Brexit and Ireland – North and South

The US journal, World Politics Review, carried a one-page interview with me last week, focusing initially on why the border is such a sensitive issue, but broadening out to cover some less obvious angles.

As the interview is behind a firewall, here’s a pre-publication draft:

WPR: The Irish border issue, specifically the prospect of a hard customs and immigration border going up between Northern Ireland and the Republic of Ireland, looks increasingly like the biggest snag in Brexit talks so far. What solutions or proposals are the different sides—in Belfast, Dublin, London and Brussels—offering?

Frank Barry: The substantive issue here is rarely spelt out explicitly. It is, as political scientists in Belfast have informed me, that if uniformed customs or immigration officers are placed on the Northern side of the border, they will have to be protected by armed police, who will in turn require the protection of the British army. This is because the border areas are the stronghold of dissident republican factions that have consistently rejected the peace agreement of the 1990s that achieved a high degree of consensus across these islands. Stationing troops in the border areas will inevitably lead to clashes, which raises the specter of a return to conflict in Northern Ireland.

The economic problems associated with Brexit are also substantial. Agribusiness, which is of major significance to both the Northern and Southern Irish economies, is the sector likely to suffer most damage from Brexit. Supply chains are highly integrated across the border, so Brexit of any form will be hugely disruptive.  Businesses on both sides of the border have been restructuring vigorously in advance of Brexit, but restructuring is costly and there are some problems that cannot be surmounted by cross-border tariff-jumping investments.

The Irish government and the European Union have advocated what essentially amounts to moving the international frontier into the Irish Sea between Britain and the island of Ireland. This proposal is anathema to both Northern unionists and the British Conservative party as it affects the constitutional integrity of the United Kingdom. The matter is further complicated by the fact that the Conservative government in the United Kingdom is dependent on the parliamentary support of Northern unionist parliamentarians for retaining its majority—giving it strong reason not to upset this part of its coalition. The British side has suggested that the problem can be resolved by technology to monitor the cross-border flow of goods. At least some customs officers and random checks would continue to be required however, and it is difficult to see how Britain can regain control over immigration without a heavy presence of immigration officials. I can see no solution to the danger of a return to civil strife other than the one being advocated by the Irish government and the EU. The constitutional issue lay at the heart of the Northern conflict however, and unionists are prepared to risk a lot rather than see their constitutional position within the United Kingdom jeopardised.

WPR: How likely is a “hard Brexit” as a result of these negotiating hangups?

Barry: Either the British deny the unionist community in Northern Ireland a veto or the EU and the Irish government accept a land border on the island of Ireland. If this circle cannot be squared, the UK will exit the EU without a deal. This is the ‘hardest’ of the ‘hard Brexit’ possibilities. A hard Brexit typically entails defaulting to World Trade Organisation rules, involving a very significant deterioration in the  trade relationship between the UK and the EU. But the bad blood engendered if the UK would to leave the EU without a deal being struck would spill over into other areas. Nor is Northern Ireland the only stumbling block in the negotiations of course.

WPR: Does Brexit pose a bigger economic threat or political threat to Ireland and Northern Ireland, given the terms of the Good Friday peace agreement?

Barry: The political threat is the one that frightens the Irish side the most, because of the danger of a return to civil strife on the island. The economic threat is substantial, particularly for, though not confined to, agribusiness. In the past, one might have hoped for EU structural funding to offset some of the damage to businesses and the economy. The UK however is a major contributor to the EU budget, and competition between remaining EU countries over the reduced budget will be intensified. Irelandwhich is by now one of the richer EU member stateswill face an uphill battle in accessing adequate compensation to alleviate the damage.

A further problem is that up to two-thirds of Irish exporters use Britain as a bridge to their continental European markets. For users of this route, Brexit will entail higher transport costs and significant time delays. Two new sets of customs frontiers will have to be crossed, as goods enter the U.K. and then re-enter the EU.

On the economic front, there are some offsetting benefits, though these pale in comparison to the costs. Britain will become less attractive to firms from the U.S. and other non-EU countries selling into the EU market, and Ireland will attract a share of the foreign investment diverted away from the U.K. British firms, too, are likely to establish in Ireland to retain free access to the EU market. Paradoxically, the harder the Brexit the stronger this effect will be. Loss of access to the Single European Market will be particularly significant for financial services firms. A large number of London-based firms are currently exploring the option of establishing operations in Dublin as a way to retain market access, though Frankfurt, Luxembourg and other locations are also competing vigorously for this business.

To the extent that Ireland is successful in attracting a share of financial services firms, however, another dilemma arises. The financial services sector in Ireland is almost entirely Dublin-based, while agribusiness is largely based outside Dublin. Regional disparities are thought to have played a role in the Brexit vote, and in the election of Donald Trump to the U.S. presidency. A widening of regional disparities could lead to a similar anti-globalization backlash in Ireland.

Brexit has not, so far, resulted in any significant weakening of Ireland’s commitment to full EU membership. But the U.K. has played a strong role in resisting the centralizing instincts of some powerful EU member states. An EU minus the UK is likely to be more strongly committed to some form of corporation tax harmonization. Yet Ireland is highly dependent on the foreign-owned multinationals, for which it serves as an export platform. These account for over 80 percent of Irish exports and have been a major factor in the rapidity of Ireland’s recovery from the financial and eurozone crises of the late 2000s. If Ireland’s attractiveness to multinational investment was to be severely diminished, its integration into the EU economy, and its ongoing commitment to the EU, could be substantially weakened.

 

29 thoughts on “Brexit and Ireland – North and South”

  1. Useful.

    fyi Yesterday’s Guardian Editorial:

    Throughout his career, Gerry Adams relentlessly singled out the British government for the blame in Ireland’s troubles. In truth, the responsibility for Northern Ireland’s miseries was widely shared, not least with the IRA and Sinn Féin, of which Mr Adams has been for so long the chief strategist. Yet it is ironic that the Sinn Féin leader announced his retirement from frontline politics at the weekend. For Mr Adams is stepping down at the very moment when a British government is unambiguously the sole cause of a massively hostile act against Ireland, north and south, in the form of a hard Brexit.

    From start to finish, Conservative Brexiters have shown that they simply could not care less about Ireland. In the referendum campaign, few gave even a passing thought to the impact of a leave vote on the relationship between Northern Ireland, the rest of the UK and the republic. When the vote went their way – though they lost in Northern Ireland – the Brexiters then gave bland assurances that the decision would make absolutely no difference to the island’s soft border, the legacy of the peace process, or north-south and east-west cooperation.

    This was and is nonsense.

    https://www.theguardian.com/world/commentisfree/2017/nov/19/the-guardian-view-on-brexit-and-the-irish-border-britains-shameful-dereliction

  2. @Dave O’Donnell: Just to clarify, your concluding sentence (“This was and is nonsense”) is part of the Guardian editorial, and not your own comment on the editorial.

    Turning to the main issues dealt with in Frank Barry’s interview, I have the impression that the emphasis being given to Irish Border issues risks hiding the really serious Irish-GB trade issues, which in purely economic terms are the major ones. I don’t want to be misinterpreted as not caring about threats to peace, but even if one solved the Irish Border problem by having Northern Ireland stay within the Customs Union and Single Market, the huge problem of access to the GB export market would remain, as would the disruption to hassle-free trade with Continental Europe. The ensuing large transactions costs will be a burden on the Irish economy given any fairly hard Brexit, whether for the UK as a whole or just GB.

  3. What Barnier had to say today.

    Let me say a few words on Ireland specifically.
    We need to preserve stability and dialogue on the island of Ireland.
    We need to avoid a hard border.
    I know that this point is politically sensitive in the UK.
    It is not less sensitive in Ireland.
    Some in the UK say that specific rules for Northern Ireland would “endanger the integrity of the UK single market”.
    But Northern Ireland already has specific rules in many areas that are different to the rest of the UK.
    Think of the “all-Island” electricity market, or of the specific regulations for plant health for the whole island of Ireland.
    Think of rules that prevent and handle animal disease, which I know well as a former Minister for Agriculture.
    There are over one hundred areas of cross-border cooperation on the island of Ireland.
    Such cooperation depends in many cases on the application of common rules and common regulatory space.
    We have nearly finished our common reading of the Good Friday Agreement. We have agreed on the principles for the Common Travel Area.
    The UK and the EU have recognised that Ireland poses specific challenges. And that the unique circumstances there require a specific solution.
    On the EU side, we must preserve the integrity of the Single Market and the Customs Union at 27. The rules for this are clear.
    The UK said it would continue to apply some EU rules on its territory. But not all rules.
    What is therefore unclear is what rules will apply in Northern Ireland after Brexit. And what the UK is willing to commit to, in order to avoid a hard border.
    I expect the UK, as co-guarantor of the Good Friday Agreement, to come forward with proposals.
    The island of Ireland is now faced with many challenges.
    Those who wanted Brexit must offer solutions.

    To say the following is NOT correct.

    The Irish government and the European Union have advocated what essentially amounts to moving the international frontier into the Irish Sea between Britain and the island of Ireland. This proposal is anathema to both Northern unionists and the British Conservative party as it affects the constitutional integrity of the United Kingdom.

    What is at issue is the geographical extent pf particular EU related regimes and the location of checks to ensure that they are adhered to. The situation is not on a par with the Congress of Vienna (or various other negotiations that could be mentioned).

  4. The unfortunate reality is that the rest of the EU will require Ireland to establish and police a hard border to protect the integrity of the Internal Market and the Customs Union. The clowns and fools currently attempting to govern Britain will not come up with anything meaningful or effective and will seek to put all of the blame on Ireland and the rest of the EU.

    A further point is that hinting at the possibility of paramilitary violence is not very clever. We are in the current mess in Ireland because the then British government did not enforce its monopoly on violence when it was usurped by Northern Unionists in 1912. As a result, it lacked the ability to do so when its monopoly was also usurped in the South (“The North Began”). Any hint of paramilitarily violence should be crushed mercilessly by the security forces on both sides of the border.

    And finally, in terms of trade in goods, we should be looking at massively expanding airport and sea port capacity to by-pass Britain as far as possible.

  5. Belfast and the Lagan Valley have always been the financial centre up north, a key banking centre for Ireland as a whole, and have always been economically integrated wholly with London. That’s the crux of the matter. And the most likely determinant, for better or for worse. Its what still allows Belfast to always keep a step ahead of Dublin and control the pace of events, as well as debate. Britain is evidently aiming to leave the EU with no deal, operating for a time under WTO rules, while charting out a new course for itself, in terms of foreign policy, and expects the rest of the world will have to adapt to that, as it might, or else pay a price. It will not sacrifice self-interest in the name of being accused of being disruptive. Instead, it will accuse others of being disruptive and use its soft power to either spread that idea or make public opinion slowly but surely accustomed to the idea that Britain can and should dictate the course of international events. It is a long-term strategy. That is the way events appear to me. It is not a question of English nationalism. Or party politics. Or personalities. Or newspaper-editorial debates. It is a question of British foreign policy and statecraft, each of which are determined by economics and laws to protect such interests. Hence the graduation of an individual from mayor of London to foreign secretary while still, no doubt, having greater influence over the financial world of London than the current mayor. Therein lies the power, nationally and internationally, for Britain to chart its own course. The fact that London is still the financial services capital of the world would allow it to operate under WTO rules to its advantage rather than disadvantage, while still protecting its economic interests internationally by diplomacy in the interregnum en route to whatever it decides as its long-term plan. It expects, not without reason, that Ireland will have to follow suit, at least sufficiently so as to retain particular advantages or indirect control over future developments here.

  6. By the way, the fact that Ireland has never worked to create its own transport industry for trade (a central idea during the struggle for independence) and instead still does its international trade via Britain will obviously have a major impact upon what way “the cookie of public opinion will inevitably crumble here”. The history of the idea of an Irish mercantile marine is an interesting one, albeit a marginal one. It is also tied in to the history of Irish international relations and the question of Irish defence budgets. Ireland has had to operate at a position of disadvantage.

    1. You may have missed the great increase in direct to continent RoRo over the last few years including to Gotenberg, as well as the worlds largest RoRo ship entering Dublin-Zeebrugge service – one with as far as I can see over 2x the capacity of the next largest on the Irish sea route.

      1. As Oliver Hardy might have said, “I most certainly did”. Thanks for that head’s up from an amateur student of history. When I get the time, I hope to get my head around the entire history of Irish international trade. Seems to me that historians to date treat the economic history of Ireland primarily as a question of domestic social history. Hence some shortcomings, perhaps, in existing literatures and understandings of Ireland’s place “in the world”. As for our island neighbours, I can not be convinced that they do not know how to look after their own interests. That’s what makes media coverage today seem so incredibly short-sighted, as if it was entirely an issue of party politics rather than civil services, lawyers, international trade and so on. But that’s the media for you, no matter what country you may think of.

  7. @ Owen McGee

    “Belfast and the Lagan Valley have always been the financial centre up north, a key banking centre for Ireland as a whole, and have always been economically integrated wholly with London. That’s the crux of the matter. And the most likely determinant, for better or for worse. Its what still allows Belfast to always keep a step ahead of Dublin and control the pace of events, as well as debate.”

    Was this written in 1921?

    This is certainly the first piece I’ve ever read – and I read The Telegraph online – to suggest that Britain has carefully thought out all its options and will use its soft power around the world to create a dynamic free-trading country that can, in effect, set rules for other countries – The British Empire II. It is an interesting thesis (I’ll give you that) and, who knows, maybe it will come to pass. Though I don’t think the 450million or so remaining in the EU are going to allow this to happen and be dictated to by Britain. I also don’t think you appreciate how ‘locked in’ Britain is to international supply chains for all types of goods and services.

    1. Britain does have foreign policies. The post-1945 rules of international “global” trade, GATT, WTO, MFN (most favoured nation) agreements etc., are often associated with the USA because it is the larger economy. But Britain invented those rules. It knows how to play the game because it invented it. And it will act strategically. London is the largest (larger than NY) centre in the financial services industry and that makes it the pivot upon which the global market operates. That’s the point. One cannot claim that the UK does not know what it is doing because UK newspapers admit that they cannot predict what exactly will happen. For politic reasons, they may not be supposed to offer (accurate) predictions either. Whether Britain’s confidence in its ability to get the trade agreements it desires is a little misplaced or not, its confidence in that regard is very well founded. It is not a question of dictation. It is a question of being in a position to negotiate self-interested trade agreements. The $1.2 trillion in mutual investments between the UK and USA, not to mention Canada, help to ensure that the USA will be a sympathetic onlooker. And the level of UK/Commonwealth investment in Europe is such that Europe has to “go easy” in terms of resisting whatever trade agreements the UK may want. As regards Ireland, Belfast still bets that London is a better financial ally to have than Dublin. That is understandable, even if it does not necessarily point to an ideal future for this southern part of the island because it can put negative pressures, at will, on Dublin. It seems to me that the Irish government is doing the best it can under the circumstances. And Ireland is fortunate to have good economists like Kevin O’Rourke, Philip Lane etc. to help the country figure how it can act in, or adapt to, the global economy, while still retaining the country’s humanitarian foreign policy image, such as it is.

      1. What has the WTO to do with the future of London and Belfast (?) as financial centres? Apart from the somewhat moribund General Agreement on Trade in Services (GATS) what, exactly, has it to offer?

  8. The Northern Ireland Affairs Committee of the UK Parliament heard evidence from Swiss and Norwegian authorities on land border control recently.

    Broadly, it heard that effective control with low effect on traffic requires intensive coverage (of license plates rather than people) by cameras, joint operation of customs posts, right of hot pursuit, support from local communities and adequate resources.

    The Swiss Federal Customs Administration is, excluding the army, the biggest unit of the Federal Government with about 2,200 in the Border Guard and 2,200 in Customs. [NB in a highly Federal state where much is delegated to the level of Canton]. The budget is about 1.5 bn Swiss francs [€1.3 bn]. The economic cost of customs checks is estimated to be 450m Swiss francs per year.

    The Director General, Federal Customs Administration (Switzerland) said: “There are two organisations in Switzerland where you get a big political mess when you close a unit, and that is the Swiss Post and the Swiss Customs. People like that there is something at the border”.

    The Chief of Staff, Swiss Border Guard said: “Specifically in Basel, we have a common patrol between the Swiss Border Guard and the German Federal Police. It is 10 from each side. I was at a checkpoint where we had many people from the German Federal Police in Switzerland. Mainly Swiss people were controlled and it was accepted. It gives security and people like this. They like that common police forces are operating”.

    Representatives of the Directorate of Norwegian Customs said: “There are approximately 1,600 employees in Customs in Norway: some on the border, some inland and some by the coast [which seems a bigger concern than the land borders with Sweden and Russia]. In Norway, we have more than 30 different governmental agencies for which Customs do the border controls.

    Between Norway and Sweden, we have 57 roads, and only 11 have customs offices; 46 are unstaffed. If people who go into Norway have uncleared goods, they have to stop at the border. If they do not have uncleared goods—perhaps they are under the limit for free importation—they can just pass through the border. But we do have cameras. And the cameras are linked to our intelligence system”. Much more at
    http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/northern-ireland-affairs-committee/the-land-border-between-northern-ireland-and-ireland/oral/72959.html

    1. I have no wish to digress from discussion of Frank’s several excellent insights into the political and economic issues for Ireland raised by Brexit. However, this historical vignette may be of interest. It is illustrative of contemporary Brexiteer delusions; both as regards the UK’s well-established position as a world leader in everything for all time, and potential to regain its status as a ‘colossus’ on the global stage once it departs the EU.

      Just over 65 years ago, on 3 October 1952, Britain exploded its first home-manufactured conventional atomic bomb at Montebello. A flurry of self-congratulation followed amongst the great and good of Britain’s political and atomic science elites. According to Churchill, once again Britain had demonstrated its claim to world status as a ‘Great Power’. (Gowing, 1972)

      The problem was that one month previously, and one month later, Russia and the United States, respectively, exploded thermonuclear devices. As summed up by the historian A.J. P Taylor: “British scientists had invented the bow and arrow just when America and Russia were perfecting the quick-firing rifle.” (Taylor,1974)

      It’s a fact that the atomic bomb project of the early 1940s was the original invention of British and Refugee scientists. The UK-US wartime ‘Special Relationship’ refers to the transfer of the British bomb project, and its scientists, from the UK to the more secure location of Los Alamos and related sites in the US; where the project could be brought to fruition, necessarily supported by a US Government investment of $1bn. In the years immediately following the end of WWII, the UK’s ‘special relationship’ to the US rapidly degenerated to that of a ‘poor relation’; with the US increasingly reluctant to transfer technologies to facilitate the UK’s own nuclear ambitions. Claims of original ‘invention’ cut little ice with the then US Administration.

      Within the UK, any hint that Britain’s grand quest to regain international status via the acquisition of atomic power, and bomb-building capabilities, might be delusionary, was not particularly well received. As noted in the official history of Britain’s quest for atomic power, (Gowing, 1972), the Chief Scientific Advisor on Defence, Henry Tizard, observed to colleagues that: “We are not a Great Power and never will be again. We are a great nation but if we continue to behave like a Great Power, we shall soon cease to be a great nation.” That soon put the kibosh on his influence in political and atomic science circles.

      The stakes were high for Britain in the post-war competition for international power and influence relating to its nuclear prowess. They are no less high now in cutting its trade and treaty ties with the European Union. Delusionary mindsets, sadly, appear much the same.

      Sources:
      Taylor, AJP (1974) ‘Delusions of Grandeur’, New Scientist, 5 December
      Gowing, Margaret (1972) ‘Independence and Deterrence: Britain and Atomic Energy 1945-52 Vols. 1 & 2 London: The Macmillan Press

      1. Veronica, I’m comprehensively unimpressed by the UK government in respect to Brexit but I think your vignette isn’t the right one to pick. The 1952 atom bomb was a remarkable thing for them to have pulled off and they had got H-bombs to work just five years later. It had the desired effect on geopolitics and confounded the Americans.

        It was remarkable ingenuity on such a shoestring that plutonium was transported between North & South of England in the boot of a typically unreliable Vauxhall.

        That, to me, is in stark contrast to the grandiose idiocy on display at the moment.

  9. I welcome this expression of a contrarian view – even if I would dispute much of what is being expressed. And, even better, it is not being expressed from behind a psuedonym – unlike those who are either sneering at or rejecting the content of these views. (There seems to be a perception that expressing a view publicly (however anodyne and establishment-validating) and being identified with that expression will attract a North Korean style punishment. If, of course, some of the powerful special interests were (or chose to be) embarrassed or annoyed, the effects of the resulting political, social and professional ostracisation and exclusion could be serious. I, unfortunately, have some insight. But such an outcome is relatively rare because credible critiques of Ireland’s rent-seeking, semi-feudal regime are equally rare.)

    There can be no doubt, given its heft, that the British economy will continue to function effectively outside of the EU. How well or badly it will perform when compared to a continuation of the current arrangements will always be a matter of dispute. Even the most ardent Breixteers concede that its performance will suffer in the short to medium term. But they are convinced, and they resolutely reject any evidence to the contrary, that this temporary economic pain will be worth it. There is, however, no evidence that those who voted for Brexit in what are described as Labour’s heartlands, and whose votes were crucial to delivering the result, share this view. In fact any evidence that exists points to a rejection of the Brexiteers’ economic vision. This will make for interesting political contortions and governing arrangements.

    However, businesses will adapt to the new arrangements, whatever they might be. The usual capitalist combination of greed and stupidity will prevail – and many Irish businesses with their long record of officialy authorised ducking and diving will be to the fore.

  10. The RoI shares a smallish island with the UK. I doubt whether any EU mainlander gives a damn what happens to us when (if?) the UK decides to separate from the EU. We are simply too small to matter either economically or politically – and also, we do have a very bad, late XX cent, history of internal dissent around our shared frontier. There are smaller EU states (Estonia, Latvia, Lithuania, Slovakia and Slovenia) but these little chaps have the good geopolitical fortunate to be contiguous with the Big Chaps. No problems.

    The RoI can be ‘easily persuaded’ to quit the EU if the UK departs the CU or whatever. Won’t be politically pretty. But as I say – we simply do not matter much in the larger scheme of things European. The Internal security and wider political concerns (to the East) of the EU Big Chaps will dictate and drive their political agenda. The UK being an island is in a much better position to protect itself. Us? Wer’e an Anglohone island also.

    I believe that the EU negotiators are insisting that there should be no physical land border between NI and RoI because they know that (a) it would be completely useless; and (b) they already have a functioning border in place. We cannot afford the financial cost of maintaining a proper functioning physical border between the EU and the UK, and I doubt the EU would agree to pick up the tab for such a dubious and unecessary setup.

    Its not the advent of a border we have to concern ourselves with – its how we will continue to get ready access to our future energy fuels ’cause our slightly carbon-free, non-exhaustibles will not suffice. How does our nat gas get here? Hmmmm.

    Dream on lads!

    1. The problem, Brian, is that the Brexiteers don’t appear to care what happens to the people, or the economy, of Northern Ireland, which is part of their own jurisdiction. Nor of the impact of their drastic political interpretation of the majority vote for exiting the EU on the rest of the UK, or any of their neighbours either.

      As for our energy supplies, climate and energy economist, Richard Tol, recently points out that the impact of Brexit on energy policy will likely lead to a collapse of the Single Energy Market in Ireland. That’s not good for us if it happens. It’s worse for the North of Ireland though.But the SEM is just one of a long series of challenges to which we will have to adapt.

      Given the political debacle that’s being made of Brexit by a dysfunctional UK administration, opinion polls here reflect no enthusiasm for Ireland to join them in leaving the EU, short or long-term. There’s no going back to a condition of servile dependency.

      1. Veronica – thanks. I wonder did we ever exit ‘servile dependency’ – its not looking too rosy at the moment since we are quite (economically) dependent on our nearest neighbour despite our long historical links with continental europe. Both of our islands are now – for the better perhaps?, Anglophones. I am yet to be persuaded that either of us are actually European (as this term is constantly misused) such that our natural political placement is to our east; its not, no matter how persistent or voluminous the political PR. Who was it that called us Hibernia (Winterland)?

        Our dependency has been deepened somewhat by the lack of direct nat gas or electricity interconnectors to continental europe. Not saying the English will act the maggot and mess with our energy supply – but …. I’d shy away from the use of the term umbilicus – but apron-strings seems quite apt.

        Europe (from the Channel to the Urals) is where the political maneuverings are occurring. It may be that the western bits are slowly coming to the realisation that the US of A is actually the real, economic and military threat to the political stability of Europe, so it might be wiser for them to make friends with the Rossians (sic).

        The EU is in deep sh*t with one of its 4-Pillars policy – the Free Movement of Persons. This was, economically, a policy guaranteed to lead to real bad political trouble; and it has. But this policy failure is utterly trivial beside the so-called refugee problem: which is catastrophic. Europe cannot absorb them, neither culturally nor economically. Its simply impossible. Brexit is not occurring in a vacuum.

        That ‘leaked’, slightly diplomatic, memorandum. Cui bono? Whitehall or Quai D’Orsay?

      2. I expect, Veronica, you’re well aware that England/Britain has been brexiting from European entanglements ever since Henry VIII found it expedient to break from the Roman Catholic Church – as Simon Jenkins points out in this piece:
        https://www.theguardian.com/commentisfree/2017/nov/23/europe-leader-angela-merkel-crisis-german-leader-brexit
        (though I would advise ignoring his wittering at the end of the piece).

        And Britain has only ever being pulled in – belatedly and, as a result, at huge cost in blood and treasure – when a shift in the European balance of power threatened its interests or even its independent existence.

        Its entanglement with the Common Market and subsequently the EU was uncharacteristic, ahistorical and never sat well with a majority of UK subjects. So the ardent Brexiteers are set fair in their deluded effort to recreate their buccaneering past that is long gone – with considerable and equally deluded support from probably a majority of UK subjects. And they should be let off to find out the hard way.

        Unfortunately it will fall to Ireland to establish a hard land border to protect the integrity of the Internal Market, the Customs Union and the proper jurisdiction of the CJEU. Ireland will need considerable support from the EU26 and in return this may require reform of the Leprechaun economics of the MNC enclave. However, a proposal from the non-UK EU27 that the UK should relinquish its permanent UN Security Council seat once it leaves the EU could concentrate Tory minds wonderfully.

  11. On ENERGY Supplies – see here from Bruegel

    The Impact of Brexit on the Irish Energy System – Pragmatism vs. Principles
    Posted on November 22, 2017 by Yves Smith

    By Georg Zachmann, a Senior Fellow at Bruegel and a member of the German Advisory Group in Ukraine and the German Economic Team in Belarus and Moldova. Prior to that he worked at the German Ministry of Finance and the German Institute for Economic Research in Berlin. Originally published at Bruegel

    Brexit promises pain for Ireland that could be cut off from the EU internal market and be left exposed to market instability in the UK. Georg Zachmann assesses the scale of the possible damage for Ireland, and how the UK and EU might use the special energy relations on the Irish island to commit to a pragmatic solution.

    Ireland is the EU member state that will be most impacted by Brexit. A particular case in point is the energy sector. Currently the Irish electricity and gas markets’ only physical connections are with the UK. So, after Brexit, these Irish markets would not be connected with the EU anymore. This has material implications.

    [,,,]
    Conclusion

    Current discussions suggest that the UK will leave the internal energy market because of matters of principle on both sides: On the one hand the EU does not want to accept a special treatment of trade in specific sectors (“no cherry-picking”), while on the other hand the UK does not want to be bound by EU institutions that are crucial for the functioning of this market. The complex case of the Republic of Ireland might offer the UK and the EU27 an opportunity to still achieve this first-best solution. The EU might argue that accepting full internal energy market membership of the UK is the price to pay for allowing the Republic of Ireland to fully benefit from the EU internal energy market. At the same time the UK might find the loss of sovereignty that comes with accepting the EU internal energy market rules acceptable in order to ensure competitive energy supplies in Northern Ireland. The rest of the UK would also certainly benefit from being in the internal energy market. This mutual dependency between the UK, the Republic of Ireland and Northern Ireland can be a credibility device for both sides, which might help convince investors of the stability of the arrangement by which the UK stays inside the EU internal energy market.

    Read all: https://www.nakedcapitalism.com/2017/11/impact-brexit-irish-energy-system-pragmatism-vs-principles.html

    I also note that the US has a deal in Cork to import LNG from across the big pond.

    Plus as Colm McCarthy noted in the DinnyOB Press recently – our electricity pricing is above the EU norm.

  12. The economic future looks grim for the UK and hence Northern Ireland if the latest projections from the Office for Budget Responsibility come to pass. The OBR concentrates on potential growth in its medium term outlook, so GDP growth is the product of labour force growth and productivity growth. The latter has for years been much lower than the pre-2007 figure of 2.2% and the OBR has persisted with the view that a return to that trend would materialise. It has now abandoned that assumption and has taken a slash hook to its productivity growth projections, which still rise but from only 0.9% next year to 1.2% by 2022. Consequently GDP growth is now expected to average only 1.4% per annum over the next 5 years.

    Note that this is not a Brexit view but rather an acknowledgment that its previous assumptions on productivity growth were wrong. If the forecast proves broadly right (it may not of course) it implies very little growth in UK living standards per head and significant pressure on the public finances regardless of Brexit. Northern Ireland has a fiscal deficit of 25% of GDP and so is heavily reliant on transfers from London.

    1. The relevance as far as Brexit is concerned is, of course, the fact that a hard version will make the UK’s economic position even more precarious. The central problem from an Irish point of view is that efforts in the UK to raise productivity are joined at the hip, in the minds of Leavers of both the right and the left , with (i) restricting immigration/free movement and (ii) for the right, the UK striking out on its own for the so-called “sunny uplands” of an “independent” trading nation i.e. leaving both the single market and the customs union.
      Janan Ganesh of the FT made the point some months go that “Brexit is an idea whose only rebuttal is its own implementation”. The question is at what point in the process of implementation that rebuttal will kick in, not in terms of halting it but making it as soft as possible.
      The likelihood of it being early enough is strong. The kamikaze element in the Tory party knows this, the paradox being that the period to Brexit/Independence Day is too long, not too short! Hence, the continued pressure for walking out of the negotiations.

      1. You describe the ardent Brexiteers as the “kamikaze element in the Tory party”, but what they want is a comprehensive and rapid Brexit to be the shock therapy that energises a scelerotic, moribund economy. Michael Gove is a maoist in the purest sense. And there are others like him. (All Al (Boris) Johnson wants is to be prime minister.) Their targets are hordes of excessively rewarded rent-seekers, pen-pushers and purveyors of bullshit. Gove was excoriated when he suggested that British people had had enough of experts. But he was perfectly correct to call them out when so many of these so-called experts spout bullshit. One should not under-estimate the extent of popular support for a serious culling of the rent-seekers, pen-pushers and purveyors of bullshit. And we have no shortage of them in Ireland either.

        1. Unfortunately, they are not the target; witness the billions being spent on extra staff to implement a needless Brexit.
          A blogger on the FT summed up the situation perfectly when he referred to Corbyn’s view of the impact of free movement/immigration on productivity and wages and the recent article by Peter Lilley in the Telegraph basically endorsing Corbyn’s opinion. As an ardent Leaver, it had not occurred to him that both are wrong. But it is the cleft stick in which the UK body politic finds itself. A sufficient block of voters, right across the political spectrum, is convinced of its validity. Brexit it is. The more soft boiled the better from an Irish point of view, the key element being whether Starmer can hold the line on continued de facto UK membership of most of the internal market, the common policies and, vitally, the customs union, the one issue where there is a clear difference between the Conservatives and Labour.

          1. I fear your overwhelming desire for a “soft-boiled” Brexit is clouding your judgement. The desire for a hard Brexit to shake up the economy is strong. The public antipathy towards the well-heeled, bullshit-spouting, EU-favouring rent-seekers also remains strong. Public opinion, in so far as it is engaged on Brexit, is hardening in favour of “just get on with it” (there is a sense that the EU is backing Britain in to a corner and that will provoke a visceral response). Nobody really believes the bona fides of the Corbyn/McDonnell duumvirate which has spent 35 years treating the EU as a capitalist ramp. And Starmer, although a competent and credible performer in the Commons, has no political base in either the party or the country.

  13. We will have to wait and see. According to a document leaked to Politico, the Commission is proposing, as one would expect given the logic of the negotiating situation, that the discussions on the Withdrawal Agreement (WA), which has the only solid legal basis under Article 50, and the standstill/implementation/transition/prolongation/whatever requested by the British, be run in parallel, and be part of the “arrangements for withdrawal” mentioned in the article i.e. be a major chunk of the WA (even if only saying Articles x, y, z of the Treaties will continue to apply to the UK).
    In short, no clarity for UK economic operators until October 2018 at the earliest.
    UK farmers are now reported as looking for a ten year transition!

    1. Indeed, we will have to wait and see. But the perfectly rational and legally based arrangements being contemplated by the Commission (and the Council – minus the UK PM) could be set to nought. My Sussex forebears hewed to the motto: “We wunt be druv.” And their modern descendants can be equally bloody-minded. The words of the Leveller, Thomas Rainsborough, addressed to Cromwell and Ireton, 370 years ago at the Putney debates resonate across the centuries “..it’s clear that every man that is to live under a government ought first by his own consent to put himself under that government; and I do think that the poorest man in England is not at all bound in a strict sense to that government that he hath not had a voice to put himself under..”

      When you add to this sound and deeply held conviction the usual visceral political lust for power you get a potent brew. We can see how this visceral lust for power could leave Ireland with a caretaker government when the European Council decides whether or not to progress to the next stage of Brexit.

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