Brexit Deal: Lost Irish leverage, or UK 'getting real'?

Updated / Saturday, 24 Mar 2018 14:47

By Tony Connelly

In Brussels this week there was a reprieve to the bad-tempered mood between Britain and Ireland over Brexit.

During a bilateral meeting on the fringes of the EU summit, Leo Varadkar offered his support to Theresa May on Russia, and she in turn recommitted to the famous December backstop deal (she also congratulated the Taoiseach on Ireland's rugby Grand Slam).

The EU gave the green light to a two year transition and adopted new negotiating guidelines that will underpin a future free trade deal.

Ireland, or at least the Irish issue, could have held up both. The fact that the Government did not wield its putative veto has caused unease.

"We have a situation," said Fianna Fáil’s Brexit spokesman Stephen Donnelly, "whereby a transition period has been agreed, and advanced discussions are set to get under way on trade without Ireland having secured any agreed wording on the border."

Has Ireland weakened its negotiating position?

There are good reasons to believe that Theresa May has been forced back into line on the backstop.  

But the UK now believes it has more room to manoeuvre, because the field of play includes the future trade relationship.

The deadline of agreeing the Withdrawal Agreement, or divorce treaty, by October is also concentrating minds and heightening tensions.

It was back on 8 November last year that the seed of the current standoff between London and Dublin was sown.

That was when Michel Barnier’s Task Force put forward, in an internal paper, the idea of Northern Ireland effectively staying in the customs union and single market.

"It...seems essential," the paper stated, "for the UK to commit to ensuring that a hard border on the island of Ireland is avoided, including by ensuring no emergence of regulatory divergence from those rules of the internal market and the Customs Union which are (or may be in the future) necessary for meaningful North South cooperation, the all-island economy and the protection of the Good Friday Agreement."

This was a game changer.  

The Task Force gambit, we now know, was the culmination of the "mapping" of all those areas of North South cooperation under the Good Friday Agreement that relied on mutual membership of the EU on both sides of the border.

It framed the problem in a more expansive way, referring to "the all-island economy" and the need to future-proof any deal.

It was a conscious escalation by Dublin, frustrated as it was by a strong belief that London was refusing to "get serious" on its promise to avoid a hard border.

The 8 November paper became the basis for what was agreed in December.

On 4 December, both the EU and UK were on the verge of a deal that spelled out three solutions for avoiding a hard border.  

The third solution  was a guarantee by London that it would "maintain continued alignment" of the rules of the single market and customs union North and South.

The deal collapsed when the DUP saw a leaked version of it. The party was incensed that by aligning Northern Ireland to the single market and customs union, it would necessarily mean the North being treated differently to the rest of the UK, and that checks would be required along the Irish Sea.

On 8 December, the deal was salvaged with extra language to placate the DUP, to the effect that there would be no barriers to trade between Northern Ireland and Great Britain.

But the gist of regulatory alignment remained.

Paragraph 49 of the so called Joint Report set out the three solutions: a border would be avoided through a free trade deal (Option A), or through specific solutions, such as technology and customs exemptions etc (Option B), or the backstop (Option C), in which "the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 [Good Friday] Agreement."

When Paragraph 49 was converted into a draft legal text in the shape of a legally binding protocol and published on 28 February, the notion of "full alignment" was fleshed out in stark legal language as a "common regulatory space" on the island of Ireland in which goods would flow back and forth and there would be no border checks.

Theresa May immediately denounced the presentation of the text in the House of Commons.  

"The draft legal text that the Commission has published would, if implemented," she said, "undermine the UK common market and threaten the constitutional integrity of the UK by creating a customs and regulatory border down the Irish Sea, and no UK prime minister could ever agree to it."

Knowing the political quagmire in which Theresa May finds herself, Irish officials half expected such a response. But they believed the British side were being at best disingenuous.  

"It was a bit of an attempt on the British side to pretend that this was a big surprise, and a big shock," says one senior Irish source.

"We would have said that was nonsense. We've been talking about this for three months. And they'd also had three months to put other things on the table if they didn't like what was coming."

The point was, that it was in the Task Force’s gift to draw up the first draft of the Withdrawal Agreement.  By rejecting it out of hand, Theresa May could not expect the Task Force to simply rip up the complex Irish Protocol and start from scratch.

In fact, other capitals were more taken back by Theresa May’s House of Commons speech than Ireland.  

According to two sources, it immediately raised suspicions that the UK was backsliding on the December guarantee, and could therefore be up to mischief elsewhere. Other member states would be more determined to hold London to account.

London saw things entirely differently. "The draft text was very specifically dividing the UK," says one source close to the British negotiating team, "by leaving one bit of it in effect within the customs union and single market and the rest of it out. That was something she couldn't accept. She couldn't sign off on the way they'd done it."

Dublin would not be able to let things stand, however.  As this week's European Council approached, the UK desperately needed the EU27 to approve a two year transition to run from March 2019. This was basically the last chance for business to decide on whether or not to to relocate outside the UK in time for Brexit coming into effect.

This left Dublin in a bind: should Ireland hold up the transition because of May's blunt rejection of the draft protocol on the Irish border, or should the government acquiesce, knowing Irish farmers and businesses are also desperate for a two-year transition?

An added irritant from Dublin's point of view was a high degree of briefing from London that the Irish issue was being spun off into a siding in which Ireland and the UK would get into long-running bilateral negotiations on the Protocol.

"There’s definitely been an attempt [by London] to say, oh, we've created this side-channel for the Irish issues so they can park that until some time in the future," says one Irish source.

"That was not a credible option for us, or for the Task Force."

British officials say they were worried that Leo Varadkar would hold up the transition. They were also starting to finesse what Theresa May had actually said in the House of Commons.

"About a fortnight ago," says one source close to the British negotiating team, "we weren’t sure whether Varadkar was going to decide to try and hold up the transition deal or not. Then 10 days ago it became clear he probably didn't want to blow up the whole process, because transition is very important to the Irish Government, and Northern Ireland.

"But he needed to be sure the PM's rejection of the protocol was on the basis of how the Protocol had been written, not a fundamental rejection of Plan C [i.e., the alignment backstop]."

Discussions between Irish, British and European Commission Task Force officials intensified in the fortnight leading up to this week's summit.  A British suggestion that Theresa May reaffirm her commitment to the December Joint Report in a letter to Donald Tusk, the European Council President, gained currency.  

"What we were saying was," explains one Irish source, "in the light of what has happened, we need a reassurance and a re-commitment. We can't keep on renegotiating things we thought we'd already negotiated, so there has to be some firm restatement of commitment. At that point the British said they'd consider a letter.

Dublin calculated that Britain was worried about the transition being held up if the Irish issue was left hanging.

"They knew they had to find a way and that the onus was on them to narrow the gap.  We were not asking them to sign up unconditionally to the [draft legal] text. But we absolutely had to find a way to narrow the gap."

The gap appears to have been narrowed by Theresa May’s letter. "I am committed," she wrote to Donald Tusk, "to agreeing in the Withdrawal Agreement operational legal text for at least the so-called 'backstop option' set out in the [December] Joint Report, in parallel with these other [options A and B] scenarios."

Other senior EU officials closely involved in the Brexit negotiations regarded the letter as encouraging, if not entirely a climb down.

"It’s reaffirming that [the] December [Joint Report] still stands, and needs to be translated into legal text," says one EU official.  "All the issues under the protocol need to be sorted. So basically, it's agreeing the rules of the game. That in itself is valuable."

There was further reassurance from the DexEU Secretary David Davis and the EU’s chief negotiator Michel Barnier last Monday. In a statement, Davis said: "Make no mistake - both the United Kingdom and the European Union are committed to the Joint Report in its entirety.

"And in keeping with that commitment, we agree on the need to include legal text detailing the 'backstop' solution for the border between Northern Ireland and Ireland in the Withdrawal Agreement that is acceptable to both sides."

Also on Monday, the Task Force published the latest iteration of the 129-page draft Withdrawal Treaty, whose publication on 28 February had provoked the London and DUP backlash.

The draft Treaty had been examined over the previous three weeks by officials from all 27 member states, and EU and UK negotiators had worked intensively on the text last weekend.

Embedded at the beginning of the text was a guide to the document’s colour coding (green for the parts where both the EU and UK have agreed the text, yellow where negotiators have agreed on what outcome they're looking for, and white where there is still no agreement).

The guide prominently stated: "Negotiators agree that a legally operative version of the 'backstop' solution for the border between Northern Ireland and Ireland, in line with paragraph 49 of the Joint Report, should be agreed as part of the legal text of the Withdrawal Agreement, to apply unless and until another solution is found."

The Protocol on Ireland/Northern Ireland was intact, having undergone only minor changes (Greece had succeeded in strengthening language on the preamble to the Protocol in order to clarify that this was a unique arrangement for Ireland, and could not be used as a precedent for any border issues that involved Turkey).

The section on the Common Travel Area was in green, while the section on the human rights and non-discrimination provisions enshrined in the Good Friday Agreement was in yellow.

The text that had so enraged both the DUP and the Tory Party remained in the document, but was in white, meaning there was still no agreement.

"A common regulatory area comprising the Union and the United Kingdom in respect of Northern Ireland is hereby established. The common regulatory area shall constitute an area without internal borders in which the free movement of goods is ensured and North-South cooperation protected…"

Irish officials bristle at any suggestion that the Irish issue has been parked, or kicked into the long grass.

"In October, or towards the end of the year," insists one source, "there will be a Withdrawal Agreement, and it has to include a backstop. And it has to be legally operative. And the UK have agreed that all the issues that are set out in this version are the issues. They may say they can come up with other ways to deal with these issues - fine, that's open for them to do so. But when we get to the autumn, there will be a Withdrawal Agreement with a backdrop that is legally operative."

But with the transition agreed, and the Negotiating Guidelines for the future relationship between the EU and UK adopted, there is a new dynamic.

London and Dublin are, however, still looking at this in entirely different ways.

First of all, London has always said that the Irish border should be solvable through a definitive trade deal (Option A) and/or specific technical solutions (Option B).

Now that the Negotiating Guidelines have been adopted for that future trade deal, British officials say they can drill into these two options in a way that was off limits before.

Ireland and the EU would say the UK has had nearly two years to come up with specific and viable proposals and has still failed to do so.

The UK also wants parity of esteem for all three options in the Withdrawal Treaty. Ireland says that while it would prefer Option A - i.e., avoiding a border through a future trade deal - only Option C can be enshrined in the Withdrawal Treaty because the other two can only be realised in the future (hence the term "backstop").

London disputes this, and says the very fact that the Negotiating Guidelines for the future have been adopted this very week changes everything.

"If Plan C is an end state of the Withdrawal Agreement, then why can't you do A and B as an end state as well? That's something for the lawyers to hammer out. Now they've got a mandate to talk about the future, we can start to talk to [the EU] about what is the art of the possible."

Dublin, and the Task Force, say this is simply not possible: how can a legally binding international treaty have a series of "options" on how things will work. The Irish Government admits that theoretically an alternative to the "full alignment" backstop could materialise, but few, outside London, believe it is realistic.

For London, of course, the appeal of bundling all three options into the Treaty is political.  It would placate the DUP and hardline Eurosceptics.

"It’s not just about plan C," says one senior British source. "It’s about what is the answer for Northern Ireland."

The source adds: "We obviously want to work them out in the context of working out what the desired outcome is: A or B, as well as the backstop. The best answer for Northern Ireland is coming up with the outcome which both the UK and Irish Government say they want, which is A as modified by B.

"The politics of this mean we would all be much better off if we were talking about A, B and C together.  If you only focus on Option C, you are into the most difficult politics on both sides."

London now accepts that the backstop commitment, reaffirmed again by Theresa May in a bilateral with Leo Varadkar at the summit, will have to be given legal effect in the Withdrawal Treaty. But even then, there is ample scope for a wide divergence in how both sides interpret the December backstop.

"There won't be a watering down of the commitment," says a source close to the British negotiating team. "But work needs to be done to answer the question: what does 'full alignment mean'?  What does 'the UK will...' mean?"

These are the kinds of Jesuitical potholes that could bedevil Ireland’s determination to hold London to account.

One comfort for Dublin is that the UK has signed up to a short, intense negotiating schedule that will get to grips with the Irish Protocol over the next six weeks.

"A jointly agreed agenda," says one EU official, "means the Brits have bought into the structure of the talks, the issues and the scope of the Irish protocol."

Dublin is determined that those talks are tightly focused on giving the backstop legal effect, and that there will not be any significant departure from the 28 February text which Theresa May rejected.

"[These] meetings have to be useful," says one source. "They can't be a cross between a magical mystery tour and a toy town train ride. They have to start somewhere, and end somewhere."

Ireland and the Task Force will also be alert to London pursuing options A and B at the expense of C, or of talking up a backstop, and not the backstop. "You can't be plucking backstops out of the air," warns one EU diplomat.

Dublin is also keeping a strategic eye on the long arc of Brexit, now that the transition has been agreed.

Nothing will change on the Irish border until 1 January 2021 because of the two year transition. It is only then that the backstop would come into effect.

In October (at the earliest), the Withdrawal Treaty will be agreed. Alongside it there will be a political declaration on the shape of the future trade agreement. But turning that future trade agreement into a legal instrument will take much longer, and will most likely not be ready by March of next year.

That means there will be a 26 month period in which the political climate in London may become more favourable to the UK remaining in the customs union.

That is the kind of Option A Ireland likes. It would remove a major source of border checks, and would safeguard €65 billion in two-way trade between Ireland and the UK.

In the meantime, the negotiating programme which gets under way on Monday, will force all sides to confront the contradictions of the December deal.

"We’ve always said," says one source, "that for better or worse that's one of the consequences of having to face into the detail of the backstop. A lot of people said that December was a bit of a fudge. It’s now about reaching incrementally clearer statements.

"As you move from political statements to legal texts, the space for fudging or constructive ambiguity starts to disappear."

Other member states are not unsatisfied by this state of affairs. They see the Northern Ireland issue as forcing Britain to come clean, or to convince itself, of its exact direction of travel in the future, and what kind of trade deal it wants.

"They see working up of the backstop as a sort of proxy," says one source close to the negotiations, "a way of forcing the UK to face some of these contradictions."

Of course, the UK does not see these as contradictions. Negotiators will be determined to push the EU’s boundaries on the Irish border issue between now and June.

"Once we begin these discussions," says a British source, "we find out what 'flexible and imaginative' really means, and where that flexibility and imagination comes to bear.

"As it was explained to us by the Commission [Task Force], once they published the [Irish] Protocol, this is our opening position. You've got yours, we've got ours. Now let's start a negotiation. We've only got a short time to do it."

Brevity is in itself a cause for trepidation, however. The shorter the time, the greater the danger that pressures build towards the October deadline, and in the rough and tumble, Ireland's red lines get disrupted.

"There will be some nervousness on the Irish side," says a senior EU official, "and the rest of member states about leaving that all pending till the last minute. Because there’s the risk that under time pressure you end up signing off on something that's suboptimal."