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The Times
Brexit Briefing
Thursday September 20 2018
Oliver Wright Henry Zeffman
By Oliver Wright and Henry Zeffman
Good afternoon and welcome to this week's Brexit Briefing from The Times.
This is bad for Theresa May. Really bad.

The prime minister’s goal at the Salzburg summit was pretty modest, all things considered. She wanted to be able to go into the Conservative Party conference in ten days armed with warm words about her controversial Chequers proposals.

Mrs May probably would have settled simply for not having Chequers knocked down.

Instead she leaves Austria with Chequers spurned in the strongest terms yet. Donald Tusk, who as European Council president was meant to be the emollient European figurehead who would shepherd both sides to a deal, instead pronounced Chequers’ death, declaring that the plan “will not work” because “it risks undermining the single market”.

The prime minister shortly afterwards pretended not to understand, admitting that her conversation with Mr Tusk had been “frank” but insisting that her plan remained the “only serious and credible proposal on the table”.

In its defiant tone, rattled demeanour and the extent of its denialism, Mrs May’s response was reminiscent of the famous “nothing has changed” moment in last year’s general election.

But something really has changed. The EU has ruled out a British proposal that is as soft as anything they could reasonably expect. They have ensured that the prime minister will have a wobbly conference, persuading sceptical MPs and furious activists that her way remains the right way.

All the while the clock is ticking. It is genuinely very hard to see where this will end up.
Morland on Brexit
 
 
The humiliation of Theresa May
When a political leader comes out of a bilateral meeting describing it as a “frank” discussion it is barely concealed code that a row has taken place.

And so when Theresa May described her talks with Donald Tusk today in such a manner it was immediately clear that the Salzburg summit had turned into a disaster for the prime minister.

The British had gone into the meeting hoping - and expecting - that EU leaders would give her domestic breathing space from critics of her Chequers plan.

And to begin with yesterday that seemed to be going to plan. While saying that elements of the package would have to be re-worked Mr Tusk nonetheless described it as a “positive evolution” that showed a “will to minimise negative effects of Brexit”.

But by today his tone had changed. Following the meeting of the 27 leaders he said that the Chequers framework for future economic co-operation “will not work”.

He also declined to confirm that there would be a special Brexit summit in November, saying that it would depend entirely on progress made at the next scheduled meeting of leaders in October.

So what went wrong?

It appears to have hinged on a meeting between Mrs May and the Irish prime minister Leo Varadkar this morning.

She is understood to have told him that British counter-proposals on the Irish backstop would not be ready in time for the October council.

That was not what Dublin was expecting to hear and fuelled fears that the British were attempting to leverage Ireland to force the EU to compromise on Chequers more broadly.

It meant that when the leaders met at lunchtime the hardline faction within the EU prevailed and a decision was taken that the prime minister needed to be sent a clear and unequivocal message that they would not be pushed around.

But the real impact of Salzburg may be domestic. Mrs May badly needed European leaders to embrace Chequers, or at least not to spurn it entirely.

She now goes into the Tory conference with her critics able to fairly claim that her plan has been rejected by everyone.

But she is right that there is no other plan on the table.

The greatest danger of a no-Brexit scenario has always been one of miscalculation. Salzburg appears to be a step in that direction.
 
The hills are alive with the sound of splits
When European leaders began discussing their response to Brexit two years ago they quickly and correctly identified their greatest weakness in the negotiations ahead: splits.

And using classic game theory they tried to turn it to their advantage by making unity the central tenet of their entire negotiating strategy.

It led to the appointment of Michel Barnier as the EU’s sole negotiator and the creation of the Article 50 taskforce. It led to the decision to ban EU leaders from talking directly to Theresa May about Brexit until Article 50 was triggered. And, most importantly, it led to the strategy of banning any type of Brexit negotiation from taking place at summits. Mrs May has been allowed to make her case but the other 27 EU leaders listen in silence and air any differences they have in private.

Until now it has been a remarkably successful strategy that has left the UK government frustrated, and at times exasperated, by the unwillingness of the big EU power players to deal directly with London.

But, just as they feared two years ago, Mrs May's Chequers plan has finally caused significant cracks in the unity of the 27 to emerge.

At a meeting of Europe ministers in advance of today’s summit in Salzburg, Belgium, Denmark, the Netherlands and Sweden broke ranks with other countries and urged “maximum effort” to find a Brexit deal, including a compromise with Mrs May. Today they were joined by Hungary and Poland in pressing for the EU to engage with the proposals, which they see as a “positive” step towards reaching a deal.

Lined up against them are the big beasts of France and Germany, which are worried that a bespoke deal could undermine the indivisible political and economic rationale of the EU and open the door to further departures.

And, for the first time, such divisions are being talked about openly.

Viktor Orban, Hungary’s nationalist conservative leader, said this morning that he was in a “camp” of prime ministers who were “getting a majority” for a “fair Brexit”. He added: “The other camp would like to deliver evidence that to make that kind of decision is to be punished and that the British must suffer. I don’t like that approach at all.”

On the other side President Macron of France stressed the need for the EU to defend the rules of the single market rather than compromise. He said: “My first wish is to stay united and to have a common approach, the 27. It is essential. The second thing is that we remain coherent. We have very clear principles regarding the integrity of the single market.”

Which side and which approach will prevail is far too close to call. But Mrs May will be relieved. If Chequers split her party it has at least split the EU as well.
 
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Febrile times
On Tuesday evening Michel Barnier held a press conference outlining in public for the first time the latest EU proposals to “de-dramatise”, as he puts it, the question of the Irish border.

He said that he was “ready to improve” his plan for the so-called Irish “backstop”, suggesting that checks on trade between mainland Britain and Northern Ireland could be conducted on ferries or in factories rather than at ports in the region. The next morning his remarks were widely publicised and led to a small but marked increase in value of sterling.

But, as ever with Brexit, it was what Mr Barnier didn’t say that was most important. His plan did not give ground on the central British objection that the backstop must not create a new legal customs border between Britain and Northern Ireland in the Irish Sea.

The Times confirmed this with Downing Street. “Any backstop will have to respect our red line that there is not a customs border in the Irish Sea,” a senior figure said. “Mr Barnier has not said anything to suggest that his position has changed on that.”

This we reported in our midday edition under the headline: “May to reject Barnier's improved Irish Brexit offer." Within minutes of the article being published online the pound had fallen by 0.5 per cent against the dollar, more than wiping out all the gains made previously (as the graph above shows).

One angry reader phoned up to question how we could be so irresponsible in running such a piece.

Of course, in the scheme of things small changes in the currency markets are of little concern. But the wider market instability, of which this episode is indicative, does matter.

There will be many and much more significant bumps on the road to Brexit, not to mention the substance of any final deal or no-deal scenario. And that will affect the pound, which over a sustained period will affect inflation, which will affect interest rates, which will affect the economy and real people’s prosperity.

We’re heading into febrile times.
 
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Food, inglorious food
In delegation rooms across Salzburg this morning diplomats from different EU states were discussing food. Specifically, food standards.

The cause was a report in Business Insider UK that Liam Fox was planning to use controversial Henry VIII powers (remember them?) to scrap European food standards in pursuit of post-Brexit free trade deals.

This is, in effect, a resurrection of the chlorinated chicken conundrum: the idea that in order to strike trade deals with new countries such as the US the UK would have to lower its food standards below the EU’s to open up its agrifood sector to international competition.

It is quite true that other countries, including but certainly not limited to the US, would see agriculture as an important part of any trade deal with the UK.

But there are problems with today’s story. The idea that Dr Fox, the international trade secretary, could quietly use mysterious powers of secondary legislation to unilaterally roll back food standards without parliamentary consent is misplaced. The new rules around Henry VIII powers are still being tested in practice but rolling back food safety rules is simply not something that could in reality be carried out on the nod.

And even if the government could do it, it’s far from clear that it would. Michael Gove, the environment secretary, has repeatedly insisted that there will be no lowering of standards. Dr Fox himself responded to the story by writing on Twitter: “I have consistently said that there will be NO lowering of UK food standards. To suggest otherwise is completely untrue, false and #FakeNews — such a shame that people pedal [sic] rumours and myths that are clearly wrong.”

But the problems with the story do not mean that it is not important. The fact is that it caused consternation in other EU countries. And that is a reminder, once again, that the UK needs to constantly reassure the EU about its intentions for post-Brexit Britain to be sure of a good deal.
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