Friday 30 September 2016

It's 2021: Post Brexit Ireland looks like a very different place

Fast forwarding to June 2021, Dan O’Brien imagines what the years of turmoil following an exit might look like

Published 19/06/2016 | 02:30

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Click to enlarge

Next week marks the fifth anniversary of an event that has already proved to be an inflection point not only in the history of these islands, but in that of our entire continent.

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The Great Disintegration that has taken place over the past five years is gathering pace. Its most obvious and painful manifestation for us is the almost weekly departure of foreign companies, as one after another shuts its European headquarters here. This island is rapidly going back to mid-20th century isolation and peripherality. The future has not appeared bleaker since the 1950s.

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Our nearest neighbour, which for centuries was the most stable country in Europe, has undergone more change — politically and constitutionally — in the past five years than in the previous 200. The referendum to leave the now-defunct European Union (EU) on June 23, 2016, led ultimately to the disintegration of two unions, Britain’s and Europe’.

Within days of that vote, the Scottish administration announced that it would hold a referendum on that nation’s constitutional status.

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With a large majority of Scots having voted to remain in the EU in June 2016, the July 2017 independence referendum in Scotland was always only going to have one outcome. Faced with a choice between staying in the United Kingdom or becoming independent and staying in the EU, Scots resoundingly chose the latter.

Among the very few good things to emerge over the past half decade from an Irish perspective has been the deep and strong relations that have evolved between the Irish and Scottish states since the latter became independent on January 1, 2019. But without in any way denigrating our Scottish friends and allies, the relationship has buttered few parsnips.

The laboriously negotiated Ireland-Scotland Free Trade Agreement has still not been concluded, and, even if it is eventually wrapped up, with two-way trade amounting to a mere IR£800m annually, it won’t be a gamechanger. Nor will it be anywhere near enough to drag either economy out of the deep and protracted recessions that both have been suffering for more than three years.

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Closer to home we can at least be thankful that the North has not returned to its violent past, for now at least. The return of the Border in 2018 was met with dismay by the nationalist community, even if they have taken it in their stride. Sharply falling standards of living have been a much bigger worry since Prime Minister Boris Johnson ended the North’s huge block grant from the UK treasury causing Greek-style austerity.

If Johnson is unloved by the green side of the sectarian divide, he is loathed by those on the orange side. Unionists say his pandering to English nationalists, who have become as hostile to sending money to Belfast as they once were to handing it over to Brussels, makes a mockery of his party’s claim to value the union.

The disintegration of these islands over the past five years has been matched on a continental scale. Within weeks of the UK referendum result a half decade ago, the campaign in the Netherlands to hold a similar in/out EU referendum had gathered one million signatures. Pressure to hold a referendum became irresistible. In the climate of anger and disillusionment that had festered in the Netherlands over more than a decade, the Dutch voted to quit in March 2017. 

The implications of that vote were felt more immediately than the British vote nine months earlier. The Netherlands was a member of the Eurozone; the referendum meant that, having spent years working to keep Greece in the euro largely to prevent any undermining of the single currency, a member country had set a course to leave voluntarily and re-establish its own currency.

The panic and uncertainty of the first euro crisis of 2010-12 quickly returned. Financiers across the continent dusted down their euro break-up plans and began pulling back to their home countries. The continent’s nascent economic recovery, which had been slowly gathering pace since 2013, came to shuddering halt.

It was at that point that the feedback loop between Europe’s deteriorating political environment and its weakening economy went into a death spiral. With the French presidential election in full swing at the time of the Dutch vote to leave, the commitment of the National Front’s Marine Le Pen to hold a referendum in France on quitting the EU was adding to her already surging levels of support. 

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As a means of neutralising the issue, the centre-right candidate Alain Juppé matched Le Pen’s commitment. Although he defeated her comfortably in the presidential run-off in May 2017, the issue of EU membership came to dominate French politics.

By the time the in/out referendum was held the following March, the European economy was in its deepest slump since 2008/09. The day French voters chose to leave the EU, on Sunday March 18, 2018, the European integration project was dealt the coup de grâce.

Early the following week the increasingly acrimonious talks that had been going on between the EU and the UK on the latter’s exit from the bloc were suspended. Prime Minister Johnson claimed that the unravelling of the EU had vindicated his stance of campaigning for Brexit in 2016.

Many of his fellow leaders, by contrast, blamed him for unleashing the forces of disintegration. An Irish diplomat with long experience of Brussels said of the emergency summit following the French vote that he had never experienced an atmosphere as poisonous in his career. Europe, he said of that week, came apart before his eyes.

Participants in the financial markets, seeing that the break-up of the euro and the EU was imminent, went into the sort of panic not seen since the Lehman Brothers collapse 10 years earlier. 

The Greek and Portuguese banks were the first to close their doors. Contagion spread fast. By the end of the week a run on the Netherlands’ third-biggest bank saw queues form outside branches in Dutch towns and cities.

A rattled-looking Mario Draghi held a press conference after the markets closed on Monday, March 26. The Italian, who was close to the end of his term as head of the ECB, repeated his mantra of 2012, saying Frankfurt would do “whatever it takes” to save the currency and the financial system. Those words had worked at the beginning of the decade. They didn’t  work second time round. So weak was the system and so great were the uncertainties surrounding the coming break-up that no words could calm the situation. As bank runs spread across the single currency zone, the entire system shut down. 

It was on Monday, April 2, 2018, that the Irish banks didn’t open for the first time. The then Taoiseach Micheal Martin broadcast to the nation that evening in an attempt to bring calm. His words were as effective as Draghi’s. Mandarins in the Department of Finance and officials from the Central Bank reactivated 2011 plans to introduce a new currency. 

Nobody who was alive at the time will ever forget the following weeks and months. As the banks stayed closed for most of the summer, the economy suffered a coronary. By October unemployment soared past 15pc, the highest level recorded in the previous collapse, and showed no signs of stabilising.

Rural areas were particularly badly hit as tourism dried up almost completely. Currency chaos and the sheer depth of recession across Europe saw to that. Ryanair was forced to file for bankruptcy at the end of the summer. A furious and visibly aged Michael O’Leary apologised to shareholders, staff and customers. He said that the carrier had not only suffered huge losses as a result of the crisis, but that its business model had no future in an era when governments had gone back to the bad old days of protecting national airlines and clamping down on foreign ones.

Google’s announcement in January 2019 that it was shutting its European headquarters in Dublin was the beginning of another wave of lay-offs. The decision had been triggered by President Juppé’s warning that he would block its search engine if it did not move staff dealing with the French market to France. 

With the EU single market being dismantled and other countries following the French lead, most multinationals began closing or downsizing their European headquarters, spreading staff to national capitals across the continent.

Ireland suffered far more than any other country as so many multinationals had centred their European operations here. Today, IDA-supported companies employ just 90,000 people, down from almost 200,000 at the peak five years ago. More losses are inevitable and with no single European market to service, those jobs are never coming back.

By the spring of 2019, unemployment surged past the 20pc threshold. Making matters worse was the deterioration in relations between Dublin and London. The new Taoiseach, Regina Doherty, and her counterpart, Boris Johnson, were not on speaking terms after London had suspended free movement of labour. He had done so after caving in to pressure from Nigel Farage’s English Sovereignty Party to halt the flow of Irish migrants into the recession-hit English economy. 

With other European countries also ending free movement of labour after the EU was formally dissolved, and President Trump in the US closing America’s borders to all Europeans, the old release valve of emigration was closed more tightly than it had ever been before. The near-permanent encampment that has existed for more than three years outside the Australian embassy on Dublin’s Cumberland road is a painful and poignant reminder of how desperate many people are to get out.

The seemingly never-ending depression has embittered public discourse to an extent barely imaginable a decade ago. Nothing illustrates this better than the heavy security measures around TDs’ constituency offices following assaults and a proliferation of threats against politicians.

Another manifestation of the deep and wide anger towards anyone in a position of authority is the ever more fragmented nature of politics.

The 34th Dail is in its dying days. A fourth election in a little over five years can only be months away. But with polls showing that the 35th Dail will be the most fragmented yet, there is little prospect of strong stable government, and every prospect of continued ungovernability.

The centre didn’t hold in Europe. It is far from certain that it will hold at home.

Sunday Independent

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