The Brexit Crisis Will be Resolved But Neither Soon Nor Easily

Will the Brexit Crisis be resolved? 

The good news is that ultimately the current crisis will be resolved to a greater or lesser extent. 

History demonstrates that the EU always resolves its crises even if imperfectly.  This time last year, many commentators saw Grexit as inevitable.  During the euro crisis, some commentators forecasted the collapse of the euro, the Economic and Monetary Union and even the EU itself.  Rejections of the Constitution, the Lisbon Treaty, the Nice Treaty and the Maastricht Treaty were all hailed by some as signs of doom for the EU.  Even Mrs Thatcher's long running Rebate Crisis was eventually resolved. 

And Brexit is not even the most serious crisis to have faced the EU.  That was probably the Empty Chair Crisis in the 1960s.  In that crisis, France walked out for seven months at a critical time for the development of the then nascent Communities and, importantly, when unanimity among all Member States was needed.  The Empty Chair Crisis was eventually resolved by the so-called "Luxembourg Compromise".  We do not yet know the name of the "Compromise" to resolve Brexit Crisis but there will probably be such a compromise someday but hardly as early as the planned Bratislava summit in September – it would be too early to hope for a resolution. 

So when will it be resolved?  

This is the bad news.  The EU institutions normally go to the 11th hour to resolve crises. Even routine fishery negotiations are only resolved at four in the morning on the last possible day.  Deals at four in the morning are valued more highly in the EU than resolutions at four in the afternoon.  EU crises tend to expand to fill the time available for their resolution.  The problem with mentioning "two years" in Article 50 of the Treaty on European Union is that it will be tempting for many to exploit the full two years – and no one knows even when that timeframe starts.  Moreover, it is possible that the two year timeframe could be extended by unanimous agreement.  And it may well be that the Brexit date – if it ever happens - could be delayed further under the final withdrawal agreement. 

Resolution could well be delayed by national politics.  There will be general elections in around 18 of the remaining 27 countries before the end of 2018 – including the all-important France and Germany.  Many countries will be reluctant to give the UK a generous deal in case it fuels the exit movements in their own countries particularly in the run up to national elections.  Contagion is a key concern.  It could theoretically be the case that matters will be resolved quickly but it is more likely that matters will not be resolved until the key elections are out of the way and that could be September 2017 when the German general election is over.  In such circumstances, the UK will have to decide when to show its negotiating hand – show it too early and it could be bidding against itself but bid too late and it could be timed out. 

How will the Brexit Crisis be resolved? 

Many commentators are mentioning the existing "models" as ways of resolving the issue.  They refer knowingly to the Norwegian, Canadian, Turkish, Swiss and other models.  But even the most advanced model - the Norwegian model (also known as the European Economic Area model) – lacks the Common Agricultural Policy, the Common Fisheries Policy, the Common Foreign and Security Policy and the EU Customs Union.  The Canadian model lacks sufficient protection for services.  Other models lack the Internal Market.  But the most fundamental flaw of all these models is that they have all been designed for States which were never EU Member States.  Therefore a different model is needed for the UK given that it has been an EU Member State for 43 years and has absorbed diligently – more than most others - over 100,000 EU legislative instruments.  So, a bespoke model is needed to deal with the UK.  The UK may require a new form of associate or mezzanine membership. The attraction of such an interim step is that it might give the UK much of what it wants but it cannot be so attractive that others would follow suit.  The EU might also help to resolve matters by compromising on some aspects.  Member States may have to be given the chance to have various levels of integration – Denmark and Sweden are, in reality, no less EU Member States despite not having adopted the euro.

Resolution will require imagination and skill.  But the negotiators will be relatively new to their jobs.  The UK side of the negotiating table will be largely new and untested.  The UK Prime Minister will be attending her first European Council meeting as Prime Minister. The EU side of the table could also potentially change if Commission President Juncker does not remain in office as some commentators are speculating.  Moreover, the all-important European Council is relatively inexperienced: of its 27 members (leaving aside the UK), 19 have joined the Council since 2013.  While 2 of the 19 had previous stints on the Council, it is a relatively inexperienced European Council.

Resolution will also require consensus.  All 27 remaining Member States will have to work together. The mini-summit of the six Founding Members on the Saturday morning after the UK vote was convenient but was unnecessarily provocative to the 21 others who are still remaining.  More generally, all Member States must seek to resolve the Brexit Crisis jointly and not exploit it for sectionalist interests which are neither pertinent nor justified. 

Resolution of Brexit is not just a matter for the UK and the Member States.  The EU itself needs to refresh and re-orientate itself irrespective of Brexit. However, the EU should not try to do much on top of trying to resolve the Brexit Crisis which is a tall order in its own right.

So, peering through the fog, one can see that the crisis will be resolved but it will probably not be soon and the solution itself is still out of sight.

For further information please contact Vincent Power or your usual contact in A&L Goodbody.

Date published: 08 Aug 2016