Business people and diplomats are familiar with the cliché that negotiations are best conducted on a “win-win” basis. But the Brexit talks are different. The negotiators on both sides are looking for a lose-lose deal. They know that if the talks are to succeed, the UK and the EU must be satisfied with the level of pain they are inflicting on each other.
The starting point is that the British are already inflicting losses on the EU through the very act of leaving. As a result, EU citizens will lose the automatic right to move to the UK, the EU will lose legal jurisdiction in Britain and it will lose a substantial contributor to its budget. The EU will also lose face. And, if things really go wrong, the EU could lose its very existence, as other nations follow Britain out of the door. Faced with all these losses, actual and potential, the EU is determined that Britain must suffer more than the organisation it is leaving. This is seen as a matter of justice and of survival.
If Britain does not suffer visibly from leaving the EU, why should other countries stay? And why should Britain be allowed to keep all the benefits of EU membership while sloughing off the costs and responsibilities? Behind the scenes, the UK government has tacitly accepted this lose-lose logic. That was the significance of the recent statement by Philip Hammond, the UK chancellor, that Britain cannot “have its cake and eat it”. For the British government, therefore, the negotiations will centre around limiting the price that the country pays for Brexit. But in seeking to craft an acceptable “lose-lose” deal, the British side faces four big problems.
First, the British public has not been prepared for the idea that there might be a substantial cost associated with leaving the EU. Second, this is not a negotiation between equals: the UK is far more dependent on trade with the EU than the other way around. Third, the structure of the negotiations favours the EU. If there is no deal reached after two years, then Britain will leave without one, facing tariffs and red tape as it seeks to export to its largest single market. Finally, there are hardliners on both sides who would relish a “train-crash Brexit” in which Britain leaves without a trade or transition deal in place.
In Brussels and elsewhere, there are plenty of people who would enjoy the sight of investors pulling out of Britain — and of lorries stacking up outside the port of Dover, as they struggled with new customs regulations. In the UK, meanwhile, there are hardliners who insist that Britain has nothing to fear from leaving without a deal. They will scream betrayal at any concessions the UK makes in the talks. Even Theresa May, the prime minister, has said that “no deal is better than a bad deal”. Despite this brave rhetoric, there is evidence that the UK government is coming to understand the dangers of a train-crash Brexit. The day after Mrs May gave the EU formal notification of Britain’s intention to leave, her most senior ministers, Mr Hammond and Boris Johnson, the foreign secretary, travelled to Germany to woo that country’s elite. I was sitting in the audience at the annual Anglo-German Königswinter conference as the two ministers attempted to charm their German audience. The reception they received was polite, even warm at times. But the composition of the audience was perhaps more significant than its reaction. The conference was just outside Berlin. But the Germans had not sent ministers of comparable seniority. The message was clear. The British now need the Germans much more than the Germans need the Brits.