There’s no British solution to the Irish problem

Theresa May has an unhappy history of dinners with Jean Claude Juncker, each one leaving a bitter aftertaste in the form of a detailed, unflattering leak to a German newspaper. British officials hope their lunch in Brussels next Monday will be an altogether happier affair, with the British prime minister persuading the European Commission president it is time to move Brexit negotiations on to the next stage.

British negotiators insist that Monday's lunch is not the deadline for agreement ahead of a meeting of European Union leaders on December 14th. But EU officials say they must be persuaded well in advance of the summit that Britain has made sufficient progress on the three priority issues of money, citizens' rights – and Ireland.

“What nobody here will accept is for Mrs May to arrive in Brussels on the eve of the summit with a large bag of unwashed clothes that she will empty out on the floor for us all to sort out,” said one senior European diplomat this week.

The real deadline may come on Wednesday, when the European Commission will meet in the Berlaymont building to decide whether its members believe sufficient progress has been made. They will then brief the member states on their recommendation ahead of a meeting of EU ambassadors the following week, shortly before the summit itself.

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Good progress

Britain and the EU have made good progress on two of the three policy areas – money and citizens’ rights – but Ireland remains a problem that could block progress. The cost of failure for Britain, and particularly for May, could be calamitous, with potentially severe knock-on consequences for other EU member states, and particularly for Ireland.

May would come under tremendous pressure from within her party and from the pro-Brexit press to respond to failure at the summit by simply walking away from the negotiations

A successful summit this month would not only allow Brexit talks to move on to the future trading relationship between Britain and the EU, but open the way for a transitional deal that would maintain the status quo for at least two years after Britain leaves the union in March 2019. British business needs confirmation of the transition deal by early in the new year to make investment decisions in time for Brexit.

Failure to secure the deal this month is likely to trigger a flight of investment and jobs, including in the financial services sector, and a further drop in the value of sterling against other currencies.

May would come under tremendous pressure from within her party and from the pro-Brexit press to respond to failure at the summit by simply walking away from the negotiations and initiating plans for a no-deal Brexit. Such pressure would be especially difficult to resist on account of the catalogue of British concessions that has been the story of the negotiations so far.

Before the talks began, British ministers ruled out accepting the Commission's preferred sequencing of talks, which demanded progress on the three priority issues before moving on to talks about trade. Brexit secretary David Davis caved in on the first day of formal negotiations.

Divorce bill

The biggest concession has been on the size of the divorce bill, with Britain apparently agreeing to pay its share of all the commitments the EU side demanded. These include a share of the last two years of the current EU budget, which runs beyond the date of Brexit; budgetary commitments that have been allocated but not spent, known as reste à liquider; structural funds for which Britain has made promises but no binding commitments; loans to countries such as Ukraine; and the cost of pensions for EU officials.

Neither side wants to put a precise figure on the divorce bill, which is impossible to calculate exactly because some bills will not come due until well into the future, while the value of other commitments has yet to be determined. But both sides acknowledge privately that it will be above €40 billion and it could be well above €50 billion.

On citizens’ rights, the two sides have agreed a framework that will protect the rights of EU citizens in Britain and British citizens in the EU. The biggest area of disagreement was over the role of the European Court of Justice (ECJ) in safeguarding the rights of EU citizens in Britain.

May has promised that Britain will leave the single market, the customs union and the jurisdiction of the ECJ when it leaves the EU. But the two sides are close to a compromise under which British courts will have to take account of the ECJ’s interpretation of relevant citizen-rights law.

So when May and Juncker meet on Monday, neither money nor citizens’ rights is likely to spoil their lunch. Ireland is a different story.

Economic integrity

After a week of noisy briefings and public statements, Irish, British and EU politicians have gone relatively quiet this week as officials work quietly in Brussels in an attempt to resolve the issue. Britain and the EU are agreed about the future of the Common Travel Area and on their commitment to uphold the Belfast Agreement in its entirety.

They also agree that they do not want to see a hard Border on the island of Ireland. But Ireland and the EU want to know how Britain can reconcile that commitment with its determination to leave the customs union and the single market.

Until now, Britain’s proposed solutions have been mostly administrative and technological, moving customs controls away from the Border and using number-plate-recognition technology to track movements. Britain has also proposed a trusted trader system that would simplify bureaucracy for regular cross-Border traders, and an exemption from controls for very small businesses and operators.

Many in Westminster and Whitehall are convinced that Taoiseach Leo Varadkar and Tánaiste and Minister for Foreign Affairs Simon Coveney are bluffing and will soften their demands

Ireland insists Britain must make a political declaration, promising to avoid the kind of regulatory divergence that would have the effect of hardening the Border. But as the negotiators toiled away in Brussels on a form of words acceptable to all sides, the DUP this week turned up the volume, reminding May that her government depends for its survival on the party’s 10 votes at Westminster.

“If there is any hint that in order to placate Dublin and the EU, they’re prepared to have Northern Ireland treated differently than the rest of the UK, then they can’t rely on our vote,” the party’s Brexit spokesman Sammy Wilson told the BBC.

British officials this week repeated that Northern Ireland will leave the customs union and the single market along with the rest of the UK and ruled out any move that would undermine the “economic integrity” of the UK.

Many in Westminster and Whitehall are convinced that Taoiseach Leo Varadkar and Tánaiste and Minister for Foreign Affairs Simon Coveney are bluffing and will soften their demands rather than risk a failure at the summit which could harm Ireland. Others believe the other member states will put pressure on Ireland to back down ahead of the summit.

For now, the word from Brussels is that the Commission and the other member states will take their lead from Ireland when they decide if sufficient progress has been made on the issue.

In the days ahead, Varadkar and Coveney must decide how far they can push the British government and how clear a commitment they need on the Border to protect Ireland’s national interest.