Johnson makes final Brexit offer, draws guarded welcome from EU

British Prime Minister Boris Johnson made a final Brexit offer to the European Union on Wednesday, pitching a possible compromise for a last-minute exit deal that was cautiously welcomed by the EU though the two sides still remain far apart.

In what Johnson's supporters cast as a moment of truth after more than three years of Brexit crisis, Johnson urged Brussels to compromise but warned that if it did not then Britain would leave the EU without a deal on October 31.

Johnson went further than many expected on the most contentious issue - the border between British-ruled Northern Ireland and EU member Ireland - with a proposal for an all-island regulatory zone to cover all goods, replacing the so-called backstop arrangement he says he cannot accept.

Besides the concession though, Johnson proposed giving Northern Ireland institutions the ongoing power to abide by or exit the regulatory zone - a possible step too far for Ireland and the EU.

European Commission President Jean-Claude Juncker welcomed "positive advances" in Johnson's proposals, such as the full regulatory alignment for all goods, but noted some problems.

"There are still some problematic points that will need further work in the coming days, notably with regards to the governance of the backstop," the Commission said in a statement issued after Johnson and Juncker spoke on a call.

"The EU wants a deal. We remain united and ready to work 24/7 to make this happen – as we have been for over three years now," it said.

Irish Prime Minister Leo Varadkar told Johnson that the proposals did not fully meet agreed objectives, his spokesman said after the two leaders spoke by phone, but agreed to study them in more detail and consult with EU partners.

With less than a month left until Britain is due to leave the EU, the future of Brexit, its most significant geopolitical move since World War Two, is uncertain. It could leave with a deal or without one - or not leave at all.

Deutsche Bank said it saw a 50 percent chance of a no-deal Brexit by the end of the year. This would spook financial markets, send shockwaves through the global economy, snarl ports on both sides of the Channel and divide the West.

Phoney Brexit Battle

While London's last-minute proposals do mark some movement on the Irish border, the biggest sticking point of the Brexit negotiations, many EU diplomats are convinced that the United Kingdom is heading towards either a delay or a no-deal exit.

Johnson says he wants to get a deal at an October 17-18 EU summit. A law passed by his opponents forces him to delay Brexit unless he strikes a deal. Johnson said further delay was "pointless and expensive".

Amid so much pessimism about the possibility of a deal in just weeks, many diplomats say a phoney struggle is underway between London and Brussels to apportion blame.

"It's a game of cat and mouse," said one EU diplomat.

Brexit negotiator Michel Barnier said the proposals marked progress but more work was needed. Guy Verhofstadt, head of the European Parliament's Brexit Steering Group, was less convinced.

Asked by a reporter if the proposal was a serious attempt to break the deadlock or designed to shift the blame on to Brussels if Britain leaves the EU without a deal, he said: "I think that last point was not so bad."

Raoul Ruparel, former Europe adviser to Johnson's predecessor, Theresa May, said the offer appeared unlikely to win over the EU.

"I cannot see the EU and Ireland agreeing to these proposals, they may not even see them as a basis for negotiations," he told Reuters.

Opposition Party leader Jeremy Corbyn said Johnson's proposals were too vague and that the EU would not accept them.

Irish Problem

Ireland, whose 500 km (300 mile) land border with the United Kingdom will become the frontier of the EU's single market and customs union after Brexit, is crucial to any deal.

The problem is how to prevent Northern Ireland becoming a "back door" into the EU market without erecting border controls that could undermine the 1998 Good Friday Agreement (GFA), which ended decades of political and sectarian violence in Northern Ireland in which more than 3,600 people were killed.

Britain said its proposals were compatible with the peace agreement and suggested a zone of regulatory compliance across Northern Ireland and the EU to eliminate checks for trade in goods.

Before the end of a transition period after Brexit in December 2020, the Northern Ireland assembly and executive that were established under the 1998 deal would be required to give their consent to this arrangement and every four years afterwards, the seven-page document said.

Northern Ireland would stay part of the United Kingdom's customs territory but to avoid customs checks, a declaration system would be introduced with a simplified process for small traders, along with a trusted-traders scheme.

"We are tabling what I believe are constructive and reasonable proposals which provide a compromise for both sides," Johnson said in a speech to his Conservative party's annual conference. "I hope very much that our friends understand that and compromise in their turn."

Asked if the proposal meant Britain expected the EU to change its customs rules, a UK official said: "We are asking them that because we agreed there will be flexible and creative solutions on the island of Ireland and part of it is adjusting legislation to enable it."

The Northern Irish Democratic Unionist Party, supporters of British rule of the province who back Johnson's government, welcomed his proposals, saying they ensured that Northern Ireland would be out of the customs union and single market.

DUP deputy leader Nigel Dodds said the proposals gave his party an effective veto over regulatory alignment with the EU, allowing them to back the plan.

Some lawmakers in Britain's opposition Labour Party also signalled they could back the deal in a parliamentary vote if it was accepted by Europe and Dublin.

A senior British official said: "The government is either going to be negotiating a new deal or working on no deal - nobody will work on delay."