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EU Council Backs Brexit Plan, Kickstarting Weekend Scramble To Win Over Parliament

Courtesy of ZeroHedge View original post here.

Update 3: As expected, the EU has decided to support Johnson's plan after Juncker successfully sold it to the European Council, which announced during a late-day press conference that they now support the plan.

Now, the battle of Whitehall has truly begun.

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Update 2: The DUP's letter rejecting the deal has been released in full…even though Northern Ireland will remain part of the UK customs territory under the deal, the DUP supposedly chafe at being "subject to the rules of the European Union Customs Union".

…Does Johnson need the DUP votes to pass his deal? Not exactly, though passing it without them might be tricky.

And then there's this tweet, playing on the notion that the DUP is seeking to extract bribes from the Johnson government and the party's insistence that there not be a customs barrier along the Irish Sea.

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Update: Now that Johnson has won the EU leadership's backing for his deal, he's seeking their approval for another measure that his team believe will be essential to passing it through Parliament. 

Johnson now wants EU leaders to offer the UK two options: Either this deal, or the UK leaves the EU on Oct. 31 without a deal. By law, Johnson is only required to ask the EU for an extension on Oct. 19 if Parliament hasn't approved a deal. The EU is not obligated to grant the extension.

While it's not guaranteed, Johnson might be able to win support from enough members of the opposition who are anxious enough about a 'no deal' Brexit that they might back Johnson if the DUP proves truly intransigent.

After all, if Johnson can pull it off, it'd be cheaper than bribing the DUP with public money.

Already on Thursday, almost all of the GBP's gain against the dollar has been erased as traders accept that Johnson still needs this second commitment from EU to materially raise the odds of getting it through Parliament on Saturday.

The drama has extended all the way across the Atlantic, as global markets now seem to care about Brexit all of a sudden (a phenomenon that has emerged over the past week).

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Does it almost sound too good to be true?

The pound rallied sharply Thursday morning on reports that, after nearly two-and-a-half years of often infuriatingly tedious dealmaking, a Brexit deal has been finished.

Jean-Claude Juncker said the EU had signed on to the deal after a spree of frenzied dealmaking as talks blew past a midnight deadline set by Michel Barnier, the EU27's top Brexit negotiator. On Thursday, an EU Council summit will begin. Many expect that hammering out a final Brexit deal would be a critical focus of the summit. But now that an agreement on a revised protocol for the Ireland/Northern Ireland border has been reached, and Juncker has given the deal his endorsement, confirmatory votes from the rest of the EU27 are expected to be largely ceremonial.

Johnson celebrated the EU's decision with a tweet where he declared the deal "takes back control"

In a letter endorsing the deal, Juncker described the new protocol for the Northern Ireland-Republic of Ireland border, long seen as the main obstacle to a deal, as "fair and balanced" and called the agreement "a testament to our commitment to find solutions."

However, the DUP, a small conservative party from Northern Ireland that had repeatedly helped sabotage Theresa May's attempts to pass a deal, has waffled on whether it will support Johnson's deal in Parliament. Though the party only has 10 votes, its support is likely critical for Johnson to pass a withdrawal bill at Saturday's special session of Parliament.

As one Twitter user joked, Johnson woke up on Thursday and learned what it must have been like for Theresa May after the DUP vowed to sabotage his new deal. In a letter, the DUP leadership said "we could not support what is being suggested on customs and consent issues and there is a lack of clarity on VAT."

The party is saying once again that it cannot support Johnson's deal because of the VAT scheme set up for Northern Ireland. But Johnson might be able to circumvent them by recruiting votes back from the opposition. However, another major sticking point is the loss of a DUP veto over the customs rules outlined in the deal. The new consent mechanism for Northern Ireland now requires only a majority from the Northern Ireland Assembly. There's also been speculation that the DUP is simply trying to extort the Johnson government for more money to bring back home to their constituents.

Meanwhile, the pound has rocketed back to just under $1.30, its strongest level since June.

While Johnson's deal with the EU leadership is significant, the biggest obstacle to a Brexit deal has always been getting it through Parliament. Labour leader Jeremy Corbyn has insisted that the opposition will support another Brexit referendum, followed by re-negotiating a deal with the EU. Whether Johnson can get the deal done during Saturday's last-minute weekend session – something that hasn't been done since the early 1980s – remains to be seen. It's very likely that he won't, at which point his opponents will invoke the Benn Act to try and force Johnson to ask the EU for another extension of Article 50.

 


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