News analysis

Britain faces hefty price for access to EU markets

Jonathan Eyal LONDON • At the end of marathon discussions by European Union leaders this week, the message to British Prime Minister David Cameron was harsh and unmistakable: the British may be able to keep their access to Europe's trade markets after their departure from the EU, but they will have to pay a heavy political price.

"To access (Europe's) internal market, a country must respect the four liberties: liberty of circulation of goods, of capital, of services and people," said French President Francois Hollande, in a direct rebuke to suggestions that Britain may be able to pick the bits it wants and discard those it does not out of this list.

But EU leaders also accepted that formal negotiations over Britain's exit will not begin until late September. And despite their outward show of unanimity, deep divisions between the heads of state and governments of the remaining 27 EU members are emerging.

Mr Cameron, the outgoing prime minister who attended the last EU summit of his political career this week, received a polite hearing. Still, he quickly became embroiled in a dispute over who should be blamed for Britain's exit.

Mr Cameron laid the blame on the continent's failure to control the movement of people across frontiers, saying: "Immigration was the key problem for the United Kingdom and will remain a key problem for the EU." But that was quickly disputed by fellow European leaders, who blamed him for failing to explain Europe to his electorate.

"My impression is that, if over years if not decades, you tell citizens that something is wrong with the EU," said European Commission president Jean-Claude Juncker in a pointed reference to Mr Cameron, "you cannot be taken by surprise if voters believe you".

German Chancellor Angela Merkel was also uncharacteristically scathing, accusing the British Prime Minister of holding an unnecessary referendum just because of turmoil within his Conservative Party.

"The principle should always be: Country, party, person. Cameron did it the other way around. And when you do that, things always go wrong," Dr Merkel allegedly said, according to confidential notes of the discussions leaked to the media.

The heated exchange is not merely of historic interest, for it underlines the current difficulty between Britain and the EU: the Europeans see Britain as responsible for the break, and expect the British to make heavy concessions in the coming separation negotiations.

EU leaders told Mr Cameron that Britain can retain most of its access to European markets. But they also warned that Britain cannot expect to avoid paying a price for this. France wants to see the City of London lose its status as Europe's top finance centre, and is particularly keen to strip London of its ability to clear deals denominated in the euro currency.

"The City, which, thanks to the EU, was able to handle clearing operations for the euro zone, will not be able to do them," said Mr Hollande, claiming that this should serve as a "lesson" to others who contemplate leaving the EU.

Meanwhile, both Mr Hollande and Dr Merkel pointed out that Britain will have to keep its borders open if it wants to keep free trade open, for it cannot get benefits without liabilities. "There will be no cherry-picking," Dr Merkel has warned.

The EU is hardly united on cornering the Brits. The East Europeans tended to blame the EU for failing to be flexible enough to avert a British exit. The Czech Republic's Foreign Minister Lubomir Zaoralek went as far as to call for the resignation of Mr Juncker, accusing the EU's chief bureaucrat of acting as a "negative symbol" for a European federalism which allegedly spooked British voters. And a few ministers in Poland did the same. "Brussels is full of frustrated people," remarked Hungary's Prime Minister Viktor Orban.

But although the East Europeans could help ease some of the pressure on Britain, they will provide no protection against the demand which Britain will find the hardest to accept: that if it wants to keep its economic advantages in Europe, it will have to abandon plans to impose border controls on EU citizens wishing to work in Britain.

That would be a hard sell to a majority of British voters who believe that, by voting for their EU exit, they have put an end to migration pressures. The discussions in Brussels this week indicate that they have not, although to Mr Cameron's relief, it will no longer be up to him to face the electorate's anger.

A version of this article appeared in the print edition of The Straits Times on July 01, 2016, with the headline 'Britain faces hefty price for access to EU markets'. Print Edition | Subscribe