Sunday 15 September 2019

Dan O'Brien: 'Patriotic duty to point out dangers of Brexit backstop'

The political and economic risks of no-deal are less clear but more dangerous than the Troika bailout in 2010, writes Dan O'Brien

Trade: A No Border No Brexit sticker can be seen close to the Hands Across the Divide peace statue at Craigavon Bridge in Co Derry. Photo: Getty Images
Trade: A No Border No Brexit sticker can be seen close to the Hands Across the Divide peace statue at Craigavon Bridge in Co Derry. Photo: Getty Images

The worst-case outcome is not yet inevitable. There are still plausible scenarios that could prevent a no-deal Brexit on October 31. It may be too late for the Irish and EU side to time-limit the backstop, a concession that would have prevented a no-deal and kept Boris Johnson out of number 10, but something may yet turn up from the chaos of current British politics.

Readers will be aware of the feverish speculation in political circles in London. Further speculation here is unnecessary. What is necessary is discussion of issues over which the Irish Government can or might have some influence and how matters could play out on this island if rupture takes place in the autumn.

Before doing that, a word on how the debate in this country on Brexit is evolving. Last weekend, a columnist in another Sunday newspaper wrote: "A real patriot would put aside any reservations about the Irish Government insisting on the backstop, and dig in with the rest of us."

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We are in dangerous times when those who critique Government policy have their patriotism questioned and are accused of not standing with "us". As the longest-standing critic of the backstop in the Irish media, I take serious issue with such claims.

In the lead-up to the bailout in 2010, I had my patriotism questioned by people who told me that it was 'unhelpful' to write about the rising risks of a bailout and its likely consequences. Then, as now, it was not my job to don what some believe to be the green jersey. The job of columnists is to use whatever knowledge and expertise they might have on a given subject to help readers understand what is happening and how it could affect their lives.

As somebody who has been professionally involved in issues of direct relevance to understanding the backstop, cross-border commerce and EU affairs for over two decades, it has been my honest opinion from the moment the backstop was put on the table in November 2017 that it was a mistake.

In these pages, on November 19, 2017, I warned that the taking of the position "in a worst-case scenario, would be to leave Ireland vulnerable in Brussels, alienate even the more moderate elements in London and end up with all the downsides of a hard Brexit".

Two weeks later, on December 3, as the position on the backstop hardened, this column stated that it "comes with costs and very significant risks. These costs and risks have been largely ignored in discourse mainly, it seems, because of a soft nationalistic sense of rallying against 'the old enemy'."

This soft nationalism has hardened. Though some may consider it unpatriotic, this column will continue to focus on the risks readers face. The biggest, and most under-discussed, is the possible short supply of things that people, businesses and organisations need and want on a daily basis.

According to the World Bank's database, there are only a handful of countries in the entire world that are as import-dependent as Ireland. As an economy we have specialised in the production of a narrow range of goods which are mostly exported. Most of the goods that are consumed here are imported: from cars and computers to flour and potatoes. According to Eurostat data, Ireland imported more than twice as much food per person last year as the UK. Half of Irish food imports are sourced directly in the UK and more come from the continent via Britain.

Imported goods, the overwhelming majority of which enter the jurisdiction via the Republic's ports, will be treated differently from November 1, if no deal is agreed between the EU and the UK. Many of them will be subject to tariffs upon arrival and the inspections regime will be transformed overnight to comply with Ireland's EU obligations from October 31. There is a very real prospect that introducing a major change of this kind, quite literally overnight, will lead to shortages for days and weeks.

It may be that temporary derogations are granted to lessen the impact, but it is important to understand how central customs issues are in the European rules-based order and how little flexibility there is in their interpretation.

The Lisbon Treaty, the EU's de facto constitution, states "products coming from a third country shall be considered to be in free circulation in a Member State if the import formalities have been complied with and any customs duties or charges having equivalent effect which are payable have been levied in that Member State".

Among other things, this means that Ireland is constitutionally bound to collect tariffs on goods crossing the Border, and these provisions are supreme over any Irish law, including Bunreacht na hEireann (the supremacy of EU law over all national laws was established before Ireland joined the EU nearly half a century ago).

All of this is policed by the European Commission. The treaty says that it "shall ensure the application of the Treaties, and of measures adopted by the institutions pursuant to the Treaties. It shall oversee the application of Union law".

We can talk endlessly about solidarity on the backstop and what a good friend to Ireland the European Commission has been on the issue, but after a no-deal exit things will change. The Commission will be bound by its most basic obligations and duties to ensure that Ireland applies European law as all other members do, including the collection of tariffs on goods coming across the Border from Northern Ireland.

The Government has still not spelt out how it will fulfil its obligations to Brussels' satisfaction. More than three years after the Brexit referendum, its position continues to be that it is discussing with the European Commission how the Border on this island can differ from every other EU frontier with a non-member country.

Contrast this with the British position on the Border. London has stated that it will not change the northern side of the Border on this island for at least a year in the event of no deal. If it sticks to this commitment - as it is very likely to do, in its own interests, if for no other reason - it will claim that it was true to its word. If the Irish Government comes into conflict with the EU on policing the Border on the Republic's side, expect to hear crowing from across the water along the lines of "those eurocrats told the Irish that they cared about peace, but look at them now, demanding a border that everyone who cares about peace in Ireland knows will put peace at risk".

Who knows how public opinion here will shift if things play out in this way. If people feel the economic pain of a crash out, they see the British not putting up a border and see the European Commission demand one on the southern side, the response might be an "us against the world" reaction.

But it may also be that support for the Government's position and the backstop is a mile wide and an inch deep. Some of those who have supported the backstop on the basis that it is what they believed to be in this island's best interests could feel that wool was pulled over their eyes.

That was a common feeling when the bailout happened in late 2010. Then the Government quickly fell apart.

There was always a clear and present danger that the backstop would cause a breakdown in the Brexit talks.

The political and economic risks in the event of a no deal happening are less clear because so many factors are at play. But they are a lot more dangerous.

Sunday Independent

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