Things are not going well with the Brexit negotiations – and the Irish Border in particular is looking intractable. Are the Irish being unreasonable and will the sabre rattling of the ultra-Brexiteers towards Ireland go mainstream and prove effective?
From Tudor times right through until the 1970s the relationship between England and Ireland has often not been good. Things improved when both countries joined the EU in 1973 and even more so after the Good Friday Agreement in 1998. The EU provided a platform where both sides could deal with each other on a day to day basis and build up friendship and trust. Since Brexit however, there has been the near intractable issue of the Irish Border.
There is, on both the Irish and UK side, a supposed cast iron agreement that no hard border will return to the island of Ireland. The Irish are determined to achieve this. However, the UK finds itself in a trilemma with mutually contradictory red lines. There is a belief in Ireland, I think with considerable justification, that the Tories – and the zealous Brexit faction in particular – view Ireland as a low priority and would jettison it as collateral damage if it gets in their way of an ideologically pure Brexit. Consequently, the relationship between Ireland and England is rapidly deteriorating. Historically England has been in such a strong position economically that it could effectively bulldozer Ireland, but over the border issue Ireland now has such steadfast backing from the EU that the power dynamics are very different. The UK’s attempt to peel off Ireland by using the Serengeti strategy has not worked. The Irish position has been absolutely coherent and consistent.
As of the 8 Dec agreement there are three options on the table:
- A comprehensive free trade agreement (FTA) for the entire UK equivalent to staying in both the Customs Union (CU) and Single Market (SM).
- A technological solution.
- Northern Ireland staying in the aspects of the CU and SM needed for the maintenance of an open border with border checks on the Irish Sea to allow Britain to go its own way. (Also called the backstop and para 49 of the 8th Dec political text).
There is no doubt in my mind that option 1 is the best solution. However, this may be difficult to deliver politically. May has repeatedly ruled out staying in the CU and SM and wants a bespoke cakeist deal. Other analysts however, particularly those with a London centric view, believe option 1 is still the most likely and May is playing a very clever game to isolate the extreme Brexit fanatics.
Option 2 has been repeatedly ridiculed by both Ireland and the EU. Steve Bullock of CakeWatch describes this as “unicorns in leprechaun uniforms flying on drones” and within the past week has been subject to ‘systematic and forensic annihilation‘ by the EU, as indeed has the UK option 1 proposals such as the three baskets and max-fac solutions.
Option 3 is the backstop solution, which, from get go, has always seemed to me the most likely outcome, and ironically that favored by the people of NI themselves, many who see it as a Hong Kong style solution which will reverse the relative economic decline as compared to the Republic. (In December both Nicola Sturgeon and Sadiq Kahn, within hours of the option becoming public were asking for something similar for Scotland and London respectively). There is the worry that the legal text, an attempt to put p.49 of the political agreement into a legally binding format has still not been agreed by the UK. Indeed May, presumably to appease the DUP, has stated that no PM could possibly agree to this.
The DUP are paranoid about any lessening of ties to Britain and, despite the fact that they were only voted for by about 36% of the NI electorate, are in a major position of power at Westminster and have an effective veto. The DUP are determined to block any solution which makes NI more different from Britain. It is certain however, that Catholics will outnumber Protestants in NI within the next few years, probably by the time of the 2021 census. This could easily turn into a majority for a United Ireland unless the lack-luster performance of the NI economy improves. Indeed, in the case of a hard Brexit a majority may exist already as shown in Fig 1.
The demographic “time bomb” is starkly illustrated in Fig 2. Sinn Féin is the major Nationalist party and the DUP the major Unionist one. It is clear the under 45s are much more likely to vote for a UI than the over 45s. For NI to survive as a separate entity Nationalists need to feel welcome. They value a totally open border, an Irish Language act, equality of esteem, liberal social policies and a thriving economy that benefits everyone.
The DUP meanwhile are failing at almost every level except one: they have blackmailed May’s government into providing £1bn extra for the NI economy and ensured, for example, that free school meals are not abolished in NI. Sinn Féin is happy to play the long game and believe in Napoleon’s adage, Never interrupt your enemy when he is making a mistake. The DUP are good at tactics but appalling at strategy. It must be remembered also that the DUP believe that the EU is a Papist plot designed to destroy protestant Britain (and this is more sensible than many of their other 17th century beliefs)!
For months there have been ridiculous statements about Ireland from both the Brexiteers and the right wing press. Some of my favorites are the Shut your Gob Leo headline in the Sun, Kate Hoey’s Trump like Mexican wall solution to the Irish border and Ian Duncan Smith’s fantastical suggestion that SF was influencing the Irish government position on the border. Such statements are totally counter productive and Naimi O’Leary of The Irish Passport podcast reports a moderate NI Unionist tweeting like the SF press office in response.
There is a worry, however, that the rhetoric is hardening as time goes on. There seems increasing desperation on the part of the Brexiteers that their solutions for options 1 and 2 are being systematically shredded by the EU and the hope of kicking the border can down the road indefinitely is being blocked. There is an increasing realisation that the road to Brexit passes through Dublin as well as Brussels. There is also some insight that the EU’s position on the border has been shaped to a very large extent by Ireland. There also seems to be some surprise that Ireland isn’t doing what it is told (as the Irish Passport notes, knowledge of Ireland is remarkably poor in the UK, with many not realising it is a sovereign country in its own right). Ireland is not expecting gun boats up the Liffey as in 1916 but the use of trade and economics as leverage is possible. The Irish living in the UK also enjoy special status in that they are treated as non foreign and at present their status will not change after Brexit. The threat of treating the Irish as other EU citizens has not been seriously deployed yet but does provide some leverage in that there are c 300k Irish citizens in Britain.
Some threats are not taken seriously, however. The 18th century head of the ultra-Brexit ERG – Jacob Rees Mogg (JRM) threat that: “If Britain trades on WTO terms, we could potentially slap tariffs of up to 70 per cent on Irish beef; that could bankrupt Ireland, who export £800million of beef to us every year” is comical. The £800million figure is probably the only credible thing in the sentence. As Ian Dunt states:
What Rees-Mogg forgot to mention was that this would have very severe consequences for the UK. Under the WTO’s Most Favoured Nation rules, countries are not allowed to discriminate on their tariffs. If you charge one country 70% on beef, then you must charge all countries 70% tariff on beef. So while Britain could impose such a poisonous tariff on its closest neighbour, it would be forced to live with that tariff on all beef imports.
This hardly chimes with JRM’s repeated claims of cheaper food and goods after Brexit.
What I think is deliciously ironic, and again shows a near complete ignorance of Ireland, is that the Irish economy has moved on from the 18th century when the Irish economy was indeed dependent on food exports to Britain. The current situation is very different. As Fig.3 shows, in 2016, for example, Bovine meat only accounted for 1% of Irish goods exports. About half of this (49%) goes to the UK. Goods and services exports are of similar size for Ireland, therefore Irish beef exports to the UK are about 0.25% of all exports. This will naturally have a major impact on cattle farming but to state it could bankrupt Ireland is simply silly and makes Rees Mogg look totally clueless.
Ireland is also one of the very few countries with which the UK has a trade surplus in goods. Ireland exports c 12.5% of its goods to the UK but about 24% of its goods imports come from the UK. Ireland, after Switzerland and the UAE, is the country with which the UK had the largest surplus in 2017. The surplus with Switzerland is artificial, however, as much is in gold bullion (which largely transits the UK with very little added value) all Nissan cars exported from Sunderland to Europe are sold to Switzerland for Tax purposes. Exports to the UAE include substantial arms sales. In reality, therefore, Ireland may well the most valuable country with which the UK has a genuine trade surplus – which means that starting a trade war with Ireland is simply not a sensible option – except to a Brexit ideologue.
Considerably more worrying are comments from David Davis at a recent Commons Committee (when being questioned by Tony Connelly) which seemed to be a veiled threat.
23. [In other words, nice country, shame if something happened to it, and there wasn’t a very generous FTA.]
— Tony Connelly (@tconnellyRTE) April 25, 2018
It is not a very productive strategy. The Irish do not respond well to threats and any suggestion that Ireland should modify its position to suit the UK Brexit faction will be counter productive. Even if the Irish government were amenable it would be electoral suicide. The Irish are making considerable efforts to insulate themselves from a hard Brexit. For example, in contrast to Dover, there is considerable work going on at Dublin Port, the most recent addition (after considerable infrastructure upgrades) being the launching of the Brexit Busting Super Ferry. If all the parking lanes on the 235m long vessel were laid end to end, they would stretch to almost 8 km, making it the world’s largest short sea ro-ro ferry.
As I mentioned above, one strategy the UK has not tried yet is to strip the Irish of their non-foreign status and treat them as other citizens of the EU. There are about 300k Irish born nationals in the UK and consequently they form one of the largest EU groups, although well behind the Poles at c. 1M, but probably similar in terms of numbers as the French. Reasons2Remain have recently produced an interesting graphic which shows the contributions to the British economy for various EU Nationalities. Unsurprisingly this shows that EU citizens of all nationalities are of immense benefit to the UK economy with £14.7bn paid in tax and £2.6bn claimed in terms of tax credits. Irish nationals contribute £1.9bn and only draw down £97m. The Irish on these statistics are 2nd only to the French in terms of net contribution to the UK economy.
Indeed, in terms of economic performance the already lack-luster predictions of UK growth of c 1.5% pa seem optimistic, with the UK narrowly missing recession with a growth rate of only 0.1% in Q1 of 2018 and GDP actually falling in per capita terms. The last thing the UK economy needs is to make productive people less welcome. The Q1 figures for the Irish economy are not published yet but Brexit uncertainty, far from depressing the Irish economy, seems to have turbo-charged it. The headline growth rate for 2017 of 7.8% may be distorted by the oversized multinational footprint but the domestic growth is estimated to be 5% pa with similar predictions for 2018. Indeed, overheating is more a worry than recession. This is a mixed blessing, as in total contrast to 2008 the construction sector – particularly in housing – needs expansion and there may simply not be the capacity to do so.
Pretty much all parties in the Republic of Ireland support a United Ireland by constitutional means. As I’ve already noted, demography is such in NI that there will be a Nationalist majority within five years and an ever increasing majority after that. As part of the GFA a border poll can be called if there is the prospect of a majority for a United Ireland. A simple majority is all that is needed for NI to merge with the Republic. Hence I think a United Ireland is inevitable unless there is a miraculous reversal in economic fortunes between Ireland and NI. It is just a matter of time – probably between 5 and 15 years. The Republic is far richer, growing much faster, and creating 50 jobs for every one in NI. A hard Brexit will likely accelerate a United Ireland. Indeed, I know some NI people who voted pro Brexit precisely because they believed it would be very bad for the UK and hasten an United Ireland. It is by no means obvious that a hard Brexit would in the round be bad for Ireland. If the UK leaves the CU and SM then substantial FDI which might have gone in Britain’s direction may come to Ireland, more than offsetting the trade loss to the UK. Ireland is already extremely successful in attracting high value FDI. It is not what most Irish people would wish but the Irish will take any unexpected upsides to Brexit.
In conclusion then, sabre rattling towards Ireland will not work and indeed has been and will be counter-productive. In the long term, if indeed the UK leaves the EU, Ireland should be a very important ally. Far more is achieved by cooperation than belligerence. And England – or at least those ‘little Englanders’ who are such ardent supporters of Brexit – need to wake up and realise that their country is no longer powerful enough to ride roughshod over its smaller neighbour. Indeed, economically that particular boot may very well soon be on the other foot.