British Prime Minister Theresa May will soon launch divorce proceedings from the European Union under the so-called Article 50 process. Her objective is to leave the Internal Market and the EU customs union, take back control over immigration, and be free of the jurisdiction of the European Court of Justice while maintaining as free a future trading relationship with the EU-27 as possible. Her goal in the two-year timetable called for by Article 50 could not be more different from European negotiators, and therein lie her basic difficulties.
EU-27 leaders are insisting on a settlement of UK financial liabilities clarifying the future status of EU citizens living in the UK—and UK citizens living in the EU-27—before discussing the future economic relationship. Their leverage is that there is a legal hard stop after the two-year negotiating process, at the end of which the UK simply drops out of the EU unconditionally. May thus needs to make quick progress on the two EU negotiating priorities without getting bogged down on the sequencing of the negotiations.
Undoubtedly, the most controversial issue will be about money and just how large the future common liabilities that the UK has entered into as an EU member are? Up to €60 billion, as Brussels claims, or zero, as the Conservative Party in Westminster believes.
On immigration, the prime minister has a better negotiating position. In their referendum, she argues, Britons indicated they wanted national control over immigration. As interior minister, May earned a reputation as a hardliner on this issue. So far, the UK government has refrained from unilaterally granting residency and working rights to EU citizens who came legally to the UK under the EU’s rules. Such a move would invariably have politically compelled the EU-27 to quickly reciprocate. At an earlier stage of the Brexit process, it could have helped clear a potentially thorny issue from the actual time-limited Article 50 negotiations and spread a lot of goodwill for the UK around other EU member states. Instead, May now has to spend both time and political capital on this issue during the two-year negotiation window, during which the EU-27 is certain to make it more complicated.
Quick mutual recognition of residency and working rights is only one part of citizens’ status after Brexit, however. Even if EU citizens are allowed to stay in the UK, there must also be a discussion of their pension rights, healthcare access, family reunification options, and availability of other public social services.
The complexity of these issues can be seen in figure 1 and 2, which show where migrants from the UK and EU-27 live.
With more than 800,000 nationals living in the UK, Poland has the most interest in resolving the issue. But the same is true for more than 300,000 British citizens in Spain—two-thirds of whom are over the age of 50. What, for example, are the rights of elderly British citizens in Spain to local public healthcare services?
Like Richard Nixon traveling to China, May could rely on her hawkish reputation to make a deal. She could, for example, offer EU citizens in the UK a British equivalent of the American permanent legal residency (green card) status, giving them not only the right to live and work in the UK but also all auxiliary rights of a UK citizen, such as access to healthcare, pension rights, family reunification, etc.—excluding the right to vote. And after five years, EU citizens could apply for UK citizenship.
Such a move would secure the greatest number of EU workers remaining after Brexit and also remove a contentious issue in the EU negotiations, as the EU would no doubt reciprocate the gesture. It would provide a positive opening for the Article 50 negotiations, making it easier to discuss the other important topics.
The best way for Theresa May to make an early bold move on immigration would be for her to include it in the official letter launching the Article 50 negotiations.
 EU-27 members can agree to extend the two-year Article 50 negotiating period, but this looks highly improbable given the requirement for unanimity among the 27 members.