Taoiseach addresses the Brexit challenge
By John O’Brennan, Maynooth University (Originally posted 16 February 2017)
A week of domestic political turbulence in Ireland was punctured by the Taoiseach’s address to the Institute of International and European Affairs (IIEA) on 15 February. The speech was a substantial and detailed response to the evolving Brexit situation. The Taoiseach covered many issues, and argued strongly that Brexit was not an Irish decision but a British one. His address set out the main challenges for Ireland arising out of the British exit from the EU and the actions being taken by government in the face of acute problems. Enda Kenny asserted that it would take a ‘supreme national effort’ to deal with the Brexit challenge over the coming years.
The speech was notable for some significant omissions. Ireland is currently grappling simultaneously with a ‘triple whammy’ in external relations of:
the Commission’s decision on Apple’s tax arrangements with Ireland;
the deep uncertainly attached to the economic policy to be pursued by the Trump administration.
There were no references to the second and third of these challenges which may ultimately prove more significant than Brexit. Neither did the Taoiseach refer much to the upside of Brexit, that is to the potential financial and competitive gains to be achieved by poaching multi-national companies from Britain and the broader benefits that may attach to being the only English-language country located within the Single Market. One assumes this omission was plainly down to a desire not to antagonize the UK in advance of the talks.
The Taoiseach could not disguise the central problem facing Ireland in the Brexit negotiations, i.e. that we will be facing both ways in the discussions. In a sense we are simultaneously part of the prosecution and the defence. Enda Kenny argued that there should be no talk of ‘punishing Britain’ or of ‘cliff edges’ as we move toward the triggering of the Article 50 negotiations. The EU should try and accommodate British preferences where possible and produce an outcome acceptable to all parties. The Irish national interest lies in achieving the softest Brexit possible, with Britain remaining in the Single Market, or at least the Customs Union. This desire sits increasingly uneasily, however, with the reality of the hard-line positions being taken by London and the lack of capital it enjoys across the EU at this critical juncture. EU negotiating dossiers will inevitably force Ireland to take sides and the Taoiseach’s speech gave little sense of how this problem might be tackled. Many member states are indeed arguing that Britain needs to be punished, if only to demonstrate that ‘membership matters’ and you cannot have your cake and eat it.
What was new in the Taoiseach’s speech? There were one or two elements which can genuinely be said to represent ‘new thinking’. As well as emphasizing the vastly increased shuttle diplomacy which has seen Ministers Charlie Flanagan and Dara Murphy engaging in intense contact with EU colleagues, Ireland will deploy the largest ever number of ministerial trade missions in 2017. One assumes that this is part of the effort to diversify Irish trade away further from the UK, thus reducing the exposure ultimately of the Irish economy to the shock of a ‘hard Brexit’.
But the Taoiseach also outlined a plan to quickly produce a national competitiveness audit. This would provide an expansive basis for benchmarking Irish competitiveness – sector by sector – with the British economy. Although it went unstated in the speech, one senses that this represents a response to the threat from Philip Hammond and Theresa May to turn Britain into an ultra-competitive economy driven by further deregulation, privatization and reduced corporate taxes and red tape. Many trade unions, in particular, will worry that this implies another iteration of the ‘race to the bottom’ with significant consequences for the public sector in particular.
The Taoiseach also made an explicit linkage between Brexit and the new National Capital Plan and the 2040 national planning framework. In effect, he was saying that these plans will need to be re-visited and ‘Brexit-proofed’.
Also new was the assertion that Ireland would ask the EU for financial assistance to help buffer the economy against the exogenous shock represented by Brexit. He did not provide any specifics but his comment points to the budgetary battle that lies ahead in the EU post-Brexit. It will be extremely difficult to secure such largesse from Brussels: Ireland is a relatively wealthy economy and although exposure to British markets is greater than that of any other EU state, that trade dependency has reduced very significantly over the years (from 60 per cent of Irish exports going to the UK in 1973 down to 15 per cent in 2016). It is difficult to see how any such budgetary demand will prove successful.
The Taoiseach stressed the most important Irish priorities in the negotiations: protecting the Common Travel Area (CTA), ensuring there is no physical border re-introduced between Northern Ireland and the Republic of Ireland, and protecting the free movement regime which prevails across the island. He did not provide any indication of the likelihood of success beyond saying that the intensive diplomatic effort underway across EU capitals was driving these points home to all other member-states as well as to EU institutional negotiators.
The Taoiseach strongly asserted the importance of protecting the Peace Process and the 1998 Good Friday Agreement. In effect, he was waving the peace process as the key problem-solving ‘card’ in the negotiations, appealing to the EU as both a financial and moral guarantor of the Good Friday Agreement. The arguments being made by Irish diplomats in EU capitals all converge around the need to protect the Peace Process: it may well prove a ‘get out of jail’ negotiating card for the Government if, as seems likely, the Article 50 negotiations become acrimonious and a ‘hard Brexit’ looks like ensuing. Interestingly, Enda Kenny also suggested he would represent the people of Northern Ireland in the Article 50 negotiations. There was an implicit suggestion here that London had failed to adequately think about the implications of a hard Brexit for the Peace Process and that the 56 per cent of people in Northern Ireland who have been effectively disenfranchised after 23 June 2016 would have a champion at the negotiating table in the shape of the Dublin government. This will come as a surprise to Unionists, in particular, who may see this as an inexcusable sop to northern nationalists and a direct interference in the internal affairs of Northern Ireland.
16 February 2017