In a letter to the leaders of the European Union's 27 remaining member states ahead of a Brussels summit on Saturday, the president of the European Council, Donald Tusk, wrote that "before discussing our future, we must first sort out our past."

The EU 27 are set to adopt guidelines for the negotiations on Brexit at the summit, following British Prime Minister Theresa May's formal triggering of the two-year process for the UK to divorce the EU in March.

EU leaders have said the key issues are the fate of the 3 million EU citizens living in the UK and the 1 million Britons residing in the EU. Another key issue is Britain covering its membership costs until at least a year after it leaves the bloc, at a possible cost of 60 billion euros ($65 billion).

May wants to discuss the divorce settlement and a trade deal at the same time ahead of Britain's exit from the bloc in March 2019.

May and Merkel clash

Tusk's comments come a day after a war of words between May and German Chancellor Angela Merkel.

Merkel said that "a third-party state will not have the same rights or even superior rights to a member state," referring to the relationship the EU has with non-EU countries such Switzerland and Norway.

"This may sound self-evident, but I have to say this clearly because some in Britain seem to have illusions on this point," she said. "That would be a waste of time."

Echoing Merkel's comments, German Finance Minister Wolfgang Schäuble said Britain must understand that it won't have advantages that other non-EU countries don't have once negotiations over its exit from the bloc are concluded.

"There is no free lunch," Schäuble told the Funke Media Group in remarks published on Saturday. "Britons must know that."

But May hit back following Merkel's comments by accusing the EU 27 of planning to "line up to oppose us."

Tusk the honest broker?

Tusk said the "only possible approach" was phased talks, in which the UK must make "sufficient progress" on the divorce issues before starting negotiations on future ties.

The talks will deal with discussions on what counts as "sufficient progress" for negotiations to start on trade.

"This is not only a matter of tactics, but - given the limited time frame we have to conclude the talks - it is the only possible approach," Tusk wrote to the leaders. "I would like us to unite around this key principle during the upcoming summit, so that it is clear that progress on people, money and Ireland must come first," he wrote.

"And we have to be ready to defend this logic during the upcoming negotiations."

Follow the money

EU leaders are expected to toughen their position on the UK paying its Brexit bills when they agree negotiating guidelines at the summit. EU diplomats have said Britain must settle its bills before embarking on trade talks.

The UK is due to make a net payment of around 20.4 billion pounds (24.5 billion euros) into the EU coffers in 2019-20, but the European Commission believes the bill could come to as much as 60 billion euros once the UK's contribution to EU liabilities, pensions and special funds is taken into account.

The EU's chief negotiator Michel Barnier's team will not present a bill on day one of the talks, but will reportedly try and bind London to a set of principles on paying its dues, which is apparently backed by Berlin.

A united Ireland?

EU leaders will give a formal undertaking to embrace the British province of Northern Ireland in the EU if a referendum unites the island, diplomats said on Friday.

Irish Prime Minister Enda Kenny has asked fellow EU members to acknowledge that Northern Ireland would, like East Germany in 1990, automatically enter the EU in the event of unification with existing member state, the Irish Republic.

The 1998 Good Friday Agreement that ended violence in the north foresees that referendums on uniting the island would be held on both sides of the Irish border if London and Dublin saw public support for such a change.

The UK's Brexit minister David Davis acknowledged last month that, if it united with the Republic, Northern Ireland would be entitled to be absorbed into the EU.

Calls for a referendum on leaving the United Kingdom have picked up since Northern Ireland, like Scotland, voted to remain in the EU, while the United Kingdom's two other nations, England and Wales, chose to leave in last year's Brexit vote.

Elections in Northern Ireland in March denied pro-British unionists a majority in the province for the first time since Ireland was partitioned in 1921, further emboldening Irish nationalists and their main political representatives Sinn Fein.

'Hard Brexit' 50-50?

EU sources told reporters on Friday that the British government's approach to Brexit was becoming much more realistic on the negative consequences of no deal, while another source said London had not "engaged with reality." One EU diplomat put the chances of the UK crashing out of the EU without a deal at higher than 50 percent.

jbh/se (AFP, Reuters)