Yves here. I would love to be proven wrong, but the arbitration proposal outlined below eems very sensible and therefore is almost certain not not happen. If any UK or Continental-based readers think otherwise, it would be instructive to get your reading of the politics.
Based on my reading of the Brexit-cheerleading press, May and her allies have been harping on the idea that she is the reincarnation of Maggie Thatcher, if such a thing were possible, the steely woman who can and will stare now those nefarious Europeans. They also keep depicting the UK as having the upper hand on a whole host of issue where it doesn’t, such as: “The Europeans wouldn’t dare interfere with the operation of a successful financial center like London!” Or how about: “The German automakers will restrain Merkel” when they’ve already said they are backing her Brexit stance.
By contrast, the Europeans are resigned to the fact that Brexit will impose economic costs on them, but even more on the UK, and a disorderly Brexit imposes even higher relative costs on the UK. So the clock is their trump card. The UK officials seem to think that the implicit EU stance, that they are willing to stonewall if the UK is unreasonable (and for procedural reasons, they already call the shots on certain “shape of the table” issues despite UK whinging) is a bluff, that the EU would never dare allow a disorderly Brexit to happen. In fact, given that any extension of the 24 month Brexit timetable would require unanimous approval of all 27 member states, it would seem very unlikely that the UK would get relief absent a significant concession.
The evidence that the EU is being hardnosed and willing to risk a disorderly Brexit comes in them putting the highly divisive issue of the Brexit settlement so early in the negotiations. Virtually every guide to negotiations recommends starting with easy issues first so as to build a successful working relationship with the other side and create some wins. By making the exit tab the second item to be addressed, the EU negotiators are seeking to maximize cohesion on their side and put the UK in its place.
So the EU would not be the party to suggest negotiations. And given the repeated touting of May as some sort of master negotiator when she won’t be negotiating, the UK would not push for arbitration either. It would be so contrary to the messaging strategy to date as to be seen as an admission of weakness.
That does not mean that both sides might not eventually resort to arbitration, but it would occur only after a deadlock and cooling off. The 24 month Brexit timetable doesn’t seem to allow for that.
By André Sapir, a University Professor at the Université libre de Bruxelles (ULB) and Research Fellow of the London-based Centre for Economic Policy Research. Originally published at Bruegel
The Brexit negotiations have not begun well. Instead of focusing on what really matters, the two sides (the European institutions and the UK Government) are publicly exchanging blows. Last week the Financial Times reported that Donald Tusk, the European Council president, has called for a ceasefire in the war of words over Brexit, saying that the “negotiations are difficult enough as they are. If we start arguing before they even begin they will become impossible”.
What really matters in the Brexit negotiation is the future relationship between the EU and the UK, and what it implies for citizens and business. There are roughly 3 million EU citizens living in the UK and about 1 million UK citizens living in the EU, who are anxiously waiting to know their status and rights after Brexit. There are also thousands of companies producing in the UK and trading with the EU27 or producing in the EU27 and trading with the UK, which are eagerly waiting to know what sort of trade and investment deal will be agreed.
What matters much less, but seems to be one of the main sources of the current tension between the two sides, is the UK’s Brexit bill. The EU and the UK will have to agree on a financial settlement of assets and liabilities linked to the UK’s EU membership at some point before the country leaves the EU.
Agreeing on the scale of the UK’s divorce bill will not be easy. One reason is that estimates of the bill vary a great deal depending on various assumptions. According to my Bruegel colleague Zsolt Darvas and his co-authors the upfront gross payment that Britain will have to make upon exit could range between €54bn and €109bn. This would translate into a net payment ranging between €25bn and €65bn once the UK receives its share of EU spending, assets and repaid EU loans.
The difficulty in finding an agreement on the Brexit bill should not come as a surprise. Any divorce procedure involving money is complicated for the simple reason that it is a zero sum game: if one sides gets more the other gets less. This is why such procedures typically end up in front of a judge or an arbitrator. And the same should apply to the EU-UK divorce.
Asking a judge or an arbitrator to resolve the size of the Brexit bill would free negotiators from a thorny issue and allow them to concentrate their political capital on what really matters to citizens and business: the future EU-UK relationship. And it’s not just a question of political capital. Time is also of the essence. Michel Barnier, the EU’s chief Brexit negotiator, has rightly underlined that getting a deal done and ratified within the two-year deadline imposed by Article 50 means that negotiations need to be concluded by autumn next year.
Who should the judge or arbitrator be? Viewed from Brussels, the obvious choice would be the European Court of Justice in Luxembourg, but this would clearly be unacceptable to London where the ECJ is viewed as partial.
A more suitable choice would be the International Court of Justice (ICJ) in The Hague. The ICJ is the principal judicial organ of the United Nations, and its role is to settle, in accordance with international law, legal disputes submitted to it by states.
But probably the best choice of all would be the Permanent Court of Arbitration, which is also located in The Hague but is independent from the ICJ. The PCA was established in 1899 to facilitate arbitration and other forms of dispute resolution between states. It is not a court in the traditional sense, but a permanent framework for arbitral tribunals constituted to resolve specific disputes. Currently, the PCA has 121 Contracting Parties including all EU27 states and the United Kingdom.
Arbitration typically involves three or five arbitrators. In the case of three (five) arbitrators, each party appoints one (two) arbitrator(s). The two (four) appointed arbitrators then choose the third (fifth) arbitrator who acts as the presiding arbitrator of the tribunal.
The PCA is no stranger to disputes between EU member states. For instance, in 2003 the PCA handled the Iron Rhine Arbitration between Belgium and the Netherlands. The case description on the PCA’s website indicates that:
The Iron Rhine is a railway linking the port of Antwerp in Belgium to the Rhine basin in Germany via the Netherlands. Its origins lie in the 1839 Treaty of Separation (“1839 Treaty”) which conferred certain transit rights on Belgium. Following World War II, parts of the Iron Rhine gradually fell into disuse and during the 1990s the Netherlands took legal steps to designate nature reserves that lay across its route.
The Parties disagreed as to the allocation of costs and risks for works necessary for the long-term use of the railway. In particular, the Parties disagreed on the interpretation of Belgium’s right of transit under the 1839 Treaty in light of subsequent developments, including environmental protection measures and the requirements of European law.
A second example concerns a case in 2001, when the PCA was asked to handle a dispute between Ireland and the United Kingdom concerning the OSPAR Convention. According to the PCA’s website:
This matter concerned a dispute between Ireland and the United Kingdom in connection with the commissioning of the mixed oxide nuclear fuel reprocessing plant (“MOX Plant”) in the United Kingdom on the coast of the Irish Sea in 1996…
Ireland objected to the commissioning of the MOX Plant and requested access to [certain] information…under Article 9 of the 1992 Convention for the Protection of the Marine Environment of the North-East Atlantic signed at Oslo and Paris (“OSPAR Convention”). The United Kingdom denied that the information fell within the ambit of Article 9 of the OSPAR Convention.
The PCA has even handled a dispute between the European Union and one of its member states in the 2013 Atlanto-Scandian Herring Arbitration between Denmark (acting on behalf of the Faroe Islands) and the European Union. The case description on the PCA’s website indicates that:
The Kingdom of Denmark in respect of the Faroe Islands instituted arbitral proceedings against the European Union under Annex VII to the United Nations Convention on the Law of the Sea (the “Convention”). The dispute concerned the interpretation and application of Article 63(1) of the Convention in relation to the shared stock of Atlanto-Scandian herring.
Obviously it can be argued that none of these cases concerned EU membership and more generally that the PCA, contrary to the ECJ, has no experience in handling disputes that concern EU membership. But this virginity should be viewed as a plus in handling the Brexit financial settlement case, since it concerns leaving the EU rather than EU membership per se, and since the departing state would not accept the involvement of the ECJ.
Finally, one may legitimately ask why the two parties should be willing to forego their efforts to find a political settlement and turn instead to arbitration. The answer is that it would save them the type of acrimony that has been building up recently and which is sure to increase as time goes on – given the zero-sum nature of the exercise. The two parties should recognise this and seek arbitration as soon as possible. They would then be able to concentrate their efforts on finding a political solution to the future EU-UK relationship and remove uncertainty about the rights and obligations of citizens and business in the EU27 and in the UK after Brexit. This would be a win-win situation for the two sides compared to the alternative of no deal at the time of Brexit.
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IMHO, the optics stink.
UK still think they owe nothing, so why agree on arbitration? On the EU side, their ‘main negotiator’ would start by handing off his first or second task to arbitration, which serves to show (or can be shown to imply) that Michel Barnier is not up to his job.
Also, the EU has been saying they need to settle the bill first, and discuss the future relationship later. Accepting arbitration implies that the two issues will proceed in parallel, and is bargaining away a stake in the ground.
I think the UK government’s position is not that they owe nothing, but that they can’t be compelled to pay anything. And the EU’s position is that the first thing to be agreed is a mechanism for totting up the bill. Outside arbitration seems appropriate.
Yves, I love your blog, but in this case it is difficult to imagine political support for an arbitrator deciding the key issue of the Brexit deal. Brexiteers voted against the European “elite”, and now the very same elite (of some form) decides the key deal
Term of Brexit? Not politically feasible.
Did you read my introduction? I said this would be a very good solution but would never happen for political reasons. So what exactly is your disagreement?
Relationships indeed. Britain’s NHS hospitals’ data hacked, was it money or data hackers were after. Has NC posted about the important article posted below yet? Might knowledge of players behind Brexit being Trump, Bannon and Mercer influence any arbitration?
https://www.theguardian.com/technology/2017/may/07/the-great-british-brexit-robbery-hijacked-democracy
The great British Brexit robbery: how our democracy was hijacked
A shadowy global operation involving big data, billionaire friends of Trump and the disparate forces of the Leave campaign influenced the result of the EU referendum. As Britain heads to the polls again, is our electoral process still fit for purpose?
by Carole Cadwalladr
In June 2013, a young American postgraduate called Sophie was passing through London when she called up the boss of a firm where she’d previously interned. The company, SCL Elections, went on to be bought by Robert Mercer, a secretive hedge fund billionaire, renamed Cambridge Analytica, and achieved a certain notoriety as the data analytics firm that played a role in both Trump and Brexit campaigns.
snip
“It was back when we were still just a psychological warfare firm.”
Was that really what you called it, I ask him. Psychological warfare? “Totally. That’s what it is. Psyops. Psychological operations – the same methods the military use to effect mass sentiment change. It’s what they mean by winning ‘hearts and minds’. We were just doing it to win elections in the kind of developing countries that don’t have many rules.”
snip
It also reveals a critical and gaping hole in the political debate in Britain. Because what is happening in America and what is happening in Britain are entwined. Brexit and Trump are entwined. The Trump administration’s links to Russia and Britain are entwined. And Cambridge Analytica is one point of focus through which we can see all these relationships in play; it also reveals the elephant in the room as we hurtle into a general election: Britain tying its future to an America that is being remade – in a radical and alarming way – by Trump.
There are three strands to this story. How the foundations of an authoritarian surveillance state are being laid in the US. How British democracy was subverted through a covert, far-reaching plan of coordination enabled by a US billionaire. And how we are in the midst of a massive land grab for power by billionaires via our data. Data which is being silently amassed, harvested and stored. Whoever owns this data owns the future.
snip
Google’s algorithm had been gamed by extremist sites and it was Jonathan Albright ( https://medium.com/@d1gi and https://twitter.com/d1gi ), a professor of communications at Elon University, North Carolina, who helped me get to grips with what I was seeing. He was the first person to map and uncover an entire “alt-right” news and information ecosystem and he was the one who first introduced me to Cambridge Analytica.
He called the company a central point in the right’s “propaganda machine”, a line I quoted in reference to its work for the Trump election campaign and the referendum Leave campaign. That led to the second article featuring Cambridge Analytica – as a central node in the alternative news and information network that I believed Robert Mercer and Steve Bannon, the key Trump aide who is now his chief strategist, were creating. I found evidence suggesting they were on a strategic mission to smash the mainstream media and replace it with one comprising alternative facts, fake history and rightwing propaganda.
Mercer is a brilliant computer scientist, a pioneer in early artificial intelligence, and the co-owner of one of the most successful hedge funds on the planet (with a gravity-defying 71.8% annual return). And, he is also, I discovered, good friends with Nigel Farage. Andy Wigmore, Leave.EU’s communications director, told me that it was Mercer who had directed his company, Cambridge Analytica, to “help” the Leave campaign.
snip
This is not just a story about social psychology and data analytics. It has to be understood in terms of a military contractor using military strategies on a civilian population. Us. David Miller, a professor of sociology at Bath University and an authority in psyops and propaganda, says it is “an extraordinary scandal that this should be anywhere near a democracy.
The “Brexit fee” has no basis in international law. One has to ask why the EU created the issue and prioritised it ahead of “what really matters” in the negotiations. Also why the fee keeps being raised arbitrarily. One answer is that it easier for the EU27 to unite around a zero-sum issue (maximise money to the EU27 from the Uk) than to get into issues that really matter but where the different national interests of remaining EU members might diverge. However, whatever the reason, any deal on the table would have to better than the UK’s Best Alternative to a Negotiated Agreement (which is WTO MFN terms) if it is to make sense for the UK to accept the deal. The current EU negotiating position does not seem to come close to that. The EU does not seem to be evaluating any deal relative to the walk-away position. It is focussing purely on what can be agreed (in 4 minutes!) by its remaining members and thus creating the likelihood it is going to end up with WTO MFN tariffs on its car and food exports to the Uk. It is not even apparent why the Uk should defer the “Brexit fee” to arbitration when the EU has yet to indicate it is willing to to discuss “what really matters”.
The best approach for the Uk government right now would be to announce to industry that its working assumption is that WTO MFN trading terms will apply to UK-EU trade with tariffs on imports into the Uk from the EU27 set at the same rate (the EU common external tariff) as apply in the other direction. This may encourage the EU to shift towards offering something that it is better (from the perspective of their own interests) than the walk-away position but even if this does not happen at least all business will benefit from the certainty created.
There is no such thing as the so-called “Brexit fee”; nor does this subject have anything to do with wider international law. This is the negotiated transfer of fiscal funds across many different funding areas of the EU of which the UK is currently still intimate member, and a member with future obligations on which they negotiated in good faith.
Like it or not, the UK is still currently a part of the EU.
Also, the UK’s position regarding adoption of WTO trade terms is not as unproblematic as is claimed.
[As a side note, I shudder to think how many Brexiteers think they can dictate trade terms or think they have some nationally inherent advantage with which they can use to avoid some very hard choices. The rest of world will be watching these negotiations with interest. I cannot foresee a UK government running rough-shod, as many Brexiteers seem to prefer, over their current commitments to the EU and expect the rest of the world not to notice.]
An example of problems unaddressed by the ‘let’s just announce we are going WTO’ route is flying rights. Without agreement the UK airlines rights to fly to and over EU airspace will be adversely affected. If this significantly affects the ability of Britons to take their accustomed summer holidays on the Med I would expect to see an abrupt about-turn by the British government. A vote for Brexit was certainly not a vote to spend all holidays in the UK in future!
I do not know what the chances of a total cessation of flights from the UK over EU territory might be but it would presumably stop all UK air access to most of Asia and presumably much of Africa as well. I am wondering if this is the EU’s ace up their sleeve which they expect to bring the UK to its senses.
Switzerland threatened to have a showdown with the EU on immigration but has backed down. Their access to the EU airspace is governed by an agreement, one of the conditions of which is freedom of movement of EU citizens in and out of Switzerland. Perhaps Brexit is Groundhog Day for this?
I would love to hear from some one who could give an authoritative opinion here as I am no expert on these matters and am probably missing some important angles.
Yes, I’ve written about the WTO issue repeatedly (albeit not in the last month or so). There is no default to the WTO, as many Brexit boosters have incorrectly stated. None other than the Director General of the WTO said so repeatedly prior the Brexit vote. Moreover, he said that the typical process for getting a deal done took many years (the examples he mentioned took 7 to 20 years), and the UK was not going to get a place in the queue ahead of other countries that had started the WTO process.
I was at a conference yesterday and the senior global economist with a large private sector financial institution was giving a talk on Brexit. He was negative and pessimistic. He spent quite some time on WTO rules and what reversion to them would mean. In the Q&As I asked him about whether the UK would enjoy automatic reversion to WTO rules. He said that its not strictly automatic but that he didn’t expect this to be any kind of problem, he didn’t even accept it as a significant risk – “queues can and will be jumped”. I quizzed him more about it afterwards and said that I had read quite the opposite (here). He stuck to his guns – not a problem. And this is from someone who seemed to me to be enjoying painting as gloomy a picture about Brexit as possible.
I also asked him how Economists cost “sovereignty” and “national identity” into their models – they don’t, of course.
Bring it on!
So the issue is whether the UK continues to pay its dues until it isn’t actually a member? Why is that an issue? I don’t understand why it even came up, let alone as a big, scary total.
Actually, I can guess why: it’s the EU trying to undercut May’s position at home. Saving on those dues was a selling point for Brexit, so it’s uncomfortable politically. But it should be easy to defuse – “the savings start when we actually Exit.”
Nor does it make sense to demand dues ahead of time. They should continue to be paid in the normal fashion, until they aren’t due any more. Again, this is the EU being cranky. I think it’s another example of the Divorce Effect: the EU is acting like a jilted lover.
Please read the post to which I linked. There is a lot more at stake here than just the outstanding dues, although that is a piece of it.
http://www.nakedcapitalism.com/2017/03/settling-brexit-bill-12-negotiating-questions.html
It’s not considerate or helpful for you to volunteer uninformed opinions when we’ve provided you with information that would clear matters up.
Its a very logical and sensible suggestion – but I suspect it won’t get far for the key reason that both sides – one of which is delusional – thinks that the issue of cash settlements is a trump card for them. For Europe, the issue of money is one which will ensure that Eastern Europe and Greece will support a hard line as they will not be willing to pick up the bill. So I suspect Brussels will only agree to it if they have decided to take a softer line on other issues. For the UK, they actually think this is something they can threaten Europe over – I don’t think they have any conception yet as to how angry the smaller countries, especially those where were traditionally very pro-UK, are about this and related issues. For countries like the Czech Republic or Slovakia, the relatively small direct cost they would bear from a hard Brexit would be dwarfed by having to pay hundreds of millions extra to Brussels to make up the shortfall.
Since we are on the topic of Brexit, there are I think two other wildcards looming. The Pheonix Magazine (not available online) is a sort of Irish Private Eye, and usually quite reliable source of information says this week that Sinn Fein in Northern Ireland are strategising for a border poll on unification in 2-3 years time (under the Anglo-Irish Agreement there are mechanism for such a poll). They are gambling that a chaotic Brexit along with demographic changes could either win the poll (unlikely I think, but it could be close), or at the very least force the Irish/UK governments into some sort of joint sovereignty deal. Its a high risk strategy which could cause all sorts of problems.
The second one is that the Guardian reports today that the housing market is stagnant now. Could this be the start of a bust? We’ve seen similar stalls in Canada and Australia very recently. Of course, it could be a blip, but I wonder about the implications for the UK if there was a serious sharp recession with a consequent drop in sterling. The UK government debt load is mostly in sterling, so not an issue, but the Brexit issue has the potential to create an instantaneous debt owable in Euro, and the lower sterling goes, the bigger it gets. Could this be a destabilising factor for the UK economy?
Yes this could turn into the mother of all negotiations – thankfully. War does not seem to be an option. I think the EU has enough trumps. Juncker / Tusk have cred at the table, May et al are keeping a stiff upper lip. Oxonian English will get a cup of tea at Starbucks – it doesn’t impress in Brussels and Strassbourg, not to mention Paris, Berlin and Dublin (in Madrid it might weaken a few knees). Tusk and Juncker are Carlos Ghosn types: the kind of people you want to represent you in complex, expensive, intercultural discussions.
There’s nothing exceptional about the EU – if it really functioned as a democratic government for Europeans then yes we could rightfully claim something unique. But it’s a mess and it IS and there are better reasons to keep it going than to bin it.
Brexit is based on island delusion-ism. Similar to the island giantism that produced the Galapagos tortoise and King Kong. The USA suffers from it too. “We are somewhat removed because we are exceptional,” says island delusion-ism. Wrong – you are somewhat removed because you are on an island.
Thank you, BM and to Yves as well. I don’t disagree with your middle and final paragraphs / contentions
“War does not seem to be an option”. I don’t know if you read the British / Brexiteer press. Some people are up for a war. Others call for the UK’s participation on the eastern front to be scaled back, so that the East and Mittel Europeans face Russia alone and, therefore, think twice about putting the UK in a corner.
With regard to war, the Brits who are up for war are divided between whether Blighty fights Germany or Russia. It depends on what the UK MSM is soiling its knickers about at that particular moment. I apologise profusely for the crude depiction, but the circumstances somewhat require it. One should not be polite about and to neo-con and neo-liberal scum. Let’s call a spade a bloody shovel. After Comey’s firing yesterday morning, the UK MSM was gunning for Russia. That may change by supper today. One never knows.
Tusk and Juncker as Carlos Ghosn? I worked in / with Brussels regularly from 2007 – 16 and got the impression that the chuckle brothers (sorry, Ian and Martin) do what they are told by Merkel and her allies and have little agency apart from the former getting hysterical about Russia, no doubt in return for the long suffering US taxpayer to divert more money to another unworthy cause far from home, and the latter to protect that squalid parasite that is Luxembourg, a country that would not be missed if it was nuked.
Thank you Smithers. Will the UK do the nuking?
I have experience with neither Tusk nor Juncker – just judging from what some elements of the German press present.
I mean, what does May think? That the UK can just say “That’s it, we’re out-a-here.” Who paid for the Chunnel? Who funds the mainteneance, expansion and renewal of British infrastructure? Who funds critical research projects at British universities? Who calms Scandinavian neighbors when the UK pilfers natural resources beyond its territorial claims? Not the Queen alone in her majesty.
Thank you, BM.
With regard to Luxembourg, who cares who nukes that parasite.
As for May, I don’t think she knows what she wants apart from political survival. Muddling through, making things up as one goes along etc. are somewhat British / English traits. One of my friends, also the son of immigrants from Mauritius, works at the UK mission to the EU. He despairs of what he observes, not just from the UK side, and can’t wait to return to Cambridge and teach history.
The Scandies? What are they gonna do? Don’t they wet themselves more worrying about the bear to the east?
My understanding is that there is no legal basis for the “bill” – it is a political construct of Juncker and the rest of his lunatic bureaucrats. If settling this “bill” is the price of (what exactly?) May should walk away.
Doing business with the EU, one would assume. If the settling of the bill is necessary for the “divorce” procedures and the EU won’t talk trade deals until said procedures are settled, then it’s a measure of how much Britain is willing to pay to be able to deal in that market.
The UK has all sorts of obligations as an EU member. It needs to pay to settle them. I had a very long post on this earlier:
From the start of that post:
Is Brexit a divorce, or is the UK leaving a club? This is the first question to answer as negotatiors discuss the key aspects of the EU-UK financial settlement. The authors present various scenarios, and find that the UK could be expected to pay between €25.4 billion and €65.1 billion. But the final cost can only be calculated after extensive political negotiation…
Nevertheless a conditional agreement at least on the methodology for calculating the Brexit bill could be a prerequisite for more meaningful discussions on the new EU-UK economic relationship. To bring transparency to the debate and to foster a quick agreement on the bill, our paper makes a comprehensive attempt to quantify all the various assets and liabilities that might factor in the financial settlement. Since the paper is rather long, we summarise our key findings in some blog posts. Largely data-based posts look at EU assets and EU liabilities. But in this blogpost we put the two sides together and raise twelve questions which negotiators need to answer in order to calculate the bill.
http://www.nakedcapitalism.com/2017/03/settling-brexit-bill-12-negotiating-questions.html
The post shows what a hairball this is.
The UK is also apparently in arrears on its EU dues.
“The UK has all sorts of obligations as an EU member.”
It doesn’t. The EU is a legal entity in its own right (Article 47 of the TFEU). Therefore like all corporate bodies it contracts in its own personality, not the ones of its members.
So once Article 50 takes effect and ‘The Treaties shall cease to apply to the State’, then that is that as far as money transfers are concerned, since all agreements with the member are a result of the treaties and nothing else. Unless the EU can come up with some signed guarantees, then there is nothing else to pay. It’s up to the legal person of the EU to sort out with its remaining members.
That is the considered opinion of our legal experts in the UK.
It’a a basic rule that you only agree to arbitration when either (1) you have no realistic choice or (2) you can accept any of the likely outcomes. Neither seems to apply here, for either side, and indeed I suspect that both would reflexively disown the decision, whatever it said.
The only historical precedent I can think of is the Dawes Plan, which modified the schedule and amount of German reparations after WW1, but that was on the basis of a binding treaty commitment that had already been negotiated (well, imposed if you like).
The “bill” reminds me of reparation. May needs to find that old train for negotiations.
https://en.wikipedia.org/wiki/World_War_I_reparations
Hitler was able to find it and relocated it to the original treaty signing location to accept the French surrender in 1940. I am not sure where it ended up after that.
The Germans burned it in 45
https://en.wikipedia.org/wiki/Compi%C3%A8gne_Wagon
The UK is part of a fiscal European system where various cash flows are decided by negotiation and subsequent contract. These contracts are binding. Many of us will remember Thatcher’s renegotiation of European fiscal commitments.
Comparing these binding fiscal commitments which governments have negotiated with those of WWI reparations is the stuff of pure nonsense; not to mention giving a bad name to those who support a Brexit stance.
BTW, binding arbitration sounds sound.
So, is there a possibility that EU might pay Britain after ‘settlement of cash flows’? Based on what I hear so far from Juncker et al., the ‘bill’ appears more like punishment than settlement of cash flow.
See the comment above that the UK appears to be in arrears in current obligation and draw your own conclusion to your question.
Yes, sometimes people with obligations (which they would like to jettison and/or which they feel superior to) do like to play the victim of their own fevered machinations.
Maybe they need to write the standard arbitration clause into the EU constitution that we all have to agree to for any credit cards, banking products, etc. where the banks get to pick the arbitrators and the arbitration results are binding with no court proceedings permitted.
That would certainly simplify the process and ensure that the important things, like the banks, are looked after properly in Brexit and other major EU matters.
The Brits are properly going to have to fight to get a clear, understandable billing statement as well because the EU bureaucrats are probably being trained by the mobile phone and cable TV industries on how to clearly communicate the costs and financial obligations.
Arbitration would be a way to get a neutral decision on these matters. I doubt the EU would go for it, though. This is an opportunity to show the British that the EU have the upper hand. Why would the EU throw it away? There has been talk already that it is time to teach the spoilt little princes in the UK a lesson.
Many of the people in Brussels spend much of their lives in negotiations. They would probably regard it as an insult for any part of the negotiations being taken out of their hands.
If the EU were looking for an easy agreement they might go down this route but I think they are looking for an outcome that demonstrates the folly of the referendum result so will want to keep matters in their own hands.
This article was very interesting, and the comments. The proposal to use the Permanent Court of Arbitration really sounds like a good idea. Because it arbitrates between states, as in it has experience arbitrating the respective laws of those states (?). So it goes right to the crux of the business at hand. PCA is not a sovereign court, but a framework, a protocol, for setting up interstate negotiations. Very interesting. So here’s my puzzle: does this make both the EU and UK laws/positions so negotiable that they are neutralized, getting rid of much of the squabble that would otherwise drag on forever? It takes politics out of the picture by reducing arguments to something like a bankruptcy resolution?
Arbitration requires both a surrender of control, and trust from both sides.
May, I perceive, is not one who like to surrender any control. I cannot comment on the EU, as its a shifting miasma of opaque responsibility with the actual decision makers well hidden.
How much trust exists on either side? Little or much?
Not only is the a major conflict between the British Muddling through (or systems thinking per Scott Adams), there is a second very serious breach between the French Cartesian approach and the English Custom which, based on my personal experience, leads to a conclusion the other side is lying by omission.
I’d also point out the tremendous conceptual differences between British Common Law and European Civil Law, as a very clear measure of the differing thought processes.
One cannot escape one’s History.
Too many good reads, too many links
The Bank of England has already said that it can create money for the government, for any purpose. Including the payment of any exit fee that the EU demands. Create the Stirling, exchange for Euros and voila, bill paid
I don’t know why they are all gnashing their teeth about it. Just go. The issues will all get resolved in the end
” a disorderly Brexit imposes even higher relative costs on the UK.”
There is a problem with this: voters, if those still matter at all, don’t care about “relative” costs. Nor do capitalists: they care about the costs they themselves have to bear. And the EU economy is already very weak – several countries could go down the drain overnight, like Italy, reported here on NC today. Italy is TBTF.
Does anyone know what happens when you mess with a “money center”? Sounds to me like London has the EU’s lifeblood in its greedy little claws. Talk about a volatility bet… So a lot depends on just how much animosity there is.
And OTOH, it’s been documented here that too big a financial sector is bad for the people, aside from those that benefit directly. The transition would be rough, and important people have a lot to lose, but long run, Britain would most likely benefit if the City was smaller.
What I see is that a lot of this is PERSONAL. It’s a divorce, with all the acrimony and resentment that comes with that. The EU is a rejected spouse, and behaving accordingly. I actually hope, for their sakes, that self-interest eventually rules.
No, companies of any size have multiple banking relationships.
There are also many very large banks in the EU that would love to eat London’s lunch: Paribas, SocGen, Deutsche, ABN Amro, ING, Santander, and of course all the US banks. And “London” is not the banks. If the banks see they will lose business if they don’t move activities to the Continent, they will move double plus quick. Banks were already working on getting new licenses the day after the Brexit vote.
Draghi has already said he sees no systemic risk out of a Brexit for the latter reason. The banks will take care of their own interests, London be damned.
As I see it there can be no solution only a descent into chaos, May can only accept a deal or the whole package deemed to be “fair” the EU can only accept a deal deemed to be “punishment” as an example to Italy, the position re Italy is much more important to the EU elite as it is an existential threat. The next two years are the frog being slowly boiled ….
Please explain how May (UK) is being “fair” by stating that the UK will not fulfill its obligations while the EU is “punishing” for insisting that they do. And note the EU isn’t demanding a predetermined set payment but is open to negotiation as the fiscal years unwind.
Seems like the UK wants to be the victim of its own decisions. Framing the situation as a punishment is tanamount to favouring one country, the UK, above the other 27 countries (and the other countries legally involved with the EU). Is the UK so special that every other country should be bound to their obligations except the UK?
the arbitrator would have to be someone beyond reproach, I would think maybe Japan but they tend to be francophiles