The Irish border
On Monday all parties initially appeared to be confident that a deal could be reached that would avoid any hard border, which might upset peace in the north of the island after decades of violence.
Ireland insists a hard border would not just create trade barriers, it would also impact on social cohesion in border communities.
Theresa May sat down to lunch with European commission president, Jean-Claude Juncker, hoping that a last-minute offer to the Irish government of “regulatory alignment” on both sides of a new UK-EU land border – apparently allowing people and goods to cross the border with no checks – would remove one of the last remaining obstacles to a deal.
But that raised the question of whether Northern Ireland would have special status, or whether the rest of the UK would also be expected to comply with some EU rules. The leaders of Scotland and Wales, and the mayor of London, announced that if Northern Ireland were to gain special status, they might want it too.
As May and Juncker spoke in Brussels and the pound rose on prospects of free trade and perhaps even a very “soft Brexit”, Northern Ireland’s Democratic Unionist party (DUP) issued an uncompromising reiteration of its refusal to accept any “divergence” from rules on the British mainland.
May, who is dependent on DUP votes for a majority in Westminster following the Conservatives’ poor result in the June snap election, appeared with Juncker on Monday afternoon to declare that the deal had not been reached after all.
The Irish prime minister, Leo Varadkar, said he has had confirmation from Juncker that Monday’s agreed text still stands. He said the DUP’s position was important and denied he was pursing any agenda, a reference to accusations that he was pursuing a united Ireland.
In October the British government claimed that a deal on citizens’ rights was “within touching distance”, but there remains at least one major stumbling block to an agreement on the issue: the role of the European court of justice (ECJ) in resolving any disputes after Brexit.
EU negotiators are adamant that the UK must give EU citizens certainty that they will be protected by EU law. They want any agreement to be a reflection of treaty article 267, meaning that Britain’s supreme court would be obliged to refer citizens’ rights disputes to the ECJ.
In September the British government appeared to concede that European law would take “direct effect” when it came to protecting the rights of EU nationals living in the UK, meaning they could appeal to UK courts citing European law as enshrined in the withdrawal treaty.
But European diplomats say Britain’s offer now appears not to be so clear-cut. While UK ministers are reportedly considering a plan that would involve some cases being voluntarily referred to the ECJ, leading Brexiters oppose any ongoing role for the ECJ in the rights of EU nationals in the UK.
The former Conservative leader Iain Duncan Smith was among several former ministers to say such an arrangement would be unacceptable, arguing that it would mean “ceding power to a foreign court on which [Britain] has no representation”.
The European parliament, which wields a veto over the Brexit deal, wrote last month to both negotiating teams highlighting a number of other issues that still need to be addressed to safeguard the rights of the 3.2 million EU27 citizens living in the UK and 900,000 British citizens in other member states.
In particular, MEPs on the Brexit steering committee have said the UK’s proposed application procedure for EU nationals did not meet the parliament’s demands that claims to remain should be processed without conditions, including a criminal records check or a cost to applicants.
The issues of family reunification – with Britain proposing that EU nationals would have to meet the same income threshold set for British nationals who want to bring a spouse from a non-EU state to Britain – and of the rights of EU nationals’ children born after Brexit, have also been major sticking points.
Additionally, the UK has demanded the EU guarantee so-called onward movement rights for British nationals on the continent, allowing them to move to any other member state after Brexit in exchange for an indefinite right to return for EU nationals living in the UK.
The divorce bill
The Brexit divorce bill has dominated headlines for months, but is turning out to be the easier bit of Britain’s negotiations to leave the EU. While Ireland and citizens’ rights pose intractable problems about preserving peace and the role of the European court, British and EU negotiators are used to haggling over money.
A breakthrough on the bill came last week, when the UK offered to stand behind obligations to the EU that could total €60bn (£50bn) – an acknowledgement that the EU accepts as progress enough for the time being.
The final sum has not been agreed, and British officials think the UK’s liabilities are far lower. The settlement includes UK payments to the current EU budget, the UK’s share of the EU’s unpaid bills, EU staff pensions, loan guarantees, plus many ad-hoc schemes such as aid for Syrian refugees in Turkey.
Final agreement on the money is unlikely to emerge until the 11th hour of talks in autumn 2018, but even that will be a ballpark figure. The exact sum may not be known for decades, as it depends on unpredictable and contingent factors – from the lifespan of EU civil servants to whether Greece defaults on 40-year-long, EU-backed loans.
Even an interim deal this week is far from the end of the story. Not only do the UK and the EU still have to work out the painstaking details, but money will loom large in talks about a future trade relationship. For the UK, the Brexit bill is the price of a future trade deal; for the EU, it is about settling past debts. Arguments between London and Brussels about money look set to continue for years to come.
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