Friday 20 September 2019

2019: Chaos, crisis and conflict as Brexit looms

In 90 days, Britain leaves Europe - but we are no closer to knowing how it will play out. If it leads to an economic downturn, it will spell trouble for the Taoiseach. But it is only one of the many issues on his plate

Leo Varadkar on an Arronmore Island ferry.
Leo Varadkar on an Arronmore Island ferry.
Coalition quandary: Mary Lou McDonald's Sinn Féin are cast as the stay-away party
Delays: demonstrators dressed as custom officials at a mock customs checkpoint between Dundalk and Killeen in the North
Farewell Europe: Theresa May
Peak popularity: Frances Fitzgerald, Simon Harris, Senator Catherine Noone and Leo Varadkar celebrate the repeal of the Eighth amendment at Dublin castle. Photo: Damien Eagers
Kim Bielenberg

Kim Bielenberg

As he faces into 2019, Taoiseach Leo Varadkar knows that he will have to grapple with some of the same intractable issues that dominated this year.

He will hope that the shape of a final deal for Britain's exit from the European Union will progress much faster than it did in 2018, and that it reaches a reasonably positive conclusion.

Handling Brexit for Leo and his Foreign Minister Simon Coveney is an exercise in damage limitation.

Their number one priority will be to ensure that the Border remains open, and that people and trade flow freely between North and South, and between our two islands.

Peace and prosperity depend on a smooth Brexit, if there must be any Brexit at all.

As well as dealing with the fallout from our neighbour's traumatic exit from the EU, the Taoiseach will have to tackle the housing and homelessness crisis, which has only got worse in 2018, and find ways of boosting supply of homes and reducing accommodation costs.

And the marathon waiting lists for hospital treatment and overcrowded accident and emergency wards will remain ever-present in the Government's in tray - along with the long-delayed roll-out of broadband in rural areas.

Leo was only a bit-part player in the presidential election this year, lending his support to Michael D Higgins.

In 2019, he will face his first significant electoral tests, and could even find himself fighting for votes on three fronts during the year - with local and European elections definitely taking place on May 24, and the ever-present possibility of a General Election during the year. Ever since Leo Varadkar became Taoiseach as head of a minority government, there have been occasional bouts of election fever around Leinster House.

He was widely expected to call an election some time this year, but the Brexit schedule, the abortion referendum and political considerations played a role in keeping him away from the hustings.

There was more speculation of an imminent election after the resignation of Denis Naughten in October amid controversy over his social meetings with the bidder for the roll-out of broadband.

Leo's Government is desperately short on numbers in the Dáil, and that could play a role in political events next year.

After losing Naughten and the Fine Gael TD Peter Fitzpatrick, the Government can only rely on the steadfast support of 54 TDs in a chamber of 160 deputies. And it is quite possible that one or two more will be lost overboard during the year. Although the Leo regime has an inbuilt instability, the threat of an imminent election in 2019 receded earlier this month when Fianna Fáil announced that it would extend its confidence and supply deal until early 2020.

That means they will pledge to abstain or support the Government in budget and confidence votes through 2019.

Both the Taoiseach and the Fianna Fáil leader Micheál Martin will insist that the momentous nature of Brexit means that 2019 must be a time for political stability.

In recent days, Varadkar said: "Both Fianna Fáil and Fine Gael understand the existential threat that Brexit [poses to] Ireland and both parties believe that an election at this time would not be in the country's interest, and I don't think the public would thank either party for causing an election at this time."

What we have, we hold

While it is true that the dénouement of Brexit is hardly a time to be precipitating an unnecessary election, there are also political considerations for both men in avoiding an election for the foreseeable future.

For Varadkar and his ministers, comfortable around Government Buildings, it may simply be a case of what we have, we hold.

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Farewell Europe: Theresa May

The Taoiseach could be tempted by opinion polls to improve his position in a general election, but Theresa May's unnecessary election in 2017 showed how a leader risks losing support and weakening their ability to govern effectively. The Dáil arithmetic may be fragile and there have been monumental failures in housing and health, but Varadkar can boast one notable achievement.

He has kept a disparate alliance between his party and an eclectic group of independent ministers together. He may now feel that this government could go the distance until an election in 2021.

Varadkar seems prepared to stay put for the moment and avoid the risks of an election.

There are also compelling reasons why Micheál Martin wants to avoid the polls.

He knows that he has only one more shot at becoming Taoiseach. If he loses, he would probably become the first Fianna Fáil leader never to lead a government.

With Fianna Fáil trailing in the polls, Martin is looking out for fairer weather.

In recent weeks, there have been small signs that the gap between the two main parties may not be all that wide.

A Kantar Millward Brown poll for the Sunday Independent on December 16 showed FG slightly down on 32pc, with Fianna Fáil at 27pc.

Martin and the other opposition leaders have been waiting for the shine to come off the young Taoiseach, and perhaps that is now beginning to happen. The same poll shows a decline in public satisfaction with Varadkar by 7pc since April to 49pc.

The change in the Taoiseach's fortunes could be exacerbated in 2019 if there is a downturn in the economy, possibly brought on by Brexit, or there could be some other unforeseen event that knocks the ship of state off course.

Donald Trump has certainly shown a talent for creating chaos, and we could feel the effects if he goes too far in upsetting the equilibrium of international trade in his battles with China and other powerful states.

The Economic and Social Research Institute forecasts the economy growing next year by about 4pc if the UK exit from the EU is orderly. That envisages a two-year transition period where nothing much changes, but that outcome is by no means certain.

The ESRI adds a note of caution, however: "The economy faces an unprecedented degree of uncertainty in 2019; the outcome of the Brexit process, combined with the possibility of increased international trade tensions, could have significant implications for the economy's performance in the new year."

'Repeatedly missing targets'

The Taoiseach and his finance minister Paschal Donohoe have come under criticism in recent weeks for promises of lavish tax cuts, and for not taking a more cautious approach by stashing away revenues during a period of economic recovery.

The State's budgetary watchdog, the Irish Fiscal Advisory Council, recently attacked the Government for "repeatedly" missing its financial targets. The council said the budget for next year, which allows for a €4.5bn spending increase, was "not conducive to prudent economic and budgetary management".

The political climate for Leo and his ministers could look a lot darker in six months' time if Britain crashes out of the EU, and suddenly the Government has to introduce cutbacks.

Fine Gael might be seen as little different to Fianna Fáil in inflicting a painful boom and bust cycle where they alternate between lavish spending and drastic cuts.

Earlier this year, as he basked in the glow of the abortion referendum, one senior party figure said that Leo was popular because he is the embodiment of what modern middle-class Ireland likes to thinks of itself - pro-European, diverse and different.

He appeals to the under 60s who are liberal on social issues, but are more inclined to self-reliance than any kind of socialism.

He reaches peak popularity when he is seen to be holding the line against the perfidious Brits over Brexit, and also when he shines his liberal halo.

His personal backstory of the gay man seeking marriage equality earned him popularity in 2015, and he picked a winner when he pushed for liberalisation of abortion laws.

There may be few opportunities to shine his liberal halo in 2019, however.

The provisional plan of the Government is to hold two referendums on the same day as the local and European elections in May.

The Cabinet is considering whether to hold a referendum on divorce and also wants another poll to extend the vote for presidential elections to Irish citizens outside of the State.

At present, the Constitution only permits divorce where certain conditions are met, including that the spouses have lived apart for four of the previous five years.

Now the Government proposes to either reduce the four-year requirement or take it out of the constitution altogether.

There are bound to be traditionalists campaigning against this if a referendum takes place, but it is unlikely to be as momentous as the marriage equality and abortion campaigns. If the referendums go ahead on May 24, they are likely to be overshadowed by the elections taking place on the same day.

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Coalition quandary: Mary Lou McDonald's Sinn Féin are cast as the stay-away party

As well as offering indicators whether Fianna Fáil can recover, the local and European elections will provide clues about the future of Sinn Féin in the post-Adams era.

The performance of the Sinn Féin candidate Liadh Ní Riada in the presidential election was disastrous with a showing of just 6pc. But the presidential poll is a personality contest much more than a contest between parties.

Carbon taxes

The local and European elections will offer us guidance on whether Mary Lou McDonald can broaden the party's appeal and threaten Fianna Fáil to become the country's second most popular party.

If there is a general election and the numbers dictate it, Sinn Féin may feel that it has little choice but to seek to go into coalition for fear of being cast as the stay-away party: stay away from coalition in the South; stay away from Stormont; and stay away from Westminster.

The Government has talked a lot about the effects of climate change, but has so far shown itself to be ineffective in taking action.

By the end of 2019, we are likely to see how far short we are of our target of reducing CO2 emissions by 20pc by 2020. Currently the expectation is that we will only have cut them by 1pc.

The Government held off on increases in carbon taxes on petrol and diesel in the budget for 2019, but indicated such rises will apply in next year's budget.

Varadkar may have been hammered for failing to hike carbon taxes, but he may now feel that this was a wise course after observing the tumultuous events in France.

Since he came to power in France, Emmanuel Macron has hiked fuel taxes as a way of reducing greenhouse gas emissions and raising revenue, but the latest fuel-tax rise sparked the revolt of the "gilets jaunes" on the streets of Paris.

After the worst riots in France in half a century, Macron has had to postpone the fuel-tax rises.

Macron's political reversal of fortune and the protests against the taxes could influence events here. The Government will be cautious about introducing hikes in carbon taxes, learning from the French example and our past experience of water charges.

If measures are needed to tackle climate change, they will require a lengthy process of careful explanation.

There are broader lessons to be learned from the French experience and our own government will have to consider them carefully in 2019.

Learning from the "gilets jaunes'' protests, Varadkar will have to prevent a gulf appearing between a well-paid, metropolitan elite and much less prosperous groups that feel that they have been left behind.

If a backlash comes, there could be a number of sources of angry opposition: it could come from smalltown or rural Ireland that never felt a recovery from the 2011 crash, or from the expanding renter class in Dublin and elsewhere, who can't afford a roof over their heads even on the average industrial wage.

To a certain extent, our fortunes in 2019 may not rest on decisions taken in Dublin but on the whims of Westminster politicians.

Our only option as they decide on the future of the Border and the relationship between our two islands is to hope for the best - and prepare for the worst.

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Delays: demonstrators dressed as custom officials at a mock customs checkpoint between Dundalk and Killeen in the North

 

Brexit: the final countdown begins

In 90 days, Britain leaves Europe – but we are no closer to knowing how it will play out, writes Kim Bielenberg

The UK is scheduled to leave the EU at 11pm local time on March 29 2019. We have a time and a date, but nobody knows exactly how Brexit will play out, or even if it will be postponed.

From that moment on March 29, the border might continue more or less as it is, or if plans of UK and EU authorities go off the rails in negotiations, there could at some point be customs checks. Nearly all the parties involved are trying to avoid having customs posts along the Border.

At some point, duty-free shopping is likely to return to the Irish Sea, and unless the UK stays in a customs union, cheap fags and alcohol will be available on a booze cruise from Dublin to Holyhead.

For the next few weeks, the drama is likely to play out in Westminster as MPs return from their Christmas holidays, refreshed and possibly brimming with Brexit good cheer or downtrodden by fear and loathing about the UK's future.

The House of Commons is due to hold its "meaningful vote" on the withdrawal agreement by January 21, and for much of the last fortnight it has seemed unlikely that this would be passed. And no doubt there will be farcical scenes, as there were before Christmas.

If the agreement fails to pass through the Commons, Theresa May will have 21 days to report back. This might give parliament a chance to amend plans and make different proposals.

Based on past performance, they will struggle to agree on anything. Both main parties are split on the issue. They are so divided that it is possible that some MPs argue with themselves in the mirror.

Before any Brexit deal can take effect, it must also be approved by the European Parliament in a plenary vote.

EU member states must also give the deal final approval in a ministerial meeting.

What happens on Brexit day depends on whether a deal is passed through these various stages. It could produce a largely seamless transition or, if the torturous negotiations fail to yield any deal, a much more chaotic cliff-edge Brexit. In the latter case, the UK would crash out.

There have been apocalyptic visions of planes being grounded, supermarkets empty of goods, and medicine supplies being cut off as importers and exporters struggle to move goods.

The result may not be as drastic as people fear and the EU has made it clear that planes will still be allowed to land, but without a deal, there could easily be severe disruption.

It is also quite possible that Brexit will be postponed before March 29 if the British government, MPs and EU leaders cannot agree on how to proceed.

If, for example, parliament needs more time to approve the EU (Withdrawal Agreement) Bill - a process experts say will take weeks - the UK might request an extension to the Article 50 process. The rest of the EU can grant such a request by unanimity.

At present, May insists that Brexit will take place as scheduled by hook or by crook on March 29. Extending UK membership beyond the date of European Parliament elections in May could also pose practical difficulties for the EU.

One last alternative is that the UK could revoke its Article 50 notification and opt to remain in the EU for good.

 

Extra Customs staff

Downing Street says such a turn of events simply will not happen, but Europhiles dream about it and are unlikely to give up their campaign to stay in the bloc.

If Brexit happens smoothly, the country will enter a 21-month period of transition, and trade talks will take place between the UK and the EU.

Revenue is employing an extra 600 customs staff to get through the transition period which runs until the end of 2020.

During this time, most aspects of UK membership of the EU will remain in place, including free movement across borders and membership of the customs union and single market. The border in Ireland will remain completely open.

Negotiations over a final trade deal between the UK and the EU are scheduled to take place until December 2020, but many believe that a settlement will take much longer.

Whatever happens, the arrival of Brexit is likely to be good news for the Border's smuggling community with substantial profits to be made from contraband alcohol, cigarettes and fuel.

Since Brexit has been mooted, locals along the frontier have reminisced about the era of a harder border when there was a healthy trade in butter, tea, bacon, bread and eggs.

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