A mock funeral casket decorated with the words ‘RIP Brexit’ sits on display during an anti-Brexit protest outside the Houses of Parliament in London, U.K. (Photographer: Simon Dawson/Bloomberg)

A Cautionary Tale for How Brexit Summit Can Collapse

(Bloomberg) -- A summit next week is being heralded as Brexit’s defining moment. The U.K. wants a deal. The European Union expects a deal. But in private, both sides warn it could be a disaster – at least on the face of it.

It’s become a Brussels tradition to have late-night pow-wows where victory seems within reach, only to end in collapse. Then the opposite is also true, with round-the-clock talks that yield a coveted deal that seemed elusive. The Greek crisis was a litany of brinkmanship with agreements that were close to being struck only to be ditched. A rescue came at the 11th hour.

That’s why last month’s gathering of Europe’s leaders in the Austrian city of Salzburg is so instructive. Beyond the posturing and bluffing for public consumption, the two sides have never been closer to finalizing Britain’s departure from the EU even after what turned into a calamity for U.K. Prime Minister Theresa May.

A combination of accident and miscommunication meant that May returned to London to newspaper headlines describing her “humiliation” at the hands of her European counterparts. She stomped to a podium in London demanding more respect. Things were meant to have played out differently for her, and EU leaders know that next week she will need to come back tougher to play to her domestic audience.

A Cautionary Tale for How Brexit Summit Can Collapse

The following is an account of what went wrong in Salzburg, based on more than half a dozen diplomats with first-hand knowledge of how events unfolded. It’s a cautionary tale of what can happen when leaders get to put their names to a deal designed by their civil servants, and why appearances can be deceiving.

At the gathering in Mozart’s birthplace, Brexit was all about the mood music. The EU had planned to rally around May.

The idea was to resist bad-mouthing her latest Brexit thinking so that she could then head into her Conservative Party conference emboldened. Back home, her political enemies seemed poised for attack. The last thing the EU wanted was for May to succumb to a leadership challenge.

“Somehow it ended up in an accident where both the European Union and Theresa May, the U.K., seemed to drift away a little bit and that is not okay,” said Dutch Prime Minister Mark Rutte.

On Sept. 20, leaders discussed Brexit over a lunch of pumpkin soup and salmon while May and her team dined a few rooms away. Shortly after, EU President Donald Tusk bluntly announced in a news conference that Britain’s plan for post-Brexit economic cooperation “will not work.”

A Cautionary Tale for How Brexit Summit Can Collapse

May was rattled. Ever since the government published its blueprint for post-Brexit relations in July, it had asked the EU not to say anything negative about it in public. The divorce plan hashed out at the British prime minister’s retreat at Chequers already led to the resignations of her chief Brexit minister and her foreign secretary.

Angela Merkel’s German government tried to convince other leaders to hold the “Save Theresa” line through Salzburg, one diplomat said. That was always going to be unrealistic, a second diplomat from a different country said.

May’s bungle had started the night before when she addressed her counterparts over dinner. Despite knowing the objections in the room to her latest proposals, she told them it was “Chequers or nothing.”

“That lost her 10 member states,” according to one diplomat. Then, when she tried to divide the group by claiming that Belgium and the Netherlands supported her, she lost them too.

Leaders were already irked by an article she had written for a German newspaper and they saw it as bad diplomacy when she started to read parts out to them. It didn’t help when Hungarian Prime Minister Viktor Orban, reviled by French President Emmanuel Macron as the embodiment of anti-EU nationalism, arrived at the summit with warm words for the U.K.

A Cautionary Tale for How Brexit Summit Can Collapse

The EU camp also made mistakes. On Instagram, Tusk published a photograph of him and May with a tray of cakes alongside the caption “sorry, no cherries,” a reference to the EU’s belief that the U.K. is trying to “cherry-pick” the parts of EU membership it wants. May is diabetic and EU officials acknowledge the move was misjudged.

It’s yet another example of why, despite some optimism that a deal on the U.K.’s withdrawal treaty is looming, diplomats still talk of another potential “car crash.”

The gathering will start on Wednesday evening rather than the originally scheduled Thursday afternoon to clear the way for what another diplomat predicted to be “a long night of drama.” EU staff have been told to prepare to work till dawn. Others have been told not to even arrive until after dinner. May’s presence at the meal hasn’t even been confirmed.

It hasn’t escaped the notice of EU officials that May was able to turn Salzburg to her own advantage by portraying herself as a prime minister standing up to truculent Europeans. One EU diplomat involved in the talks said it was always going to be the case that Britain would tap into World War II pride. 

“We’ve always said the Brits would have to evoke the Blitz spirit before doing the deal,” the person said, referring to when the nation withstood German bombing raids.

Officials in Brussels also suspect May needs a “fight” with the EU before she gets the necessary backing. She needs support from her divided Conservatives, the Northern Irish party she’s allied with and from lawmakers in the opposition Labour Party to muscle a Brexit deal through a parliament because she doesn’t command a majority.

The current plan is for the bulk of the U.K.’s divorce agreement to be sealed next week, leaving a month for the two sides to work on a statement on future relations before another summit penciled in for mid November. But, like with Greece in 2015, time is on the side of the EU. Unlike May, they can let things run and diplomats are already raising the prospect of meetings in December or January instead.

“If October is a breakdown,” one EU diplomat said, “we’d wait for them to get on their knees and beg us to come back and talk.”

©2018 Bloomberg L.P.