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Oct 19, 2017 | 17:52 GMT

9 mins read

For Ireland, Brexit Is No Small Matter

The United Kingdom forms a physical barrier between the island of Ireland and the rest of the European continent.
(iStock)
Highlights
  • Britain's exit from the European Union threatens not only Ireland's economic model, but also the stability of Northern Ireland.
  • Ireland's main goal in the Brexit negotiations is to avoid the introduction of a "hard border" between it and Northern Ireland, which could aggravate the historical tensions between the two parts of the island.
  • Dublin is also resisting a push by France and Germany to standardize corporate taxation across the bloc.
While the United Kingdom is at the center of the Brexit, its neighbor, Ireland, has almost as much at stake in the negotiations over its departure from the European Union. The Emerald Isle, an EU member, is watching its largest trading partner end the arrangements that allow goods, people, capital and services to move freely over their shared border. Economic concerns are not the only issues at stake: Ireland worries that the split could increase the potential for violent unrest in Northern Ireland, the portion of the island that is part of the United Kingdom. And as Anglo-Saxon influence in the European Union decreases with the United Kingdom's departure, the bloc could move in directions detrimental to Ireland's economic model. While Ireland will be unable to shape these much larger forces, it can try to make its voice heard by both sides in the negotiations, and if the final Brexit deal does not meet its needs, it can change its circumstances by voting with its feet and leaving the European Union as well.
The European Union and the United Kingdom
Ireland, positioned at the western extremity of Europe with the bulk of the United Kingdom separating it from the Continent, has historically been dominated by its larger neighbor. Direct interference began in the 12th century and continued until 1922, when an Irish Free State was declared, and Ireland was finally able to govern itself. But the economic and societal links between the countries have continued to flourish. Today, the air route between Dublin and London is the busiest in Europe and the second busiest in the world, with 368 flights per week. The United Kingdom is the source of 24 percent of Ireland's imports and the destination for 13 percent of its exports. Closer to home is the issue of Northern Ireland, the northeast sixth of the island that remained in the United Kingdom when the Irish Free State was declared. Three decades of violence and unrest plagued the territory starting in 1968, largely driven by the dispute over whether it should be Irish or British. Ireland — alongside the United Kingdom and the European Union — is deeply invested in the 1998 Good Friday Agreement that brought these "troubles" to an end.

Border Problems

Ireland is highly exposed to the changes that the British exit from the European Union may bring. The starkest issue relates to the border between Ireland and Northern Ireland. About 30,000 people cross the boundary each day for work, study and other reasons. The Good Friday Agreement made special provision for residents within Northern Ireland to be able to maintain Irish citizenship should they choose to, and the continued free flow of people across this border is a highly emotive issue. This makes avoiding any kind of "hard border" that might inhibit those crossings one of Ireland's key negotiation priorities in Brexit talks.
 
The United Kingdom is currently negotiating its departure from the EU single market, which allows free movement of people and goods among its members. London is also considering leaving the EU customs union, which allows goods to cross international borders without being checked. Normally, the these departures would demand that inspections be instituted at the new EU-United Kingdom border — in this case, between Northern Ireland and Ireland — that could inhibit the flow of goods and inflame tensions. Both sides are therefore motivated to come up with a workable solution that keeps the border open.
 
There are two aspects at play here: The first, involving the free movement of people, should be relatively easy to resolve — that has been the status quo since the Irish Free State was declared, long predating both countries' entrance into the European Union. The second, involving the movement of goods, presents a more difficult situation. The United Kingdom has vaguely suggested that it wants an "unprecedented solution," which would create a "transparent" border — one that is easily crossed — though it hasn't laid out how this might work. Dublin has rejected the United Kingdom's proposals as unconvincing. On the European side, no solid proposals have been aired, only leaks that appear to indicate that the European Union will offer to set the new border in the Irish Sea, retaining Northern Ireland as part of the customs union while the United Kingdom leaves. The citizens of Northern Ireland, who voted to remain in the bloc in the Brexit referendum, might agree to this idea.
 
But the Northern Irish Democratic Unionist Party (DUP) will put up strong resistance to an Irish Sea border. The DUP, the unionist half of the Northern Ireland power-sharing government (opposite the republican Sinn Fein), is staunchly committed to keeping the region as closely attached to Britain as possible, so any new border between Northern Ireland and the United Kingdom is unacceptable to it. The DUP's current role in United Kingdom politics gives added strength to its voice. Northern Irish parties send lawmakers to both the devolved parliament in Stormont and to the national Parliament in Westminster. In London, the 10 DUP members of Parliament are currently supporting the shaky Conservative Party government via a confidence-and-supply agreement. United Kingdom negotiators will thus be particularly aware of DUP concerns when discussing the Irish border.
 
From Ireland's perspective, changing demographics mean this issue may have arisen prematurely. The historical basis of the Northern Ireland-Ireland divide is largely religious in nature. In the 17th century, the English and the Scottish moved into the northeastern province of Ulster en masse, overlaying the Catholic population with a Protestant and Presbyterian minority with strong ties to their British roots. In a sentiment historically shared with the Irish, the Catholic residents of Northern Ireland tend to support a united Ireland (as part of the Good Friday Agreement, Ireland had to agree to remove the long-term goal of uniting Ireland from its constitution). Today, the majority of the population of Northern Ireland would like to remain a part of the United Kingdom, but the long-term trends are on Ireland's side. The Catholics north of the border are reproducing faster than their Protestant counterparts, meaning that over time, Northern Ireland's ties with the United Kingdom should weaken and those with Ireland should strengthen. The Good Friday Agreement states that if a majority of Northern Irish residents choose to join Ireland by referendum, it should happen.

Losing America

Ireland also faces more indirect issues thrown up by the Brexit vote. The United Kingdom and Ireland joined the European Union in the same year, and while they have had their differences, a shared history and similar geography have long given them common interests within the bloc. While Continental powers such as Germany and France tend to favor policies that regulate foreign corporations and back national champions, the United Kingdom and Ireland have preferred creating domestic economies suitable for foreign investment, often through corporate tax breaks and other types of support. In Ireland's case, this tendency has been taken to an extreme in the decades since the 1960s. Attracting foreign investment — particularly U.S. investment in Ireland's chemical, pharmaceutical and tech sectors — has resulted in one of the highest gross domestic products per capita in Europe, but the results of this strategy have proved to be deceptive. In 2017, Ireland's central bank found that a large proportion of this headline figure was not being enjoyed by Irish citizens but was benefiting only the multinational corporations that use Ireland as a base. A more real figure of Irish production, the gross national income, came in 31 percent lower. Nevertheless, Ireland has enjoyed five decades of strong economic growth largely based on an economic model of offering tax advantages to foreign companies, and it is highly motivated to maintain it.
 
Ireland: Gross Domestic Product as a Percentage of Gross National Income
Brexit removes a powerful voice in favor of free-market economics. As a result, France and Germany are seizing the opportunity to clamp down on what they perceive to be unfair policies by EU members that allow foreign multinationals to not pay taxes on profits earned in the large core European markets. For Ireland, this represents a deep and penetrating attack on its business model. If it loses the ability to keep its corporate taxes low and to grant tax breaks to multinationals, the foreign companies on which its economy is largely based could start to pull out. Being short of resources and in a geographical position isolated by the United Kingdom, Ireland has spent the majority of its history as a relatively poor region, susceptible to crippling famines and experiencing one of the highest relative emigration rates in the world. That is not a reality it would like to return to.

Ireland's Priorities

Going into the Brexit negotiations, Ireland's top priority is to avoid violence and unrest in Northern Ireland. There is a huge potential for spillover into its territory, but Ireland also views Ulster as a natural and future part of itself, so it will feel directly invested in the well-being of its citizens. This goal may be hard to fulfill, however, because it is dependent on the actions and negotiations of others. Furthermore, Ireland is motivated to keep the border as soft as possible, with the ideal result being a new EU border in the Irish Sea. That would serve as an early but useful step toward unification.
 
The second goal for Ireland involves fiercely resisting efforts to standardize taxation across the bloc. Though it is just one small country among the 27 that will remain in the European Union, it will have some allies in this struggle. Netherlands and Luxembourg also have been great beneficiaries of lax tax standards, and as core founding members of the European Union, their voices may prove influential in the fight. Should things go against Ireland, it may have options outside the bloc. Ireland's membership in the eurozone represents an immensely disruptive barrier to change, but forces are building that might challenge that obstacle. Ireland's top two trading partners are the United Kingdom and the United States, and considering its geographical position, a trans-Atlantic grouping may make more sense in the long run over a European one without the United Kingdom. Thus, Ireland will be extremely interested in London's talk of possibly joining the North American Free Trade Agreement after Brexit. A supranational trade arrangement including the United Kingdom and the United States would prove highly attractive to Ireland, especially because U.S. influence would help prevent Ireland from being dominated by the United Kingdom, a constant and historical danger.

 

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