A glimpse at EU member states’ guidelines for the Brexit negotiations

Published on Open Europe's blog


Dutch daily De Volkskrant has more on the long-awaited 'guidelines' that will determine the position of the 27 remaining EU member states in the upcoming Brexit negotiations. Open Europe's Pieter Cleppe provides a summary of the revelations.

The document only contains ten pages and would only have been seen by six people, including European Council President Donald Tusk and European Commission President Jean-Claude Juncker. De Volkskrant is reporting about its content on the basis of information provided by “some who were involved” in its preparation.

The guidelines have been drafted during the last nine months by the head of the Council’s Brexit task force, Belgian diplomat Didier Seeuws. He used to be both the chef de cabinet of Herman Van Rompuy (when he was European Council president) and the spokesman of the European Parliament’s Brexit ‘point man’ Guy Verhofstadt (when he was Belgian Prime Minister).

Chapter 1 – “Access to the internal market requires the acceptation of the EU’s four freedoms”

The first chapter of the guidelines is reportedly quite general, and insists that the EU-27 are united and that access to the internal market requires acceptance of the ‘four freedoms’, including freedom of movement of workers.

Chapter 2 – Principles regarding the exit

The second chapter deals with the principles preferred by the EU-27 for the “exit” negotiations. First of all, the EU-27 reportedly want the 3 million EU citizens who are currently in the UK to be able to stay, keep their jobs and right to health care. In return, they would be prepared to guarantee the same for the approximately one million Britons who reside in the EU.

Secondly, the chapter deals with the UK’s “liabilities” or “exit bill”. According to De Volkskrant, the guidelines won’t mention the €60 billion figure which the EU Commission has floated. The idea would be to negotiate a calculation method. The newspaper mentions that this part is a technical and legal minefield, given the challenge of how to calculate future pension liabilities of EU officials as well as the value of the EU’s assets, to which the UK has contributed.

One particular challenge results from former Prime Minister David Cameron’s efforts to cut the EU’s 2014-2020 budget. This resulted in a compromise by which EU “payments” are being cut for the first few years, while – in return – higher “commitments” were agreed for the future. As a result of this, the situation will arise that the EU Commission will be promising money during the time that the UK is still a member which member states would only need to effectively pay for after Brexit.

Furthermore, as the UK would no longer recognise the European Court of Justice (ECJ) as the arbiter to sort disputes related to the exit negotiations, the International Court of Justice in The Hague may fulfill this role – or at least some are suggesting that it should.

Chapter 3 – Principles regarding Britain’s trade status after its exit

The third chapter deals with the UK’s status after Brexit. Here, the proposed EU-27 guidelines would insist that EU membership should be rewarding, meaning that the UK should lose some of its trade “benefits”.

This of course assumes that a benefit for the UK isn’t a benefit for the EU-27, indicating that the EU – or at least those who drafted the guidelines – consider trade really to be a zero-sum game. Little consideration is made for EU-27 consumers facing higher hurdles when trying to tap into capital from the City of London or UK consumers facing more expensive German cars or less choice in European wine.

Chapter 4 – “Loyal cooperation” as the guiding principle of the negotiations

The fourth and final chapter discusses the principles of the negotiations itself, with “loyal cooperation” being pushed forward as the key principle.

More about the negotiations

The article reveals that EU leaders will need to decide if they’ll start with the talks about the separation act and trade relation simultaneously or whether they’ll prioritise the former, suggesting that there may be some sympathy for the UK government’s stance that things should be discussed in parallel. Let’s hope that this line will indeed prevail. Not only is trade access to the UK also very important for a number of EU member states so it’s better not to lose time, the EU may well manage to convince the UK to pay a bit more if this is linked to trade access. Interestingly, the newspaper mentions that a third option is being considered, which is to start negotiating on everything with the caveat that there can’t be a deal on any issue related to trade before there is a deal on the exit-aspect of that issue.

When the 27 EU leaders approve the mandate at 29 April, it’s reportedly expected they’ll have some discussions on the calculation method for the exit bill and on whether negotiations on exit and on whether Britain’s trade status after the exit should be conducted in parallel. After that, the EU Commission’s Brexit team, led by former French EU Commissioner Michel Barnier, will further develop their “directives” to negotiate in detail and then receive approval for that as well. That apparently shouldn’t take a lot of time, as the guidelines would have been prepared in close coordination with Juncker and Barnier in the first place.

Barnier and his deputy, German EU Commission official Sabine Weyand, have now visited all 27 member states and would be ready with the registration of all sensitivities and possible division points among the 27. Barnier himself is keen to start the negotiations already in May, aiming to conclude them in autumn 2018, so member states and the European Parliament can approve the separation act before the European Parliament elections of May 2019.

Another recent blog comment on Brexit can be found here.

The EU could learn from Dutch PM Mark Rutte on how to stop the populist tide

Published on CNN, Czech newssite eurozpravy.cz and Open Europe's blog

Just because Geert Wilders’ Party of Freedom failed to win as many votes as predicted in the Dutch elections, it doesn’t mean wider discontent in both the Netherlands and across Europe has disappeared.

We shouldn’t forget that during his campaign, Wilders didn’t even try to moderate himself – unlike Marine Le Pen, leader of the French National Front, for example. In February, Wilders called Moroccan immigrants “scum,” despite only two months earlier having been convicted of inciting discrimination against the very same group. His style may have lost him the votes of people who thought he was too extreme. But it is possible that this was part of a deliberate strategy by Wilders to influence the policy discourse of the opposition. To a certain extent, he’s been successful at that.

Not only was there Dutch Prime Minister Mark Rutte’s firm stance on immigration during the campaign – in January he wrote an open letter to immigrants, saying those who did not “behave normally should go away” – but also Rutte’s confrontation with NATO ally Turkey in the days before the vote. The Turkish Foreign Minister was banned from entering the country and Turkey’s family affairs minister deported, according to Turkish media, after being told she was not welcome to give a talk at the Turkish Consulate-General in Rotterdam. His use of the term “normal” is questionable from a civil liberties perspective, but Rutte’s Turkey-stance was broadly supported across the political spectrum. International law also allows host nations to declare a particular member of the diplomatic staff to be persona non grata at any time, without providing a reason. However, without Wilders, the Dutch government may not have gone so far.

The other two traditional mainstream parties in the Netherlands – the Christian Democrats and Labour – have also adopted a more critical stance towards the EU. As a result of this, it will be hard to get the Dutch government to agree to shift more powers to the European Union. This could create fresh tensions, as the new coalition is unlikely to become more Eurosceptic: The centrist D66 and maybe even the Green Left, who’re both in favor of more transfers of powers to the EU, stand a good chance of entering government together with the Christian Democrats and Rutte’s more Eurosceptic, center-right VVD.

The popularity of the anti-establishment forces in the Netherlands can be explained by more than just excessive intervention in domestic affairs by the European Union and the opposition to political globalization – which should be firmly distinguished from economic globalization. Also crucial were uncontrolled mass immigration, lack of integration of existing minorities and Islamist terrorism, while the Dutch welfare state is struggling to cope with an aging population. Technological disruption has also gotten people used to the idea of the status quo being upset in many ways, so even in a country with pretty decent economic performance – achieved after the implementation of austerity measures – many are keen to challenge the system.

The European Union could take a lesson from Rutte about how to stop the populist tide and take the concerns of the disgruntled more seriously. It could become more modest and focus on what it’s good at: scrapping trade barriers. As long as it thinks it will win the hearts and minds of people by concentrating ever more power and money at the central level or micromanaging national and local issues, it’s bound to fuel the anti-establishment brigade.

What a Wilders victory would mean for the European Union

Published on IB Times 

It’s widely expected that Dutch right-wing populist Geert Wilders is unlikely to enter government in the Netherlands, when it elects a new Lower House on Wednesday. Mainstream political parties are simply planning to form a government with as many parties as needed just to keep him out. However, what would happen if he would somehow manage to rise to power after all?

Then, the first concern wouldn’t be Dutch membership of the European Union. It would be Dutch membership of the Eurozone. Wilders has said that "If I become prime minister, there will be a referendum in the Netherlands on leaving the European Union”, specifying that “We want be in charge of our own country, our own money, our own borders, and our own immigration policy."

As destabilizing a Dutch EU exit may be, the likely thing is that markets would focus on a possible Dutch exit from the monetary part of the EU club.  

It has emerged that in early 2012, at the height of the euro crisis, both the Dutch and German governments had emergency plans for a return to their national currencies. The details have never been disclosed, but it’s obvious that a bank holiday and capital controls would be implemented during the transition stage, which may take a few years. Who would keep their savings in Dutch banks in the run up to the referendum? A bank run would be a real risk, which on its turn would also make it less likely that people would vote to get rid of the euro. It may actually be a good idea for the Netherlands to exit the euro, given how taxpayers, importers, consumers and savers would gain much more than the advantage an undervalued currency represents for exporters, but due to the unstable transition stage, even a country where deposits may go up in value if it were to exit the euro may decide not to do so.

Would a Dutch euro-exit lead to other countries leaving? Possibly. Finland would be a candidate, pursing “Fixit”, but also Germany, the eurozone’s paymaster, may do so. Countries who would see their new currency depreciate against the euro are less likely to exit as a lot of their debt would then still need to be settled in euros, making a default more likely. Still, the precedent would make markets more convinced that an exit of a weak Eurozone member state could be a serious option, so a Dutch euro exit would accelerate the end of the euro.

What about Dutch EU-membership? On the one hand, there is a much stronger consensus that the EU is a good thing for the Netherlands than there is about the euro. On the other, it’s probably much easier for the Netherlands to leave the EU, as costly as it may be, than to leave the euro. A “Nexit” is currently not enjoying support in opinion polls, but the difference between “remainers” and “leavers” is only a few percentage points in some polls. Also, well-known pollster Maurice de Hond has pointedout that EU opponents could win a referendum if the turnout among Nexit supporters would be higher than expected.

Even if the Netherlands would somehow remain a member of the Eurozone while leaving the EU, this would be a massive blow to the EU project. Not only was the Netherlands one of the six founding members of the project in 1960, it’s also a member of the EU’s predecessor, the Benelux Customs Union, which was agreed in 1944.

In all likelihood, a Dutch exit from the EU would cause a fundamental rethink of European cooperation. If a new alternative arrangement would be created, it would have the following two features.

First of all, it wouldn’t be as intrusive as the EU has been at times, with its overregulation, fiscal transfers, national budget supervision and measures imposing mandatory quotas to accept asylum seekers.

Secondly, it wouldn’t have as many member states, as especially Bulgarian and Romanian EU-accession are seen as a mistake by many Dutch. This is also why the Dutch government is blocking accession to the passport-free Schengenzone for them.

According to a Pew poll, a majority in EU member states wants to return powers from the EU back to national capitals. In the public discourse, the European Union rarely gets criticized for making it easier to buy or sell products or services across borders. Typically, when it is under fire, it’s because some are annoyed about freedom of movement of people. It’s hard to imagine that if the EU were to be refounded in some modified form, monopolies for airlines would be restored. Imagine the public outcry. On the contrary, the “new EU” may not include a number of Balkan countries, something that may make them more unstable, while also freedom of movement may face more restrictions. In any case, especially in the age of e-commerce, if the EU wants to become more popular again, it should focus on its core task where it still enjoys trust: removing national barriers to trade. 

Four things you need to know about the Dutch elections

Comment published on Open Europe's blog and The Daily Telegraph

1. Right-wing populist Geert Wilders is very unlikely to enter government

Despite leading opinion polls for more than a year now, right-wing populist firebrand Geert Wilders isn’t likely to enter government or even prop up a minority government, as he did between 2010 and 2012.

Unlike France’s Marine Le Pen, Wilders hasn’t been attempting to moderate himself. Le Pen is no longer a proponent of just giving up the euro like that, but wants to organize a referendum on the issue, as part of an overall vote on EU membership and after negotiations with other European countries.

Wilders on the contrary is clear: he wants to take his country out of the EU and out of the Eurozone. His full programme for government is written on exactly one single page. Only his Party for Freedom refused to allow the Dutch Bureau for Economic Policy Analysis to calculate the economic effects of their proposals. Wilders also didn’t want to take part in a number of TV panel debates, in a further sign of unwillingness to engage with opponents.

In 2012, Wilders torpedoed the then minority government, because of his opposition to spending cuts. Since then he’s become more radical than ever, leading his supporters into chants demanding “fewer Moroccans” in 2014, while recently calling “a large part” of Dutch Moroccans “criminals”. Last December, he was convicted without facing punishment for those comments, something that seems to have boosted his popularity for a while. Recent opinion polls, however, indicate that he’s losing support and Prime Minister Mark Rutte’s centre-right VVD party may now even overtake his party and become the biggest again.

Wilders has stated that he would never form a government with the VVD as long as Rutte is its leader. Rutte has responded that there is “zero chance” that his party would manage to close a coalition deal with Wilders, given their policy differences. Rutte has, however, stopped short of excluding Wilder’s party on principle, while VVD faction leader Halbe Zijlstra denied that his faction would agree a deal with Wilders even without Rutte. Zijlstra stated that Wilders “is now economically to the left of the Socialist Party and wants to end certain liberties for certain groups”.

In any case, Rutte’s top priority is to make sure his party is bigger than Wilders’ Party for Freedom. The biggest party is traditionally given a prominent role in coalition talks, so coming first would avoid even having to go through a round of talks with Wilders. Yet there is a precedent for excluding the biggest party from government – in 1977 the social democrats then the biggest party were excluded from government. According to an opinion poll in November by prominent pollster Maurice de Hond, 60% of Dutch thinks Wilders’ party needs to be welcomed in government if it becomes the biggest party, indicating that keeping Wilders out may not be popular.

So far, only one party which is likely to get a decent number of seats in the polls, the “50PLUS” party, a pensioners’ interests party, has not ruled out governing with Wilders, but it’s unlikely the two parties would together obtain a majority.

2. In all likelihood, we’ll see a government composed of at least four parties

The Netherlands has a strongly proportional system of voter representation, which results in political fragmentation. In order to obtain 76 out of 150 seats, opinion polls suggest that at least four parties will be needed: Rutte’s ruling centre-right VVD, the centrist Christian democratic CDA and EU-federalist D66, which have been rumoured to be keen to form a government, narrowly scrape together only about 60 seats. To add the “GreenLeft” party and/or the “Protestant” parties Christian Union and SGP, could just result in a shaky coalition. The ruling Labour party (PvdA), currently in coalition, could then lick its wounds in the opposition, likely to lose between two thirds and 75% of its seats since the 2012 election, if polls are correct.

3. The influence of the Dutch Senate and the referendum on the EU-Ukraine Treaty

Another reason why at least four parties will be needed for a government coalition is that currently, and until 2019, it takes at least four parties to obtain a majority in the Dutch Senate. There, VVD, CDA and D66 together with GreenLeft have a very narrow majority of 39 seats.

The Dutch Senate doesn’t have a lot of powers so it wasn’t a major issue for the current VVD-PvdA coalition to have to close deals with opposition parties there. Yet after the elections the Dutch Senate will need to decide whether to ratify the EU-Ukraine Treaty, which a majority rejected in a referendum last Spring. Following an EU declaration on the issue obtained by Rutte, D66 and GreenLeft are happy to approve ratification anyway. There are also strong indications that CDA Senators would be willing to lend support. This would take away a major headache for Rutte if indeed he would become PM again. Whether ignoring a referendum isn’t going to boost Euroscepticism on the long term is of course a whole different matter. A number of small parties, including right-wing liberal VNL and the Forum for Democracy have been receiving a lot of media attention railing against those ignoring the referendum result.

4. Euroscepticism is becoming mainstream but the EU is only part of the debate

The current two governing parties, the centre-right VVD and the centre-left PvdA, have both adopted strong elements of Euroscepticism. The VVD always tended towards this, defending free market reform of the EU, but recently PM Rutte has adopted some of the harsher language of Wilders on immigration, for example warning immigrants to “be normal or be gone”.

The Labour party has also abandoned its unconditional support for the EU. Its new leader, Lodewijk Asscher, has complained that “wage-lowering labour migration in Europe nowadays leads to unequal competition between workers”, stopping short of calling for restrictions on free movement of labor, but arguing for the need to “tackle the negative side-effects” of the EU’s free movement of workers.

Still, a Dutch exit from the EU or Nexit is only supported by a minority. In the run-up to the election, banks as Rabobank or ABN have come out with warnings of the economic consequences of this. Given how integrated the Dutch economy is with the other economies of mainland Europe, it’s clear that the EU’s downsides need to be a lot bigger for the Netherlands than they are for the UK to make it beneficial to leave.

Meanwhile, the eurocrisis refuses to go away, most recently with Greece yet again debating with other Eurozone countries whether it has fulfilled the conditions to receive bail out cash so it can pay back its debt. Greece only needs to pay back lenders in July, so in all likelihood this isn’t going to influence the Dutch elections much but it hardly reflects well on Rutte and his government.

One reason for the success of Geert Wilders are the loose monetary policies of the ECB, which have triggered parliamentary debates in a country with more than 1700 billion euro in pension savings. Pension investors already had to cut payouts and may well do so again as a result of the fact that low interest rates make it harder for them to comply with their promises. One Christian democratic MP, Pieter Omtzigt, has claimed the ECB damage to Dutch pensions amounts to 100 billion euro. Amid complaints from trade unions and the success of “50PLUS”, Geert Wilders has suggested that each pensioner should be given €300 from the €900 million he claims the Dutch government has saved in terms of interest payments.

Still, this time around it’s not just about the economy, which has been recovering quite well after a series of savings packages had been implemented, following the financial crisis and the painful bursting of a real estate bubble. As Dutch commentator Derk Jan Eppink describes it: “culture wars have reached the Netherlands”, referring to opinion polls suggesting there’s a lot of sympathy in Europe for Donald Trump’s travel ban for people from a number of Muslim countries, adding: “do EU leaders even know their own population?” Still it would be a mistake to see Wilders’ success merely as a sign of the ‘original’ population of the Netherlands rebelling against a multicultural society, given that his party would be the second most popular among Dutch originating from Suriname.

Conclusion

The popularity of anti-system forces in the Netherlands and beyond can probably be explained through a multitude of factors: uncontrolled mass immigration, problematic integration of existing minorities and Islamic terrorism, a welfare state struggling to cope with an ageing population, supranational overreach and, last but not least, technological disruption challenging the status quo in many ways. In terms of the EU debate, a more modest EU, focused on scrapping trade barriers without organizing mass financial transfers and micromanaging national or local issues, could fit very well in today’s mood. It seems like many in the Dutch political class have understood this, unlike EU Commission chief Jean-Claude Juncker, who thinks we need more Summits and grand projects to concentrate power and money- this time only for “core Europe”. Core Europe may be about to send him a message.