Cross-posted from Zero Hedge
Diplomatic relations between the UK and EU are fast approaching zero degrees Kelvin.
One day after Theresa May not only cemented, but allowed herself Brexit negotiating breathing room with her stunning, yet cunning decision to announce snap elections which would only boost the leverage of her party, Brussles has retaliated and as the FT reports, Brussels is starting to “systematically shut out British groups from multibillion-euro contracts” while urging companies to migrate to one of the 27 remaining EU members.
The Brussels note suggests that tensions between the UK and EU mey deteriorate to the point where even Bremainers may turn on Brussels:
In an internal memo seen by the Financial Times, top European Commission officials have told staff to avoid “unnecessary additional complications” with Britain before 2019, highlighting an administrative chill that is biting even before Britain leaves the bloc.
It explicitly calls on EU staff to begin encouraging the UK-based private sector to prepare for the “legal repercussions” of Brexit and consider the need “to have an office in the EU” to maintain their operating permits. Agencies are also told to prepare to “disconnect” the UK from sensitive databases, potentially on the day of Brexit.
The memo, which was sent a week after May officially triggered Article 50 exit talks last month, outlines how Britain will immediately lose out on money and influence. It urges agencies to “take account” of the fact that Britain may be “a third country” within two years, including in appointing staff and in awarding billions of euros of direct contracts for research projects or services.
“Apart from the legal requirement for a contracting party to be established in the EU, there may be political or practical reasons that speak in favour of contracting parties established in a specific member state, not only at the conclusion of the contract, but also throughout the duration of the contract.”
The memo also urges agencies to prepare for a disorderly Brexit by establishing how to sever the UK’s access to EU information, such as crime-fighting and asylum databases.
“In the absence of certainty about arrangements (if any) for a future relationship, commission services and decentralised agencies should start considering the practical aspects of disconnecting access from non-public databases hosted by EU bodies.”
The FT reports that the commission note was circulated to senior staff and signed by Alexander Italianer, the commission’s secretary-general; Martin Selmayr, the president’s chief of staff; and Michel Barnier, the EU’s Brexit negotiator.
“It offers one of the first insights on how the bloc is adjusting to Britain’s departure in its day-to-day work. ”
While EU officials have not gone so far as to fereeze EU spending in Britain through various structural and regional funds, Brussels has for example stipulated that any contracts in the latest phase of work on the €10bn Galileo satellite navigation system can be cancelled without penalty if the supplier is no longer based in an EU member state.
The memo’s final section calls on EU staff to encourage the private sector to prepare immediately for the “legal repercussions” of Britain leaving the bloc and losing the rights of member states. Examples that private parties may want to consider include “requirements, according to EU law, for marketing authorisation holders or registrants to be established in the EU or to have an office in the EU”.
Of course, now that the wheels of Brexit are in motion, this is just the beginning, and over the next two years the amount of dirty laundry that will emerge will be staggering and make for hours of fantastic copy. What we find most amusing however, is that the commentariat at the FT, the original Bremainer bastion, is lashing out at Brussels in response, so if Europe wanted to burn every last bridge, it has certainly succeeded while assuring that the upcoming episodes of what is now set to be the messiest divorce in history will be dramatic, chaotic and delightfully entertaining.