BRUSSELS (Bloomberg) - Prime Minister Theresa May's first European Union summit since her disastrous election could mark the scene of the first big row of the Brexit negotiations as she outlines how Britain proposes to treat the bloc's citizens after it leaves.
Mrs May will run her fellow leaders through the principles of her approach towards EU nationals over dinner in Brussels on Thursday (June 22) before publishing a detailed plan on Monday. While this week's opening round of Brexit negotiations was considered by the two sides to be generally constructive, diplomats said Mrs May's plan for expats may lay bare the divisions between them.
"It's an early test," said Jonathan Portes, professor of economics and public policy at King's College London.
"If we can't get a sellable deal on this issue, which is less problematic than others, then we might be in trouble."
Britain's stance on the rights of an estimated 4.5 million European and British nationals living in each others' countries is expected to fall short of the EU's expectations, officials in Brussels said. Failure to find common ground quickly would jeopardise Britain's ability to strike a Brexit deal by the time it leaves the bloc in March 2019, and would likely at the very least delay when EU governments would be willing to discuss the trade accord Mrs May wants.
While both British and EU officials say they want to end the uncertainty for the millions of people involved, there are obstacles. They include what the rights are, which citizens get to enjoy them and whether Europe's top court will have the power to enforce them.
Mrs May must find a middle way between satisfying EU governments without running into opposition from eurosceptics at home.
Mrs May on Wednesday (June 21) unveiled a two-year programme of government that contained eight new laws to help Britain unravel itself from EU membership after 44 years. In the Belgian capital, she will face the likes of German Chancellor Angela Merkel, having lost the confidence of her Conservative Party after failing to win the popular mandate for the hard Brexit she promised.
The prime minister needs to mend fences after claiming EU officials were trying to sabotage her election campaign. In an effort to show Britain is still working with its continental partners, she'll pledge assistance with discouraging African refugees from attempting to get to Europe, trying to persuade them to turn back during the journey.
While she'll attend discussions on topics including counter-terrorism, defence cooperation and migration at the two-day summit, she will be asked to leave immediately after she's addressed leaders on Brexit at the end of Thursday's dinner.
She won't receive any feedback and will be warned that any attempt to negotiate on Britain's withdrawal will be given short shrift, and could undermine the goodwill built up by officials this week, diplomats said.
Once she leaves, the EU's chief Brexit negotiator Michel Barnier will give his assessment of the start of talks, and the 27 leaders will discuss their next steps.
The EU is demanding that European nationals who move to Britain before it leaves the bloc keep the same rights as they currently have throughout the continent. This could give them higher protection than those enjoyed by British citizens, something that Britain is likely to say is unacceptable, EU officials said.
Central to this is the right to bring a non-EU spouse to Britain, which, when she was Home Secretary, Mrs May made more difficult for Britons. European citizens face far fewer hurdles and the EU is demanding that this continues.
"I am not going to say we are going to make concessions," Mr Barnier said Tuesday. "I have a mandate to defend the EU, which the UK has decided to leave."
Then there is the matter of whether the European Court of Justice should have a role if disputes emerge over how citizens are being treated after Brexit. Mrs May has identified ending the court's say in British law among her Brexit red lines.
The EU also wants the rights to apply to people who may not have the paperwork to prove they have been residents and to make March 2019 the cut-off date for people to claim the privileges.
While officials welcomed the calm start to negotiations on Monday, EU diplomats are expressing pessimism that Britain will agree a deal before it leaves the bloc. One senior official close to the talks predicted the collapse of negotiations at some point because of what he described as Britain's incapacity to be realistic.