Courtesy of ZeroHedge. View original post here.
While the political chaos slamming the UK over the weekend, will be its own chapter in the history books one day, with UK's dynamic leadership duo of Cameron and Osborne suddenly nowhere to be seen while the Labour party is undergoing a rebellion even as Boris Johnson has yet to make a concerted push to claim the victory the British people unexpectedly handed him, things in Europe are no better. Case in point, Europe's collective (or rather not so much) on the next major catalyst in the UK's exit from the Eurozone, which as we explained previously, is the moment Article 50 is triggered, widely expected to take place some time over the next several months if not much sooner.
According to Reuters, the EU is allegedly interested in a quick and clean divorce, reporting that Britain need not send a formal letter to the European Union to trigger a two-year countdown to its exit from the bloc, EU officials said, implying British Prime Minister David Cameron could start the process when he speaks at a summit on Tuesday.
The potential delay in the triggering of Article 50 has been interpreted by some as a case of Buyer's (or perhaps seller's) remorse, going so far as to suggest that a Boris Johnson cabinet may never invoke it at all, and instead opt to remain in the EU, openly defying the will of the majority.
"'Triggering' … could either be a letter to the president of the European Council or an official statement at a meeting of the European Council duly noted in the official records of the meeting," a spokesman for the council of EU leaders said.
Why does the EU want a quick response? According to a second EU official cited by Reuters, who noted the mounting frustration among leaders with the British prime minister's delay in delivering the formal notification required to launch divorce proceedings, "It doesn't have to be written. He can just say it." Cameron will brief the other 27 national leaders over dinner at a European Council summit in Brussels on Tuesday on the outcome of Thursday's referendum at which Britons voted to leave the EU, prompting him to announce he will resign.
On Friday, he said he would leave it to his successor as Conservative party leader and premier to trigger Article 50 of the EU treaty, which sets out a two-year process to quit the bloc. That appeared to be a reversal of a pledge to launch the process immediately after the vote. It has angered EU leaders who want a quick settlement to limit uncertainty. It has also prompted some abovementioned experts to speculate that it is Boris Johnson who is delaying the exit when in reality the balls is, and will remain for a while, in David Cameron's hands.
What makes things complicated is that some Brexit campaigners have long said that Britain should aim to negotiate a comprehensive new relationship with the EU, seeking access to markets without submitting to EU rules or open migration, before binding itself into the two-year timetable that would be fixed for talks if Article 50 is triggered. Such talk worries EU officials and leaders who fear that a prolonged haggling with London will further increase the risk of a domino effect of nationalist-led demands for exit from other states. They do not see a legal way to force Britain to start the process but have piled political pressure on Cameron to honor his pledge to launch Article 50 negotiations and respect the popular vote.
The chief executive of Britain's "Vote Leave" campaign called for informal talks before London notifies the EU it wants to leave under the Lisbon Treaty, which provides for two years of divorce proceedings. But German Foreign Minister Frank-Walter Steinmeier, a member of Merkel's Social Democrat coalition partners, showed a greater sense of urgency.
"This process should get under way as soon as possible so that we are not left in limbo but rather can concentrate on the future of Europe," he said after hosting a meeting with his colleagues from the other five founding members of the EU – France, Italy, the Netherlands, Belgium and Luxembourg.
Putting the heat back on Cameron, Reuters adds that the Council spokesman made clear that leaders cannot simply choose to interpret something Cameron says as the trigger without the prime minister saying clearly he means it to be.
"The notification of Article 50 is a formal act and has to be done by the British government to the European Council," the spokesman said. "It has to be done in an unequivocal manner with the explicit intent to trigger Article 50. Negotiations of leaving and the future relationship can only begin after such a formal notification. If it is indeed the intention of the British government to leave the EU, it is therefore in its interest to notify as soon as possible."
To be sure, all would be well – all things considered – if Europe could at least present a united front in its treatment of Brexit and Article 50, however even that appears impossible, because elsewhere Reuters writes that German Chancellor Angela Merkel sought to temper pressure from Paris, Brussels and her own government to force Britain into negotiating a quick divorce from the EU, despite warnings that hesitation will let populism take hold.
Almost alone in continental Europe, Merkel tried to slow the rush to get Britain out of the EU door. Europe's most powerful leader made clear she would not press Cameron after he indicated Britain would not seek formal exit negotiations until October at least."
Quite honestly, it should not take ages, that is true, but I would not fight now for a short time frame," Merkel told a news conference. "The negotiations must take place in a businesslike, good climate," she said. "Britain will remain a close partner, with which we are linked economically."
The issue is that with the strongest person in the EU suddenly backtracking on the urgency, it will likely only inflame even more tensions in Europe, where virtually everyone else demands a quick separation. Ironically, Merkel's position may even help the Euroskeptic camp around Europe.
Eurosceptics in other member states applauded Britons' decision to leave the European Union in a referendum that sent shockwaves around the world, with far-right demands for a similar vote in Slovakia underlining the risk of a domino effect.
This has promptly led to concerns among Europe's core: French Foreign Minister Jean-Marc Ayrault warned of the dangers of delay. "We have to give a new sense to Europe, otherwise populism will fill the gap," he said. They followed European Commission President Jean-Claude Juncker, who said on Friday it made no sense to wait until October to negotiate the terms of a "Brexit".
European Council President Donald Tusk made a start by appointing Belgian diplomat Didier Seeuws to coordinate negotiations with Britain. Britain's representative on the EU executive, Financial Services Commissioner Jonathan Hill, resigned on Saturday after campaigning against a British exit.
At the same time, the pressure on the UK is rising: after the referendum decision and Cameron's resignation, European politicians and institutions felt free to shower demands on Britain over its future outside the world's largest trading bloc. The European Central Bank said Britain's financial industry, which employs 2.2 million people, would lose the right to serve clients in the EU unless the country signed up to its single market – anathema to "Leave" campaigners, who are set to lead the next government in London.
But it is not just the splintering of the EU that has grabbed everyone's attention: as reported earlier, the United Kingdom itself could also now break apart as a result of Scottish First Minister Nicola Sturgeon's threat that her government was preparing to present legislation allowing a second independence referendum while continuing discussions on its place within the EU. She also warned that her government may veto the Brexit decision.
Amid all this confusion, one thing is clear: with suddenly countless variable emerging and countless paths forward, nobody has any clue how any of this will play out, which likely means another bout of global risk off now that the markets have had a chance to catch up to the new Brexit reality, which in turn will force even more central bank intervention, just as the Central Bank's Central Bank, the Bank of International Settlement, warns in its 86th annual review, that "easy-money policies and unprecedented monetary stimulus have started to backfire in global financial markets."
In short: everyone is praying that someone, somewhere will be successful in kicking the can for at least a few more days.
