Kaloyan Simeonov: It is too early to assess the Brexit deal

In complex and crucial negotiations, especially between true partners, each side needs to compromise in order to strike a deal

If Italy falls into a deeper economic crisis, the first door it will knock on will be the EU's, Kaloyan Simeonov, Associate Professor in EU policies, says in an interview to Europost.

Mr Simeonov, did the EU get a good deal on Brexit after an arduous negotiations period?


It is too early to assess the Brexit deal. The over 500-page document contains various arrangements and the evaluation of their future implementation will require in-depth analysis by everyone, from administrations and the big and small businesses, to different civil society groups and the citizens. I believe that the real assessment will not come in until the agreement is in place and put into effect, and we still have some way to go before that happens. At this point, the biggest obstacle seems to be the ratification of the deal by the British parliament. But Brexit is expected to stir heated debates during its ratification in EU Member States as well. Last but not least, analyses should be made on the transition period and we should wait to see what other arrangements might be struck before it is finalised. Due to the current uncertainty, all parties involved in the process continue to prepare for a scenario in which there is no approved and implemented Brexit agreement.


Who ultimately made bigger concessions - Brussels or London?


In complex and crucial negotiations, especially between true partners, each side needs to compromise in order to strike a deal. If both parties had not relented here and there, there would not have been an agreement. As to whether Brussels or London made bigger concessions, time will tell. Because if today issues like migration seem more pressing and important, tomorrow others may pop up on the agenda and force us to have another look at the Brexit deal provisions and analyse them from a different angle.


Most experts predict significant damages to the economies of both camps in this divorce. And yet, who do you think will be in better shape?


Both sides are losers in any divorce. Some claimed that the EU hoped the UK would get a bad deal so that other EU Member States would be discouraged from leaving the bloc. It is true that the talks on the UK's exit from the Union galvanised to a certain extent the remaining 27 members. But I do not think that the European leaders or Member States have sought revenge against the UK in this entire process. We all realise that the partnership across the Channel will continue post-Brexit. The question is in the new framework that has to be created for this partnership.


It seems that an increasing number of British citizens are starting to understand what they actually voted in support of during the Brexit referendum. Could there be a last-minute change of heart and scrapping of Brexit?


We should ask the British what they have learned. But it is true that there is growing sentiment in the UK that a second referendum is needed, or some other mechanism of delaying or even preventing the country from leaving the EU. No matter how much I would personally like this, I do not believe that a complete reversal of the course is possible at this stage. The June 2016 referendum cannot be erased. We should also learn from the way that debates in the run-up to the UK referendum were conducted. Brexit supporters had a much more effective campaign, with far simpler and resonating messages to the British people, albeit not all of them accurate in terms of facts.


Will we be able to take our lessons from that?


The next European Parliament election will be the first test. It will also show whether we, the supporters of the European project, can come together in a more effective manner. Just days ago, we marked the centennial anniversary from the end of WWI. It obviously had not taught us enough about how to overcome our differences because we did end up having WWII. Division and alienation are no remedy for today's problems either. On the contrary, it is only united that we will be able to cope with modern challenges. This is why I believe that even if Brexit comes to fruition, the UK and the EU will remain strong partners. And if the EU continues to improve and deepen its integration, I would not be surprised to see negotiations on the accession of the UK be conducted in the future. This seems like a more plausible scenario to me than Brexit disappearing all of a sudden.


The Italian government had a serious clash with the European Commission on the common budget. Did the austerity policies proposed by countries like Germany do more damage than good?


Unfortunately, opposing Brussels appears to have become a fashionable trend. Besides the episode involving Italy and the budget rules, there were other examples with Hungary, Poland, and even Romania of late. The general public somewhat missed one particular circumstance. Soon after the Italian government stated that it would not keep to the EU's strict budget rules, natural disasters struck the country. Then Rome announced that it would turn to the European Union Solidarity Fund, which provides financial aid for countries hit by such natural disasters. You cannot be a member of the EU and insist on following only the rules that suit you in any given moment while ignoring the requirements that do not fit your stances. Let us not forget that if Italy falls into a deeper economic crisis, the first door it will knock on will be the EU's, it will first ask its European partners for help.
It is still very early to assess the austerity policies that were recommended to and implemented in most EU Member States. We have a tendency to focus on the bad news, the scandals or the disagreements, like those we see today between the Italian government and the EC. We paid far less attention, for example, to the fact that in August 2018 Greece successfully concluded its bailout programme within the framework of the European Stability Mechanism, reduced its unemployment rate and recorded, albeit small, economic growth, and even some budgetary surpluses over the past two years. This goes to show that the structural reforms, even though carrying some negatives in the short term, yield positive results in the long run. It has been speculated recently that the Italian government is going against the European rules because the slow European procedures would not be able to penalise this conduct in time for the next European Parliament election. This is no way for an EU member to behave either. But these speculations may well turn out to be unfounded.

Do you expect that the populist parties will lay the basis for a new balance of powers in the European Parliament after next year's election?


I can say for sure that after the EP elections the forces in the parliament will be distributed in a new way. It is highly likely that the populist parties will have better representation. However, I personally do not expect that the overall picture will be more dramatic than it is now. First of all, it is possible that the upsurge of nationalistic moods could make the pro-European citizens to also be more active during these elections. Besides, I do not think that the populist parties in the EP will have consensus on most of the decisions. It is more probable that they will share stands only on a limited scope of issues, as for instance those of migration.


Bulgaria persists in making efforts towards closer European integration and accession to the Eurozone. What progress has it made in this respect?


The accession to the Economic and Monetary Union without derogation, in particular to the Eurozone, as well as adoption of the euro, are in practice a continuous process which started already before our country became a member of the European Union. Bulgaria's accession to the Eurozone is our commitment, according to the country's EU Accession Agreement. Some analysts in the country and abroad have recently defined the euro adoption as a demarcation line with regard to a two-speed Europe. Actually, it was conceived as (and still is) a project for a single European currency for all EU Member States. In reality, only the UK and Denmark have the so-called opt-out clauses in their agreements. The UK opted later for Brexit, while Denmark in practice is closely integrated not only with the EU but also with the Eurozone. Because, ever since the euro came into existence on 1 January 1999 and up to this day, Denmark has participated in ERM II with very narrow exchange volatility margins of about 2.25% set against the euro. Now let us get back to our subject. This summer something important happened not only for Bulgaria but also for the rest of the Member States outside the Eurozone. In a Eurogroup statement of 12 July 2018 the rules and requirements for entry into ERM II were defined more clearly. And participation in ERM II is one of the criteria for Eurozone membership. Before the statement was made, the Bulgarian institutions sent a letter of intent where they outlined the priorities of our country and the steps it will take to be prepared for entering ERM II and the EU banking union. Besides, the Bulgarian government adopted an Action Plan setting concrete deadlines and specifying institutions responsible for it, and this plan is being currently implemented.


Is the simultaneous entry into ERM II and the banking union a new requirement for our membership of the Eurozone?


In my opinion, this is not a new requirement for membership, especially if we take a closer look at the objective circumstances and the changes that occurred in the EU and the Eurozone after the latest global economic and financial crisis. Let's remind that after the emergence of the Eurozone in 1999, and during its first enlargement, there was no banking union in the EU and the European Central Bank was not given the authority to exercise supervision over the significant credit institutions within the Eurozone. It was only after the latest global crisis and the establishment of the Single Supervisory Mechanism and the Single Resolution Mechanism that the banking union became mandatory for the member countries comprising the Eurozone. The countries outside the Eurozone were also given a possibility to take part in it via the so-called close cooperation agreements with ECB. The countries which are preparing to join the Eurozone, and prior to it ERM II, must before that pass the quality assessment of their assets in the ECB banking systems, and correspondingly take part in the banking union, instead of waiting for the day of euro adoption. And this is quite logical, having in mind how important banking markets are for the stability of not only the EU financial system but also of its real economy. That is why the EU banking union was established. It has no analogues in other regional alliances in the world.


Is it really so important for Bulgaria to become a member of the EU Economic and Monetary Union and the Eurozone?


Of course it is important, and for several reasons. First of all, the accession process will stimulate the implementation of reforms in Bulgaria. The new EU policies are increasingly focused on stimulation and support of these reforms as there is a possibility that the new Multiannual Financial Framework will envisage additional funds for their financing. Moreover, after the latest economic and financial crisis, a large part of changes within the EU are related to the strengthening of its Economic and Monetary Union and its final completion, including the establishment of fiscal, financial and political union. To let Bulgaria be part of these changes, it is necessary to take part in this higher-degree integration. And last but not least, after the UK withdrawal from the European Union, in a future EU consisting of 27 Member States, the Eurozone members will account for 85% of the GDP in the EU, while the countries outside the Eurozone will account for only 15% of its GDP. It is possible that this will also diminish their role in the process of decision making in the Union.

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Kaloyan Simeonov is the head of the European Studies Department with the Faculty of Philosophy at Sofia University “St. Kliment Ohridski”. He has over 17 years of academic experience in the field of European affairs, including at the Diplomatic Institute of the Ministry of Foreign Affairs, the Institute of Public Administration, the Centre for European Programmes with the American University in Blagoevgrad, the University of National and World Economy, etc. Simeonov has also worked for 20 years in the public administration as an expert during Bulgaria's EU accession talks and the country's post-accession period. He has also taken part in projects and missions in Kosovo, Northern Cyprus, Bosnia and Herzegovina, Macedonia, Montenegro, Ukraine, Turkey, Azerbaijan, Algeria and other countries.

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