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28/09/2016

After Brexit: Roadmap for a leap in the dark

UK & Europe

After Brexit: Roadmap for a leap in the dark

Members of Number 7 Company Coldstream Guards march as Britain's troops celebrate the 90th birthday of their Queen. London, 11 June.

[Defence Images/Flickr]

This is a rough outline of the steps Europe plans to take after Britain’s referendum on Thursday (23 June) on whether to leave the European Union, based on public and private comments by officials.

  • DAY 1 (Friday, 24 June) – The three R’s – or more

Polls close at 10PM. No mainstream exit polls are planned but overnight counts should give a result by around the time the midsummer sun comes up over Brussels.

Aside from the result itself, there are already several big imponderables. Cameron says he will notify the European Union “immediately” if Britain is leaving. But he may take some time. If he has lost he will be under huge pressure from his divided Conservative Party to resign. He might also be, even if he wins.

Money markets will be volatile. The Bank of England and European Central Bank have contingency plans to deal with a “Brexit shock” to sterling and the euro.

Leaders of the main parties in the European Parliament plan to meet at 7AM in Brussels followed by a broader meeting of all party chiefs with the speaker at 8AM. Some want British MEPs excluded very swiftly if Britain votes to leave.

Institutions plan emergency sessions in event of Brexit

European President Martin Schulz told MEPs to brace for an extraordinary plenary session on Tuesday (28 June), while a meeting of the College of Commissioners would take place on Sunday (26 June) if Britons vote to leave the EU.

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If it is Brexit, European Council President Donald Tusk, who will chair an EU summit next week and will have spoken to all the leaders in the days before the vote, may deliver a brief statement in the name of the Council, the EU’s governing body, possibly soon after Cameron has confirmed the result.

However Britons vote, European Commission President Jean-Claude Juncker, will host Tusk and European Parliament President Martin Schulz at his Berlaymont headquarters in Brussels at 10:30AM. Also present will be Dutch Prime Minister Mark Rutte, whose government holds the rotating EU presidency, to take stock and deliver a message.

If Britain votes to leave, look for a mantra of Three Rs: Regret – at losing nearly a fifth of the EU economy and more of its military and global clout; Respect – for the will of the British people; and Resolve – to forge ahead with European integration.

“The show must go on,” one senior EU official said.

There may be a fourth message. Call it Reprisal, perhaps, though Britons should not take it personally; warnings of woe for those leaving will aim to discourage others from following suit. “Don’t try this at home,” as a senior EU diplomat put it.

German Chancellor Angela Merkel, as well as other key EU leaders, are expected to make statements once the result is in.

German Foreign Minister Frank-Walter Steinmeier will meet counterparts from the other five EU founders – France, Italy, the Netherlands, Belgium and Luxembourg – ahead of a routine meeting of EU ministers in Luxembourg. All 28 ministers will discuss the result over lunch from 1PM and speak afterwards.

If it is Brexit, Tusk may fly to key capitals, such as Rome, Berlin and Paris, EU sources say, though it is not confirmed.

  • DAY 2 (Saturday, 25 June) – No, Minister?

Foreign ministers from the six founders of the bloc – Germany, France, Italy, Belgium, the Netherlands and Luxembourg – may meet again in Berlin on Saturday after Friday’s talks.

Some eurozone finance ministers have suggested their Eurogroup might hold an emergency meeting but senior officials call that unlikely; managing banking and market turbulence will be up to the ECB and other regulators.

  • DAY 3 (Sunday, 26 June) – Rallying round the EU flag

Member states’ ambassadors and leaders’ “sherpa” advisers are expected to meet in Brussels in the event of a Brexit vote.

  • DAY 4 (Monday, 27 June) – Keep clam and carry on

Commission President Juncker will chair a meeting of the executive’s 28 Commissioners. A meeting could be brought forward to Sunday, particular if there is turmoil after a Brexit vote.

EU officials insist there is no “Plan B” for Brexit. But, recalling the same denials during last summer’s near departure of debt-laden Greece, one speaks of a “Room B”, where a fire-fighting team of EU lawyers and experts will be ready.

French President François Hollande says he will meet Merkel in Berlin to discuss EU initiatives “next week”. As they will be in Brussels on Tuesday and Wednesday, he may go on Monday.

The start of a new week on global financial markets will see investors and voters demanding answers on where Britain and the EU are heading. Expect both to offer assurances of orderly talks, while nothing changes immediately, for firms or citizens.

  • DAY 5 (Tuesday, 28 June) – “David, are you leaving now?”

A 24-hour EU summit is scheduled. After any Brexit vote, his political career may be over but Cameron would likely stay on until his deeply divided party elects a successor. He would be expected to appear for dinner in Brussels. Big question – would he notify summit chair Tusk that he is triggering Article 50 of the EU treaty, the legal basis for Britain to leave? In London, pro-Brexit would-be successors may try to play for time.

EU officials and diplomats say they would want Britain to launch the process right away and rule out any new negotiations, though for now they see no legal way to force London’s hand. The EU treaty does not allow for expulsion but there would be fierce political pressure, urging London to respect voters’ wish to leave, and the other 27 could start discussions without Britain.

If Cameron secures a referendum win, the summit will discuss enacting the reform package he won from fellow leaders in March to give Britain a special deal to stem EU immigration. The European Commission has seven legislative proposals to enact the deal.

  • DAY 6 (Wednesday, 29 June) – “Please wait outside, David”

Day Two of the summit and, if it is to be Brexit, leaders of the 27 other states will confer without Cameron in the room – a pattern Britons will have to get used to. Article 50 sets a two-year limit on divorce talks. The EU must fill a Britain-sized hole in its budget and reassure millions of EU citizens living in Britain and Britons on the continent of their future rights.

EU leaders may push for a quick show of unity on more integration. Divisions between Berlin and Paris on managing the euro zone probably rule out a big move on that front before both hold elections in 2017. Closer EU defence cooperation, without sceptical Britain, may be revived. A major EU security policy review is already on the summit agenda.

Other initiatives, aimed at blunting Marine Le Pen’s far-right, Eurosceptic bid for the French presidency in 2017, could include a push to create more jobs, especially for the young.

However, others, including Polish chairman Tusk, caution against alienating voters by moving ahead too fast. Tusk argues British voters have shown many in Europe are reluctant.

EU leaders should give the Commission a negotiating mandate. Some in Britain see exit discussions lasting longer than two years to include talks on new trade terms. But an extension requires an EU unanimity that few in Brussels expect.

Some suggest talks with Britain on its future trade terms can run in parallel. Juncker has said the EU’s priority would be a two-year divorce, then talks starting “with a blank slate”.

  • FROM DAY 7 – Nothing (and everything) changes; Hello Estonia

After a Brexit vote, all EU laws would apply in Britain until two years after London starts the process to leave. Then none would apply. Meanwhile, British lawmakers sit in the EU parliament and thousands of Britons would go on working as EU civil servants and British ministers sit in EU councils. But they will have no real voice. There would be pressure to exclude MEPs and Britain’s Commissioner, Jonathan Hill, might leave before being stripped by Juncker of his strategic portfolio overseeing the EU financial sector; Britain would be expected to renounce its EU presidency in the second half of 2017; Estonia might come forward to start its first stint in the chair six months early. Other solutions include new member Croatia being slotted in or Malta extending its presidency, which starts in January.

There could be another summit in July if there is Brexit.

Whatever the referendum’s outcome, a host of other EU plans, shelved for fear of alienating British voters, will come out of cold storage, including energy-saving rules to limit the power of toasters and kettles. Dealing with the fallout from a Swiss referendum on EU migration and a Dutch rejection of the EU trade deal with Ukraine will get back on track, as will a review of the EU’s seven-year budget, which covers a period out to 2020.

If Britain votes to stay in, some, notably in France, fear a new British-led push to free up EU markets and rein in regulation. Some British officials see a mandate to do just that after a referendum win, though others doubt that Cameron, if he survives at all, would have much appetite for deeper EU engagement amid post-campaign Conservative blood-letting.

A post-Brexit relationship between Britain and the EU is the great unknown. Many EU leaders, wary of eurosceptic voters at home, are determined Britain cannot have access to EU trade and financial markets if it wants to keep out EU workers and refuse to contribute to the EU budget. “Out means out,” they say.

New trade barriers would hurt both sides’ economies. But the EU fears a political “domino effect” would cost more long-term.

  • End of the road?

Leaders have much else on their plates to distract them from negotiating with Britain, including Russia, the euro, jobs and refugees. London may have other priorities, too, not least the likelihood europhile Scotland would bid again to break away.

There is a “Brussels consensus” that Britain would face a chilly future, cast out to perhaps talk its way back later into some kind of trade access in return for concessions such as free migration from inside the bloc and contributions to the EU budget – things which Brexit voters want to end. But cautious diplomats do not rule out surprise turns.

EU law may seem clear but EU leaders, German Chancellor Angela Merkel included, are loath to see Britain go and may yet seek a way to keep it in, whatever the vote on June 23. “Will Merkel really shut the door?” a senior EU diplomat said. “It may seem clear-cut in Brussels. But in politics, never say never.”