Written by Ray Bassett
This article was first published in ‘Briefings for Brexit’ and we re-publish with their kind permission.
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This article from former Irish Ambassador to Canada, Ray Bassett, argues the Irish Government’s solution to the financial crisis in 2008 was a disastrous blanket guarantee for the liabilities of the failing banks. It has worrying similarities to the current position on the backstop.. It would be the Taoiseach’s nightmare that in a messy Brexit, Brussels demands that Dublin respect the integrity of the Single Market and start erecting barriers.
Initially, the Irish Government’s guarantee [to all creditors of Irish banks in the 2008 banking crisis] was regarded as an extremely clever move which would put one over on other jurisdictions, stabilise the banking system and would never be called in. It was tactically clever, but strategically disastrous. It was based on a bluff and our bluff was called. Large deductions are still being made today from every pay packet in Ireland to pay for this folly.
The backstop appears to have been retrieved from the same bluffer’s drawer in Dublin’s Government Buildings . The original backstop, which only covered Northern Ireland, was hailed as a smart manoeuvre which gave Ireland and Brussels the whip hand in the Brexit discussions.
Again, the early expectations that the backstop would be a trump card began to fade as the House of Commons refused to stomach it. The British Government had it extended to cover the whole of the UK in the Withdrawal Agreement, but again it hit the rocks. In reality, it was never a runner.
Not only has it has scuppered the premiership of Theresa May, it has also sent the moderate, pro-EU wing of the Conservative Party into total retreat. Meanwhile, Nigel Farage’s Brexit Party is threatening to inflict huge damage on both Conservative and Labour traditional bases outside London.
Boris Johnson is odds-on favourite to move into 10 Downing Street and adopt a much more confrontational attitude to Brussels, and indeed Dublin. Even if Boris stumbles yet again, the next occupant of that famous address will have a fairly similar approach.
We may be faced with a demand from London to conclude a free trade deal on the lines of the Canada-EU agreement (CETA), coupled with a declaration that the UK will not initiate any hard border on the island of Ireland, using advanced technology instead.
It would be the Taoiseach’s nightmare that in a messy Brexit, Brussels demands that Dublin respect the integrity of the Single Market and start erecting barriers. Ireland’s junior European minister, Helen McEntee, took up this theme when she opined that in a no-deal outcome, it would be very difficult for the Irish Government to reconcile its obligations to the EU with protecting the Good Friday Agreement.
And it was all so unnecessary. A few simple concessions could have allowed both sides move on to the next stage of Brexit, the future trade arrangements. The insertion of a time limit on the backstop would, in all probability, have secured the passage of the Withdrawal Agreement through Westminster.
The Irish Government’s bluff is being called and its Brexit policy is in tatters. Instead of giving lectures to the British people, the authorities in Dublin need a deep and critical examination of how they managed to contribute to the present unsatisfactory situation.
But such a reflective process is not the forte of Irish administrations and the Irish media, with the occasional notable exceptions.
Even if Boris or another new Prime Minister is not able to get the House of Commons to back his or her approach to Brexit, it is only a matter of time before a Brexiteer administration is returned to power, even if we have a short interregnum of a Corbyn/Lib Dem administration. No wonder that Presidents Macron and Juncker are coming around to the view that keeping a fractious and divided UK inside the EU would be a major mistake.
Meanwhile, our recent guest, the US President, is leaving nobody in any doubt about his support for a true Brexiteer in power in London. A future trade deal between a fully independent UK and the USA, coupled with trade wars between Washington and Brussels, is the stuff of nightmares for Ireland.
The London consultancy firm Primary Access, in analysing Irish investment abroad and Foreign Direct Investment in Ireland, stated that “Ireland has €93bn committed to the US, and €88bn to the UK in direct investment abroad; the comparable numbers for France and Germany are €4.4bn and €3.1bn respectively. The same pattern repeats in terms of inward direct investment. The US has €179bn, and the UK €58bn invested in Ireland; France has €15bn and Germany €5bn”.
As I have stated on many previous occasions, Ireland’s economic connections with mainland Europe are overwhelmingly those of the multinational (mainly American) companies located within the Republic.
If the international climate changes and these companies no longer feel comfortable in Ireland, we will be left with precious little else. In the meantime, our two closest economic and cultural partners, our neighbours to the west and east, as well as home to the majority of our diaspora, will have moved on without us.
In the European elections, the governing coalition parties in Germany recorded a vote which was over 18 per cent below their totals in 2014. The Greens and the Eurosceptic AfD gained ground. In Britain, the Brexit Party emerged as the clear winners, while Marine Le Pen’s group outpolled Macron’s party in France. In Italy, the Lega under Matteo Salvini stormed to victory and the left-wing pro-EU Democrats suffered heavy losses.
The four largest countries in the EU all recorded deep disillusionment. Yet to listen to Irish media, or indeed the EU Commission-financed Euronews, one would have imagined a triumphant endorsement of the present set-up.
Ireland (North and South) was one of the few countries which experienced a drop in turnout, which was particularly noticeable in Dublin, where only a 42 per cent poll was recorded. So much for Euro-election enthusiasm.
The Taoiseach is right. We are entering a dangerous period. And we have the backstop, and that bluffer’s drawer, in significant measure to thank for it.