Friday 18 October 2019

Michael Gannon: 'Britain is our friend, and when friends are in trouble, we help'

The risks are too high for Ireland not to help broker a Brexit deal with the EU for the UK, writes Michael Gannon

Palace of Westminster. Photo: PA
Palace of Westminster. Photo: PA

Michael Gannon

two weeks ago, the Government gave a stark assessment of a no-deal Brexit; 50,000 jobs lost and a current account deficit of over €5bn - in effect, wiping out the hard earned recovery since 2010. Added to this, the Mercosur deal spells bad news for beef farmers here. Has the Government spent its influence in Europe on the backstop?

Of course, we can all hope that common sense will prevail on October 31, or that the next UK prime minister will go back on his campaign promises, but governments and businesses don't work on hope. Even if it turns out to be 'all right on the night', time, money, effort and worry is being expended right now; energy that might otherwise be more positively channelled elsewhere. Does it have to be this way? Why are we gambling with such an expensive outcome that can be avoided?

In business, banking and even government, we are accustomed to identifying and managing risk. Arguably every day in business is about managing one risk or another. With respect to Brexit, we know the negative impact if a no-deal materialises. However, we seem very reluctant to analyse cause and remediation of the risk leading to it.

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A political analysis of the no-deal scenario identifies its cause as Britain leaving the EU without an exit deal because of opposition to the Northern Ireland backstop. The backstop itself is a form of insurance to prevent a border re-emerging on the island of Ireland, but it only applies after the exit agreement is in British law, after Britain has left the EU and after the EU and Britain fail to agree trade terms. In other words, it applies under particular but not all circumstances. It does not address the present risk. If my insurance broker brought me a policy that I knew only worked in some circumstances, I would be sending him back to the drawing board.

Brexiteer bombast and incompetent negotiation has led Britain into disarray but the EU must also bear some responsibility for the situation. Good outcomes are normally the consequence of good processes. The EU was mistaken not to commence the trade and exit negotiations at the same time. This would have brought certainty to the process and set aside concerns that the backstop was interminable, as well as making good use of time. The EU has been dogmatic when we need pragmatism and this has resulted in a flawed process.

Even at this stage, it's possible to synchronise Britain's exit with trade negotiations and achieve the seemingly irreconcilable objectives of Britain leaving the EU on October 31, without re-opening the exit agreement and without a border in Ireland. It will require an agreement between the EU and Britain to suspend the exit deal for two years. Parliament will be required to vote through a temporary customs union covering the same period. Britain will then leave the EU on October 31, go into the temporary union without reopening the exit agreement, contribute to the EU budget for these two years from outside, and there will be no border in Ireland.

Trade negotiations will commence at the same time and work to a two-year timetable. At the end of this period, parliament will be required to vote the exit deal into law if a trade agreement is to be concluded. This parliament (and it may well be a new one) will know the likelihood of such a deal by then, thereby removing any fears of entrapment by the backstop.

The intervening period will also provide the opportunity to assess the much discussed 'border-free electronic scanning' technologies for a worst case scenario of a border, a scenario that will now only arise if a trade agreement is not concluded between the parties after October 2021. This, in my opinion, significantly reduces the risk of a hard border.

Cumulative trade in excess of €500bn moves each way between Britain and the EU. Britain is our second largest trading partner after the US. If there is no future trade deal between Britain and the EU, there will be tariffs, resulting in trade losses, leading to the other losses described above. It is in the EU's interest, and in our interest, that there's a trade deal. If common sense prevails in the trade negotiations, there will be a deal and we should all be working to this objective. Three years have already been wasted which is far too long.

We also have to think of the relationships in these islands. Although there has been a difficult history between Britain and Ireland, the bonds between the two countries are deep and lasting, through politics, culture, business and family.

The cherished peace in Ireland is largely the result of the Good Friday Agreement and its guarantors are Ireland and Britain. The agreement works well when both governments work in partnership. This has been a depressing period, with political and media discourse reverting to atavistic Anglo-phobia, and it's disappointing to see relations between the governments at such a low ebb. None of this helps the people in Northern Ireland. Anglo-Irish relations urgently need to be restored to their pre Brexit calm.

Britain and Ireland are friends. In 2010, when this country was in trouble, Britain loaned Ireland €3bn at a time when the European Central Bank was pressurising the Irish exchequer to pay all bondholders. If a friend is in trouble, as we were then, you help him out. Britain is in trouble now. Is it not time for Ireland to help her out?

Are we not big enough to help broker a deal between Britain and the EU when there's a deal to be done?

We are living with too much uncertainty on this issue. The risks for us all are too high. We cannot continue with brinksmanship until October 31. The time to act is now.

Michael Gannon is managing director of a software SME based in Dublin

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