Brexit Split on Citizens' Rights Bodes Ill for Harder Topics

(Bloomberg) -- Protecting the rights of citizens was meant to be the easy part as everyone wanted a quick deal. Instead it’s laid bare just how little each side is willing to concede when it comes to Brexit.

The critical stumbling block at the moment is a hard red line for both camps: the role of the European Court of Justice in protecting the rights of European Union citizens living in Britain when the country formally breaks off from the bloc.

Prime Minister Theresa May promised Brexit will free the U.K. from the rule of the ECJ, which has become a hated target for Brexit-supporters and some British newspapers. EU chief negotiator Michel Barnier is equally clear, though: only the ECJ can provide the guarantees that European citizens’ rights won’t be diminished after Brexit -- and no British court will ever be good enough. 

The U.K. and the EU claim that their top priority is to end the uncertainty for millions of citizens living in each others’ countries by guaranteeing their rights for the future. Yet even with such political will, four days of Brussels talks involving 140 officials, showed just how unrealistic it is to think the divorce can be wrapped up in two years with a trade agreement at the end of it.

Peter Mandelson, who served as EU commissioner for trade between 2004 and 2008, said the notion that a comprehensive Brexit deal can be reached by the March 2019 deadline is like living in “cloud cuckoo land” and predicted that the May administration will get a wake-up call in six to ninth months.

Sense of Entitlement?

“The problem with the British government is they tend to approach Europe both with a lack of realism of what’s possible but also a tremendous sense of entitlement that what Britain wants it can get,” said Mandelson, founder and chairman of Global Counsel, on Bloomberg Television.

Barnier made a similar point, more diplomatically.

“This is not a political point we are making, it’s a legal one,” Barnier told reporters at the end of the talks. “Simply, if there is to be continuity of EU law, that has to be framed by case law of the court.”

“Only the court can interpret EU law -- it’s not a choice, it’s an obligation,” he said at the news conference with Davis.

‘Ridiculous’

Veteran Conservative politician Ken Clarke, who campaigned against leaving the EU, said the U.K.’s position was “ridiculous” and a trade agreement wouldn’t work without a fair method to resolve disagreements. 

“If you’re going to have a trade agreement or a treaty of any kind, you have to have some means of arbitrating disputes,” he said on Bloomberg Television Friday. “Only hard-line right-wing nationalists say anybody we have an agreement with has got to accept that British courts will decide all the disputes.”

The fate of 3.2 million Europeans living in Britain -- and about one million British expatriates -- is a key concern for businesses hoping to keep hold of their foreign staff.

The fact that the ECJ is such a major hurdle to progress could also spell trouble for the rest of the negotiations because the court arbitrates in trade disputes within the EU, and some other body will be needed to enforce the U.K.-EU trade deal after Brexit.

Tick, Tock

As banks prepare their exodus from London and companies invest in contingency plans for a messy split, British officials conceded that the two sides remain a long way apart -- not just on citizens’ rights, but on the financial settlement and the Irish border. They are also aware that time is not on their side.

“To coin a phrase, Michel, the clock is ticking,” U.K. Brexit Secretary David Davis told Barnier at the joint press conference.

While the gaping disagreements on the rights of citizens was more unexpected, the fight over the so-called exit bill has been well flagged. How much money the U.K. will be ready to pay the EU when it leaves the bloc to settle its budget obligations and pension promises is a politically sensitive topic back in Britain.

Read more about why the Brexit Bill is such a minefield in talks

The popular answer, usually played up for a domestic audience, is that of Foreign Secretary Boris Johnson. He recently said that the EU could “go whistle” if it expected the U.K. to pay “extortionate” sums of money.

It was this comment that prompted Barnier to respond with: “I’m not hearing any whistling, just the clock ticking.”

Britain has publicly accepted that a financial settlement will be required at the end of the talks but has frustrated the EU side by failing to provide any detail over its own estimates of what it will have to pay. Some in the EU have estimated the bill at between 60 billion ($60 billion) and 100 billion euros.

“We have had robust but constructive talks this week,” Davis said of the financial bill. “Clearly there’s a lot left to talk about and further work before we can resolve this. Ultimately getting to a solution will require flexibility from both sides.”

--With assistance from Francine Lacqua

To contact the reporters on this story: Tim Ross in Brussels at tross54@bloomberg.net, Ian Wishart in Brussels at iwishart@bloomberg.net, Charlotte Ryan in London at cryan147@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Alan Crawford at acrawford6@bloomberg.net, Kevin Costelloe