Mujtaba Rahman @Mij_Europe
@eucopresident this morning provided interesting counterpoint to mood I picked up in Bxl—which is bleak. As I’ve written prev, most senior EU officials now have no-deal as their central scenario. Many also think cost of long extension > no-deal. #Brexit thread
twitter.com/Mij_Europe/status/1110869901701459968
Most straightforward scenario for both sides would be deal over MV3 and an orderly withdrawal on 22 May. But Bxl thinks this least likely outcome. We are raising possibility of MV3 passing from 15% to 20%—but it’s certainly not basecase 1/
If MV3 doesn’t pass and outcome of indicative votes is uncertain, UK participation in European elex is absolute pre-condition for any EU flexibility 2/
If UK doesn't participate in EP elex (not our basecase) 22 May is unlikely to be date of no-deal exit—as leaders want to avoid no-deal on eve of EU elex. Realistic window is 12 April to 22 May—with “preference to front load”. Would fall on Fri eve/weekend to avoid market rout 3/
Why is EU sceptical MV3 will pass? DUP and ERG are engaged in a game of chicken. DUP only wants to signal support for May’s deal if they’re sure it’ll pass—which depends on Tory Eurosceptics. Eurosceptics want DUP to move publicly first before they switch sides 4/
Corbyn also asking for the unachievable. Corbyn’s problem not the Withdrawal Agreement, but a “blind Brexit”. But Labour not pushing EU to give legal weight to the Political Declaration—understand it’s not possible and that current deal/PD don’t exclude softer Brexit 5/
Labour wants domestic legislation to tie hands of future Government/Parliament to implement softer Brexit/what is ultimately specified in PD. Impossible to achieve—perhaps, like Labour’s six tests? Gives Corbyn pretext to keep opposing deal AND outcome of indicative votes 6/
With no MV3, no clarity on outcome of indicative votes, will EU offer long extension? Many, many EU officials now believe costs of LT extension now exceed those of no-deal because... 7/
1) MFF requires sign-off in Commons. Doable? 2) What about UK negotiating FTAs while being a MS? 3) There’s concern UK will continue to “leverage” Brexit, impairing EU’s ability to act eg UK's veto of ESA Budget as Govt didn’t agree with EU stance on Galileo 8/
Senior UK officials counter these points with good arguments. But important point is that attitudes in Bxl and EU are hardening on cost-benefit balance of a long extension for the EU 9/
EU officials also want to limit economic cost and uncertainty for EU businesses—as in a LT extension, UK could decide to leave or stay at any moment 10/
If a political process were to emerge—we think risk of a Tory leadership election and early general election are both rising—it would be highly unlikely that the EU would deny a longer extension 11/
But EU equally concerned about LT extension that leaves EU in same or worse situation. This is highly likely, if leadership election and general election throw up a more Eurosceptic PM, who promises to negotiate a better WA and ditch backstop—which are of course, unachievable 12/
And EU is clear, as @pmdfoster notes, that during the extension, nothing will happen on Brexit—the WA won’t be renegotiated, and no discussions on future relationship possible until UK is full third country. So possibility of "standing still" despite political change is real 13/
Best summary, perhaps, is senior EU official to me: “One of our objectives for #EUCO was to have leaders exclude the possibility of serial extensions. We were partly successful. Leader’s didn’t exclude another extension, but they recognised that extensions come with a cost 14/
Alas, debate on EU side on LT extension is also complex, and far from straightforward ENDS
Key points from above
a) Cost of no deal to the EU is arguably LESS than a long extension for the UK. This is significant
b) DUP and ERG both looking to climb down and support the WA. Neither wants to be first as they both think it makes them look weak. And Labour Leavers won't support the WA because they want both the ERG and the DUP to go first.