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EU Leaders Planning Emergency 'No Deal' Summit As UK Conservatives Scuttle Draft Brexit Plan

If you didn’t already, developments related to the ongoing negotiations over a Brexit agreement outline – negotiations that, as far as we know, have been an unmitigated trainwreck – should almost engender pity for UK Prime Minister Theresa May and the impossible situation in which she now finds herself. Without a parliamentary majority to fall back on, May has been caught between the warring demands of a fractious conservative caucus and EU leaders who are seemingly unsympathetic to the UK’s plight.

Indeed, the poor girl – who for the past few months has been laboring under the threat of internal mutiny – never really had much of a chance to begin with, as the bewildering process of squaring the myriad opposing interests involved in the negotiations – from the pro-remain Labour MPs on whom she must ultimately depend for a modicum of support, to the Brexit hardliners who oppose anything suggesting that the will of the 17.4 million voters who supported leaving the EU could be ignored, to the EU leaders sensitive to “undermining the integrity of the single market” – could be compared favorably to being stretched across the rack.

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And in the latest development threatening to roil UK markets on Monday, as the possibility that negotiators will meet the self-imposed deadline for producing an elusive draft “political statement,” the Guardian reported on Sunday that EU leaders are prepared to abandon a November conference where the agreement (which will, in reality, likely take the form of a vague “political statement”) was supposed to receive the final signoffs from both sides before heading to a vote in the EU Parliament, UK and Dublin. In its place, EU leaders are considering holding a summit to hash out a plan for an extraordinary “no deal” Brexit. Reports about the possibility of an emergency summit followed another round of conflicting reports about the status of a deal – with reports that a draft agreement had been reached were once again immediately followed by anonymously sourced reports to the contrary on Sunday.

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These reports closely followed an editorial published by Arlene Foster, the leader of Northern Ireland’s Democratic Unionist Party, claiming that her bloc would oppose any agreement leaving open the possibility that any substantive borders could arise between Northern Ireland and the rest of the UK, a possibility that Foster said would be tantamount to the “annexation” of Northern Ireland by the EU.

This development has apparently shattered EU negotiators’ willful illusion that May might be able to unite Parliament around an agreement that the Continent would also find palatable. What’s worse, these last-minute difficulties arose after both sides had leaked hat a draft agreement had nearly been reached.

In response to concerns over May’s ability to hold her government together and push through a deal, however, the EU is now planning an alternative use for the November summit should it be required.

The bloc’s deputy chief negotiator, Sabine Weyand, had told EU ambassadors gathering in Luxembourg on Friday that talks were progressing well, and that results might be made public as early as Monday. One senior EU diplomat said: “The wedding knot is tied.”

The two negotiating teams were due to make an assessment of the state of play on Sunday evening. A leaked EU planning document, obtained by the German newspaper Süddeutsche Zeitung, noted: “Deal made, nothing made public (in theory).”

May’s volatile domestic situation remains the greatest risk to a deal. Internal government emails leaked to the Observer revealed on Sunday that the DUP leader, Arlene Foster, had privately let it be known that following a “hostile and difficult” meeting with the EU’s chief negotiator, Michel Barnier, last week that she was now ready for a no-deal scenario. She said she regarded it as the “likeliest outcome”.

In a story published in Sunday’s Financial Times, the paper’s reporters offered a broad outline of the negotiations surrounding the Brexit withdrawal treaty and its controversial “backstop” plan (which has been revised again and again since the initial agreement-to-agree on a protocol for the Irish border was reached last December).

Mrs May has said that leaving the customs union is “non-negotiable” and the deal is expected to be premised on Britain ultimately pursuing an independent trade policy, with separate agreements from the EU around the world.

But any deal this week will turn on Britain being able to stay in a “temporary customs arrangement” with the EU while the Northern Irish border issue is solved — a period that will be finite but without an immovable end date.

Such an option will allow Mrs May will be able to say she has agreed terms to ensure Britain’s economic union with Northern Ireland will remain undivided, at least in terms of the UK’s customs territory.

But as a point of law, the withdrawal treaty will also make clear that regulatory and customs barriers could be erected across the Irish Sea as a last resort as part of a “backstop” plan specific to Northern Ireland.

It is for this reason that Mrs May’s partners the Democratic Unionist party are threatening to oppose the deal. Writing in the Belfast Telegraph this weekend, Arlene Foster, DUP leader, urged Mrs May “to stand by her principles and instincts rather than accepting a dodgy deal foisted on her by others”.

While EU officials reportedly insisted that these preparations represent a “parallel track” to negotiations over a deal, the preparations will include plans to avoid such practical concerns as how to avoid “long lines of lorries” arriving from the UK from piling up at customs.

The European commission’s secretary general, Martin Selmayr, told member states last month that their governments would need to decide how far it would be in the EU’s interest to mitigate some of the impacts of a scenario in which the UK leaves the bloc without a deal.

A senior EU diplomat said leaders at the November summit would also want to coordinate their responses in areas where national governments have competence, such as contingency measures to avoid long queues of lorries waiting at customs, or in aviation and haulage.

A senior EU diplomat said: “Preparations on contingency are really advancing in almost all member states. We’re in close contact with our neighbours and exchanging all these issues. The commission has beefed up its team working on contingency.”

“This is a parallel track. We’re going to do this anyhow whatever the outcome because even if there’s a positive outcome [this week] we’ll still need to continue preparedness and contingency because we can never exclude the possibility that negotiations will break down at a later stage”, the same source said.

“Unless we have a final deal agreed upon by the House of Commons and the British parliamentary system we’ll carry on with our preparedness and contingency. That’s normal work.”

As a reminder, here’s a timeline of important Brexit-related dates and a summary of four different possible outcomes once “Brexit Day” (set for March 29, the last business day of the first quarter) arrives (charts courtesy of ING and Statista):

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It’s not surprising that the EU is moving ahead with this badly needed contingency planning. What is surprising, however, is that it took them this long – though we imagine they held off to avoid any damaging leaks that could have further destabilized May’s already tenuous grip on power. With nearly all of the difficulties over the negotiations arising from the UK’s side, it’s worth asking at what point will the UK’s Continental partners simply throw up their hands and walk away?

Source: zerohedge.com

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