MNI INTERVIEW: Italy Tonini - Brexit Price To Be Costly For UK

--Phase 2 Brexit Talks To Exact High Price to Pay For UK

--Brexit "Reversal" Possible If EU Changes 

--Pro-Growth, Reformed Union Key To Potential "Comeback"

By Silvia Marchetti

     ROME (MNI) - The second phase of Brexit negotiations will leave the UK with

a "high price to pay", but if the European institutions reform and become more

appealing, chances of an exit reversal are likely, a senior Italian

parliamentary official told Market News in an exclusive interview. 

     Giorgio Tonini, Democrat president of the Senate's Budget Committee, said

adequate progress had been made in the first phase of negotiations but warned

that London will have to pay a "costly ticket" moving onto phase two and the

defining of future trade relations.

     "The UK has asked for a transition period of two years to remain inside the

single market, but it's quite clear it cannot benefit from this at a zero cost.

London will have to pay an entrance fee, which adds to the compensation

'payback' owed Brussels," argued Tonini.

     Last week, following a breakthrough in negotiations, London and Brussels

made an important step forward, with Brussels signalling that 'sufficient

progress' had been made in phase one talks. European council head Donald Tusk

however warned London that to rapidly move on to phase two it would have to

accept the union's conditions.

     --TOUGH ON UK

     According to Tonini, these conditions would not be 'soft' for London.

     "London cannot pretend it will be granted for free the same privileged

trade treatment now that it no longer has a chair on Europe's executive board.

It has no voice inside the EU institutions that decide on the future of the

bloc," argued the senator.

     In his view, progress made so far in the thorny negotiations is more

beneficial to Brussels than London, especially as the UK must accept all EU

rules during the initial transition period, including jurisdiction of the

European Court of Justice.

     The UK will probably have to abide to Brussel's "conditions" even beyond

that, if it opts to remain close to the single market. Tonini sees possible

future trade relations leading to the creation of a free trade area like the one

currently existing between the EU, Switzerland and Norway.

     "The hard part comes now," said Tonini, "as it's not yet clear what will

happen inside the single market and customs union when the UK formally exits in

2019, so it's crucial to start examining this at once".

     --REVERSE BREXIT?

     According to Tonini, London appears to be the weak party, which might

prompt reconsiderations among UK policy makers and voters.

     "I believe many British citizens have come to understand that it was a

mistake to vote for 'leave', as do several members of the UK institutions who

appear to have rising problems over this," noted Tonini.

     However, feels the conditions that led to the Brexit vote weren't entirely

the UK's fault. Tonini believes the EU's identity crisis and its incapacity to

deal with global challenges and push for pro-growth measures was determinant in

the June 2016 outcome.

     He expressed confidence that Brexit might not be "irreversible", that the

separation would not necessarily lead to the finality of divorce.

     "If the Eurozone succeeds in bringing forth a deep process of internal

reform that strengthens its governance model and focuses on accommodative fiscal

policies rather than orthodox austerity and mere bureaucratic rules, the UK

might reconsider its outsider position and somehow comeback," said Tonini.

     "It's also a matter of mea culpa, acknowledging one's faults and fixing the

picture. Brussels knows this, that's why it needs to give the union a makeover

that renders the European integration project an appealing one, capable of

luring back the British".

     Europe has its fair share of responsibility in Brexit, added Tonini,

therefore the moral price to pay, along with the burden of breaking-up, are not

just on London's shoulders.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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