Boris Johnson’s EU Nemesis Starts to Loosen His Tie

(Bloomberg Opinion) -- What did they put in the coffee when the European Commission boss Jean-Claude Juncker met with U.K. Prime Minister Boris Johnson earlier this week? At the time the encounter seemed like a humiliation for Johnson, who was described by the Financial Times as “slumping” in his chair when he realized how little chance he had of getting a new a-la-carte Brexit deal from the EU by Oct. 31.

It turns out Juncker has a completely different interpretation of events. He told Sky News that the meeting was “positive,” that “we can have a deal” and that the Irish backstop proposal (to avoid a hard border post-Brexit) could be scrapped. “I don’t have an erotic relationship with the backstop,” he quipped awkwardly.

Nobody should assume, however, that he’s ready to move on quite yet. Juncker insisted too that the backstop could only go if it was replaced by something else to protect the integrity of the single market while upholding peace in Northern Ireland. Judging by Irish Foreign Minister Simon Coveney’s gloomy comments on Friday morning, those alternative arrangements haven’t been found. The price of sterling yo-yo’d, briefly hitting a recent high before falling back to a virtually unchanged level.

Even if Juncker’s loosening of his tie is just a change in mood music, it serves a purpose. The warm words juxtaposed with Ireland’s caution are part of an elaborate dance on the European side to encourage Johnson to get on with it, while also maintaining the unity of EU member states.

The EU nations are getting closer to a common position on Brexit ahead of next month’s leadership summit, as was evident from Luxembourg Prime Minister Xavier Bettel’s surreal press conference this week featuring an empty podium where Johnson should have been. Country after country — from Luxembourg and France to Spain and the Netherlands — has made it clear that it’s up to the U.K. to deliver concrete proposals on a backstop alternative and to provide a good reason for any delay to the Brexit date.

Mini-deadlines on any new proposals from Johnson (set by Germany’s Angela Merkel and France’s Emmanuel Macron) are part of the strategy; Europe’s politicians want to avoid the blame should Johnson’s brinkmanship end up crashing the U.K. out of the EU on Halloween.

Juncker must realize that the prospect of no deal is weighing heavily on European governments’ minds; this will become especially acute the closer the October summit gets. Brussels doesn’t want to cave in to Johnson but neither does it want a hard break that would damage the euro zone’s already fragile economy.

The Ireland question is make or break. What if a sub-optimal compromise on the backstop was rejected in favor of no deal, only to see that same arrangement eventually agreed upon after Britain has crashed out? If the pessimistic forecasts of a long-term $250 billion cost to the EU of a Halloween exit prove correct, that would be an expensive mistake for Europe.

For all the insistence of Brussels technocrats that the EU is prepared for no deal, there isn’t much in place beyond its emergency contingency plans. That’s why Juncker describes Johnson’s sketchy plan of Northern Ireland following EU rules on some sectors as a “starting point,” and the idea of customs checks being done away from the border as an “arriving point.” There isn’t much else to hold onto at this stage.

It’s far from certain, though, that Johnson could deliver on that arriving point. It’s still down to the U.K. to decide on what it wants to do, and then push it through its own fractious parliament.

This won’t be easy. Brexit is like the dance of the seven veils and it’s seductive at times to imagine a deal is within reach; pound traders fall for it every time a European leader offers some tantalizing (and vague) words. Johnson isn’t someone who likes to deal in political realities. This time he can’t avoid them.

To contact the editor responsible for this story: James Boxell at jboxell@bloomberg.net

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.

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