by Frank Schnittger
Sat Mar 14th, 2015 at 03:39:43 PM EST
UK Prime Minister David Cameron has promised to hold a referendum on the UK's membership of the EU should the Tories win an overall majority at the next election due in May. Never mind that his pledge was mainly to fend off the challenge of UKIP, and that he hopes to have negotiations with the EU in the meantime which might address some of the criticisms many Britons have of the EU. Opinion polls in the UK have been sharply divided on Brexit (with a trend favouring remaining in more recent polls), and any renegotiation of the UK's terms of membership is likely to influence the outcome of the vote.
The fact is however - whether Murdock media inspired or not - that many Britons lack a sense of fellow feeling with their compatriots in EU. They view their security as being guaranteed in large part by the USA and look to the EU as little more than a free trade area with a lot of unwanted immigration and meddling bureaucrats which need to be cut down as much as possible. There appears to be a disconnect between the business elite - generally very much in favour of British membership - and the working and lower middle classes who are much more concerned with the impact of immigration on their job prospects and the social and cultural life of the UK - an impact they blame on the EU, even though net immigration very much predates membership of the EU.
The irony is that there are now more than a million Britons living in France and Spain whose residency status and health care could be severely impacted by Brexit. But many of these don't have a vote, or won't go to the trouble of voting. Some indeed, would vote for UKIP in any case. The little Englander mentality runs deep even in some of those who have made their homes elsewhere. Basically many in the UK want the benefits of being part of a large market without bearing any of the costs of social solidarity which the EU ideal mandates.
It is doubtful whether the implications for expatriates or neighbouring states like Ireland will have a huge bearing on any UK referendum debate. The implications for N. Ireland could be very serious indeed. So much so that the Irish Department of the Taoiseach (Prime Minister) is setting up a specialist unit to consider and prepare for such a development - having stayed studiously neutral and silent on the Scottish independence debate. Follow me below the fold for an initial assessment of what the implications for N. Ireland and Ireland might be.
1. Northern Ireland.
The constitutional status of N. Ireland was last settled in the Good Friday Agreement which guaranteed equality of esteem for both the Irish nationalist and British Unionist traditions and agreed that the constitutional status of N. Ireland can only be changed by a referendum vote of the majority of the electorate in N. Ireland. That agreement has delivered over 15 years of peace in N. Ireland if one excludes a few riots and contentious marches in the meantime.
All military outposts and border checkpoints have been dismantled. You would hardly know you are moving from one jurisdiction to another when crossing the border and there is an increasing amount of trade, tourism and cultural exchange across that border. The Euro is widely accepted in N. Ireland and both economies are increasingly integrated. The importance of agriculture in N. Ireland means that the N. Ireland economy has more in common with the Republic of Ireland than it has with the rest of the UK. Partly because of the Common Agricultural Policy, you simply don't get the animus against the EU that you get in England.
So what if the UK leaves the EU? Firstly, a lot depends on the terms of exit. Presumably both Ireland and the UK will remain outside the Schengen Area, so at least there will not be a return to passport controls on the border between Ireland, North and south. Presumably the UK will also seek to retain free access to the single market as an EFTA member. However what if the remaining EU members take the view that the UK should not be a beneficiary of the single market if it does not share in the costs of the complementary social cohesion goals of the EU?
It is one thing for the EU to give preferential treatment to relatively small EFTA economies like Iceland, Liechtenstein, Norway, and Switzerland, quite a different matter to do so for a major competitor economy like the UK. Why should, for instance, Germany give the City of London the same access to financial markets as, say, Frankfurt, when the UK no longer carries the cost of EU membership? It could be argued that the UK is no different from Switzerland in this regard, but there are close social and linguistic ties between Germany and Switzerland that are less evident with the UK.
Even if no immediate trade barriers are erected, there is the risk of a divergence in regulations and tax rates as time goes on. Why should, for instance a Tobin tax be imposed on EU financial institutions if no similar cost is imposed on UK financial institutions? It is for this reason that big business in the UK is almost unanimously opposed to Brexit - the fear of a loss of access to the Single Market, or at least a loss of influence over the rules by which that market is regulated. They fear the EU progressively adopting regulations that are less advantageous to the UK.
But for N. Ireland, the fear is much more immediate. A loss of access to EU CAP subsidies would put N. I. farmers and related industries at a severe disadvantage to their southern counterparts. The N. I. economy is still hugely dependent on fiscal transfers from Westminster and there is no fear of an immediate shift in N. I. politics toward a United Ireland. But sectoral tensions will increase and there is a danger that the fragile consensus built up over the Good Friday Agreement will start to unravel with all the sectarian tensions this might entail, especially in deprived loyalist urban areas of Belfast and Derry.
A Brexit may also lead to renewed pressure for another referendum on Scottish independence with an independent Scotland likely to seek to rejoin the EU. Given that N. Ireland Unionist's historical and cultural ties are predominantly with Scotland rather than England, a move by Scotland to rejoin the EU would put them in the awkward position of being tied to England rather than Scotland and still outside the EU despite their close integration with the Irish economy and dependence on the CAP..
The very fear that UK big business might lose access to the single market might also prompt many of them to move at least their European Headquarters into an EU jurisdiction. Given that Ireland has close historical, cultural and linguistic ties to England and a lot of experience in attracting US multinationals to locate their European Headquarters as well as considerable manufacturing and development facilities in Ireland, I have no doubt that the Irish Industrial Development Authority will be licking its lips at the prospect of attracting a lot of UK financial services and other businesses to locate at least part of their operations in Ireland. The UK would also cease to be Ireland's major competitor for FDI looking for access to the single market.
On the other hand, the UK remains Ireland's largest trading partner accounting for 32% of Irish imports and 15% of Irish exports and any disruption of UK Irish trade would be very damaging to the Irish (and UK) economies. You can be sure that the Irish Government will be very focused on retaining this trading relationship as part of any Brexit negotiation - by special opt-out if necessary. Given the relatively small size of the Irish economy, and a general recognition of Irish dependence on UK trade, it is not difficult to see the EU making some provision for Irish interests in that situation. In particular, the Island of Ireland might be regarded as a single market, whatever divergences may emerge between the UK and EU elsewhere.
At a political level the dissipation of British Irish tensions in the wake of the Good Friday agreement as exemplified by the visit of Queen Elizabeth to Ireland in 2011 has resulted in Ireland and the UK becoming close negotiating partners within the EU. The loss of a key ally will be keenly felt by the conservative dominated Irish Government who will feel the EU centre of gravity drifting eastward and becoming ever more dominated by Germany. It is conceivable that Irish sensitivities and concerns will become increasingly marginalized in an EU context. In some ways this could be a positive in that Ireland is much less opposed to the social market and agricultural aspects of the EU. But overall the Irish Government will feel the loss of a major negotiating partner very keenly indeed.
The bottom line is that the Irish Government - almost any Irish Government - will try to prevent a Brexit very vigorously - including siding with the UK in any negotiations over the future of the EU, and seeking to influence how the very large Irish diaspora in the UK will vote in any referendum. Almost 1 million people in the UK were born in Ireland and 6 million people (c. 10% of the population) have at least one Irish grandparent. They do not necessarily take their voting directions from the Irish government, but many will be sensitive to any risk of a deepening rift between Ireland and the UK.
However, aside from the danger of the peace settlement in N. I. unraveling somewhat, a Brexit may not necessarily have disastrous consequences for the Irish economy, depending on the terms of exit negotiated. Indeed, I would venture to suggest it could have very much more serious consequences for the UK economy, especially if the EU decides not to cut the City of London any slack in the Single Market. It could also be very damaging for the political cohesion of the UK as a whole, with English anti-EU sentiment out of step with much more complex and nuanced attitudes in Scotland and N. Ireland in particular.
But sin scéal eile (that's another story) as we say in Ireland.