28 Oct 2016
Professor Madan Pillutla urges the UK and EU to put all feelings to one side when negotiations begin
Staying calm and refusing to engage in a bitter dispute is tough after more than four decades of marriage. But the UK and EU’s representatives must avoid getting emotional when negotiating their parties’ divorce, said Madan Pillutla, Professor of Organisational Behaviour at London Business School.
“People on both sides said things to upset the other party in the run-up to the EU referendum, but they shouldn’t let personal insults get in the way of negotiations,” he said. “However, that’s easier said than done. Having spoken to sensible, bright people from the EU who live in the UK, it’s clear they feel a sense of rejection, which is very hard to get past. This wasn’t a positive vote to affirm the UK’s independence in the world – it was a rejection of what the EU stands for. The question is: can the EU representatives get past that and move forward?”
Talks between the two are on hold until the UK triggers Article 50 to confirm it wants to leave the EU. For Professor Pillutla, both parties should use that time to think about how to reach an amicable settlement and avoid unnecessarily prolonged negotiations.
“It could become a drawn-out process if either party is unwilling to compromise,” he said. “If after one and a half years they haven’t agreed anything, there will be a sense of urgency, with people panicking and doing deals that quickly unravel. The concern for me is that the negotiations become farcical.”
While putting emotions aside is critical, the UK and EU must also establish their key objectives. “The best outcome for both parties is to have a clear idea of what they want before holding talks, to ensure a clean break,” Professor Pillutla said. “It’s about causing the minimal amount of disruption to EU and UK citizens and businesses when it comes to disentangling Britain from the union.
“The UK’s best hope is that the EU has a set of strong negotiators who are clear about their aims. We want a strong, unified EU with a clearly articulated position so the UK can strike a deal with them. If the EU negotiators bicker, they won’t agree on anything and they’ll be afraid to make any commitments or concessions.”
From the UK’s perspective, agreeing a strategy that satisfies the people who voted to leave will be crucial. Professor Pillutla believes Brexiters fall into two categories: those wanting to curb immigration and Britons who believe the UK will be stronger economically outside the EU.
“The UK needs to be crystal clear about what it wants, but that’s difficult because the people who feel strongest about Brexit and voted for it did so for different reasons,” he said. “The predominant idea for some was that the country was being overrun by foreigners. The people who really felt this were probably the economic have-nots – they looked at the EU and said, ‘How does it benefit me?’ London may be the services capital of the EU, but the money hasn’t trickled down to many.
“Then you have another group of people who said that the UK could forge its own destiny by breaking away from the cumbersome European system and striking trade deals with China, India and the US. The challenge for the UK is to come up with a consistent position to satisfy both groups.”
Before entering talks, the UK’s negotiators need to consider whether leaving the EU will make Britain less attractive to foreign investors, students and top talent. For example, will it be able to attract the best people from non-EU countries such as India and China rather than Italy or Germany?
They should also think about how Brexit will affect the nation’s financial and legal sectors, according to Professor Pillutla. Only then will the UK understand what it should ask for – and offer in return – during the negotiations.
“It’s about what each side can give the other party,” he said. “You’re asking for things, but what can you give them in return? The starting position from the EU’s perspective seems to be that the UK won’t be part of the EU, but it should accept the union’s laws and have free movement of labour. However, free movement is a deal-breaker for the UK if the politicians most involved in the Brexit preparations are to be believed.
“If the UK isn’t willing to accept free movement, it has to think about what it can offer in return. The EU may still say no and refuse to consider having no trade barriers, in which case the UK has to look at alternatives. A good negotiator may say, ‘If I can’t have free trade with the EU, the following industries will suffer and that will affect EU member states. But we can invest our resources in those sectors if you allow us to trade with EU countries.”
Whether the UK and EU have clear objectives and are willing to discuss terms that benefit both parties remains to be seen. But even then, the negotiators still face a hugely complex process. The challenge for the UK is to strike a deal that satisfies at least 20 of the 27 member nations.
“We’re not talking about one person negotiating with another, it’s one country talking to a collection of nations that all have their own interests,” Professor Pillutla said. “As a starting point, the UK has to work out which countries it shares common interests with and focus on those if it wants to eventually agree a deal that satisfies most of the EU nations.”