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Brussels considers Brexit options to deal with UK threats

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Good morning and welcome to Europe Express.

The Brexit sabre-rattling over the Northern Ireland Protocol (and what the EU would do in retaliation) is getting louder as commission officials head to London on Friday. We’ll unpack the options to be discussed over lunch today by EU ambassadors, and look at why capitals are divided over how hard to hit back if the UK triggers Article 16.

Also on the agenda of EU ambassadors today: Belarus and a fifth round of sanctions aimed at the regime of Alexander Lukashenko who is showing no intention in stopping shuttling migrants to EU borders. I’ll bring you up to speed with the latest thinking and what reservations persist among EU diplomats.

And in transatlantic news, EU commission chief Ursula von der Leyen will meet US President Joe Biden in Washington today. With cyber security top of the Biden agenda, we’ll give you the download of one of his administration’s senior officials meetings in Brussels yesterday.

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Retaliation nations

Retaliation is the talk of the town ahead of crunch Brexit talks on Friday between the EU and UK’s chief negotiators — although for the time being the EU is keeping its powder dry, write Mehreen Khan and Andy Bounds in Brussels.

Europe’s Brexit commissioner Maros Sefcovic will meet Lord David Frost on Friday in London amid talk of EU countermeasures if the UK triggers Article 16 to suspend parts of the Northern Ireland protocol. (Here’s the FT’s excellent explainer on what a post-Article 16 world looks like).

Irish deputy prime minister Leo Varadkar yesterday echoed threats from his foreign minister Simon Coveney in calling for a suspension of the EU-UK deal that guarantees tariff and quota-free trade, if the Brits seek to rewrite the protocol on the grounds that it has caused serious disruption to trade within the UK.

“If Britain were to act in such a way that it was resigning from the protocol, resigning from the withdrawal agreement . . . the EU would have no option other than to introduce what we call rebalancing measures to respond,” Varadkar said.

Sefcovic will brief EU ambassadors and MEPs this afternoon ahead of his visit to London. But EU officials and diplomats have been quick to dismiss talk that there is already a fully cooked action plan for retaliatory action to deter the UK from triggering Article 16.

Today’s meeting with ambassadors will be used to concentrate minds on the possible fallout from the UK’s withdrawal from the protocol and a gearing up of contingency planning in that event. “For many member states, Brexit has not been at the top of their radar. The commission wants them to start thinking about it now,” said one diplomat.

EU governments are divided over whether to suspend the trade accord — a process that could take nine to 12 months depending on the legal basis. That would delay the economic impact, as the EU’s post-pandemic economic recovery is still fragile. But there would still be job losses and a financial hit, especially in France, Belgium and the Netherlands.

Such a drastic step might end up getting escalated to EU heads of government. Ursula von der Leyen, commission president, would only recommend it if she was confident she had broad support, so the move is some way off yet.

The EU also has retaliatory tools it can wield beyond suspending the trade deal.

One possible punishment could be to overturn the granting of a data adequacy agreement that allows the free flow of personal information from the EU to the UK. The commission has the power to unilaterally renege on the decision that was granted earlier this year.

The commission has tried to use leverage with little apparent success in forcing the UK to climb down. The UK’s application to join Horizon Europe, an EU-funded network of academic research projects, has yet to be approved. London has said Brussels has delayed approval to pressure it over Northern Ireland and hinted that it could go it alone on science spending instead.

A spokesperson for the UK government told Europe Express that “disappointingly, there have been persistent delays from the EU. We have always been clear that our priority is to support the UK’s research and development sector and we will continue to do this in all future scenarios.”

Chart du jour: Export lag

The UK’s Office for Budget Responsibility last month restated its estimations that the post-Brexit drop in total UK imports and exports would be 15 per cent lower than if the country had stayed in the EU. As FT’s Martin Wolf writes, this is twice the estimated long-run costs of the Covid-19 pandemic and, in today’s value, £80bn a year. (More here)

Fifth time lucky?

With the situation at the Belarus-Polish border aggravating and Lithuania declaring a state of emergency, EU ambassadors today are set to discuss a fifth round of sanctions against Belarus, and hope that this time, they will work.

Top EU officials, including European Council President Charles Michel in a speech yesterday, are now equating the situation at EU’s borders with Belarus with a “hybrid attack” and are considering including this on the list of reasons for sanctioning the Lukashenko regime.

Nato chief Jens Stoltenberg also chimed in on Twitter yesterday after speaking with Poland’s president and said that “Belarus using migrants as a hybrid tactic is unacceptable”.

In addition to more Belarusian officials and companies being included on the sanctions list, the EU is also considering punishing airlines from other countries, including Russia and Turkey, which are helping the Lukashenko regime in bringing migrants from the Middle East.

This idea was first floated by Warsaw and picked up by European Commission president Ursula von der Leyen (their relationship still seems to work despite the frozen EU funds over the rule of law dispute) — but is being met with some scepticism among EU diplomats. Their main questions are: can the bloc really afford to ban airlines such as Aeroflot or Turkish Airlines? What would be the legal reasoning? (As a reminder, sanctions are often challenged in court — and sometimes the plaintiffs win.)

A spokeswoman for the commission yesterday said they are still in the process of “exploring” the legal avenues for an extension to airlines from other countries.

Peter Stano, the commission’s foreign affairs spokesperson, insisted that the four rounds of sanctions currently in place against Belarus individuals and companies are working, because Lukashenko “really feels the pressure from sanctions”.

US push on cyber threats

A top Biden administration official is in Brussels urging Nato and EU officials to beef up their responses to cyber threats as the administration tries to corral allies to better defend themselves against Chinese and Russian hacking, writes Katrina Manson in Washington.

The visit to Brussels from Anne Neuberger, deputy US national security adviser for cyber, comes as the Biden administration seeks to elevate cyber security as a central, strategic plank at the heart of the Nato alliance. The topic may also feature in today’s talks between Joe Biden, US president, and commission president Ursula von der Leyen in Washington.

“Both Nato and the EU bring significant contributions to addressing cyber security and indeed, we believe that each can mutually reinforce each other’s contributions,” Neuberger told reporters after her meetings.

She said the EU could help with efforts to improve the security of both software and hardware and to establish standards for critical infrastructure. Nato, for its part, could establish norms for acceptable behaviour in cyber space, determine how to attribute malicious cyber activity and then hold perpetrators accountable, Neuberger said.

The US helped rally Nato to update its cyber defence policy for the first time in seven years. The alliance this summer affirmed cyber incidents could trigger its mutual defence clause under Article V. Neuberger said the alliance needed to incorporate cyber into strategic planning and conduct resilience exercises and incident planning.

Nato for the first time in June issued a co-ordinated statement about China and cyber attacks, when it acknowledged national statements by Canada, the UK and the US that attributed responsibility for the Microsoft Exchange Server compromise to Beijing. The EU also issued a statement, with weaker language.

Erica Lonergan at the Carnegie Endowment for International Peace is among those who have detected divisions between the forward-leaning US approach and European reticence. It was “not clear whether the United States has sufficient political capital to convince European states to sign on to Chinese sanctions”, she said in this note.

The US has had more success developing joint responses to Russia. US authorities on Monday brought criminal charges against a Ukrainian and a Russian national for their roles in high-profile ransomware attacks, as part of a sprawling global crackdown on digital extortion groups.

“The Europeans are further along when it comes to taking a stand against Russia, and this [effort] is to encourage them to bring China up to the same level,” said James Lewis, cyber security expert at the Center for Strategic and International Studies.

“The hope is the [effort] will help move things a bit faster,” he said.

What to watch today

  1. Ursula von der Leyen meets US President Joe Biden in Washington

  2. EU’s General Court rules on the commission’s €2.4bn antitrust fine against Google

  3. EU ambassadors meet on Belarus sanctions and Brexit

Notable, Quotable

  • Whistleblower warning: Facebook whistleblower Frances Haugen in an interview with the FT warned that the EU and the UK “will have missed a huge opportunity” if they do not broaden the scope of new digital laws to force tech companies to keep harmful content off their sites.

  • Gazprom move: Russia’s state-owned Gazprom has begun to fill some of its gas storage facilities in Europe in the first sign it is prepared to act on a promise by President Vladimir Putin to help assuage the continent’s energy crisis.

  • Hungarian opponent: Peter Marki-Zay, the Hungarian opposition leader, tells the FT in an interview what his plans are if he wins next year’s election. Marki-Zay is a political novice next to Viktor Orban, who has served for 16 years as premier. The 49-year-old pitches himself as a churchgoing family man (he has seven children) and a small-town conservative.

  • Climate fail: The UN published a new scorecard yesterday which found that countries’ 2030 climate targets are still far off track and would lead to a temperature increase of up to 2.7C by the end of the century, despite dozens of new pledges in recent days.

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Today’s Europe Express team: mehreen.khan@ft.com, andy.bounds@ft.com, katrina.manson@ft.com, valentina.pop@ft.com. Follow us on Twitter: @MehreenKhn, @KatrinaManson, @AndyBounds, @valentinapop.

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