Brexit Talks Are Almost Here. What Do the EU Nations Really Want?

Both sides brace for difficult discussions over divorce terms.

U.K.'s Hammond Sees Growth as Brexit Draws Near

From safeguarding citizens’ rights to protecting their national economic interests, European Union governments are sharpening their red lines while maintaining general unity as Theresa May prepares to formally withdraw the U.K. from the bloc.

With less than a month to go before the British prime minister triggers Article 50 of the Lisbon Treaty to start two years of divorce negotiations, a Bloomberg News analysis shows that, while the EU’s 27 other governments have differing priorities, they remain united in wanting Michel Barnier, the bloc’s chief negotiator, to drive a hard bargain. Brexit isn’t on the agenda of a two-day summit of EU leaders starting on Thursday in Brussels, but it will be the elephant in the room.

Their individual negotiating positions have shifted since Bloomberg’s last survey of the 27 governments in September. At that time, they were insistent that the U.K. couldn’t remain part of the European single market for goods and services if it wanted to restrict the bloc’s principle of free movement by controlling immigration from other EU countries.

QuickTake How Does U.K. Want to Trade With EU Post-Brexit?

May listened. In a speech in January in which she set out what the U.K. expected from Brexit, she said Britain would no longer be a member of the single market. She wants a bespoke customs agreement that would retain the “frictionless” movement of goods across borders between the EU and Britain. But she also talked up the possibility of the U.K. slashing corporate tax rates if she doesn’t get her way and became the first European leader to meet President Donald Trump as she pushes for a swift free-trade deal with the other side of the Atlantic as soon as Brexit happens.

Reflecting that, nearly nine months since Britain voted to leave, the EU’s 27 other countries have added new negotiating positions and refreshed others. Some maintain they want to keep as close ties to the U.K. as possible, others can barely conceal their ambition to punish the U.K. for leaving the club. Practically all say the U.K. needs to be seen to be worse off outside the EU than in it.

Throw into the mix the likelihood of the U.K. being charged about 60 billion euros ($63 billion) for leaving, wrangling over whether it can fully escape the clutches of the European courts and the rule that it must exit the EU without any deal if it isn’t concluded before the deadline, and it’s not hard to see why diplomats are bracing for difficult talks.

LONDON, ENGLAND - MAY 28:  Border Force check the passports of passengers arriving at Gatwick Airport on May 28, 2014 in London, England. Border Force is the law enforcement command within the Home Office responsible for the security of the UK border by enforcing immigration and customs controls on people and goods entering the UK. Border Force officers work at 140 sea and airports across the UK and overseas.  (Photo by Oli Scarff/Getty Images)

Border Force agents check the passports of passengers arriving at Gatwick Airport in London, England.

Photographer: Oli Scarff/Getty Images

Key issues: ‘No free lunch,’ U.K. budget commitments

Austria insists there should be “no free lunch” for the U.K. government in the Brexit talks and that the country must be worse off after it leaves. While the Austrians don’t have huge bilateral issues, Chancellor Christian Kern predicted a “lengthy debate” about the U.K.’s financial commitments to the bloc in a Feb. 23 interview with Bloomberg. Kern said the EU’s 60 billion-euro ($63 billion) Brexit bill would likely cause “disappointment” in the U.K. as it contrasted with the Leave camp’s pledge to British voters that exiting the bloc would save them money.

Key issues: Close ties with Britain, EU unity and integration

Belgium, one of the EU’s most open economies, is primarily concerned that U.K. ties remain as close as possible after Brexit and it stresses the need for a common negotiation by the 27 remaining members of the bloc. Belgian Prime Minister Charles Michel insists that EU governments must resist the temptation to engage in parallel trade talks with Britain and must not succumb to U.K. attempts to divide them. The government in Brussels seeks to shore up the push for closer integration within the EU, at different speeds if necessary, while minimizing disruption in trade with the U.K.

Key issues: EU development aid, nationals’ rights in U.K.

While only about 3 percent of its exports are destined for the U.K., Bulgaria is among the net beneficiaries of development aid from the EU budget. So along with protection of the rights of the nearly 60,000 Bulgarian citizens living and working in the U.K., the government in Sofia seeks continuation of the EU’s development policy without the U.K. Aid from the EU budget will be one of Bulgaria’s main priorities when it holds the rotating EU presidency in the first half of 2018. Bulgaria may also try to bargain for more aid to deal with refugees crossing the border from Turkey.

Key issues: Rights of Croatians in U.K., freedom of movement

Croatia is most interested in preserving freedom of movement for its citizens living and working in the U.K. The government in Zagreb insists that Britain should not be granted any access to the European single market without protection of the bloc’s four freedoms.

Key issues: Rights of Cypriots in Britain, U.K. bases in Cyprus

Given its history and extended ties with the U.K., Cyprus is one of the countries most exposed to Brexit. The Cypriot government wants to ensure the rights of Cypriot citizens living in the U.K. and to have a smooth transition to the new EU-Britain relationship. Cyprus puts equal weight on the rights of its citizens residing and working in two British sovereign territories on the island country, where the U.K. will continue to maintain military bases.

Czech Republic
Key issues: Economic ties, security, Czech nationals in the U.K.

The Czech Republic wants the EU to maintain close relations with the U.K. in trade and security. The government in Prague seeks to preserve as much as possible the current economic ties, with Prime Minister Bobuslav Sobotka vowing to oppose tariff and non-tariff barriers. The premier is adamant that the rights of Czechs living in the U.K. must be protected. The Czechs also want a “fair financial settlement” regarding the U.K.’s contributions to the EU budget.

Key issues: Farm, energy exports to the U.K., fishing rights

Denmark’s Brexit Task Force is charged with identifying both defensive and offensive priorities. These include protecting agricultural and energy exports to the U.K., fishing rights in British waters and luring the European Medicines Agency from London.

Key issues: EU solidarity, defense, close U.K. relations

Estonia wants “as tight and good future relationship as possible” with the U.K. and will strive to maintain solidarity among the 27 EU nations when the government in Tallinn holds the EU presidency in the second half of this year. Estonia will need to put more effort into other formats of cooperation after the EU framework is no longer there to support ties, according to Matti Maasikas, the country’s chief Brexit negotiator. This is particularly true in the area of defense. Estonia will seek to keep relations with Britain as close as possible given the U.K.’s role in anchoring the NATO contingent in the country and the mixed messages coming from the Trump administration in the U.S. regarding the trans-Atlantic alliance.

Key issues: EU unity, freedom of movement, EU integration

Finland’s top priority is ensuring EU unity during the divorce negotiations with Britain, with its main concern the balance of power within the EU without Britain. The government in Helsinki is adamant that even limited access to the single market requires the U.K. to accept the “four freedoms” and is on the lookout for opportunities to deepen EU integration post-Brexit.

Key issues: No favors for Britain, French citizens’ rights in U.K.

France is adamant that the U.K. cannot expect special favors as it leaves the EU, with French presidential candidates Emmanuel Macron and Francois Fillon vowing exacting Brexit negotiations. At the same time, Marine Le Pen’s calls for a so-called Frexit could prompt the EU to take an even tougher stance to dissuade the French from heading to the exit, too. The government in Paris wants to ensure the rights of French citizens in the U.K. and sort out U.K.-related fishing rights in the post-Brexit world.

Key issues: U.K. must be worse off, no back-door industry talks

Germany has made it clear that the U.K. will “have to settle for less” since Prime Minister May isn’t interested in staying a full member of the European single market. The government in Berlin wants to ensure a package deal without back-door negotiations by carmakers, banks and other industries. Chancellor Angela Merkel has repeatedly appealed to German business to support her in staying tough on that stance.

Key issues: Agricultural exports, Greek citizens in Britain

The Greeks’ main concern is trade, particularly exports of agricultural products to the U.K. One of their top priorities is also the preservation of social status for Greek employees and students in Britain. The government in Athens wants to protect rights related to university fees and social security for Greeks in the U.K.

Key issues: Trade ties, Hungarians in U.K., EU-Britain relations

Hungary seeks to maintain strong trade ties with Britain and, along with other central European EU members, wants its citizens who are already in the U.K. to be able to continue to work and live there without discrimination. Hungary wants the EU to be fair with Britain as it exits the bloc and to avoid the “suicidal strategy” of alienating Britain, Hungarian Foreign Minister Peter Szijjarto said in an interview this week. The EU should strive for trade relations that give Britain better terms than other countries offer, he said.

Key issues: Close U.K. ties, no hard border, common travel area

Ireland wants to have a relationship as close as possible to its pre-Brexit ties with the U.K. That would include no hard border with Northern Ireland and a common travel area. The government in Dublin also wants the U.K. to have as much access to the single market as possible, though insisting that Britain must allow free movement of EU citizens.

Key issues: Non-destructive Brexit talks, rights of Italians in the U.K.

Italy wants to make sure its citizens living in the U.K. are treated fairly. Italian Prime Minister Paolo Gentiloni said in February after a meeting with the U.K.’s May that it was important for “negotiations not to be destructive.”

Key issues: Security and defense, rights of Latvians in Britain

Latvia’s priorities are the rights of its nationals living in Britain along with security and defense. Latvia wants the post-Brexit U.K. involved in European security policy. The U.K. will have soldiers in Estonia as part of NATO’s policy to reinforce and reassure the Baltic states.

Key issues: Lithuanians’ rights in the U.K., budget commitments

The No. 1 priority for Lithuania is ensuring the rights of its citizens in Britain, followed by maintaining trade ties. It also is important for the government in Vilnius that the U.K. honor its budget commitments regarding various EU programs that will continue after Britain leaves the bloc, not least of all the agreed co-financing for the dismantling of the Ignalina nuclear-power plant, which Lithuania shut down due to safety concerns. Defense and security also are top issues for Lithuania and other countries in the eastern flank of NATO.

Key issues: Economic ties, financial-services industry

Luxembourg wants to maintain strong economic links with the U.K. and build closer ties with the City of London after Britain leaves the EU. The Grand Duchy is among continental business centers making a pitch for post-Brexit business and Prime Minister Xavier Bettel said in February that “a number of” financial-services companies have shown interest in switching operations to Luxembourg from the U.K. due to Brexit. Luxembourg also is interested in bidding to host the European Banking Authority.

Key issues: ‘Balanced’ Brexit deal, U.K. worse off after exit

 Malta, which holds the EU’s rotating presidency in the first half of 2017, wants a Brexit agreement that is “good and fair,” Maltese Prime Minister Joseph Muscat said in a Bloomberg interview on Thursday. “The deal cannot be superior to membership” in the bloc, he said.

The Netherlands
Key issues: Trade and security, limited Brexit damage to both sides

The Dutch government is most keen to protect its interests in trade and security but also wants to limit the damage as much as possible to both sides in the divorce. With domestic issues taking the fore in looming national elections, Brexit has gotten little focus in the campaign.

Key issues: Rights of Poles in Britain, defense, development aid

Poland, the biggest exporter of workers to the U.K., is adamant about protecting the rights of the nearly 1 million Polish nationals living and working in Britain. And Poland counts on Britain’s continued commitment to NATO. With Poland the top recipient of EU development funds, the government in Warsaw also will push hard for an arrangement that won’t dramatically cut the bloc’s development-aid budget. While the EU’s largest eastern economy is trying to lure companies including HSBC Holdings Plc and Goldman Sachs Group Inc. to move jobs from the financial-market hub in London, it also wants a deal that won’t hurt its trade with the U.K.

Key issues: Preserving U.K. relations, ensuring EU citizens’ rights

Portugal sees the rights of EU citizens in the U.K. as the No. 1 priority for the other 27 nations in the bloc. The government in Lisbon wants to preserve its long-standing bilateral relationship with the U.K. Portugal plans to apply to host the European Medicines Agency in Lisbon.

Key issues: Close EU-U.K. cooperation, rights of Romanians in Britain

Romania wants to make sure the U.K.’s exit agreement ensures that the rights of Romanians living in the U.K. are fully protected. President Klaus Iohannis has insisted on the importance of a negotiation as soon as possible of the aspects regarding the rights of the EU citizens in Britain. Romania supports a continued close cooperation of the EU with the U.K. after Brexit.

Key issues: Rights of EU citizens in Britain

Slovakia will fight hard to protect the rights of its citizens living and working in the U.K., with Prime Minister Robert Fico saying the Brexit talks must prevent the creation of “second-class citizens” from the nationals of other EU member states now in the U.K.

Key issues: Steadfast EU in Brexit talks, minimal impact on EU budget

Slovenia is steadfast that the EU be firm in the negotiations with the U.K., fearing that allowing any “cherry-picking” could spur nationalist movements in other members of the bloc. The government in Ljubljana also wants to ensure that Britain’s exit has minimal impact on the EU’s budget.

Key issues: Rights of Spanish citizens in U.K., Brits in Spain

Spain’s main priority is removing uncertainties for the more than 130,000 of its nationals living in the U.K. and about the 800,000 Britons living Spain at least part the year. Keeping trade, tourism and investment flows also is key for Spain as it battles to reduce its budget deficit. Spain is standing by its request to have co-sovereignty over Gibraltar. Any concession to Scotland would raise concerns in Spain that separatists in Catalonia could use it to build their case in the international arena.

Key issues: No increase in budget contributions, unified EU in talks

Sweden is most concerned that Britain’s exit from the EU does not lead to an increase in contributions to the bloc’s budget by the remaining member states. But the government in Stockholm says EU countries should avoid pitching individual agendas, which could risk undermining the bloc’s position in Brexit talks. The Swedes have warned that excessively aggressive corporate tax cuts on Britain’s part would complicate the divorce negotiations. At the same time, Swedish Finance Minister Magdalena Andersson argues that the EU shouldn’t try to punish the U.K. in order to deter other EU states from leaving.

—With assistance from Nick Rigillo, Boris Groendahl, John Martens, Slav Okov, Elizabeth Konstantinova, Stephanie Bodoni, Jasmina Kuzmanovic, Paul Tugwell, Peter Laca, Ladka Mortkowitz Bauerova, Peter Levring, Ott Ummelas, Raine Tiessalo, Kati Pohjanpalo, Jonas O Bergman, Mark Deen, Tony Czuczka, Birgit Jennen, Rainer Buergin, Eleni Chrepa, Zoltan Simon, Dara Doyle, Alessandra Migliaccio, Aaron Eglitis, Dalius Simenas, Corina Ruhe, Anne Van Der Schoot, Marek Strzelecki, Joao Lima, Esteban Duarte, Charles Penty, Andra Timu, Radoslav Tomek, Boris Cerni and Johan Carlstrom.

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