EU's Barnier Throws Brexit Bone to Battered Theresa May

(Bloomberg) -- The European Union gave U.K. Prime Minister Theresa May a glimmer of hope that her Brexit plan could provide a way forward in deadlocked negotiations.

After a dramatic two weeks in which May’s blueprint sparked a domestic political crisis, EU chief negotiator Michel Barnier said he’s willing to consider alternative proposals to his own plan for resolving the most difficult aspect of the divorce: how to avoid a hard border with Ireland.

Barnier noticeably softened his tone toward May’s proposed terms for the final exit deal, which he wants finalized by November. He said several parts of her plan will form the basis for a constructive discussion, even as others raised questions and clashed with the EU’s principles. The pound rose.

On the issue of the Irish border, Barnier said the EU is open to improving or amending the proposal it has put forward, which May has repeatedly said is unacceptable. Still, EU officials have said they will look at the language but their goals remain unchanged.

“We need to de-dramatize things,” Barnier said at a press conference in Brussels after meeting EU ministers on Friday. “I’m sure we’ll find a way forward.”

Negotiations over the U.K.’s withdrawal from the bloc have practically ground to a halt over the issue of how to avoid the need to police the Irish border when it becomes the frontier between the U.K. and the EU. The bloc has insisted that the U.K. government sign up to a workable guarantee before it will conclude any exit deal.

The pound rose against the euro for the first time in five days, and strengthened 0.7 percent against the dollar.

Barnier spoke after a meeting of European affairs ministers from the 27 EU nations who had gathered to discuss the U.K.’s “white paper” vision for post-Brext ties. Whilst striving for a more encouraging tone, the 67 year-old Frenchman warned May that he did not understand key parts of her blueprint.

On July 12, May set out her detailed vision for the future relationship between the EU and the U.K. in a 98-page paper. The document proposed keeping Britain tied to the European single market regulations for goods and agrifood but breaking free for services. It also proposed an innovative new customs plan under which British officials would collect EU tariffs at the U.K. border on goods destined for other countries in the bloc.

May’s proposals for keeping close to the EU market infuriated pro-Brexit members of her Tory government, prompting both her Brexit Secretary David Davis and Foreign Secretary Boris Johnson to resign in protest.

“This white paper is a result of intense internal debate in the U.K. that was necessary and we’ve all seen this debate in the U.K. is not over yet,” said Barnier. “There are several elements in white paper that open the way to a constructive discussion.”

He cited the U.K.’s focus on a trade agreement, its commitment to a level playing field and the willingness to continue cooperating on security. Still, he questioned whether the British proposal is compatible with the EU need to maintain the integrity of its single market.

Earlier on Friday, May used a trip to Belfast to call on the EU to budge on the issue of the Irish border. She said the EU’s so-called "backstop" proposal to avoid a hard Irish border -- which is to put control points between Northern Ireland and the rest of the U.K. -- “could never be accepted.” The situation for May is even more delicate as her government is propped up by a Northern Irish party whose main goal is to keep Northern Ireland part of the U.K.

Barnier appeared keen to give her some hope that the EU will be flexible. “We’re going to continue working on this,” he said. “We need a backstop, perhaps not our backtop but there will be a backstop.”

EU officials have said they are open to tweaking the language of the backstop clause, but the intent will remain the same. Barnier said the EU isn’t trying to put a border between Northern Ireland and Britain, just some checks on goods to protect consumers. He noted that some checks already exist between Northern Ireland and Britain, for example on animal imports.

©2018 Bloomberg L.P.