Brexit begins: What we learnt the day British PM Theresa May triggered Article 50

A Pro-Brexit leaflet is seen at an event to celebrate the invoking of Article 50 after Britain's Prime Minister Theresa May triggered the Brexit process.
A Pro-Brexit leaflet is seen at an event to celebrate the invoking of Article 50 after Britain's Prime Minister Theresa May triggered the Brexit process.PHOTO: REUTERS

LONDON (BLOOMBERG) - "Dear President Tusk." Thus British Prime Minister Theresa May began a six-page letter giving the European Union formal notice that Britain is leaving. What did the contents reveal? And what can be gleaned from the reaction of the various capitals about the direction the negotiations will take?

Here are the takeaways.

BREXIT MEANS BREXIT

May was roundly mocked for her vacuous soundbite when she took office. Yet there were still some in Europe who believed Britain wouldn't follow through on last year's referendum vote to leave. On Wednesday, that hope was maybe dispelled.

By March 30, 2019, Britain will be out of the EU. "This is an historic moment from which there can be no turning back," May told lawmakers in London. The recipient of the letter, EU President Donald Tusk said "there is no reason to pretend that this is a happy day, neither in Brussels nor in London."

European Commission President Jean-Claude Juncker said he was "feeling fine" but that Britons had made "a choice they will regret one day."

Despite the warmer tone from May, and corresponding pleasantries from Tusk, the two sides are as far apart as ever on how the negotiations will unfold.

MAY WANTS TO BE FRIENDS

After triggering Article 50, May no longer needs to convince her Tory Euroskeptic colleagues that she's committed to their cause. She can now turn her attention to her EU counterparts and try to woo them instead.

May alarmed European leaders in January with threats to walk away from talks and turn Britain into a tax haven if the EU's trade offer isn't good enough but struck a far more conciliatory tone in her letter.

Britain's vote to leave the EU "was no rejection of the values we share as fellow Europeans" she insisted. "I have listened carefully to you" and to other EU leaders, she told Tusk, promising Britain won't be "cherry picking" elements of single market membership.

May said she understood the negotiations would be difficult, and that Britain would pay a price for leaving - losing influence over setting EU trade rules that British-based businesses will have to operate by.

"It is a hard letter: Brexit is Brexit," Dutch Foreign Minister Bert Koenders said. "But there were constructive elements in the letter like the protection of European values, the necessity of a good new relationship and the notion 'you can't have your cake and eat it."'

...BUT SHE CAN'T HELP MAKING A THREAT

May casts Brexit as a deal that can't just be about money and trade, but must be a "deep and special partnership" spanning prosperity and also security - which was mentioned 11 times in the letter.

A week after a terror attack in the British capital, she linked security to the economy repeatedly. Her argument reached a crescendo on the final page of the letter, when she set her demand for a security and trade accord in the context of wider threats to regional stability that stretch beyond areas of EU competence.

"Europe's security is more fragile today than at an time since the end of the Cold War," May's letter said. "Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake."

Later, Home Secretary Amber Rudd went further. "We are the largest contributor to Europol, so if we left Europol, then we would take our information - this is in the legislation - with us," she told Sky News. "The fact is, the European partners want us to keep our information in there because we keep other European countries safe as well."

European Parliament President Antonio Tajani responded that "close cooperation on defence, police intelligence and judicial matters should continue with Britain whether there's a deal or not." Guy Verhofstadt, the European Parliament's point person for Brexit, interpreted May's words as "a special threat on Ireland and also on Northern Ireland."

THE ARGUMENT ABOUT THE ARGUMENTS HAS BEGUN

May confirmed she thinks it's vital to discuss the divorce terms alongside the framework for the new British-EU trade deal. But Brussels instantly rejected this, insisting that Britain must accept its exit bill and other responsibilities before any discussion of the future can begin. Germany's Angela Merkel was firm on the point too, while offering a glimmer of hope to May.

"Only when those questions have been dealt with, but hopefully soon, can we talk about how to craft our future relationship," she said.

Some in the EU pointed to the complexity of the talks that lie ahead. Maltese Prime Minister Joseph Muscat said he was informed by the EU's chief Brexit negotiator, Michel Barnier, of "a very interesting statistic which shows the degree of detail to which they are going" into: 250,000 cats and dogs cross annually from Dover to Calais with a pet passport.

NOW ABOUT THAT CLIFF...

May also called for an early commitment from the EU to negotiate a transitional period - which she described as implementation phases - to help businesses avoid the "cliff edge" Brexit they fear.

Not so fast was the answer she got. In a draft resolution, the European Parliament, which must approve any Brexit accord, said "substantial progress" should be made "towards a withdrawal agreement" before "talks could start on possible transitional arrangements."

MAY WANTS A DEAL FOR BANKS

After telling Bloomberg in January that she wanted to keep banks in London, May made her clearest demand so far for an EU deal to cover financial services, which she said were "crucial to our linked economies." She urged Brussels to make talks on the future of financial regulation an early priority in order to preserve "fair and open" trade.

BRITAIN WOULD LIKE TO SETTLE THE BILL

Some in May's team claim the British can leave the EU without paying anything - never mind the EU's stated exit fee of 60 billion euros (S$89.9 billion). But May took a small step towards acknowledging that she might have to cough up.

She also signalled the discussion won't be one-way. Both sides will have to respect Britain's "rights" as a departing EU member state, as well as its responsibilities, May said.

This could be seen as a hint that the British will hit the EU with a counter demand for a share of common European assets, such as buildings and other infrastructure, when the haggling begins.

What perhaps the British and its adversary can agree on is that it will be a point of contention.

"There's certainly going to be a dogged fight about that," Austrian Chancellor Christian Kern said.

DON'T FORGET THE PEOPLE

Ever since she became prime minister, May has been asked what she plans for EU citizens currently living in Britain. She's refused to answer, arguing that she wants to guarantee their rights, but wants to secure agreement on the rights of British citizens in the EU at the same time.

This is not, she said, the same as treating them as bargaining chips. In her letter, she called for "an early agreement about their rights." 

If this is an early example of May negotiating, it's not promising: She's holding onto an implied threat that she might not give people some rights that she's also conceded she really wants to give them.

Instead of making a generous first move, she finds herself clinging to an early position that not even her own side supports.

 

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