Excessive reparations aren’t a good idea
Angela Merkel might not, just at the moment, be giving Brexit her full attention, given the difficulty of converting the results of Germany’s September election into a viable coalition government. Nonetheless, Brexit is a big problem for her and for the other EU27 leaders, and one which cannot simply be ignored. European, and especially German, history has important lessons which they should heed.
In 1806, Frederick William III of Prussia went to war against Napoleon, who had invaded much of what is now Germany. It didn’t work out well for Prussia, which suffered a series of humiliating defeats. By July 1807 Prussia was on its knees, suing for peace. Napoleon’s terms, in victory, were draconian, including the complete dismemberment of Prussia, and huge reparations. Louisa, Frederick’s queen, met Napoleon in a personal attempt to persuade him to be more reasonable, but she was ignored. Prussia had no choice but to submit to Napoleon’s vindictive conditions, which shocked Europe. The Prussians never forgot the insult, even after they got their revenge at Waterloo.
In 1871 the boot was on the other foot. Prussia was now the arrogant victor, and France was outraged to discover that it was now treated the same way. The cycle continued, catastrophically, in the 1919 Treaty of Versailles, until it was finally resolved, but only after the destruction of much of Europe, in the magnanimity of the post-WWII settlement.
Of course, we do things differently today. The UK is not a warmongering state which has wreaked havoc across Europe, raping and pillaging huge swathes of the continent, and giving rise to an understandable, if counter-productive, thirst for revenge. Instead, it is a nation which has peaceably decided, wisely or unwisely, to exercise a right enshrined in Article 50 of a treaty formally ratified by 28 European nations. Yet the mindset of the EU27 seems to be worryingly akin to that of France in 1919: the UK is expected to pay reparations for having the temerity to exercise its right to leave the EU.
The UK has already agreed to continue its full payments for a two-year transition period after we formally leave the EU. That means that the EU will have had four full years’ notice before any drop to its budget from the day Article 50 was triggered, and nearly five years’ since the referendum. That should be enough to cover any residual liabilities, and give the EU27 time to adjust their financial plans, surely.
It might be that the relative negotiating strengths of the two sides are so uneven that the EU27 think that they will be able to extract their €60bn+ reparations for this slight to their amour-propre, and for the knock-on effects on their budget, just as Napoleon judged that he could ignore Queen Louisa’s appeal at Tilsit in 1807. That doesn’t make it a good idea for them to try to do so – especially if they offer nothing concrete in return and pitch their demands at a level which the Prime Minister, weak and buffeted on all sides, cannot accept. The shared interests of the UK and the EU27, and their close economic relationship, mean that this isn’t a zero-sum game; both sides will lose badly if it is mishandled.