EU trade war ultimatum looms as ‘window of opportunity’ opens for hated Brexit deal

Liz Truss told to 'swing behind' Brexiteer Penny Mordaunt

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As the race to succeed Boris Johnson as leader of the Conservative Party picks up steam, Brussels is hoping the new Prime Minister will drop Mr Johnson’s Brexit demands and move closer to a deal with the bloc.

But, according to Eurasia Group director Muktaba Rahman, EU officials are still unwilling to take the threat of a trade war with Britain off the table.

In an analysis of the Tory leadership frontrunners and their chances of successful negotiations with the EU, he wrote: “Despite rhetoric of Tory leadership campaign, the fact UK will have new PM will present a new opportunity to do a deal. But candidates for No10 need to disabuse themselves of idea EU will offer them concessions simply because they’re not Boris Johnson.

“The EU feels broadly vindicated by its strategy – basically a non-escalatory holding pattern. There’s also a belief (correct in my view) that UK Government decision to go ‘radical’ & ‘unilateral’ with the Northern Ireland Protocol Bill rather than via Article 16 has weakened not strengthened Government’s position.

“Boris Johnson was a serious roadblock to productive relations. Now he’s going it’s becoming even clearer just how much he was disliked in EU.

“So senior EU officials talk about the fact the UK/EU could be ‘at the start of a new cycle’. There is no expectation or naiveté about UKG fundamental position changing – for now. But the ‘positive effect’ of a new PM could potentially open up space for (intense) negotiations.”

“That will obviously apply most to Rishi Sunak,” he added.

Mr Rahman claimed that between Mr Sunak, Liz Truss and Penny Mordaunt, the former Chancellor is the closest to have increased chances of a successful relationship with Brussels.

But he continued: “Beyond the identity of the new PM, what they actually do and say will (of course!) be much more important. All candidates have pledged to stick with NIP Bill. But the fact its passage through Commons has been quietly delayed creates a bigger window for negotiations.

“[…] As one senior EU official says: ‘[The UKG has a position. We have a treaty.’ A signal from new PM that they’re committed to treaty the UKG signed, albeit seeking some changes, rather than a Bill that disapplies it, would help build confidence in Brussels/EU capitals a deal could be done.

“[…] Officials in UK & EU can see a landing zone under the right conditions – especially if new UK PM engages in good faith & doesn’t simply seek to scapegoat EU to play to the Tory eurosceptic base.

“Opinion in EU ranges from pessimism to cautious optimism as to whether this will happen.

“f this ‘window of opportunity’- as officials on both describe it – doesn’t break impasse, then all bets are off.

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“Although senior EU officials aren’t explicitly threatening a trade war, in private they’re v clear that the link between Withdrawal Agreement & Trade deal remains.”

It comes as Northern Ireland Secretary of State Shailesh Vara said on Wednesday that the Government is giving “100 percent attention” to its legislation on the Northern Ireland Protocol despite the Tory leadership race.

Day one of the committee stage of the Bill’s progression through Parliament was heard as Conservative MPs cast their votes in the first round of the contest to replace Mr Johnson.

Mr Vara, speaking to reporters outside, insisted the Bill was not being forgotten about.

“It is receiving 100 percent attention,” he said.

“Yes, the Conservative Party is in the process of electing a new leader but that is not to say that legislation is not continuing, as it rightly does both for Northern Ireland and the rest of the United Kingdom.”

Powersharing in Northern Ireland is in limbo after the DUP blocked the formation of a devolved executive following May’s election in protest at the protocol.

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Unionists and loyalists are enraged at trade arrangements that have resulted in new checks on goods moving between Great Britain and Northern Ireland.

The protocol was agreed by the UK and EU as part of the Brexit Withdrawal Agreement but the Government’s controversial legislative move would effectively scrap the bulk of the arrangements.

Mr Vara, who replaced Brandon Lewis as secretary of state last week, insisted triggering the legislation remained a “last resort” and the Government’s preferred option was to find a negotiated solution with the EU that would cut red tape on Irish Sea trade.

He said “communication and engagement” would be key to finding a resolution.

“I think most political parties and many of the business community and individuals in Northern Ireland recognise that the system that we have at the moment is not working correctly and they all recognise that there ought to be some change,” he said.

“And what we are prepared to do and very happy to do, and indeed have been trying to do, is to engage and the UK Government has been engaging with the EU to try and take a common sense approach and move forward.

“Sadly, however, whilst people are saying they want to engage in dialogue and conversation and this should be a negotiated settlement, sadly when you sit at the table, the response is sometimes ‘well, sorry, but you know, you’ve signed up to this, so we’re going to have to get on with it’.

“So, if that attitude prevails, then I’m afraid the people of Northern Ireland will not get the common sense approach that I want.

“So, what I want to do is for everyone to recognise that what is there at the moment is not working, and we need to talk and make it work and this (the Bill) is a last resort, but you know we are determined that if it’s necessary we will pass that legislation, because it’s in the interest of the nearly 1.9 million people in Northern Ireland.”

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