UK fears Brexit breakdown as May takes her offer to lunch

[BRUSSELS] Brexit talks risk being torpedoed by the taboo issue of the European Court of Justice, a senior British official said, as Prime Minister Theresa May heads to Brussels on Monday with the best offer her party will tolerate.

While a deal on what happens to the Irish border after Brexit is still to be done, the role of the ECJ in enforcing the rights of citizens emerged as the greatest obstacle on Sunday after a weekend of intense talks, according to the British official and a person familiar with the EU side.

Mrs May has offered all that she can and a rejection from Europe now would risk a breakdown in talks, according to the UK official.

Mrs May has lunch with European Commission President Jean-Claude Juncker on Monday, which the EU has set as the final deadline for her to come up with concessions if she wants talks to move on to trade by year-end. The UK pushed back against the deadline, saying the crucial date is the EU council summit on Dec 14, and UK officials on Sunday played down expectations of an imminent breakthrough.

"With plenty of discussions still to go, Monday will be an important staging post on the road to the crucial December council," the British government said in a statement on late on Sunday.

Mrs May is prepared to make some concessions on the role of the ECJ after Brexit, enraging members of her Conservative Party for whom the court is a symbol of lost sovereignty. But the compromise may not go far enough to satisfy the EU.

The UK is aiming to win the approval of the other 27 EU states for talks to move on from the separation to the future relationship at the leaders' summit on Dec 14. Lunch on Monday is meant to be a stepping stone toward that. Without progress by the end of December, officials on both sides worry Brexit negotiations will collapse.

Some Tory euroskeptics, already uneasy with Mrs May's concessions on the financial settlement that Britain will pay when it leaves, think Mrs May should be ready to walk out now.

"If they don't want to go for trade, the money should be off the table, and if there are no trade talks by Christmas we need to get ready to depart on World Trade Organization terms," former Conservative leader Iain Duncan Smith said in an interview.

IRISH BORDER

Two other divorce issues need to be signed off before negotiations can move on: an outline agreement has been reached on the financial settlement and talks have intensified on how a hard border can be avoided on the island of Ireland once Northern Ireland quits the EU along with the rest of the UK.

Irish foreign minister Simon Coveney said on Sunday he hoped for progress, and that Ireland would not ask "the impossible" of Mrs May. Mr Coveney said he wasn't looking for final answers in order for talks to progress, but an agreement on the "parameters" for resolving the issue in the months ahead.

The Irish cabinet meets on Monday and an EU official said there was some optimism - though the deal is not done. One British official said the prospect of a solution to the Irish question is still bleak.

Mrs May will set out her case to Juncker at the European Commission's headquarters. The pair are likely to be accompanied by UK Brexit Secretary David Davis and EU chief Brexit negotiator Michel Barnier for the meal, according to two British officials.

Before they sit down to eat, Mr Davis and Mr Barnier are planning to hold a separate meeting to take stock of progress made during frantic behind the scenes negotiations last week and over the weekend.

ECJ COMPROMISE

The battle of the ECJ is of totemic importance on both sides. European leaders want the ECJ to keep its legal power to protect the rights of EU citizens living in Britain after Brexit in 2019, arguing that UK courts could dilute the entitlements of foreign nationals over time.

Mrs May has previously ruled this out but is now offering to give the ECJ a permanent role, to the dismay of many euroskeptics in her own party.

Under Mrs May's plan, the Supreme Court in London will be able voluntarily to refer cases involving EU citizens to the ECJ, when the law needs to be clarified. That doesn't go far enough for those who want to maintain an automatically binding role for the Luxembourg-based court.

Officials in London believe France and Germany are the most resistant to Mrs May's plan, privately saying that the negotiations will be pushed back if these two countries do not compromise.

The European Parliament, which has a veto over the final deal, has also demanded a role for the ECJ and last week called for the UK to do more to defend EU citizens' rights after Brexit.

BLOOMBERG