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17 October 2018

October European Council: the clash of the ‘big shots’ over Brexit - 145th Brussels for Breakfast – CPD Notes

Yesterday’s European Council may have been May’s last chance to secure a deal that will avoid a crash Brexit next year. There will only be another Council meeting when there are concrete proposals as nothing new was offered by the UK – except some willingness to lengthen the transitional period.

Graham Bishop/Paula Martín Camargo

Highlights from the “Brussels for Breakfast” meeting

The Brexit frenzy is building up but we kept our Trappist vow of silence on the politics of the subject and only touched on the practical implications --- of which there are many and profound issues. But first – who will be the next Commission President? A string of possibles declared they were not running but the real question is whether the Spitzenkandidat system will survive. Despite the superficial attraction of an indirect election by the people, it now looks as though it would deliver a permanent EPP President. But the EPP has the same number of Heads of State as ALDE – 8 out of 27. Whatever the HOSGs do, the end-point is a vote in the European Parliament to approve the candidate who must obtain an absolute majority of the expected 705 members.


Discussion of President Juncker’s last State of the European Union (SOTEU) led us to his call for the euro to emerge as a genuine international currency – responding to US sanctions on Iran that start in a fortnight. Clearly, an international payments system cannot be set up in that time but it may turn out that President Trump will have forced the EU to counter the long-standing use of the US dollar’s role in international payments as a powerful instrument of US foreign policy. [...]

Key items of the rest of the month

Time is running out for an agreement on Brexit terms before the official departure date on 29 March next year. Deep disagreements between both sides over the (seemingly) unsurmountable stumbling rock of avoiding a hard border on the island of Ireland dashed hopes over the weekend of securing some progress before the European Council this Wednesday that could pave the way for a final deal on an extraordinary 17/18 November meeting. Top EU Brexit official Barnier’s proposal to refine its backstop solution that would see minimised checks on goods travelling between Northern Ireland and the Republic of Ireland was flatly rejected by Brexit Secretary Dominic Raab on Sunday.

Officials at Brussels hinted at domestic problems that hindered Prime Minister May’s wiggle room to make further concessions, i.e. dire warnings from the Northern Irish DUP that props up her government and had even threatened with calling an early election, should a border emerge in the Irish sea to guarantee the protection of the EU’s customs union.  Europeans also believe that a good fight with Michel Barnier’s team will help May at home show a strong hand that may appease Brexiteers within her own cabinet threatening revolt because they are increasingly worried that the deal May wanted to clinch with the EU will keep Britain tied to the EU’s customs union indefinitely, curtailing the UK’s power to strike new trade deals. Brexit backers set 2022 as the deadline to such an arrangement. The Prime Minister may still have a hidden card to head off rebellion within her flanks: Bloomberg revealed that May plans to rush her Brexit deal through Parliament, while The Sunday Times reported that aides at Number 10 secretly begun to plot a snap election in November to save the Brexit talks and May’s job after EU leaders rebuffed her Chequers proposal in Salzburg.

It remains in doubt whether Theresa May will even survive to this week, after former Brexit Secretary David Davis called for a vote against her Chequers plan. The Prime Minister struck a more conciliatory tone in Parliament Monday to say that more time is needed to negotiate over the EU’s proposal for a "backstop to the backstop,” which was saluted by French President Emmanuel Macron saying that “collective intelligence” would ultimately prevail. France is no greater fan of the proposal: finance minister Bruno Le Maire said it would be ‘suicidal,’ and claimed the EU is more concerned with its own future than Britain’s. A weakened German government after Angela Merkel’s Bavarian allies lost their historic absolute majority won’t certainly help May’s case in Brussels.

October European Council was thus poised to be the ‘moment of truth’ to agree on a Brexit deal, as Council President Donald Tusk warned, while cautioning that parts of May’s Chequers agreement “would not work” for the EU.  But Tusk was gloomy after listening to the chief EU Brexit broker’s update about Britain’s prospects of coming out of the Council with an agreement. Michel Barnier briefed the EU27 about the ongoing talks and many member states came out thinking that a deal was ‘achievable’ – as Theresa May put it at her arrival at the Council meeting – in November, while others reflected that the issue might drag on until December.  Anyways, “much more time is needed,” said Barnier, for an orderly Brexit, and talks will continue over the next weeks. The Frenchman also said to be open to a one-year extension of the Brexit transition if Theresa May accepts a “two-tier” backstop to avoid a hard border in Northern Ireland. [...]

Full article available for consultancy clients here

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