Ireland’s
Brexit meltdown
There’s
doom and gloom on the other side of the Irish Sea.
By CHARLIE
COOPER 2/22/17, 4:32 AM CET Updated 2/22/17, 4:45 AM CET
DUBLIN — Forget
about the Brexit upside. Just weeks before British Prime Minister
Theresa May is expected to pull the trigger which begins divorce
negotiations, Dublin is convinced that Britain’s departure from the
EU will be disastrous and is desperate for the rest of Europe not to
forget its plight.
The turning point
was May’s admission that Britain intended to leave the single
market and probably the customs union, delivered in a speech at
Lancaster House in London in January, which set out the prime
minister’s vision for a United Kingdom outside the EU.
“We genuinely
believed that Britain would not want to walk away from the single
market,” Danny McCoy, CEO of the Irish Business and Employers
Confederation (IBEC), told reporters at a Brexit dialogue event
hosted by the government in Dublin Friday. “We are now confronting
the reality of Ireland being in a different customs union to Britain.
For the business community that’s by far the biggest issue.”
Tariffs would be
“devastating” for goods exporters, while regulatory
inconsistencies could cause havoc in Ireland’s pharmaceutical and
med-tech industries, McCoy predicted.
The Irish government
shares business leaders’ concern that the economy is so intertwined
with the U.K. — its second biggest export partner after the U.S.
and its biggest importer — that a punitive Brexit deal that erects
trade barriers between the EU and the U.K. will hurt Ireland at least
as much as it does Britain. Dublin therefore is preparing to be
Britain’s best friend among the EU27, pushing for the closest
possible trading links, or at the very least special status for
Northern Ireland.
London, Dublin and
Brussels are united in their warm words for people here. On Tuesday
European Commission First Vice President Frans Timmermans became the
latest to visit Dublin, promising Brexit negotiations will take into
account Ireland’s “very special circumstances.”
All say they are
committed to preventing the return of a hard border. Few business or
community leaders believe the platitudes. If the U.K. is out of the
customs union, the argument goes, how can it be avoided? Government
officials are equally pessimistic, and point to the words of
ex-European Commission customs official and trade expert Michael Lux,
who told a Westminster committee earlier this month that May’s
assurances about a frictionless border were mere “nice words.”
While Dublin still
hopes to secure a boost to its banking sector by guaranteeing
continued single market access to companies leaving Britain and is
hoping to attract the European Medicines Agency if it relocates from
London, the overall economic harm to the country from a hard Brexit
will outweigh the positives, the government projects.
Dublin has been
proactive in getting its message across to the remaining EU27.
Foreign Minister Charlie Flanagan has held more than 80 meetings
since July with EU partners and EU institutions. Last week, to ensure
European capitals have not missed the point, the government arranged
for 11 news organizations from Brussels, Paris, Berlin and Rome
(including POLITICO) to tour the border and see first-hand what
Brexit means for the Irish.
‘That’s when the
shooting starts’
A visit to a dairy
processing plant in Monaghan on the south side of the border, run by
LacPatrick, a company supplied by 1,050 farms in both the North and
the South, crystallizes the acute threat to the local economy.
Agriculture on this
island operates to an “all Ireland” principle. Livestock and farm
products cross the border daily for slaughter, processing and
distribution. LacPatrick has two factories in the north, one in the
south. Some of its supplier farmers have cows on both sides of the
border.
LacPatrick’s chief
executive Gabriel D’Arcy now faces the prospect of an international
customs border cutting through the middle of his patch.
“The way we
operate across the border is seamless. Now it is going to be an
international frontier,” he said. Many British supermarkets and
distributors he supplies are now seeking domestic alternatives, to
avoid the risk of customs duties. Trade further afield is also at
risk.
“What about
regulatory standards? The Chinese are very, very pedantic. They have
approved EU milk as a raw material. They haven’t approved U.K.
milk. So we have to go into a big cycle where veterinarians from the
Department of Agriculture in China are going to have to come over to
approve it. Where is that going to be on the U.K.’s list of
priorities?”
Irish agriculture
could be one the biggest losers anywhere in Europe. Forty-three
per-cent of Irish agri-food exports go to the U.K. If there is no
Brexit trade deal, and the U.K. relies on World Trade Organization
rules, nearly €1 billion in annual dairy exports would be subject
to a 40 percent tariff. €1 billion in annual beef exports would be
hit by 50 percent levies, said Michael Creed, Ireland’s agriculture
minister, describing such levels as potentially “calamitous” at
the dialogue event Friday.
For others in the
farms and villages of County Armagh, Northern Ireland, the prospect
of the reintroduction of a hard border reignites memories of this
region’s violent past.
The prospect of
Brexit speeding a return to violence along the Irish border — once
a militarized zone, today merely a line on a map — may seem
far-fetched. But it is being taken seriously by the people who live
here, and by the government in Dublin.
Standing outside the
house he once lived in, in the border village of Whitecross, Eugene
Reavey recalls the night 40 years ago when three of his brothers,
Catholics, were murdered in their own home by Protestant Ulster
loyalist paramilitaries, at the height of the Troubles.
Now an old man,
Reavey surveys the eight miles stretching toward the Republic of
Ireland and contemplates what a “hard border” might mean.
Customs checkpoints
would become prime targets for attacks by those remaining dissidents
committed to an armed struggle, he predicts. “As soon as those
customs officers arrive, they’re standing there isolated. They’ve
got nobody to protect them,” he says grimly.
“And that’s when
the shooting starts.”
Borders, pillars and
posts
With May’s mind
apparently made up, Dublin’s best hope of limiting the damage is to
persuade the EU27 to go easy on Britain. Keeping the U.K. effectively
within the customs union would appear to be the government’s ideal
scenario, with government officials calling for the “closest
possible trading relationship.” Failing that, a special arrangement
that would allow a soft border in Northern Ireland will be sought. On
the question of the €60 billion divorce bill, Ireland is likely to
be among the voices seeking to soften the blow.
“It’s going to
be difficult because there’s that question of, when a member state
leaves the club, it shouldn’t be better off than if it stayed in,”
said one senior government official, speaking on condition of
anonymity. “But on the other hand, we don’t believe in the
punishment concept either.”
Another official
pointed to the desire of a number of European business sectors —
notably in Germany — to maintain open trade ties with the U.K..
Dublin will seek to build a “coalition” of countries aiming for a
the closest possible trading links with Britain, one official said.
The role of the EU
in helping foster the 1998 Good Friday Agreement peace deal in
Northern Ireland will be emphasized, as will the damage that could be
done to the EU’s reputation if it were seen to be stoking tensions
in a former conflict zone, all for the sake of customs rules.
“We are entering
these negotiations with a copy of the historic Good Friday Belfast
Agreement firmly to the fore,” said Flanagan, the foreign minister,
on Friday. “Borders, pillars and posts” would “categorically be
detrimental to the gains of the peace process,” he added. Ireland
won’t be a “proxy” for the U.K. when the EU27 begins to
determine its Brexit negotiation position later this year, he
insists.
For those still
hoping for a soft Brexit, Ireland could be an influential champion.
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