positioned on stage for the inevitable knife in the back a la Maggie Thatcher. Her deluded "Jamaica" coalition of stoned greenie freaks and elitist business clerks try to reconcile square pegs up their round hole politics where the twain shall never meet. The "negotiations" will drag on until the tsunami of bankster filth breaks over the bankrupt USSA like its EUSSR side kick and when that finally happens all their banter will be no more than the screams of the doomed as the Titanic hulk of Western bankster excess sinks to the bottom of the "new" new world order where it should have landed a long long time ago.

 

 

https://www.rt.com/business/397677-germany-russia-export-growth/

"Erika" Merkill's Maggie Thatcher moment

https://sputniknews.com/europe/201711071058895238-germany-coalition-merk...

 

Debugas's picture

Could somebody please inform us what is the net trade balance between EU and Britain ?

 

The figures i got are 80bln pounds net import to UK in year 2016

 

Exports of goods and services to other EU countries were worth £240 billion in 2016, while exports from the rest of the EU to the UK were worth about £320 billion.

EddieLomax's picture

The Uk exports around 180 billion in goods to the EU, we also send them 18 billion in taxes, so in effect we are paying a 10% tax on all goods exported.

As others have shown the net figure is that the EU exports more to us than we export to them.  However export figures are meaningless as a gross number, as a Japanese car whose parts are assembled in the UK and then exported to Europe generates far less wealth in the UK than a Jaguar whose parts are built in the UK and the car exported.

I think the term value added is used for the export costs minus the importation of components cost, in those figures the USA is by far away the UK's biggest export market as the cheap Japanese cars assembled in the UK have high import costs.

Amphius1's picture

The U.K. has no legal obligation to pay anything to quit the EU club. Britain has been a huge net contributor over the years, whilst most of the other countries have just been net recipients of British cash. The EU is indeed trying to extort untold billions out of the U.K, and its tactics are creating much ill will in the U.K that will probably last forever. If they carry on like this, the Europeans are going to create a generation of British who will hate other European countries forever. Not a sensible tactic by the EU.

theprofromdover's picture

These negotiations are a courtesy, they are not part of the resignation process which is two years notice to leave, that's all.

May has never understood this; she should pull her team out of all meetings, and wait out the divorce period.

The civil servants should be a given a very short rope round their necks to discuss all the details they want about what european standards the UK might not continue with (the UK has already gut a blanket Parliamentary Bill to cover everything for the moment., and throw out what they don't want, later), but the politicians should be kept apart.

The UK should get some foreigners to do their negotiations for them, people with short tempers who are easily offended.

gunzeon's picture

If one was to credit the Brits with any sense of independence and confidence in managing their own affairs, then it would seem that for them the future's plain sailing and blue sky, once they shake off the yoke of the Eurocrats.

The Brits ought to see them in court, only way sometimes ... my two ex wives for ex.

mind you, what're the chances of the justice system being rigged ?

 

Mustahattu's picture

Wining and dining, hookers and some fine columbian powder is the way to every man's heart.

oneshot2shots's picture

How about refuse to pay a dime, give two fingers to the EU. Problem solved.

What is this obsession with paying money to the bankers at all costs, under reams of apparently logical rules and regulations?

gespiri's picture

The Brits, what's left of 'em, should FIRE TERESA MAY SINCE SHE IS PART OF THE ESTABLISHMENT WHO DOES NOT WANT TO LEAVE THE EU.

QIG's picture

She is trying to resoolve an issue that is beyound resoution. This is a matter of choice: "Freedom, or Slavery". You resolve that by choosing one or the other.

andletgo's picture

I have to admit that I find all this extremely entertaining, how things have changed, the Anglo-American empire is not at all accustomed to being the weaker party in any talks and this is just the beginning, funny thing is most of the world will savour the taste and if UK believes there are special deals lined up for it after Brexit, well, it's in for a very rude awakening, karma is a bitch!