News analysis

Britain edging towards preliminary Brexit deal, but at a price

British Prime Minister Theresa May remains optimistic about her ability to strike a deal with the European Union before the end of the week that will open the way to more substantive negotiations on Britain's trade links with Europe after Brexit.

"I am confident we can conclude this positively," Mrs May said.

She may be right to remain upbeat, notwithstanding the fact that the negotiations on Monday in Brussels ended with no agreement. In the words of Mr Jean-Claude Juncker, president of the European Commission, the "two sides are narrowing their positions" and hopes are high to "have a fair deal with Britain".

However, the biggest difficulty for Mrs May is not from Europe. Instead, it comes from her own parliamentary backbenchers and supporters at home, who are still bickering over Britain's position towards its former EU partners.

EU negotiators have always insisted that the Brexit talks be conducted in two consecutive stages. In the first round, matters such as how much Britain should continue to pay into the Union's coffers for existing financial obligations, border controls and what would be the status of EU citizens residing in the United Kingdom need to be settled.

Only after these are resolved could negotiations move to the long-term political and trade relationship between Britain and the rest of Europe.

Mrs May conceded that after leaving the EU, Britain will remain liable to pay around €40 billion (S$64 billion).

Anti-Europeans such as Mr Nigel Farage, the former leader of the UK Independence Party, swiftly denounced the financial agreement as a "bad deal".

But the fact that the British payments will be spread over decades and are largely unquantifiable at this moment made it easier for Mrs May to push through the arrangement, and fudge the question of the final bill.

The status of the estimated 3.5 million EU citizens in the UK also appears to have been settled.

But the biggest sticking point remains the status of the border between Northern Ireland and the Republic of Ireland.

Most of the largely Catholic people of Ireland resent that border since it was created by the British almost a century ago, when they gave Ireland its independence. But the Protestants in Northern Ireland are determined to remain part of the UK, and insist on maintaining the border, which contributed to many bouts of communal violence. In the last bloodshed which ended in the late 1990s, up to 3,000 people died.

Mrs May thought she could get around the problem by promising Ireland that the frontier "will not be a hard border", and that trade will continue to flow unhindered. But the 10 Protestant MPs who represent Northern Ireland objected to the implication that their province will have a separate status in the UK after Brexit, and vetoed the deal.

And since they hold the balance of power in the London Parliament, their words carry weight.

Mrs May was reportedly scheduled to discuss the issue with the Democratic Unionist Party, the largest in Northern Ireland, yesterday.

There are ways around the problem. All of Britain could remain part of a Customs union with the EU, which would diminish the need for special Northern Ireland border arrangements. And although Ireland's Prime Minister Leo Varadkar admits to be "surprised and disappointed" by the latest impasse, Britain is his country's biggest trading partner, and he has been moderate in his criticism.

There is also a feeling among other EU leaders that they must not miss the chance of moving to substantive talks on trade by year end. Chances are thus better than ever that a deal could still be hatched by the end of this week, and announced at the EU summit next week.

Still, the experience has been a lesson for Britain. For it now knows it will have to swallow its pride and accept whatever the EU is willing to give.

And it also knows that the price for Brexit would be much higher than anyone has imagined.

A version of this article appeared in the print edition of The Straits Times on December 06, 2017, with the headline 'Britain edging towards preliminary Brexit deal, but at a price'. Print Edition | Subscribe