Category: General

Playing with fire

Over on This Union Graham Gudgin makes the case that there is room for a sensible outcome from UK/EU negotiations, including agreement arrangements with respect to the Irish border.

That is not the place where Leo Varadkar and his Government seem to be right now.

In this week’s Spectator, James Forsyth calls out the dangerous gamble that is the Irish Government’s most recent position, within a wider and clear-headed report of where the UK / EU negotiations stand at present.

On the recent threat by Leo Varadkar to veto progress to Phase 2 of the negotiations unless he gets written commitments on the Irish border, James Forsyth notes:

“The Irish proposal is quite remarkable: it is a state seeking to divide its neighbour economically. This despite the fact that only 15 per cent of Northern Irish exports go to the Republic while 60 per cent go to the rest of the UK.”

“It is often said that this idea is a non-starter because of Theresa May’s reliance on the Democratic Unionist Party. But this is to miss the point. Even if she had a majority of 100, she could not accept an internal UK customs border. As one cabinet minister who supported Remain points out to me: ‘It is not just the hard right of the Tory party for whom this is non-negotiable.’”

No surprises there. He continues:

“Inside government, there is mounting anger at the way that the Taoiseach and his team are behaving. One normally mild-mannered cabinet member tells me that Varadkar is ‘playing with fire’. Another complains that the Irish foreign minister Simon Coveney has his own leadership ambitions, so is making the situation even worse.”

“Dublin is taking a huge risk with its hardline approach. No decent UK government could agree to what it is demanding. It is therefore making the collapse of the Brexit talks more likely. If these negotiations do fail, the effect on Ireland’s economy would be dire. As one government source warns: ‘If we crash out, they crash even further.’”

James Forsyth could have added the question of how UK acceptance of Northern Ireland in the Customs Union (or similar) wouldn’t open up that question in Scotland, something that at present lies dormant.

On the Republic’s current position, the puzzlement in London is understandable. The message from Leo Varadkar in October was markedly different in tone, and more grounded in the realities of our intertwined economies (and by scale, much to Ireland’s advantage).

Patrick Smyth, the Irish Times, Brussels, noted that there is No case for separate North deal in Government strategy:

“And as Varadkar made clear again in the Dáil, making the case for a separate NI deal is not part of the Government’s strategy for economic as much as political reasons.”

“’I know the issue of Northern Ireland and Border issues are extremely important,’ he told TDs on Wednesday, ‘but from the point of view of Irish business and agriculture, the trade between Ireland and Great Britain is much greater than the trade between Ireland and Northern Ireland.’ ” 

Smyth continues his analysis:

“This is particularly the case for the agri-food sector so we are determined to secure a customs union partnership and a free trade agreement or area between Great Britain and Ireland when it comes to the post-Brexit scenario.

“The UK remains by far the biggest importer of Irish agri-food, representing 47 per cent of total Irish agri-food exports or €5.1 billion (in 2015).”

“Whereas, on the other hand, North-South trade represents just over a seventh of this – in 2015 the Republic exported €690 million in food and beverages to Northern Ireland.”

“The same dependence on East-West trade is also true of Northern Ireland. The UK remains the most significant market for businesses in Northern Ireland – sales to Great Britain were worth one and a half times the value of all Northern Ireland exports and nearly four times the value of exports to the Republic.”

For all the talk of the ‘Peace Process” that is not what concentrates the minds of Irish Officials according to Smyth:

“But that broader commercial reality makes it inconceivable that Northern farmers and food businesses, or business generally, would be willing, even at the price of preserving a frictionless North-South border, agree to tariffs and phytosanitary controls – a border – in the Irish Sea.”

“There is a danger, some Irish officials fear, that the inevitable preoccupation in the talks with Northern Ireland and with safeguarding the peace process may distract attention and sympathies among our fellow member states from the scale of the challenge Ireland faces on the East-West trade front, and not least in the hugely important agri-foods area.”

While calls for “no hard border” North/South might feed the green flames of the Irish nationalist dragon it is hard to see how it doesn’t ultimately burn everyone. A threat to veto on no ‘hard border’ focused on land would both a) severely damage the Northern Ireland economy by threatening its far more substantial East/West trade, and b) it still leave the Republic with a hard and damaging border down the Irish sea.

Indeed the strongest case for the Irish Government to make is the urgent need for the widest and deepest free trade deal with the UK post-Brexit to mitigate the inevitable challenges of UK departure from the Customs Union and Single Market – for those still doubting, it is happening.

It may be common for nationalist Ireland to demand the UK sorts out Irish problems where it needs to apply its own imagination to resolving domestic challenges. The UK may have in past indulged the Irish State – most recently with a massive £ billions bailout in the Banking crisis (as well as the £3.2bn loan). The Irish Government has made its bed with the EU, it needs to work out what that means.

The Sun, while it could have been a tad less bombastic, was not entirely wrong is saying that Varadkar needs to grow up. Ignoring the underlying point because ‘it’s the Sun’ ignores an underlying truth. Accepted, Ireland seeks some leverage because it knows past Phase 1 it becomes a single voice in twenty-seven (and not the biggest either). Even so, it is as independently Sovereign as the UK (though relatively less so post Brexit) and needs to develop policy in that respect with its 26 EU partners.

Stephen Bush starts from a different point in his morning Staggers Morning Call newsletter (worth subscribing to even if not completely in agreement with his outlook):

“The only way you can avoid a hard border is to remain in the customs union and continue to have regulatory harmonisation – which is also the only way to get a trade deal which maintains the same level of market access to the rest of the EU as the UK currently enjoys, and vice versa.”

It is unlikely the UK will have total regulatory harmonisation – Michael Gove has already made the environmental case of raising the bar in a number of areas: and no doubt there may be other areas where EU regulation is viewed as ‘excessive’. Those decisions are entirely at the discretion of a Sovereign State outside the EU.

Point being that the border will be a bit more real after Brexit, and that whatever a final agreement looks like between the UK and EU27 (determining ‘how’ real) there will be significant challenges for the Irish Government. Not accepting the word ‘gamble’ Stephen still thinks it is a political calculation:

“Far from being a gamble, the political calculation for Varadkar is simple: unless the British government changes its Brexit objectives there is going to be economic damage to his country but he can avoid the political damage to his career if he carries on the way he’s going.”

Particularly as an Irish election looks increasingly likely to be sooner rather than later – for both Fine Gael and Fianna Fail, it would be timely to have an election while Gerry Adams was still leader of Sinn Fein.

It is still a gamble, and short term political consideration still threatens an outcome far far worse than a less than full Brexit free trade deal. However political difficulties might be a calculation within the negotiation, they are not the point of negotiation. Again, the UK will be leaving the institutions of the Single Market and Customs Union: for those still doubting, it is happening.

The Irish might well continue to leak scorn on the UK. (£)

However in the world or real politick The Daily Telegraph reports voices from the EU (£) that say:

“…if the UK reaches agreement on the financial settlement and citizens’ rights, then the Irish will have to accept compromise language that essentially defers a reckoning on the issue.”

“The reality is that there is no magic solution Ireland,” the EU diplomatic source said, “so if money and citizens are not sorted, then Ireland can hold up talks. But if money and citizens are agreed, then the Irish issue will ultimately have to be deferred.”

In the end it is all about the money. (£)

“British withdrawal will slash EU revenues by 16pc once the current budget framework ends in 2020, forcing the Brussels to confront vocal vested interests. It threatens to ignite bitter divisions.”

 And

“While the sums are manageable in macro-economic terms, they are politically neuralgic and run across deep cultural and ethnic fault-lines.”

 “The political sensitivity of funding is a key reason why Britain’s showdown with the EU over the Brexit divorce bill has become so explosive.” 

The Irish intervention in the negotiation process is a valuable lever to the EU. However, the Irish would be foolish to believe it is anything more, and needs to adapt its position to an understanding that in the end it is money that talks.

If you play with fire, you can’t blame anyone else for getting burned.

 

* bold text is highlighted by editor
* worth listening to Peter Lilley on BBCNI The View (from about 20.20 mins – the rest isn’t worth watching) which, unlike the appearance of Ken Clarke the previous week, hasn’t been provided as a clip.

More than words

Over the summer months, while things were/weren’t intense/deadlocked up on Stormont Hill, the News Letter published a series of letters and responses that provided an interesting distraction from an otherwise dull news agenda.

A little patience is required to run through the correspondence the series of letters between UUP and Alliance Party Councillors and MLAs; the subject matter ranging from bonfires to blitz, and of course an Irish language Act. What is interesting is the nature of the Alliance proposition across the points raised.

Read more… »

Irish nationalism’s self-regarding single certainty.

United Ireland, inevitability and Brexit.

This long read is available as a PDF download.

In his excellent study of Ideology and the Irish Question, Paul Bew quoted a Ballymoney Free Press editorial of May 1912 at the height of the Irish Home Rule crisis. ‘The statement of Unionist Ulster’, it announced, ‘is that it merely wants to be let alone’. Unfortunately, ‘since Satan entered the Garden of Eden good people will not be let alone’.

This editorial captured a universal truth of Ulster Unionism – the desire to be ‘let alone’ – a truth with ambivalent consequences.

Read more… »

False flag

The Commission on Flags, Identity, Culture and Tradition has been established as part of commitments made under the Stormont House and Fresh Start Agreements.

Given experience, and the political background to the Commission, there must be deep reservations about any final Report; and more specifically the use of that Report beyond what any might imagine or intend.

Read more… »

Stop talking, start doing.

Leaving the EU is a good time to reshape the Northern Ireland economy

Following the decision of the UK electorate on 23 June 2016 to leave the EU, the Government of the United Kingdom has undertaken a great deal of work to prepare the country for triggering Article 50 on 29 March 2017.

Before the vote last year, Northern Ireland civil servants had pulled together a preliminary view on what might happen if Leave was to win the day. This seemed to be more concerned with the impact on the Republic of Ireland than on the opportunities presented to Northern Ireland if such an event should occur. Since then, other than a letter to the Prime Minister, as far as is publicly visible, the Northern Ireland Executive appears to have done little of anything in preparation.

It is time to stop talking about ‘re-balancing’ the Northern Ireland economy. The UK decision to leave the EU means there is no better time than the present to take action to gain best advantage of the opportunities that lie ahead; time to tip the scales in favour of private sector enterprise and exports. As a UK regional economy Northern Ireland faces issues around productivity, economic inactivity within its workforce, and an overbearing public sector.

In a new report, An Agenda for Northern Ireland after Brexit, local Northern Ireland business and the Global Britain think-tank have collaborated to offer a policy framework of what needs to be addressed constructively and positively by all levels of government in Northern Ireland. Most importantly, Northern Ireland needs focused leadership from the Executive.

Read more… »

Make your mind up time

It is make your mind up time for the Irish Republic.

Nothing new, but there has been hugely irresponsible and faintly histrionic noises coming out of Dublin, and Irish republican/nationalism generally, along with other voices (usual suspects), to the effect that Brexit means a return to violence in Northern Ireland. The only obvious return to the past is the use by the Republic’s politicians of events related to Northern Ireland as a distraction away from issues for which they are responsible, a deflection from the economic and political realities on its own doorstep.

Read more… »

unintended consequences?

The Renewable Heat Association (RHANI) sought a legal injunction to stop the Department for the Economy publishing the names its members, about 500 in total.

Yesterday an interim injunction was overturned in respect of those companies who successfully applied to the RHI scheme. Individuals who applied would seem to be except from their names being published, for now.

There has been lots of comment on the judgement which has mostly focused on the publication of ‘names’, and how quickly those names might be published. However, in the BBC report of the judgement it was a small comment that caught eye of @thedissenter which seemed more important to the scheme of things.

The report on the case states:

The judge ruled that the application for RHI subsidy did not amount to a legally binding contract.

and;

He said the department had the right to vary the terms.

Why is that interesting? The argument that the RHI will cost £XXX million over 20 years rested on the premise that approval of the applications meant the creation of a legally binding, invariable contract. This judge would seem to disagree.

It might expected that legal actions on RHI are far from over. However, if the point the judge in this case goes unchallenged (improbable, but not to say he will be over-ruled on this point later) that moving forward:

  • the current 12 month fix by the Minister, Simon Hamilton, will hold, and that;
  • going forward the scheme can be altered to a controlled scheme within what funding is available from Westminster.

While seeking to protect the anonymity of its members the RHANI may well have sped up the process of revision to the grant payments of those who had RHI scheme approvals pre-2016, at considerable relief to the Northern Ireland budget.

Seems RHANI members may soon be facing the Law of Unintended Consequences.

And why are we having an election?

 

 

The Blame Game

First: Cover Your Ass.

First: Cover Your Ass.

Having been focused on travelling and/or working in the later half of 2016 the RHI story was in the background, though hard to miss the heat and noise around the issue.

At the start of 2017 it seemed that despite the heat and noise, there wasn’t much light on the subject. Nolan was on repeat. While plenty of titbits were being bandied about as if Moses had just revealed them himself, nothing seemed to be moving the story forward. The story of RHI had become left behind by the political story unraveling before us.

Worthwhile at this point to rewind. Helpfully, early last July the Northern Ireland Audit Office produced a report on the Renewable Heat Incentive Scheme. You can read the report here along with the summary contained in the accompanying press release.

If you want to know about the Renewable Heat Incentive Scheme then you really should read the NIAO report. It provides a timeline of events, the likely immediate impact on budget finances and a series of actions that had been agreed within the Department of Enterprise Trade and Investment in particular.

And it is worth listening to the short two minute item here from UTV(ITV) on the scheme, closing with the Minister, Simon Hamilton, confirming a pathway forward in respect of addressing the failures of the scheme. The NIAO summary of what was launched into the public arena back in July 2016, is easy to recognise:

The RHI scheme encouraged the installation of costly eco-friendly heating systems by paying a tariff per kilowatt of heat burned over a 20-year period. It was administered on behalf of Department of Enterprise, Trade and Investment (DETI) by the Office of Gas and Electricity Markets (OFGEM). Read more… »