Salzburg was the centre of attention this week, with EU leaders gathering for a key Brexit summit in the Austrian city. This meeting was billed as a rare opportunity for British Prime Minister Theresa May to sell her Chequers proposals directly to national EU leaders, rather than negotiating through the European Commission and Michel Barnier.
Until now, the Chequers proposals had received a lukewarm reception from the European Commission. However, the British government believed that by talking directly to national leaders, political pragmatism would dominate and a more flexible approach would emerge from the EU that would at least open the doors to movement and further discussions in the talks.
The Chequers proposal was flexible, designed as the only real option that could forge a path between all the red lines on both the UK and EU side. It allowed the UK to leave the customs union while ensuring there is no hard border in Northern Ireland or between Northern Ireland and the rest of the UK. It may not have been perfect but it was the only attempt, from either side, to find a possible path forward.
It appears though that EU leaders were never prepared to show any flexibility. They left the summit with many publicly rejecting the Chequers proposal. Officially, the EU reiterated its existing position, that the UK effectively has only two choices in a deal. Either stay fully in the customs union and single market (with no say over the rules) or accept a border in the UK between Northern Ireland and Great Britain.
The EU has at least been consistent in its position, even if its hard-headedness has driven the talks down a complete dead end. No UK Prime Minister could ever accept the two options offered by the EU. British politicians have stated this many times yet the EU continues to demand the impossible from the UK.
The EU also insists Brexit cannot undermine the integrity of the single market. However, virtually every previous trade deal struck by the EU has regularly done just that. Canada has near complete access for goods, but not for labour or services. Norway, in the single market, has no preferential access for agricultural products. The EU single market for services itself is far from complete - try being a hairdresser in Germany or a ski instructor in France. Every day EU governments undermine the single market by passing laws that keep other European products out. In many cases, the European Commission fails to challenge these barriers.
The EU position on the single market therefore appears opportunistic and effectively rules out any agreement; the UK have made it clear that it cannot accept continued free movement of people after Brexit.
Its position on the Irish border reinforces that further by ruling out any option in which Northern Ireland leaves the single market, meaning either the whole UK stays in (including free movement) or the province is cut off from the rest of the UK.
These sort of tactics may work on small countries; they are not that different from the tactics used on Greece during the bailout talks. But they are unlikely to work on a country the size of the UK, which itself also possesses a strong streak of independence
It is likely that the UK approach gets some criticism in the coming weeks, but the UK has put proposals on the table and has tried to find a way to meet all concerns. It is the EU’s stance that has been stubborn and inflexible and is most likely to provoke a no deal scenario. Future historians will likely view this approach in a very negative way and deservedly so, as the approach deserves significant criticism.
It is unclear where the Salzburg summit leaves the talks. With six months to go until the UK leaves the EU, both sides need to overcame their differences quickly so that a deal can be done. Despite some positive comments that were made about the need for deal, this looks unlikely for now. However, EU negotiations do tend to come together straight after the most difficult times, so there is still the likelihood that a deal will be done
It is worth highlighting that the Chequers paper is most important in the context of the future trade relationship, and this could be fudged at this stage to allow the main negotiations to happen after the UK has left. It doesn’t need to be agreed to avoid a no deal scenario.
It is the Irish border backstop that threatens a no deal scenario. What do the two sides agree to do if no trade deal can be negotiated? Solve that conundrum and we will have a withdrawal agreement without getting into the key details of Chequers.
In Salzburg EU leaders gave the British government a month to come up with a new plan for Northern Ireland. Even if a new plan is forthcoming, it is difficult to see the EU accepting anything that deviates from their two options above, given the lack of flexibility they have demonstrated so far.
The impact of the Salzburg summit in the UK is also difficult to gauge. The government have to date ruled out extending article 50 or calling a second referendum. If the EU is not going to budge at all in the negotiations then there is only one option left. No deal at all.
Such a scenario would be a massive failure of diplomacy on all sides with existential challenges for the UK, for the EU and for the West as a whole. It would have significant global economic and political repercussions. It is still inconceivable at this stage. But with only six months to go, both the EU and the UK can’t afford to have too many more weeks like this. October’s EU summit will be the time for both sides to get it right.