No breakthrough for May at Salzburg. More moves on the border needed and concessions on the single market

God knows where we are now. Groping towards a solution probably.  We’re unlikely to get much more clarity from Salzburg by the end of the day.  The suggestion of a second referendum by the Maltese and Czech leaders made an interesting diversion but little more. The Irish Times headlined “stark divisions” between May and Varadkar in advance of their breakfast meeting today but added:

Sources close to the prime minister accepted, however, that London would be bringing forward proposals on the regulatory control dimension of their backstop proposals and did not rule out that some such controls could be carried out in the Irish Sea.

The Independent was more specific, claiming that May is about to concede checks in GB.

Theresa May is set to make a major new compromise in Brexit talks in a bid to break the deadlock over the Irish border problem. Under proposals to be brought forward by the UK government, Britain is expected to accept some checks taking place between Northern Ireland and Great Britain.

The shift, combined with other moves by the EU to “de-dramatise” its own backstop plan, means there is now a real possibility that both sides could meet in the middle on the issue – which would allow them to prevent a hard border with Ireland and avoid a no-deal Brexit.

A senior UK government official speaking in the margins of the Salzburg summit said the government would bring forward new proposals for its own backstop, and indicated that regulatory checks on the Irish sea were now on the table.

There are checks which take place already [between Northern Ireland and Great Britain] in relation to some agricultural products,” the official said.

“On the Irish backstop, we have put forward our proposal in relation to customs backstop. We’ve been having discussions on that with the EU for a number of months now. “We’ve always said that we will need to bring forward further proposals in relation to the regulatory aspects of the backstop. That will happen.” The official insisted that customs checks at ports would undermine the economic and constitutional integrity of the UK and would not be drawn on why the Government did not consider regulatory checks to do so as well.

The Independent understands that some officials regard it as easier to move customs compliance checks away from ports, but not regulatory checks. The combination of concessions – with Britain accepting regulatory checks at ports and the EU moving some customs checks in-land – therefore appears to clear the path for a potential solution

However on the surface, Varadkar gave no encouragement to the notion of an imminent breakthrough when their breakfast meeting was over.

The EU is very united around our view that we need to protect the integrity of the single market and any agreement on the Withdrawal of the UK from the EU, which we can achieve in the next couple of months, must involve an Irish protocol, a guarantee that a hard border doesn’t emerge in Ireland.

“I don’t think we’ve made much progress since March. The EU has tabled its proposals which we find workable and legal. The UK has yet to table in writing alternative proposals, but PM May is working hard on that. I think she is very sincere and we’ll see what they produce.”

In Dublin  foreign minister Simon Coveney made what sounded like a dig at May’s swift dismissal of Barnier’s revised plan.

Reflecting the tensions on both sides, he said certain parties were rejecting EU proposals on resolving the issue without even seeing them. It is not a preferred approach but a fallback position

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RTE Europe editor Tony Connelly quoted Irish sources saying May told Varadkar that a UK policy on the border wouldn’t be ready in time for a Brexit special summit in October. Too close to the Conservative party annual conference? A new date has been set for 17/18 November.

Charles Grant, the director of the strongly pro-EU Centre for European Reform tweeted:

In Brussels today I was struck that officials on both sides of Brexit talks think a deal really is doable, because all want a deal; but that on Irish border, there has been no convergence of position. Thus I think no deal cannot be ruled out

On the UK’s  wider focus for dealing with the border problem,  Theresa May is opposed to anything that hives Northern Ireland off from the rest of the UK, shifting the EU border to the Irish Sea. Instead she has offered a plan to align the whole of the UK with the EU customs and regulatory checks that would otherwise necessitate a hard border. It remains to be seen if this would commend itself to a majority of MPs.  A significant number on both sides of the argument regards this as the worst of all worlds. Nevertheless a deal along these lines actually concluded would surely become different reality of greater appeal, particularly when faced with the alternatives.

However on the EU side, the Chequers proposals for the final deal aligning the UK with the single market for goods only, is rejected as “cherry picking”  and therefore  breaching the  integrity the single market. But is this the sacred cow it appears to be?  Professor Anand Menon, the director of Britain in a Changing Europe, is as unaligned and as expert a commentator as you get.  In the Times, he questions the inviolability of the single market in the interests of a deal.

Chequers represents a genuine attempt to identify what is required from Brexit: the kind of hybrid outcome which Britain could accept.

The EEA option, however appealing economically, would not be politically acceptable for this prime minister or her party.

As for something along the lines of “Canada”, it would mean a serious economic hit and implementing the “Irish backstop” — that is to say creating new barriers between Great Britain and Northern Ireland.

And it’s worth pausing to underline how unacceptable this is in Britain. The notion that part of the United Kingdom would be subject to laws over which our parliament has no say is anathema to many MPs — and this is not a problem confined to the Democratic Unionist Party.

Simply put, the integrity of the United Kingdom will always be more important to British politicians than the integrity of the single market.

Which brings us back the need for a hybrid solution that goes beyond the commission’s mantra of “in the single market or out of it”. For all that the idea of the “integrity of the single market” has taken on a theological quality in the Brexit debate, we should remember two things.

First, even within the EU itself, the four freedoms are not only divisible, but divided. Second, this “integrity” is obviously negotiable — as the cases of Switzerland and Ukraine illustrate all too clearly — for non-member states.

Nor, would the kind of “blind” or “fudged” Brexit increasingly discussed be the answer to the dilemma. We all hear talk about a vague political declaration that will not bind the member states.

And it’s not just Brexiters who would baulk at the lack of good faith this approach implies. It would also confirm for the Labour front bench, hardly Europhiles themselves, many of their worst suspicions about the European project.

And, finally, why would Britain accept vagueness on the Brexit issues it cares about — the terms of a future trade deal — while being forced to accept excruciating specificity when it comes to the Irish backstop?

So what if the talks fail, or if they culminate in a deal that imposes real economic pain on the UK? Yes, the much vaunted “integrity” of the single market will be preserved, but at what price? First, the economic pain would also be felt in the EU, albeit not as severely as in the UK.

More importantly, the acrimony that would result would damage UK-EU relations for years to come. Theresa May might have offered an unconditional commitment to European security, but it’s hard to imagine the British people feeling the same way.

It is impossible to discount that, in a context where politicians are blaming the EU for a damaging outcome, populist politics would emerge strengthened and the British commitment to the security of the West would be reduced.

And remember, the UK is one of the few member states that meets Nato’s 2 per cent of GDP defence spending target and one of only two EU countries that spends 20 per cent of defence resources on equipment.

If Europe is serious about achieving “strategic autonomy” in this most uncertain of times, it can only do so with the UK. Are abstract and empirically unsubstantiated principles about the integrity of the single market worth risking that?

An extra obstacle is the EU’s “ free movement” red line.  The Independent’s Andrew Grice argues that the government is on an unnecessary collision course with the EU on  immigration policy and should U turn .

When the cabinet discusses immigration next Monday, she should listen to ministers such as Philip Hammond, the chancellor, and Greg Clark, the business secretary, who want to use migration as a bargaining chip in the Brexit talks. They are rightly worried that requiring EU workers in Britain to obtain a visa after six months would provoke retaliatory measures by the EU27, creating another burden for business, already deeply worried by the uncertainty of Brexit.

Countries such as India will make preferential access for their people their top demand in return for a trade deal with the UK. So it is logical to keep a liberal regime for the EU, in the hope of safeguarding trading links with the UK’s biggest partner. EU migrants contribute £4.7bn a year more in taxes than they receive in benefits and public services – more than those from the rest of the world, who take out £9bn more than they put in.

Overall, Bloomberg’s assessment of Brexit opinion among  the big players  at Salzburg was ” downbeat.” 

 Germany and France, the European Union’s two most powerful countries, struck a downbeat tone about the prospect of a Brexit deal, as the two sides failed to come up with proposals to break the deadlock.

France consistently takes the hardest line against the U.K. during Brexit discussions in Brussels, EU diplomats say. French officials oppose nearly every idea the EU floats aimed at finding a compromise, insisting that Britain must be seen to lose from Brexit, according to one official who spoke on condition of anonymity.

But the Germans were also dissatisfied with May’s presentation, according to a person familiar with the situation. Chancellor Angela Merkel heard nothing new in it, the person said. Merkel went into the meeting without speaking to reporters, as did May.

Both sides agree that they want a deal and are penciling in a summit for mid-November to get it done. But neither has come up with a proposal that can break the deadlock on the most pressing issue of all — how to avoid a border on the island of Ireland without cutting Northern Ireland off from the rest of the U.K. EU officials have started drafting an alternative proposal, but diplomats say it won’t address the bits that are most unacceptable to May…

The U.K. team was disappointed by leaders’ comments at the summit, according to officials who declined to be named. In the run-up to the summit, diplomats had said EU leaders knew they needed to help May get through a politically perilous time in London. The last thing they want is for her to be toppled by pro-Brexit hardliners in her own party before the U.K.’s withdrawal is complete.

May faces a crucial test of her authority on Sept. 30 when the Conservative Party’s annual conference begins in Birmingham, England.

But operation Save May was nowhere to be seen.

More later today when the EU leadership and Mrs May will give separate press briefings.