Tag: Irish Government

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.