Events at Salzburg last week should have come as no surprise to anybody writes Jim Power.
We are currently in the middle of a difficult negotiation process and, inevitably, both sides will play hardball as this is the typical process of negotiation.
There is, of course, no certainty that a negotiated settlement will ultimately be agreed, and it is certainly not inconceivable that the UK will walk away from the EU next March without agreeing a deal, but the odds still have to favour an eventual deal with good common sense and pragmatism ultimately prevailing.
Nobody should underestimate just how high the stakes are in the whole process. At the EU level, the ultimate long-term survival of the whole EU edifice is at stake.
The EU is built on four pillars — the freedom of movement of goods, services, capital and people.
Going back to when the present-day EU construct was given birth to, the sole objective was basically to ensure that another savage war would never again be fought on the European continent.
Creating a much more socially, politically and economically integrated group of countries was judged by the French and the Germans, in particular, to be the best means of ultimately achieving this noble aspiration. The EU has subsequently grown in size and there has been a gradual process, which is still a work in progress, to remove all barriers to the free movement of goods, services, capital and people.
Thankfully to date, peace has been preserved.
The EU edifice is far from perfect and has many deep flaws, which were particularly highlighted during the economic and financial crisis of the past decade.
However, when one is trying to integrate 28 countries who are generally driven by national interests rather than the greater good of the EU, it is inevitable that the process of integration would be slow and torturous.
The manner in which the EU has failed to deal in a coherent manner with the migration crisis over recent years is the best or worst possible example of the fault lines within the EU.
Indeed, migration and the attitude towards it probably represents the biggest threat to the ultimate survival of the EU.
We have already seen the rise of the right in countries such as Italy, Hungary, Austria, Poland and even Sweden. While part of this trend may be down to the legacy of the ‘great recession’, the main driving force is migration.
Over the next 30 years, the world population is projected to grow by around 30%, with 50% of this growth expected to emanate from nine countries, most of whom are categorised as under-developed economies, and predominantly based in Africa.
Meanwhile in the context of the Brexit negotiations, the EU cannot really make any concessions on the four principles as to do so would create a very dangerous precedent.
A deal that would allow the UK access the Single European Market, while at the same time not allowing the free movement of people, would not be feasible for the EU.
On the UK side, it is still impossible, at least from an economic perspective, to rationalise why the UK would possibly want to walk away from free access to a total market of over 500 million people.
However, that is the decision that has been made and the challenge for those who care about the long-term prosperity of the UK is to get a deal that will not significantly damage access to the EU market.
There is absolutely no certainty about what will happen over the coming weeks, but I sense that — ultimately — after either or both parties walking away from the negotiating table a number of times, a deal will be done that will prevent the UK from tumbling out of the EU next March. Here’s hoping.
Jim Power is one of Ireland’s leading and best-known economic analysts