What Is Going On With Brexit After 'No Deal' On The EU 'Divorce'?

It's complicated.

Theresa May went to Brussels on Wednesday in order to seal a deal to take the UK a big step closer to quitting the European Union. Everyone thought it was a formality. It wasn’t.

As it was confirmed there was no agreement on the Brexit ‘divorce’ settlement, here’s where everyone stands after a day of high political drama:

What is the issue with the Irish border?

The Irish border - specifically the border between EU-member Ireland and the British region of Northern Ireland - is proving to be a major obstacle. Protracted talks over its future status is preventing negotiations between the UK government and the EU to start over a future trade agreement.

Dublin fears the creation of a ‘hard border’, replacing the existing ‘soft’ arrangement, could disrupt 20 years of delicate peace in Northern Ireland and put the Good Friday Agreement in jeopardy.

Some have alluded to the the army checkpoints and watchtowers that dotted the 310-mile border during the Troubles, and Ireland has sought assurances that nothing similar will be revived.

However, there has been a stalemate.

Theresa May and Jean-Claude Juncker announce the 'no deal' in Brussels on Monday afternoon
Theresa May and Jean-Claude Juncker announce the 'no deal' in Brussels on Monday afternoon
Yves Herman / Reuters

Ireland has called on Theresa May to keep Northern Ireland in the EU’s customs union - essentially a free trade area - in order to avoid the ‘hard’ border.

But, as the UK government is at pains to argue, this goes against the principles of Brexit, which it says must include the UK leaving both the customs union and the single market, which permits free movement of goods, people, services and capital.

That’s enough of a catch-22 without the Democratic Unionist Party potentially bringing down the minority Conservative government.

Why is the Democratic Unionist Party (DUP) having an influence?

The Northern Irish DUP and its 10 MPs in Westminster has been propping up the Tories after signing a ‘confidence and supply’ agreement following May’s disastrous snap General Election. Walking away from the deal is the Northern Irish party’s trump card.

Last week, speculation mounted that a deal was being thrashed out to harmonise trading relations in some areas between Northern Ireland and the EU (or, in other words, the Irish republic). The DUP appeared willing play its hand, hinting that any deal to “placate Dublin and the EU” would mean the Conservatives “can’t rely on our vote”.

So how does the UK government satisfy both Northern Ireland and Ireland?

With great difficulty.

On Monday, a leak of a draft text suggested the UK had agreed that Northern Ireland would maintain ‘regulatory alignment’ with the EU to prevent the need for customs checks at the border.

A 15-page joint statement from the European Commission and the UK stated that “in the absence of agreed solutions the UK will ensure that there continues to be continued regulatory alignment” with the internal market and customs union.

This is where confusion reigned supreme.

As the text was passed around Brussels, London, Dublin and Belfast, debate raged over whether ‘regulatory alignment’ constituted effectively still being an EU member. A former Treasury adviser did not think so:

As press conferences and lunches were arranged and cancelled as reports varied as to whether the DUP and the Irish government had agreed the deal, it was soon clear the unionists would not buy it.

DUP leader Arlene Foster, in robust fashion, told reporters they could not back the proposal.

“We will not accept any kind of regulatory divergence which separates Northern Ireland economically or politically from the rest of the UK,” she said.

“Northern Ireland must leave the EU on the same terms as the rest of the United Kingdom.”

Why is the Irish border dispute blocking wider Brexit negotiations?

Meanwhile in Brussels, May was hoping to announce that a deal had been agreed on Northern Ireland, as well as the rights of EU citizens after Brexit and how much the UK is willing to pay as part of the ‘divorce’ bill.

So with the DUP effectively nixing the border solution, the UK Prime Minister was left in limbo (May was having lunch during the DUP press statement, and had to break from talks to phone its leader Foster to meet her concerns).

Standing side-by-side with European Commission president Jean-Claude Juncker, she was forced to admit there was no agreement with Brussels on the entire divorce package.

But they remained confident on getting agreement, saying differences remain only on a “couple of issues” - with the Irish question still outstanding.

Negotiations over the ‘divorce’ settlement is known as Phase One, and is crucial to pushing on with Brexit. The EU insists Phase One has to be completed before moving on to Phase Two - namely the talks about fresh trading relationships between the UK and Europe.

Negotiators are working to a strict timetable, with the hope from the UK side being that Phase One is wrapped up before the December 14 summit of EU leaders. This, in turn, is seen as important to providing enough time for new trading arrangements to be thrashed out by March 29, 2019 - the day the UK official leaves the bloc.

Why has a ‘special’ deal for Northern Ireland prompted Scotland, Wales and London to ask for the same?

Both Nicola Sturgeon and Sadiq Khan demanded ‘special’ Brexit deals for Scotland and London, arguing there was no reason why other parts of the UK can’t get different treatment if Northern Ireland does.

Scotland’s Fist Minister said that if a Brexit deal can be done that “effectively” keeps Northern Ireland in the single European market, there is “surely no good practical reason” why others should not benefit from the same.

Both Scotland and Northern Ireland voted to remain part of the EU in the referendum.

The Mayor of London, buoyed by the capital voting by a margin of 59.9 percent to remain within the EU, followed suit:

The domino effect continued, with Welsh first minister Carwyn Jones also calling for Wales to be allowed to stay in the single market if other parts of the UK could.

Brussels correspondents, however, suggested they might be guilty of political opportunism.

So is Brexit actually going to happen?

Despite the many moving parts, Brexit is moving ahead - but at a glacial speed that has led many to question whether it will lead to a decent deal given the multiple compromises already made.

A damning editorial in the London Evening Standard, edited by former chancellor George Osborne, pointed to the series of concessions the UK has made since the EU insisted the terms of trade couldn’t be negotiated until the divorce settlement was agreed. It pointed to:

- Foreign Secretary Boris Johnson telling Europe to “go whistle” if it wanted a generous divorce settlement, only for the UK now being close to agreeing to pay a £50 bn in return for favourable trade talks.

- Conceding to all the demands on future status of EU citizens living in the UK, which has included accepting involvement of the European Court of Justice - crossing one of May’s apparent ‘red lines’.

- The Irish border, and which Brexiteers “were publicly telling everyone it was a trivial issue which a clever camera could solve”.

All that aside, Donald Tusk, the chairman of EU leaders, said today that while time to reach an agreement on divorce terms is “getting very short”, a deal that would unblock talks on a future trade agreement is “still possible” by next week.

In short, it’s still on.


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