Germany to demand UK pay a divorce bill

GERMANY: British Prime Minister Theresa May faces being taken to the court in The Hague if she tries to leave the EU without paying a €60 billion (NZ$92b) ’’divorce bill’’, German officials have warned.

May says she won’t pay ‘‘huge sums’’ to the EU budget after Brexit. She has been bolstered by advice from government lawyers that Britain can leave without paying anything.

However, Germany is determined to force May to settle Britain’s ‘‘debts’’ and believes it has a case, according to a leaked strategy document prepared for Wolfgang Schauble.

The 74-year-old finance minister is regarded as an anglophile who wants to retain the good relations with Britain. However, the paper shows his department takes a hard line on the Brexit bill.

Britain was ‘‘not only politically but also legally obliged to pay its debts’’ according to Article 70 of the Vienna treaty convention, the paper said. At the beginning of the negotiations, the British should be asked to make sure they will pay all their payment obligations after Brexit, it added.

‘‘Great Britain pays for its share, just like the other member states,’’ the paper says. There should be no discounted access to the single market, it added.

The British should be asked for a ‘‘financial contribution’’ to be able to take part in the single mar- ket, the officials said. This could offset the cost of losing the EU’s second-largest net contributor, a blow that will fall heaviest on the largest payer, Germany.

The Vienna convention on the law of treaties, which Britain signed in 1970, governs what happens when states terminate treaty commitments and disputes are heard at the International Court of Justice in The Hague.

The document also reveals that Germany fears a ‘‘hard Brexit’’ could trigger a financial crash and that, contrary to its public statements, the European Commission is sceptical about whether a deal can be agreed in the twoyear timetable that starts tomorrow.

The Handelsblatt newspaper, which has seen the report, said that Bafin, the German financial regulator, was working on ways to offer a transitional solution to Britain to avoid it crashing out without a deal.

Avoiding a shock to the economic system was the top priority of Schauble’s finance department in the negotiations.

That message was reinforced by Sir Simon Fraser, the former permanent secretary to the Foreign Office, yesterday.

‘‘I think it’s certain that we won’t have resolved everything in the period before the expiry of the Article 50 process,’’ said Fraser, Britain’s top diplomat until he retired in 2015. – The Times