Tory Rebels Hint No Stomach to Fight PM Next Week: Brexit Update

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Theresa May has averted a crisis, for now, and sent her proposal on how to solve the Irish border question to Brussels.

Amid speculation Brexit Secretary David Davis was preparing to resign over her proposal, May held crisis talks that resulted in new language on time-limiting her plan to tie Britain to European Union customs rules after leaving the bloc. It now says the backstop “should” end in December 2021, by which time it expects its new customs setup will be ready.

But the result is a fudge, not the Davis victory some are spinning. May has headed off another threat to her leadership, and her Brexit vision is the one sent to Brussels. It’s not at all clear her proposal will clear EU scrutiny, though after 24 hours of intense political drama, reaching the next stage of negotiations remains a victory of sorts. The fight has been postponed.

Liam Fox Backs Irish Border Proposal (6:04 p.m.)

Brexit-supporting Trade Secretary Liam Fox said the backstop proposal sent to Brussels is a "proper compromise." He also says the time-frame floated in the proposal would mean the U.K. will be clear of EU arrangements "well before the next election," which is due in 2022.

Cruddas Backs May to Carry On (4:54 p.m.)

Peter Cruddas, chief executive of CMC Markets and a contributor to Vote Leave, said now is not the time for a leadership challenge with “too much going on.”

“Just leave things alone,” Cruddas said in an interview. “It’s a crucial time. I wouldn’t like to see a leadership challenge at this stage. There’s too much going on. Let’s get our heads down and deliver Brexit and enjoy the moment.”

Asked if the prime minister was delivering the Brexit he wants, Cruddas gave her the benefit of the doubt -- though he also said “next week is crucial.”

“It’s too early to tell,” he said. “It seems to me that we just have to wait and see what happens in the next couple of weeks.”

Tory Rebels Hint No Stomach to Fight PM Next Week (4:20 p.m.)

Some good news for May, potentially.

Some rebel Conservatives aren’t minded to defeat the prime minister on her Brexit legislation this side of the June EU summit, because her position is already perilous and they’re afraid a parliamentary defeat could topple her, according to a person familiar with their thinking.

May’s EU Withdrawal Bill returns to the House of Commons next week, and lawmakers will debate 15 amendments introduced by the upper House of Lords. Most seek a softer Brexit -- and seek to give Parliament more power over the Brexit process.

The government has sought compromises on all amendments except two, making a mass rebellion unlikely, the person said.

Of the other two, one is already set to fail because Labour won’t back it. The other, on staying in the EU customs union, is so loosely worded that the government doesn’t consider it binding.

And while some Tory rebels do want the U.K. to remain in the EU customs union and its single market, they’re also inclined to keep their powder dry this time to save May’s job, the person said. With hardline Brexiters already threatening a backlash against May’s backstop proposal for the Irish border, a defeat over her Brexit bill could be the final nail.

Significantly, they’ll also get a later chance to rebel on Brexit. May’s Trade Bill is coming back to the Commons before the summer recess, potentially after the EU summit. Twelve Tories this week signed an amendment to the legislation calling for the U.K. to stay in the single market.

May might be in a stronger political position then, and lawmakers will be voting on more specific policies compared to the withdrawal bill amendments, the person said.

Brussels Says It Won’t Fly (3:40 p.m.)

As EU diplomats in Brussels begin to digest the U.K. proposal, they’re reacting with a mixture of confusion and dismay.

One described the government’s paper as a “joke,” and another as “backtracking.” A third said the EU would never be able to accept it without far greater clarification. All spoke on condition of anonymity because of the sensitivity of the Brexit negotiations.

“It’s a fudge that satisfies her cabinet, but it’s a fudge that’s practically irrelevant to reality,” said the first diplomat, who said it remained unclear what would happen if the future arrangement isn’t ready in December 2021.

There’s still the question of when the U.K. will engage with the issue of alignment of EU standards that’s needed to prevent a hard Irish border -- as well as why the U.K. is confusing the U.K-wide customs plan with the Ireland solution, the diplomat said.

That theme was expanded on by the second diplomat. The U.K. plan turns the Irish backstop solution into a U.K.-wide customs arrangement that would probably give the U.K. goods access to the internal market without the usual conditions, which “raises the question why we should do this,” the diplomat said.

Guy Verhofstadt, the Brexit coordinator in the European Parliament, was also dismissive: “Difficult to see how UK proposal on customs aspects of IE/NI backstop will deliver a workable solution,” he said on Twitter.

Brexiteers Not Happy (2:50 p.m.)

Tory lawmaker Peter Bone, a long-standing Brexit campaigner, doesn’t like the backstop.

“I hope it does fall at the first hurdle, it’s a stupid suggestion,” he says “Enough is enough. These negotiations are impossible with the European Union.”

He also accuses May of handing over control of negotiations to “Remoaners.”

“The person who should be driving and in total control of this negotiation is David Davis,” he tells Sky News. “There are officials and special advisers running the show in Brussels and that’s not acceptable.”

Barnier: EU Will Test If Backstop Is ‘All-Weather’ (2:02 p.m.)

The EU’s chief Brexit negotiator Michel Barnier said on Twitter he welcomed the U.K.’s publication and said analysis of it would focus on three main questions: Does it avoid a hard Irish border? Does it respect the integrity of the EU’s single market and customs union? Is it “all-weather,” meaning will it last until a more permanent arrangement takes effect?

The bloc’s negotiators have known what to expect for a month or so and have indicated they’re likely to give a (very) cautious welcome, while emphasizing there’s still a long way to go.

The EU has insisted that this arrangement must be time limited and officials in Brussels know that the end-2021 date mentioned in the text is no more than an aspirational deadline to satisfy May’s pro-Brexit cabinet members rather than anything that binds the EU.

The bloc will also be encouraged that the U.K. recognizes that this isn’t the full story and that the Irish border problem is more than just about customs. There needs to be a “joint approach on regulatory standards, which will also need to be addressed,” the document says.

But the EU won’t be happy, and won’t consider the Irish border problem resolved, until those issues are set in stone.

One European official said privately that May’s proposal could at least represent a reasonable jumping-off point for further talks, though the official warned that some will focus on the 2021 deadline and that some member states may not be prepared to indulge the U.K.’s penchant for ambiguity.

Irish Foreign Minister Simon Coveney said he looked forward to discussing Britain’s proposals, while making clear a “a great deal of work remains to be done.” He again stressed that “substantial progress on the backstop is needed before the June European Council.”

An Ambition Rather than a Deadline (1:33 p.m.)

The document has now been published online though it hasn’t formally been presented to the EU side yet.

As we reported at 12.52 p.m., the text fudges the key issue of when the customs backstop plan will end. Davis had been pressing May to set a cut-off date, but what has happened is in fact little more than a cut-off ambition.

The text says the backstop “should” be time limited (rather than “must” be) until new arrangements are in force.

“The U.K. expects the future arrangement to be in place by the end of December 2021 at the latest,” it says.

Davis isn’t resigning and his allies are claiming he’s won a significant concession from May -- but it’s not yet clear that fellow Brexiters will think language such as “should” and “expects” is strong enough. They want guarantees that the U.K. won’t be forced to stick with EU tariffs indefinitely.

It’s also not clear that the EU will take any notice of an end date expressed in this way. They have made clear a backstop has to be open-ended by definition.

The U.K. document acknowledges that the idea of a cut-off date needs a lot more work.

“There are a range of options for how a time limit could be delivered, which the U.K. will propose and discuss with the EU.”

Irish Backstop ‘Should’ End in Dec. 2021 (1:22 p.m.)

The document says the backstop arrangement “should” come to and end in December 2021, by which time a new customs and trading regime will be in place. It doesn’t look very binding.

The proposal is all about customs, which is only half the problem. The U.K. acknowledges there is also a regulatory issue to be discussed to ensure no hard border emerges in Ireland after leaving the bloc.

Currency Markets React (1:06 p.m.)

Meanwhile, the pound has fallen as much as 0.3 percent, erasing earlier gains, amid reports of a time limit on May’s backstop proposal -- something the EU has said it won’t accept.

The pound is suffering “from the ongoing soap opera in the Conservative Party as it becomes increasingly visible that there is no whatsoever common stance on the Brexit negotiation within the Tory party,” says Andreas Steno Larsen, a strategist at Nordea.

Irish Backstop Plan Said to ‘Fudge’ End-Date (12:52 p.m.)

A person familiar with the document tells Bloomberg.

Just to reiterate a point from earlier, the EU won’t accept any proposal that includes a fixed date for an agreement to expire.

May Said to Amend Brexit Plan After Davis Talks (12:41 p.m.)

A person familiar clarifies Davis’s position on May’s backstop proposal for the Irish border. The paper has been amended after talks between May and Davis, and now has “much more detail” on the time-limit for the plan, the person says.

Varadkar: EU Won’t Accept Time Limit on Border Plan (12:31 p.m.)

Irish Prime Minister Leo Varadkar spoke to local media on Thursday, and made clear that while he’s willing to look at any new wording from the U.K. on the backstop plan, the EU won’t accept any time limit on its insurance against a hard border emerging, TV3 reported. Varadkar said he’s not confident of an imminent breakthrough.

The EU’s position on this is well known, but it’s a reminder of the bind May is in as she tries to avoid submitting a proposal to the bloc that is instantly rejected.

May Calls Davis Back for Crisis Talks, BBC Says (12:03 p.m.)

BBC reports on Twitter. We’re still waiting for the backstop to be published, which could mean that an agreement hasn’t been reached.

Duncan: Referendum Possible on Brexit Deal (11:52 a.m.)

Foreign Office Minister Alan Duncan says Britain could hold a referendum on any exit deal it agrees with the EU -- though not on leaving the bloc itself.

“It would, I suppose, just be possible to ask the people in a referendum if they liked the exit deal or not,” Duncan says in a speech in Berlin. “It would not in reality offer people the option of reversing the original decision to leave the EU.”

U.K. Negotiators Await Instructions in Brussels (11:46 a.m.)

Meanwhile in Brussels, the latest round of Brexit negotiations has been going on since Tuesday.

The U.K. team is waiting for instructions from London on whether the language on an end date for May’s customs plan needs to be hardened to stop Davis quitting. They haven’t handed the document formally to the EU side (though the Europeans obviously know what’s coming), one person familiar with the situation said.

No One ‘Threatened to Resign’ (11:30 a.m.)

May’s spokeswoman, Alison Donnelly, declined to comment if Davis was now on board with the plan -- a backstop solution aimed at solving the Irish border issue. But she told reporters in London talks were “constructive” and that no one threatened to resign. The prime minister was confident Davis would remain in his role, she said.

The border backstop plan is expected to be today.

May Faces Cabinet Rebellion (9:24 a.m.)

May is facing a major cabinet rebellion over Brexit, in a conflict that could destabilize the whole government, according to people familiar with the matter.

Davis is said to be furious over May’s plan to tie the U.K. into European Union customs rules for an open-ended period of time after the country leaves the bloc next March. She argues it’s a necessary step to break the deadlock in talks with the EU.

The U.K.’s proposal was due to be given to the EU side Wednesday, but British negotiators are holding it back while May and Davis argue, officials said.

The issue rapidly became toxic, with Davis and his allies failing to quell speculation that he could quit over the row. Foreign Secretary Boris Johnson, Trade Secretary Liam Fox, and Michael Gove, the environment secretary, also object to the plan.

At the head of a fragile government with no automatic majority in Parliament, May also knows that the resignation of the minister responsible for her central Brexit policy could trigger a campaign to oust her among disillusioned members of her Tory party.

“To contemplate these negotiations continuing without David Davis would be deeply upsetting and deeply dangerous for the country and David Davis needs to stay where he is,” former Brexit minister David Jones told BBC Radio 4’s Today show. Backing his former boss’s position, he said that an open-ended customs deal “would just not be acceptable to the mass of the Conservative Party.”

Davis and his fellow euroskeptic ministers are ready to confront May over the policy at a crunch meeting of her Brexit “war cabinet” Thursday, the people said, speaking on condition of anonymity because the matter is sensitive. Davis won’t back down ahead of the meeting, although he and May could hold talks alone in a bid to hammer out their differences beforehand, the people said.

Davis did little to damp talk in the media that he could resign over the disagreement, when he said Wednesday that it is up to May whether he stays in her cabinet or not. Some government officials privately believe he will quit if May doesn’t back down, while others say they don’t know what he would do.

The latest crisis facing the premier is one she thought she’d successfully avoided. Last month, May persuaded Davis and the other pro-Brexit ministers in her inner cabinet that they should support her plan for a temporary customs arrangement with the EU, until a new system comes into force.

The plan was to have a fall-back option of keeping the U.K. aligned with EU tariff rules for longer. It was to be a last resort measure designed to solve the intractable problem of the Irish border. May’s officials drafted a paper setting down the proposal in writing, ready to be sent to the EU negotiating team for consideration this week.

But Davis apparently objected when he saw the document’s wording because although it stipulated that the extension of EU customs rules would be time limited, it did not say exactly when the arrangement would come to an end.

Brexit backers in May’s party fear the result will be that the U.K. is forced to remain inside the EU’s tariff rules forever, destroying their vision for the country’s future outside the bloc. If the U.K. applies the EU’s tariffs on goods imports, it won’t be able to negotiate effective trade deals with other countries, euroskeptic Tories believe.

Coming up:

  • May’s so-called Brexit war cabinet meets at 12:30 p.m.
  • Davis is scheduled to issue written statement to Parliament on Brexit
  • Lawmakers will debate the refusal of Vote Leave director Dominic Cummings to appear before a House of Commons select committee

Earlier:

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