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As Brexit begins, the British face a Europe with far more at stake

In the bitter breakup between Britain and the European Union, Britons on Wednesday will finally file the divorce papers. But the 27 spurned partner nations of Europe may have far more at stake.

French leaders are fearful of their country's insurgent anti-E.U. forces, who will chalk up any British gain from the divorce settlement as a reason to file exit papers of their own. Italian leaders are combating anti-establishment parties who may gang up to hold a Brexit-style referendum. And surging anti-E.U. campaigners elsewhere are eager to press any advantage they see from the negotiations, which will start after Wednesday's formal notice from Downing Street.

The decision triggers a two-year clock before Britain drops down the E.U. escape hatch. In the meantime, the two sides will haggle over such matters as the cost of the exit – upward of $65 billion, the European Union says – and whether British retirees can keep living under Spain's golden sun. The British are hoping that Europe will go easy on them to soften any hit to fragile economies. But with E.U. unity at stake, Brussels can hardly afford to be kind, leaders say.

The outcome may be a jarring wake-up call to British leaders who say that their nation has opted for a latter-day declaration of independence, one that will give the country back its rightful place as one of the world's eminent powers.

"The United Kingdom remains a partner of the Union, but by necessity it will pay the consequences, because that is the choice it has made," French President François Hollande said Saturday at a pomp-filled ceremony in Rome marking the 60th anniversary of the treaty that laid the foundation for the European Union.

Hollande is trying to thwart the surging anti-E.U. leader Marine Le Pen, whose rat-a-tat nationalistic call to arms has made her the most popular politician in France ahead of presidential elections in April and May. Even if she ultimately falls short of the Élysée Palace, she will remain a ballot-box threat who will stiffen the spine of whichever French leader is charged with negotiating Britain's departure in March 2019.

Leaders elsewhere in Europe are facing similar concerns – and in a bloc notable for its fractious disputes in recent years, they have been unusually unified in taking a tough line against Britain. Any new deal between the European Union and Britain will have to be ratified by all of Europe's parliaments, giving extra leverage to the toughest holdouts.

"In order to maintain Europe in the long term, but above all to strengthen Europe in the long term, we must preserve and defend the achievements of European integration," German Chancellor Angela Merkel told the German Parliament last week.

It was a gentle but unmistakable reminder that Europe's most powerful leader is committed to preserving club benefits for E.U. members – but cutting them off for those who no longer want to pay the dues.

It would be hard to overstate just how much Britain has at stake in the negotiations that will come after Wednesday's divorce notice, known as an Article 50 notification after the once-obscure section of a European treaty that governs breakups.

The nation's international trading relationships and laws will all be on the line when British negotiators square off with their erstwhile European Union partners. Decades of E.U. integration have meant open access to European markets for British goods, services and workers – and all of it will now need to be untangled during a brief window. Even Britain's integrity as a single country could be in question if Scotland opts to hold an independence referendum, because Scottish voters favored remaining in the European Union.

Analysts think the downside costs of a bad deal – or, perhaps even worse, no deal – would be considerable. About half of Britain's international trade runs through the European Union, and its trading relationships outside the bloc are governed by the body's rules. Economists have warned that an unfavorable outcome for Britain could seriously harm the world's fifth-largest economy.

But if Britons' concerns are focused largely on their pocketbooks, Europeans are facing a more existential threat: the possibility that the E.U. breakup doesn't stop with Britain. The imbalance creates all the more incentive for European leaders to take a tough line.

"This free-trade agreement cannot be equivalent to what exists today. And we should all prepare ourselves for that situation," Michel Barnier, a French former politician who has served as the European Union's lead negotiator, told regional officials last week.

Barnier said he plans to insist on finalizing the terms of the split before beginning talks on a new trade deal. Given the speedy negotiating timeline, that stance will put intense pressure on the British. E.U. leaders will meet April 29 to finalize Barnier's negotiating guidelines.

"If Brexit leads to a bright, prosperous future in the U.K., that is something that could lead to a domino effect," said Janis Emmanouilidis, the director of studies at the Brussels-based European Policy Centre, an influential think tank that often advises E.U. policymakers.

"It clearly will have to be something which is not better than when they were inside the club. The red lines we have drawn, I think we will clearly stick to them," he said.

Despite the risks, British leaders have emphasized the benefits of coming out from under the thumb of an E.U. bureaucracy that Brexit advocates regard as an intolerable infringement on U.K. sovereignty.

Prime Minister Theresa May outlined her negotiating aims in a January speech that identified control over immigration levels, an exemption from the European Court of Justice and freedom to negotiate Britain's own trade deals as her red-line demands.

"We seek a new and equal partnership – between an independent, self-governing, global Britain and our friends and allies in the E.U. Not partial membership of the E.U., associate membership of the E.U., or anything that leaves us half in, half out," she said.

Many European officials considered the speech a step toward a more realistic British stance because it recognized that the United Kingdom would need to sacrifice some of the benefits of E.U. membership if it also wanted to forsake the responsibilities.

Until then, Britain's position had been caricatured by the oft-repeated "pro-cake, pro-eating it" stance of Foreign Secretary Boris Johnson.

But analysts say Britain is still probably asking for more than Europe can give, and is setting itself up for disappointment.

Simon Tilford, deputy director of the pro-E.U., London-based Center for European Reform, said British officials are "naive" because they don't realize their demands are seen across the continent as an example of "egregious free riding."

"It would appear that they realize they can't have their cake and eat it. But it's wrong to say that the British government understands now what is possible and what isn't," Tilford said. "They're still much too optimistic about the amount of leverage Britain has in this process, and the amount of wiggle room the other side has."

In particular, Tilford said, British leaders underestimate just how much of an incentive their European counterparts have to ensure Britain doesn't walk away with an attractive deal that would contribute to E.U. disintegration.

Other analysts think a failure to reach a deal is a distinct possibility – and perhaps even likely.

Longtime British diplomat John Kerr, who wrote Article 50 on behalf of the European Union, has said there is a "less than 50/50 chance" that Britain can conclude divorce talks and reach agreement on a new relationship with the bloc by the time the two-year deadline comes around in 2019.

The two-year deadline was imposed in part to deter countries from contemplating an exit, and gives the union a distinct advantage over any country that decides to bolt.

If Britain and the European Union fail to reach agreement on new trade terms, World Trade Organization rules would kick in – meaning considerably higher tariffs on the flow of goods and services across the English Channel.

That probably would hurt both sides – but economists say it would hurt Britain more.

"The negotiation process will be quite damaging and negative all around," said Stefan Lehne, a former senior Austrian diplomat. "Any kind of divorce is always pretty nasty."

[Source: By Michael Birnbaum and Griff Witte, The Washington Post, London, 28Mar17]

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