PM seeks to charm EU summit with offer on citizens after Brexit

British Prime Minister Theresa May on Thursday pledged to treat European nationals living in Britain fairly after Brexit in a bid to win over sceptical EU leaders at a summit in Brussels.

Her 27 EU counterparts are set to say there is insufficient progress on divorce issues to move on to the second phase dealing with future relations, and the most they can do is to start internal preparations to discuss trade and a transition deal in December.

But in a move to sway EU leaders on what is a key topic for them, May said in an open letter on her Facebook page to the three million EU citizens living in Britain that they are "within touching distance" on a deal to secure their rights after it leaves the bloc in 2019.

"We want people to stay and we want families to stay together," wrote May, promising a new "streamlined" process for settling in Britain, and vowing to set up a group to consult EU citizens.

In a speech to EU leaders at the summit dinner on Thursday, May will also "encourage them to move the conversation on to consider the future partnership and the implementation period, so that they are ready to engage in that discussion as soon as possible," a senior British government official said.

The EU agrees that of the three key separation issues at stake, citizens rights is the most advanced, but that talks on the bill Britain must pay to leave are deadlocked and that discussions on Northern Ireland still have far to go.

EU President Donald Tusk warned there would be no breakthroughs at the summit, saying that while there had been "promising progress" London needed to come up with more concrete proposals.

"I don't expect any kind of breakthrough tomorrow -- we have to work really hard in between October and December to finalise this so-called first phase and to start our negotiations on our future relations with the UK," Tusk said.

With the talks already taking place in a difficult atmosphere, the EU changed the meeting venue at the last minute after a chemical leak in its new 321-million-euro Europa summit building sickened several people on Wednesday.

'Nice words' are cheap

After five rounds of negotiations produced few results, fears are growing that Britain may fail to strike a withdrawal agreement before its formal departure on March 29, 2019, which would have a major economic and social impact.

Britain's exit bill is the most poisonous issue. In a speech in Florence last month, May promised to maintain Britain's contributions for two years after Brexit in March 2019 to complete the current EU budget period, totalling around 20 billion euros ($24 billion).

European Parliament chief Antonio Tajani -- whose institution will have a final veto on any Brexit deal -- told the BBC on that "20 billion is peanuts. The problem is 50 or 60 (billion euros), this is the real situation."

A German government official however struck a more positive note on the eve of the summit, saying that "if you look at the dimension of the European-British relations, then the financial questions may not be as important as they are made now."

EU diplomats said the decision to start internal preparations was designed to throw May a bone at the summit, while sticking to the French- and German-led insistence on settling the bill before starting trade talks.

"Writing a few nice words in the summit conclusions doesn't cost much... just 10 billion per sentence," an EU diplomat joked.

The summit takes place over two days, including a special session on Brexit on Friday morning from which May will be excluded.

Separately, Britain's opposition Labour party leader Jeremy Corbyn will hold talks with leading European Union negotiators on Thursday in a bid to "break the Brexit logjam".

Macron trade appeal

On Thursday French President Emmanuel Macron will push trade onto the agenda with a call to his sceptical EU counterparts to put the brakes on free trade agreements or risk angering citizens who are increasingly wary of globalisation.

The leaders will also deal with foreign affairs including Turkey, the crisis over North Korea's nuclear weapons and US President Donald Trump's refusal to certify the 2015 Iran nuclear deal.

On Friday morning Tusk will discuss an ambitious timeline of 13 summits over the next two years to reboot the EU and introduce major reforms of the eurozone.