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For Theresa May Brexit News only Gets Worse
12 Oct 2017

Brexit

With less than 18 months to go before Britain is scheduled to leave the European Union, and with British businesses growing increasingly concerned about the future, this was the moment Prime Minister Theresa May hoped for a breakthrough in the paralyzed negotiations on the process known as Brexit.

Instead, she is fighting a tense battle to stop the talks from collapsing.

After phone calls to Berlin and Paris, and the first of two visits to Brussels in three days, the most Mrs. May accomplished on Tuesday was a promise to keep talking. However, this dialogue does not yet include the subjects Mrs. May wants to discuss: a transition deal to prevent an economically damaging “cliff-edge” Brexit and future trade relations.

This week, she is to make her pitch to European Union leaders at a summit meeting in Brussels, but the main discussion of Britain’s departure from the bloc will happen after Mrs. May has left the room.

Both at home and abroad, the prime minister is hamstrung by her political fragility. She is constantly forced to mediate between warring factions in her cabinet, some of whom want a quick, clean break with the bloc, while others fret about protecting the economy. She must also fend off doubts on the Continent about her ability to deliver a deal, even if one is agreed to.

“Britain is not seen as a credible negotiating partner,” said Charles Grant, director of the Center for European Reform, a London-based research institute. “Continental Europeans read Britain’s newspapers and watch its TV news, and it seems very confused. They don’t know who is in charge, and who speaks for the government.”

Jens Geier, who leads Social Democratic lawmakers from Germany in the European Parliament, has a similar perspective. “Looking at the never-ending Internal divisions within the Conservative Party, we in Brussels are wondering how much leeway Theresa May has at all,” he said, “and if she is actually able to deliver, or whether she will be undermined by other members of her cabinet.”

So bad is the situation that perhaps the best thing Mrs. May has going for her are worries among European officials of a doomsday feedback loop. The lack of progress in Brussels could strengthen the Brexit hard-liners in Mrs. May’s Conservative Party, who want Britain to crash out without a deal, cutting ties as it heads for the cliff edge.

To avoid that, the European officials say, they need to offer at least glimmers of hope to Mrs. May if only to make progress on a transition agreement and trade negotiations.

At the heart of the current stumbling block is a Catch-22. The 27 other European Union nations want Britain to commit to paying more than $60 billion as part of a divorce deal, before discussing Mrs. May’s ideas for a two-year transition and for a new trade relationship.

But money is one of Britain’s few negotiating cards, and it could be politically disastrous for Mrs. May to promise such a hefty divorce payment unless she gets a transitional deal and a future trade arrangement in return. So, Britain wants to finalize the financial payment at the end of the deal.

Continental Europeans have an interest in an agreement, too, as a failure to reach a deal would hit their exporters hard. Mrs. May thought she had broken the deadlock in September with a speech in Florence, Italy, in which she took some risks with her party by promising to pay around 20 billion euros, or about $23.5 billion, in 2019 and 2020.

The British have a point when they say that some of the issues that the 27 other members of the bloc want to be resolved before moving to trade talks — such as the border between Ireland and Northern Ireland — are probably insoluble without a broader agreement on future trade relations.

But with the clock ticking to the planned departure, in March 2019, and British businesses threatening to cut off domestic investment and to begin shifting jobs to the Continent, the European Union has all the leverage.