European Commission wants UK to pay Brexit costs — in euros

Brussels wants the UK to pay all related costs and bear the currency risk, according to draft negotiating directives.

The European Commission wants Britain to pick up the tab for any costs related to its departure from the EU, such as the relocation of agencies now hosted by the U.K., and bear the currency risk by paying in euros, according to a draft of Brussels’ negotiating plan.

The hard line for the Brexit talks, laid out in a draft of the Commission’s detailed negotiating directives obtained by POLITICO, also includes tight protections for EU citizens and the EU budget, robust legal controls for any transitional phase for U.K. withdrawal, and clear guarantees for businesses whose goods go on the market before the “divorce” is finalized.

But it is the Commission’s approach to the U.K.’s ongoing financial obligations to the EU that stands out in the document, suggesting that Brussels wants to make it very clear that leaving the bloc doesn’t come cheap.

“The United Kingdom should fully cover the specific costs related to the withdrawal process such as the relocation of the agencies or other Union bodies,” the Commission wrote, adding that the U.K.’s financial obligations to the EU “should be defined in euro” rather than sterling.

The Commission’s directives, which will provide a careful roadmap for the EU’s chief Brexit negotiator Michel Barnier, can only be adopted once leaders of the remaining 27 EU member countries have approved broader guidelines now being developed by the European Council. The 27 will meet to discuss those guidelines at an extraordinary summit in Brussels on April 29.

But even as the Council’s draft guidelines were being revised and reviewed by diplomats in Brussels and in capitals across the Continent, officials at the Commission have been hard at work on the more detailed directives, under the close supervision of Commission President Jean-Claude Juncker, his chief of staff, Martin Selmayr, as well as Barnier and his team.

The document is likely to enliven discussions between Juncker and Prime Minister Theresa May when they meet next Wednesday in London.

In a reflection of the bureaucratic labyrinth of EU operations that the U.K. hopes to escape, the Commission’s thinking was drafted in a document titled “Non Paper on Key Elements Likely to Feature in the Draft Negotiating Directives.”

The start of the formal negotiations could now face slight delays because of May’s decision to hold snap national election in Britain on June 8, EU diplomats have generally taken the view that the U.K.’s election timeline should not alter the planning and preparations in Brussels or the drafting of legal instructions to Barnier and his team.

One European Council official said that the Commission’s legal paper on the negotiating directives and the draft guidelines will be agreed and published before the British election campaign heats up. The official said that major changes were not expected as a result of the U.K. election.

But at least one EU government has expressed concern about hardening the EU’s negotiation positions before the results of the June 8 vote. Such concerns are certain to be discussed at a General Affairs Council meeting next Thursday, where diplomats will meet to prepare for the summit on April 29.

Part of the concern is that issuing any formal negotiating positions could be seen as prejudging the outcome of the U.K. vote or even meddling in the election, in which opinion polls show an overwhelming advantage for May’s Conservatives. Already some senior officials in Brussels have expressed hope that the election will give May the strong mandate she needs to silence some hard-line Brexiteers, which could help reach an agreement on an orderly withdrawal more quickly.

The Commission’s draft, obtained by POLITICO, closely tracks the priorities of the emerging Council guidelines, including a strong emphasis on citizens’ rights. “The withdrawal agreement should provide the necessary comprehensive, effective, enforceable and non-discriminatory guarantees for those citizens’ rights,” the Commission wrote.

Like the Council’s guidelines, the Commission’s draft directives pointedly insist on settling the terms of the U.K.’s withdrawal before turning to the framework of a future relationship, presumably an expansive free-trade agreement.

The Commission document also underscores the excruciating level of detail that will be required to prevent chaos when the U.K. leaves the EU. For instance, the Commission wants to be sure that businesses will not have to recall commercial goods put on the market prior to the U.K.’s withdrawal date.

“The Agreement should ensure that any good lawfully placed on the market of the Union on the basis of Union law before the withdrawal date can remain on the market/be used for the first time/put into service after that date both in the United Kingdom and in the EU27 under the conditions set out in the relevant Union law applicable before the withdrawal date,” the Commission wrote.

And the Commission wants to be sure that no legal loopholes or gray areas are created during the divorce process, saying in the document for example that the eventual deal “should ensure the continued application of the rules of Union law relating to choices of forum and choices of law made before the withdrawal date.”

Ryan Heath contributed reporting.