Juncker Puts Price on Brexit as Italy Offers Early Trade Talks

EghtesadOnline: The U.K. will have to pay a bill of about 50 billion pounds ($62 billion) when it leaves the European Union, Commission President Jean-Claude Juncker warned as Britain prepares to trigger the start of Brexit negotiations.

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25 March 2017

While there is no desire to punish Britain for leaving the bloc, the EU must deter other countries from following, the head of the EU’s executive arm told the BBC in an interview broadcast on Friday. British Prime Minister Theresa May’s government knows they’ll have to pay what they owe, he said.

“We have to calculate scientifically what the British commitments were and then the bill has to be paid,” he said. Asked if the bill will be 50 billion pounds, which is about 58 billion euros, Juncker replied: “It’s around that.”

According to Bloomberg, May plans to launch Britain on a two-year process of negotiations to quit the EU on March 29, by triggering Article 50 of the bloc’s Lisbon Treaty. The size of Britain’s exit bill will be among the first -- and most contentious -- topics for discussion, with British ministers indicating they do not believe the U.K. is liable for such a large sum.

Brexit is "a tragedy and a failure" - @JunckerEU's exclusive BBC interview as UK prepares to trigger EU exit processhttps://t.co/PW79iqYBCg pic.twitter.com/lCYefIe5nU
— BBC Breaking News (@BBCBreaking) March 24, 2017

Juncker’s statement is the clearest indication from the commission of the size of the bill, and is in line with an estimate cited by Austrian Chancellor Christian Kern last month. So far, the EU’s chief Brexit negotiator, Michel Barnier, has argued that the terms of the divorce, including the size of the bill, must be settled first, before any negotiations over the new trading relationship between the U.K. and the EU can begin.

Britain wants talks on the exit and a new free trade deal to run simultaneously -- and its argument received a boost on Friday when the Italian government said the two sets of talks could “overlap” to some extent.

“We will be at the end of the exit negotiation and at the same time we can start the new deals on trade, and we hope also for example on security,” Italian junior minister for European Affairs Sandro Gozi said in a Bloomberg TV interview.

‘Not an Elephant’

The EU’s remaining 27 member states are preparing to celebrate the 60th anniversary of the bloc’s founding Treaty of Rome, without Britain, on Saturday. Asked if May’s absence from the gathering would be an elephant in the room, Juncker responded: “She is not an elephant,” adding that he likes her “as a person.”

Juncker insisted the EU is not “in a hostile mood” on Brexit because it wants “a friendly relationship” with Britain. “But I don’t want others to take the same avenue because let’s suppose for one second that others would leave -- two, three, four, five -- that would be the end.”

The clash between the U.K. and the EU over the size of Britain’s exit bill -- covering liabilities such as pensions for EU officials, infrastructure projects, and the bail-out of Ireland -- is shaping up to be one of the first major obstacles in the talks.

The U.K. government has floated the idea that Britain could leave the bloc without paying anything at all and Liam Fox, one of May’s most senior ministers, described the notion of a 60 billion-euro exit charge as “absurd.” Her aides have said any payment will have to be negotiated.

EU Nationals

An early deal to guarantee the rights of Europeans living in Britain, and British nationals in the EU, is also a key priority for Juncker. “This is not about bargaining, this is about respecting human dignity,” he said.

May has also promised to work for an agreement as soon as possible to end the uncertainty of millions of EU nationals living in the U.K. who fear they will be forced to leave the country after Brexit.

The EU 27 member states will find ways to separate with the U.K. in a peaceful, friendly and mutually beneficial manner, Dalia Grybauskaite, the Lithuanian President said before leaving for the Rome celebrations. “True, it is hard to talk when we lose one member state but the U.K. will remain our partner, the country will never become our foe,” she said in an interview to LRT, the Public TV channel, broadcast on Friday morning.

Meanwhile, the European Central Bank downplayed talk of risks to financial stability from Brexit but raised concerns about the costs to the U.K. of withdrawing from the bloc. “We have learned from the crisis how to handle dangerous situations,” ECB Executive Board member Peter Praet said in interview with VDI Nachrichten. “What concerns me are the massive costs that the withdrawal will cause for the EU27 and, above all, for the U.K.,” Praet said.