Brexit News, Member News

The weekly Vulcan View for the 9th to the 13th of July featuring analysis of the latest EU developments


Theresa May’s softer Brexit plans thrown into disarray by prominent resignations.
Theresa May’s conservative government encountered a wave of resignations this week in the aftermath of her cabinet showdown at Chequers last Friday. Brexit secretary David Davis was the first to resign.  He announced his resignation, accompanied by his junior minister Steve Baker, on Sunday, in a bluntly critical letter which stated he would not be a “reluctant conscript” to proposals which would give no more than “illusory” sovereignty to the UK.
The Brexit secretary was quickly followed by the foreign secretary Boris Johnson on Monday. In his resignation letter, Mr. Johnson stated that the dream of Brexit “is dying, suffocated by needless self-doubt’’, before adding that Britain was “headed for the status of colony”. Prime Minister May declared herself “sorry and a little surprised”, but refuted his attacks on her proposals.  Many have speculated that Boris Johnson’s resignation is an opportunistic play for power, rather than a conscientious objection, given that his resignation came just two days after joining his cabinet colleagues in backing the plan, and after the Tory leaning media has heavily criticized it. 
Anticipating a series of resignations, Ms. May’s government had a contingency plan in place to deal with the fallout from the Chequers meeting. Mr. Davis has been replaced by hardline pro-Brexit Dominic Raab, meanwhile the moderate Health Secretary Jeremy Hunt will replace Boris Johnson as foreign secretary. While the threat of continued mutiny in the Conservative party remains, Ms. May has promised to fight any challenges to her leadership.   She has emerged strengthened from the events of the past week. 
Observing the political turbulence from across the UK Channel, the President of the European Council Donald Tusk reacted to the developments by tweeting: “Politicians come and go but the problems they have created for people remain. I can only regret that the idea of Brexit has not left with Davis and Johnson.  But…who knows?’’
UK Government publish latest Brexit white paper
The British government’s white paper on the future relationship between the United Kingdom and the European Union was officially unveiled yesterday after a week of turmoil that has rocked the British political establishment. With this latest white paper London is hoping to deliver ‘’on the result of the 2016 referendum’’, yet meanwhile ensure a softer Brexit that keeps the UK closely aligned to the EU acquis (rule book) in order to maximise access to the single market.
However, it will now be up to Brussels and the remaining EU27 to determine whether Britain’s proposals are compatible. Although initial reaction from some fellow European leaders has been warm, it is clear that the British will have to make a few more concessions before a deal can be agreed.
The white paper will calls for the creation of an ‘’association agreement’’ seen in other EU agreements with countries such as Ukraine. The British government however, has stated ‘’this new relationship needs to be broader in scope than any other that exists between the EU and a third country’’.
The detailed 98-page paper sets out a number of proposals, including the anticipated creation of a ‘’free trade area for goods’’ which will deliver a frictionless border and avoid the need for a hard border on the island of Ireland. For the lucrative services sector, it proposes a looser relationship than in the past based on new arrangements that would preserve the mutual benefits of the integrated market but meanwhile respect ‘’the right of the UK and the EU to control access to their own markets’’.   Crucially there is no proposal for “mutual recognition” of regulation, but this may come from the continuing negotiations. 
Other notable aspects of the white paper include continued UK participation in essential EU agencies, a new border framework that respects the UK’s border but enables citizens from both jurisdictions to continue to travel to each other’s countries, and a common rulebook for agri-food goods which would effectively hamper any potential UK-US trade agreement. After facing down internal Brexiteers within her own Tory party, Ms. May will be hoping to receive support for this latest Brexit proposal from her EU counterparts.
Trump lashes out on allies in chaotic European trip
The US President Donald Trump has this week continued to show his animosity towards traditional allies, as he launched a war of words at the Brussels NATO summit by calling for increased defence spending and lambasting an over-reliance on Russian energy supplies. The US President repeated his frequent criticisms of NATO members for not meeting their 2% defence spending commitments and went even further, declaring that members should increase spending to 4% of economic output, as the US is no longer willing to subsidise their defence. The US current defence spending is 3.5% of GDP.
Mr Trump’s attack was primarily directed at Germany and it began early into the President’s visit to Brussels. Before breakfast had even been served on Wednesday, Trump accused Germany of being “totally controlled by Russia,” because of their disputed pipeline deal, which will see Russian gas imports doubled. He told reporters that it was “very inappropriate” that the US was paying to defend Europeans against Russia while Germany “pays billions and billions of dollars a year to Russia.”
The summit schedule was thrown into disarray by Trump’s antagonism, as discussions about the accession of Ukraine and Georgia were interrupted, and their leaders were asked to leave. The chaos led to German Chancellor Angela Merkel and British Prime Minister Theresa, among others, to cancel press conferences and bilateral meetings, as leaders struggled to react to what was seen as a potential threat by President Trump to leave NATO.

Despite the threat though, Trump later contradicted his remarks, saying the US commitment to NATO is still “very strong”. The President is continuing his European tour over the next few days

Nonetheless, such is the chaos that the US President causes, his exact intentions continue to remain ambiguous.
Unlikely alliance struck between axis of interior ministers 
A meeting of EU interior ministers this week in Innsbruck, Austria, has led to the formation of an extraordinary agreement between Italy’s Matteo Salvini, Germany’s Horst Seehofer, and Austria’s Herbert Kickl on the deeply divisive issue over migration. Despite it being a meeting of all EU28, the trio of interior ministers met for a trilateral meeting and agreed to get tough on policing the bloc’s external border.
Labelling themselves as the ‘’axis of the willing’’, they committed to beefing up border controls, accelerating deportations and establishing centres outside of Europe to curtail the number of migrants reaching the continent. Although the three met amongst themselves ahead of the official meeting, ministers of the EU28 did discuss plans to create ‘’controlled centres’’ inside the EU and ‘’disembarkation platforms’’ outside Europe.
While the so-called ‘’Vienna-Munich-Rome’’ axis reached a consensus on how to deal with limiting migrants entering the EU, there remain differences on how to deal with migrant movements inside the EU. Both Germany and Austria are demanding that Italy do more to take in failed asylum seekers from their countries if they were originally registered in Italy. However, such demands have been dismissed by Mr. Salvini who refused to take back a single migrant without the  implementation of stronger external border controls. 
Polish government to appear before EU in September over controversial judicial reforms 
The long-raging battle between Warsaw and Brussels over the formers implementation of contentious new legal reforms of its judiciary looks set to continue next autumn according to sources from a recent EU ambassador’s meeting in early July. Poland has been widely criticised by its fellow EU member states over its rule of law, after a series of measures were passed by the county’s ruling Law and Justice Party that grant its considerable power over the judiciary, including the ability to forcibly retire supreme court judges.
Warsaw will now have to justify its action next September when it addresses the EU’s General Affairs Council. This follows on from a previous hearing held last month which left national ministers and the Commission unconvinced by Poland’s reasoning, deciding instead to continue in its efforts to sanction Warsaw. Reports from last week’s internal meeting of ambassadors revealed that many EU governments remained unconvinced by Warsaw’s tactic and that another hearing in September was the next best step.
Any hopes that another hearing would dissuade Warsaw from continuing on its current route quickly vanished last Tuesday after the country’s foreign minister Jacek Czaputowicz, stated that while he was in favour of maintaining open dialogue with Brussels, his government would not backtrack on its planned overhaul of the judiciary. Informing reporters that ‘’there is nothing in our system that contravenes European standards’’, the comments from the foreign minister merely highlight that further clashes between Poland and the Commission are inevitable.

Dates ahead: Monday 16th – Sunday 21st July
Tuesday 17th July: EU General Affairs Council
Thursday 19th July: Beginning of Golf British Open

And Beyond 
Thursday 26th July: ECB Monetary Policy Meeting

Compliments of Vulcan Consulting, a member of the EACCNY