Both the UK and EU are falling into the Brexit negotiations trap

The more the negotiators struggle, the more complicated the negotiations get. 

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How are the Brexit negotiations going? That is a deceptively easy question with a fiendishly complicated answer. After the latest round of negotiations, Brexit is quickly becoming synonymous with words like "impasse", "deadlock", and "blockage". Yet, in another sense, it was never going to be any different. In particular, the fault lines keep re-emerging precisely where the unstoppable force of Brexit meets the immovable object of the EU – notably, budget contributions. As both sides pull harder, loose negotiation threads become tangled into what the Greeks call a Gordian knot - the legendary bundle that nobody could untie.

Worse, the current approach by David Davis and his team appears, if anything, to be tightening the knot further for two main reasons. First, while the British press and politicians focus on Brexit every day, nudged by a constant stream of leaks, this is not the case on the continent. Part of this is understandable - untangling 44 years of European law is fiendishly complicated, as the EU Withdrawal Bill demonstrates.

However, this creates the impression that these negotiations are followed closely by national leaders and that, perhaps, the UK can bypass the "inflexible" European Commission and talk directly to the "decision-makers". This is unlikely to work. Simply put, Brexit is down the EU's pecking order of challenges, behind topics such as migration and neighborhood policy, rule of law in some member states, security challenges, and managing the transatlantic relationship. Indeed, in the recent German electoral debate between Angela Merkel and Martin Schulz, Brexit was mentioned exactly zero times.

The second reason why the Gordian knot keeps tightening, as the third round of negotiations last month made clear, is the UK's contribution to the EU budget. Its refusal to engage on the issue and discuss a possible methodology has angered many in Brussels. The reason why this is proving so tricky lies in the conception of the infamous Article 50. Brits should be aware of this, given the leading role of Lord Kerr in the process.

In short, Article 50 was never intended for a big member state, but rather as a quick procedure to terminate relations with a recalcitrant member state that had drifted far apart in matters of rule of law and democracy. The candidates in mind at the time were all among the new members in Central and Eastern Europe - and they are net recipients rather than contributors to the EU budget. Therefore, Article 50 did not explicitly envisage any rules for what to do if the leaving country is actually a contributor, not to mention one as large as Britain, which is responsible for roughly 12 per cent of the overall EU budget.

For Brussels, Britain is still pushing and poking for ways to "have its cake and eat it too". The barrage of position papers, while welcome, shows that London is still aiming at a bespoke deal that preserves the benefits of membership (frictionless trade, free-flowing capital) without its obligations (European Court of Justice jurisdiction, movement of people, and budget contributions). Hence the oft-repeated invocation "no cherry-picking" that reflects, simply, the fact that the EU is not going to consciously break its own social contract to satisfy Davis.

Therefore, in this first few months of negotiations, Britain has continuously tried to push against the fundamental reasons for the existence of the EU. This has meant EU leaders have had the relatively easy task of dismissing such attempts. Anyone who has closely followed the EU over the last decade cannot fail to note that the 27 member states and the Commission have been more united on Brexit than perhaps any other topic during this period.

To begin to untie the Gordian knot, Britain should accept that trying to recreate membership outside of the EU is a non-starter. Instead, it should focus on outlining certain trade-offs - these do not yet need to be fully spelt out, but would be an important signal that the UK grasps the reality of being a "third country". To a slight extent this has happened on the topic of ECJ jurisdiction,. It is possible that within the next two negotiation rounds '"sufficient progress", in the EU jargon, can be claimed in this area. However, it has decidedly not happened on the topic of budgetary contributions.

In response to such acknowledgment from London, the EU should also act. In October, it is increasingly likely that the European Council, composed of national leaders, will deem there has not been "sufficient progress" to move to what Britain really wants to talk about - trade and transitional arrangements. In response to a British acknowledgment of inevitable tradeoffs, the Council should move to loosen the strict split of "separation" and "future relationship" issues currently embedded in Barnier's negotiation strictures.

In this new phase - we might call it phase 1.5 of the negotiations - the focus should be on a narrow set of issues. It is increasingly clear that keeping "separation" issues apart from the framework of future relations is counterproductive. In particular, this should open the way to discuss the linking of British payments into the budget with transitional arrangements, marking a step back from exacting an up-front settlement.

This time should also be used to flesh out additional details on the current ideas surrounding the rights of EU citizens, notably acknowledging the significant administrative challenges and discussing tricky areas such as the right to bring in family members. Given the negotiation timeline, this phase however should be strictly limited to December 2017. At this point, the European Council should make its decision on "sufficient progress".

In the end, the Gordian knot in Ancient Greece was severed - not by carefully unpicking loose ends, but by Alexander the Great deciding to cut through it with his sword. On Brexit, Britain should show that it recognizes the need for trade-offs and Europe should reciprocate via a phase 1.5 of the negotiations. Just maybe, this can be the decisive action needed to get things moving.

Ivaylo Iaydjiev is a a DPhil student at the Blavatnik School of Government at the University of Oxford. He is a former adviser to the Bulgarian government.

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