LONDON (BLOOMBERG) – Mrs Theresa May came closer than ever on Monday (Dec 4) to the Brexit deal she’s been working on for months.

But a last-minute upset over the Irish border left all parties embarrassed and doesn’t bode well for a second run at a breakthrough.

Irish Prime Minister Leo Varadkar said a solution to an intractable problem – what to do with the shared border with Northern Ireland when the UK leaves – had been agreed in the morning and unravelled while Mrs May was at a lunch with European Commission President Jean-Claude Juncker in Brussels.

The meal that should have been the clincher was interrupted by a phone call between Mrs May and Ms Arlene Foster – the leader of the Democratic Unionist Party, which opposes the EU’s plans for the island after Brexit and props up Mrs May’s government in London.

For the DUP, any proposal that would apply to Northern Ireland and not the rest of the UK was going to be a problem.

Shortly afterwards, Mr Juncker emerged to deliver a two-minute statement saying, “It was not possible to reach a complete agreement today.”

The divisions over Ireland and the powers of the European Court of Justice had proven too great.

The episode will make striking a deal by the end of the year harder, according to a person familiar with the Irish government’s thinking. Dublin had signed up to the agreement and was happy with it and any change now to placate Mrs May’s Northern Irish allies will look like a concession from Dublin.

“I am surprised and disappointed that the British government now appears not to be in a position to conclude what was agreed earlier today,” Mr Varadkar told reporters in Dublin. He raised the possibility of another summit in January if December is a flop.

Both sides vowed to carry on talking this week. Mr Juncker was generous to the embattled prime minister and said he is confident that getting a result in time for a summit in mid-December is still within reach.

That deadline looms large because it’s only once leaders conclude Britain has achieved “sufficient progress” in the first phase of talks that trade negotiations can start and the transition arrangements wanted by businesses can be put in place.

It’s 17 months since the referendum and Britain will leave the bloc in 15 months, with or without a deal.

But it’s not just the Irish border standing in the way of a deal, according to another person familiar with the situation. The reach of the European Court of Justice in the UK after Brexit was also a stumbling block.

It’s an issue of totemic importance to both sides, with some members of Mrs May’s Conservative party seeing it as a symbol of lost sovereignty, while the veto-wielding European Parliament says it must have a role in protecting EU citizens.

The UK had downplayed expectations going into the lunch meeting on Monday, saying it was a staging post on the way to the council summit on Dec 14 and 15. But as Mrs May travelled to the appointment, hopes were raised when chief EU negotiator Michel Barnier told a group of European lawmakers that a breakthrough was imminent.

They then told the world, even as UK officials continued to call for caution. The pound rose on their comments, only to fall later when reality sunk in.

The Irish border was always going to be the kind of challenge that would require a lot of political will on all sides. The current invisible border is possible because both Northern Ireland, which is part of the UK, and the Republic of Ireland are members of the EU’s single market and customs union.

When the UK leaves the EU, Northern Ireland goes with it.

Mrs May has just days to do what she has failed to do in months: find a formula on the Irish border that’s acceptable to both parties and find a concession she can offer on the ECJ that won’t enrage elements of her party so much they decide they’ve had enough.

She will hold talks with Ms Foster on Tuesday, the Times of London reported, without saying where it got the information.

The stakes are high: Mrs May’s own position as prime minister is precarious as senior members in her Tory party want to replace her after she led them in a failed election campaign.

The June vote cost Mrs May’s Conservatives their majority and left them relying on the DUP to get legislation through Parliament.

The debate over Northern Ireland also threatens to generate more tension in the already fractious union. As details leaked of the proposed exception for Northern Ireland, remain-voting Scotland and London piped up to ask for the same.

“We’ve been negotiating hard and a lot of progress has been made and on many of the issues there is a common understanding,” Mrs May said before heading back to London. “On a couple of issues some differences do remain which require further negotiation and consultation.”

Holder added, “You’ll find integrity and honesty at FBI headquarters and not at 1600 Penn Ave right now,” referring to the White House.

Trump earlier Sunday said that “after years of Comey, with the phony and dishonest Clinton investigation (and more), running the FBI, its reputation is in Tatters – worst in history! But fear not, we will bring it back to greatness.”

Peter Strzok, a top counter-intelligence agent who also helped run the investigation into Hillary Clinton’s use of a private email server, was abruptly reassigned this summer to the bureau’s human resources office after Justice’s inspector general discovered communications involving him and another FBI official, Lisa Page, who also had been previously detailed to Mueller’s team.

The content of the communications was not immediately disclosed.

“Immediately upon learning of the allegations, the Special Counsel’s Office removed Peter Strzok from the investigation,” Mueller spokesman Peter Carr said Saturday. “Lisa Page completed her brief detail and had returned to the FBI weeks before our office was aware of the allegations.”

When the communications were discovered, the inspector general alerted Mueller and other Justice Department officials.

In a statement released Saturday, Attorney General Jeff Sessions said the allegations, “if proven to be true, would raise serious questions of public trust.”

“We will ensure that anyone who works on any investigation in the Department of Justice does so objectively and free from bias or favoritism,” Sessions said.

The disclosure, first reported by the Washington Post, comes a day after Mueller’s team announced it had reached a deal with former national security adviser Michael Flynn. Flynn agreed to plead guilty Friday for lying to the FBI about his contacts with Russian ambassador Sergey Kislyak and to cooperate with Mueller’s ongoing inquiry into Russia’s interference in the 2016 campaign.

The development involving Strzok could revive claims by Trump that the Russia investigation is politically motivated. The president has frequently denounced the probe as a witch hunt, a hoax and fake news.

Trump insisted again Saturday that there was no collusion between his campaign and the Kremlin in last year’s election. Mueller’s team is investigating possible collusion as well as possible obstruction of justice.“What has been shown is no collusion, no collusion,” Trump told reporters Saturday. “There’s been absolutely no collusion, so we’re very happy.”

Mr Flynn has entered a plea deal and agreed to co-operate with an inquiry into alleged collusion with Russia.

The deal, for a lesser charge than he might have faced, prompted speculation that he has incriminating evidence.

The president wrote on Twitter on Saturday that he had “nothing to hide”.

Mr Flynn is cooperating with Special Counsel Robert Mueller, who is leading an investigation into alleged ties between the Trump campaign and Russia ahead of the 2016 election.

On Saturday, a day after Mr Flynn’s indictment, it emerged that a veteran FBI agent was dismissed from Mr Mueller’s team after the discovery that he had sent anti-Trump text messages.

Peter Strzok was removed from the investigation in summer, a spokesman for the special counsel’s office, told the New York Times.

Saturday should have been a momentous day for Mr Trump, after his sweeping tax reform billfinally scraped through the senate in the early hours of the morning with 51 votes to 49.

But any celebratory mood among administration officials would have been short-lived – dampened by a string of news reports on the Russia scandal.

In tweeting early on Saturday to deny that Mr Flynn had acted unlawfully as part of his transition team, Mr Trump appeared to admit that he knew the former general had lied to the FBI before he fired him, contradicting the president’s account at the time.

WASHINGTON – Former national security adviser Michael Flynn’s move to cooperate with the Federal Bureau of Investigation (FBI) has put the Donald Trump administration in a vulnerable position, say analysts.

Mr Flynn had pleaded guilty last Friday to lying to the FBI about his contacts with Russia and agreed to cooperate with the FBI probe into possible collusion with Russia by the Trump campaign.

Special counsel Robert Mueller, who is heading the probe, now has “an ally who understands that he will only get a benefit if he ‘cooperates’ with the investigation, and that the meaning of ‘cooperation’ is entirely within the control of the prosecutors,” Mr Jack Sharman told The Washington Post. He was a special counsel during investigations into President Bill Clinton in the 1990s.

Mr Joel B. Pollak, a senior editor at the conservative Breitbart News, wrote: “The information he (Mr Flynn) provides will help Mueller hound anyone and everyone in the Trump orbit, in pursuit of the swamp’s political revenge. And this is only the beginning.” The “swamp” refers to Washington’s bureaucracy and political elites.

“There’s been absolutely no collusion,” Mr Trump told reporters on Saturday (Dec 2) morning.

Those who could be vulnerable to the FBI’s expanding investigation, include Mr Trump’s son-in-law Jared Kushner. Reports citing sources say Mr Kushner instructed Mr Flynn to contact foreign ministers and ambassadors of countries on the United Nations Security Council – including the Russian ambassador – ahead of a vote condemning Israeli settlements, to oppose the resolution or delay the vote until Mr Obama had left office.

Ms K.T. McFarland, who was Mr Flynn’s deputy, is also said to be on the FBI’s radar. She is the Ambassador-designate to Singapore, but her appointment has not yet been confirmed.

“No skilled prosecutor makes an arrangement with a person who has as much legal liability as Michael Flynn has unless he has excellent reasons to suspect Flynn has damaging information about people higher up,” Professor Glenn Altschuler, who specialises in American Studies at Cornell University, told The Sunday Times.

Since last Friday, the White House has tried to distance itself from Mr Flynn, with Mr Trump’s lawyer calling him a Barack Obama-era official. But Mr Flynn was actually fired from a post during the Obama administration.

Mr Flynn was a key member of Mr Trump’s campaign – and Mr Trump has repeatedly defended him. Former FBI chief James Comey testified that Mr Trump had asked him to go easy on investigating Mr Flynn. Soon after, the President fired Mr Comey.

The Trump administration could attack Mr Mueller. Some of the President’s more hawkish supporters – like his former strategist Steve Bannon – have advised firing him. But analysts warned that this risks igniting a political firestorm.

“I’m sure the White House is walking on eggshells right now,” Mr Evan Siegfried, a Republican strategist, told The Sunday Times. “Based upon media reports, certainly Jared Kushner is in the cross hairs, and potentially even the President himself.”