Brexit Enters Endgame With a Defining Call for Boris Johnson

(Bloomberg) --

Boris Johnson and European Commission President Ursula von der Leyen are heading for a defining meeting with each side warning a Brexit deal depends on the other giving way.

The chances of a deal “are very good if everybody just exercises some common sense and looks at the deal that is there to be done,” Johnson said in an interview with the Daily Telegraph published late Friday. “I'm pretty optimistic.”

Meanwhile, German Chancellor Angela Merkel told reporters that “much will depend on what the U.K. wants and what it doesn't want.”

The British prime minister's video call with von der Leyen on Saturday afternoon is set to be the crunch moment in the seven months of fraught negotiations over the two sides' future trade and security relationship. Johnson has set a deadline of the middle of this month to reach an accord -- or Britain will crash out of the single market at the year-end.

Officials in London and Brussels agree that while both sides may want a deal, something now has to give if they are to strike one. With only two weeks left before Johnson's self-imposed deadline, people close to the discussions are cautious about the prospects for an accord and concerned about the risk of an accident.

On Friday, after the final scheduled round of negotiations broke up, the two sides put out competing gloomy statements, each warning that only limited progress has been made.

Impossible to Bridge?

The U.K. said disagreements over what access EU boats will have to British fishing waters -- one of the areas where the two sides are furthest apart -- “risks being impossible to bridge.” The EU side identified “persistent serious divergences on matters of major importance.”

Yet for all the rhetoric, people close to the negotiations on both sides privately acknowledge a deal is within their grasp. They say that as the talks enter their endgame, it's up to their political bosses to make a final leap -- which will entail difficult compromises for both.

For the EU, that means Johnson will have to signal that he's willing to sign up to restrictions on government subsidies to businesses and a legally binding dispute resolution mechanism. So far, his government has been unwilling to do that.

The U.K., on the other hand, needs the EU -- and notably French President Emmanuel Macron -- to soften its stance on fisheries and allow British boats to catch far more -- and, by extension French vessels far less -- in U.K. waters than is currently the case.

“These issues are fundamental to our future status as an independent country,” David Frost, Britain's chief negotiator, said on Friday.

‘Working Hard'

Johnson's government, as well as seeing Brexit as giving the U.K. its right to take back sovereignty from the EU, is less repulsed at the thought of giving subsidies to business than his Conservative predecessors. For its part, France's fishing industry, on whom Macron will rely for votes in next year's election, has been greatly helped by the EU-bestowed right to fish in British waters.

So far, the EU has shown itself willing to overlook Johnson's attempt to rewrite parts of the Brexit Withdrawal Agreement, a move that breaks international law. While the EU has started legal action, it says it won't break off negotiations with the U.K.

“This is so difficult but, overall, where there's a will there's a way,” von der Leyen told a news conference on Friday. “So I think we should intensify the negotiations because it's worth working hard on it.”

Assuming there are no major hiccups during Saturday's call, negotiators will resume talks in London next week and then in Brussels a week later. EU officials said it's unlikely a deal will be struck in time for Johnson's Oct. 16 deadline, when leaders are scheduled to hold a summit in Brussels. However, that meeting itself could help unlock an agreement if the two sides are already close.

The accord they're trying to strike would avoid the return of tariffs and quotas when the post-Brexit transition period ends on Dec. 31. But it goes beyond that. It would also include elements of security, transport and law-enforcement cooperation and leave a foundation for working together in the future. Failure to reach one could poison relations between the two sides for years to come.

Both sides said they are committed to working to find an agreement. There's “every chance” to get a deal, Johnson told the BBC. Von der Leyen said the EU, for its part, wants one too.

“It's good to have a deal,” she said. “But not at any price.”

©2020 Bloomberg L.P.