U.K. Prime Minister Faces More Tortured Brexit Talks After Ireland Cries Foul

By Simon Nixon Features Dow Jones Newswires

Just when Theresa May thought she was finally making progress in the Brexit negotiations, she finds herself facing the gravest crisis since she triggered Article 50.

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For months, the U.K. prime minister has been grappling with how to choreograph a climbdown over the so-called Brexit bill. She has to navigate the diplomatic failure of her Florence speech, which failed to deliver the expected breakthrough when the other 27 EU member states rejected her financial offer as too vague to warrant the start of trade talks.

Since then, U.K. officials have been working on an elaborately stage-managed sequence of events designed to break the logjam at the EU summit in December. The goal is a deal where the U.K. would agree to honor its share of the EU's existing financial obligations in return for the EU's vow to start trade talks and commit to a two-year transition deal.

This choreography already was fiendishly complicated. But the Irish government now threatens to derail the whole process with its declaration that insufficient progress has been made on finding ways to avoid a hard border with Northern Ireland -- one of the three priorities for the first phase.

Dublin, with full EU backing, is insisting that the U.K. needs to commit to avoiding any future regulatory divergence between Northern Ireland the EU, so goods can continue to move freely across the Ireland-Northern Ireland border.

The U.K. government is adamant that it cannot possibly give such a guarantee since this would effectively undermine the economic and constitutional integrity of the U.K. itself. As things stand, it is hard to see how these positions can be reconciled. Yet without agreement on this issue in the next 10 days, the choreography won't work: the negotiations can't move to the second stage, regardless of what money Mrs. May puts on the table.

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Dublin's hard-line stance appears to have caught London completely unaware. But it is hard to see why it should have.

The Irish position has always been clear. The rejection of a hard border in Ireland was in the EU's negotiating guidelines. Dublin has consistently stated that it won't accept technological solutions to the border problem such as those contained in a U.K. white paper published this summer. And EU's view that negotiations over the border had not made sufficient progress were clearly stated in the conclusions of the European Council's October summit and repeated by Irish and EU officials since.

Meanwhile the U.K. has been engaged with the EU's Brexit task force in an extensive mapping exercise since July which has so far identified over 140 different areas in which Brexit threatens the Good Friday Agreement. The U.K. could hardly expect to conclude this process with Ireland without identifying solutions, says a senior EU official.

The British misjudgment was to assume that Dublin would never stick to its guns -- whether because the other 26 EU countries would refuse to allow it to hold up the process or because Ireland itself has as much to lose from a disorderly Brexit.

Certainly British officials believe Dublin has made a serious mistake by asking for something that is utterly impossible for any British government to accept. They argue that the Conservative party would be just as opposed to any deal that committed Northern Ireland to no regulatory divergence with the EU as its allies in the Democratic Unionist Party.

The U.K. government continues to insist that it is impossible to find a solution to the Northern Irish border until you know the shape of the problem, which won't be known until there is clarity about the future economic relationship between the U.K. and EU. By adopting such a granular approach, the U.K. thinks it will be possible to iron away most of the border problems.

Yet the U.K. government underestimates the extent to which this is an existential issue for Ireland: it is less than 100 years since the Republic of Ireland fought a bitter civil war following the partition of the island. No Irish Prime Minister wants to go down in history for signing a second treaty leading to the re-imposition of a hard border.

Besides, Irish and EU officials reject the idea that carving out a special status for Northern Ireland would undermine the U.K. constitution: they note that the U.K. already accepts regulatory divergence from U.K. standards in Northern Ireland, such as the arrangements underpinning the all-island electricity market. It also argues that there are many examples of separate regulatory arrangements within sovereign states. The U.K. was instrumental in establishing exactly such an arrangement in Hong Kong in 1984.

Can this deadlock be broken? That's not clear.

But the pressure is clearly on Mrs. May. She needs to make sufficient progress in December, both to shore up her political position and to avoid an exodus of business as companies activate their contingency plans in the New Year.

But to make progress, Mrs. May will need to acknowledge that her current policy on Northern Ireland is based on three incompatible red lines: no membership of the EU customs union or single market; no hard border in Ireland; and no border in the Irish Sea. Dublin and Brussels are determined to that the UK government should spell out how these red lines will be redrawn; the fate of Brexit may hinge on the outcome of this harsh confrontation with reality.

Write to Simon Nixon at simon.nixon@wsj.com

(END) Dow Jones Newswires

November 22, 2017 17:57 ET (22:57 GMT)