Will Ireland Pay a Heavy Price for Brexit?

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Penn's Brendan O'Leary and Jay Roszman of Carnegie Mellon discuss Brexit's impact on Ireland and Northern Ireland.

Once the U.K. officially exits the European Union, Northern Ireland faces the prospect of a hard border with its neighbor to the south, the Republic of Ireland, bringing to the surface memories of a violent past and creating challenges for businesses on both sides.

The majority of voters in Northern Ireland cast ballots to remain part of the EU during the June 2016 Brexit referendum. But they ended up on the losing side of the debate, and U.K.’s impending departure from the political and economic union could hurt the fortunes of agricultural exporters and creates the potential for a resumption of smuggling across customs boundaries.

Meanwhile, Northern Ireland has been without an executive government since January with the failed renewal of a power-sharing agreement between Sinn Fein (the Nationalist party that wants independence from the U.K.) and the Democratic Unionist Party (the DUP, or Unionists who want to remain part of the U.K.). Adding to that quagmire is the seeming conflict of interest for Theresa May’s government to play the role of an “honest broker” between the two parties while she depends on the DUP to support her minority government. May found herself in that constrained state after her party, the Conservatives, lost precious ground to the Labour Party in a June 2017 snap election, where she hoped to gain a stronger mandate to exit the EU.

The institution most visibly under threat is the so-called 1998 Good Friday Agreement, or GFA, brokered by U.S. President Bill Clinton that ended more than three decades of violence in Northern Ireland between the Nationalists and the Unionists, and resulted in the power-sharing agreement between the two groups. That threat to the GFA has arisen because Great Britain wants to take Northern Ireland along with it as it exits the EU, according to Brendan O’Leary, professor of political science at the University of Pennsylvania.

“That has led to the high likelihood that there has to be a major amendment to the GFA,” said O’Leary. “That destabilizes things; every party no longer knows where it stands. It’s also up to people to consider whether they want to renegotiate those parts of the agreement that they dislike. It will be tempting to both parties [Sinn Fein and the DUP] to pursue things that they lost on previous occasions.”

Worries also abound in Northern Ireland across political parties about the future of the financial support it receives from the EU. “The amount of money that is being poured into these communities on both sides — nationalist and unionist/loyalist sides — from the EU has been a huge boon to local communities for redevelopment, trying to get outside of the shadow of the troubles and the violence that surrounded it,” said Jay Roszman, an adjunct professor at Carnegie Mellon University’s Department of History. “It is a great concern as the U.K. pulls out of the EU, as to what will happen to the redevelopment that is happening at a community level.”

O’Leary and Roszman discussed the implications of Brexit on Northern Ireland and other related issues on the Knowledge@Wharton show on Wharton Business Radio on SiriusXM channel 111. (Listen to the podcast at the top of this page.)

Memories of Dark Days

According to O’Leary, “U.K.-exit” (he refuses to call it Brexit since the whole of the U.K. is involved) “would be deeply damaging.” Roszman worried about the talk of violence, even if it doesn’t actually materialize. “Whether violence may break out again or the peace process will fall apart altogether, the fact is both political parties are using it as a weapon in their kind of narrow-minded way,” he said. “It’s problematic when the whole premise of Northern Ireland governance is based on [the DUP and Sinn Fein] working together and finding agreement.”

“The U.K. government has … told everybody it wants a frictionless border, but in fact that is not under its control.”–Brendan O’Leary

May’s government has severely compromised its ability to bring peace between the DUP and Sinn Fein. “Before the recent elections [in June 2017], the Conservatives regarded Northern Ireland as collateral damage or roadkill on their way to getting out of the EU,” O’Leary said. “Now, however, they’re in the deep difficulty that they have to negotiate with the DUP in London and with Sinn Fein in Belfast.”

Philip Nichols, Wharton professor of legal studies and business ethics said Brexit would create “serious” implications for Northern Ireland. “The EU funds dedicated to implementing the GFA will probably no longer exist, and the EU institutions that were set up to support the GFA will probably no longer exist, and that is pretty serious,” he said. “The U.K. and Ireland will no longer interact in EU institutions, and the familiarity and closeness created by those interactions will be lost, which is pretty serious.”

According to Nichols, “the implicit possibility of peaceful reunification would be made more difficult by a hard border between Ireland and the U.K.”

Nichols also conjured up visions of likely tensions on the border. “The aspect of Brexit that visually will present the most disturbing image, are the customs posts that will be stationed along the border, the trucks that will be stopped so goods can be inspected and duties levied, the checks on passports and identifications,” he said.

Multiple Casualties

Another casualty will be farming communities, noted O’Leary. “EU programs, together with the operation of the single market, dramatically benefit both sides of the border,” he said. “If there is an end to the common agricultural policy for the island of Ireland, and if there is to be a strong customs barrier, then the agricultural sector is going to be extremely badly hit in the north and in the south. In the north, the U.K. government will be [impacted], because of its current difficulties, obliged to pay off the farmers of the north who are a key component of the DUP’s constituency.”

“It is a great concern as the U.K. pulls out of the EU, as to what will happen to the redevelopment that is happening at a community level.”–Jay Roszman

O’Leary worried that the emerging new order will bring back bad memories. “I grew up there between the ages of 8 and 18. I recall regularly being searched at the border, and the impatience people would display and the fear that people would have that there would be either bombs or bullets at the border,” he said. He didn’t see May as being able to avert a return to those days. “The U.K. government has been singularly inept on this question; it has told everybody it wants a frictionless border, but in fact that is not under its control.”

A Trust Deficit

O’Leary dismissed talk of a border free of controls instead of a hard border between the U.K. and the EU, adding that it would require a level of trust that doesn’t exist now. He noted that the European Commission is currently evaluating a report that the U.K. failed to properly apply customs tariffs in dealings with China, and may be slapped with a fine of two billion euros. “What it tells you is [the European Commission] have absolutely no reason to trust the U.K. authorities that they would run their side of the customs arrangement properly,” he said.

O’Leary also raised the prospect of smuggling. “They are people with tremendous skills in smuggling and criminality and because of that knowledge, there’s no way the EU is going to trust a [less controlled] relationship. It’s going to look for some kind of hard border,” he said. Roszman agreed. “[This is] not to fear monger, but one of the ways that the provisional IRA [the militant Irish Republican Army] was able to raise money was because they were able to smuggle petrol and cigarettes across the border and make money on the black market, which they used to buy weapons,” he said. “There are people there that have built their livelihoods on being able to extract wealth from the black market, smuggling goods across both sides of the border. Theresa May and unionists are going to have to think long and hard about it.”

Is Northern Ireland a Spanner in the Works?

The DUP is also in a difficult situation — it supports the move to leave the EU, while the majority in Northern Ireland is in favor of staying in the EU. It now supports the May government on critical votes that could threaten the survival of the May government, and most of those involve votes about the U.K. leaving the EU, O’Leary noted.

The key question is how the DUP will position itself on Brexit, said O’Leary. “When it wakes up to the fact that a hard customs border is going to have a significant impact on its constituents and it wouldn’t be able to get a payback from the London treasury to compensate fully for all the costs associated, will it change its position?” he asked. “If it does, it threatens to impact the entirety of the U.K.’s exit strategy from the EU. So, it is still the case that Northern Ireland might put a spanner in the works of the Conservatives’ prospects of getting out of the EU.”

O’Leary doesn’t see May up to the task she faces. “May is going to be trying to bargain her way out of the EU while bargaining with [chief Brexit negotiator Michel Barnier] in Brussels, bargaining with the DUP on a constant basis in London, and at the same time, trying to show good faith by bargaining with Sinn Fein inside Northern Ireland to reconstruct the power-sharing agreement,” he said. “This woman is singularly inept for managing that task for the long run.”

One option for the U.K. is to make Northern Ireland a Special Autonomous Region, said Nichols. He likened that to “the reverse of Greenland, which belongs to Denmark, but is not part of the EU.” An autonomous Northern Ireland could not join the EU, but it could negotiate an arrangement with the EU similar to Norway’s, he added. “That would, of course, create a boundary between Northern Ireland and the rest of the U.K., but that is a whole lot better than people hurting one another.”

Meanwhile, the revival of the power-sharing agreement between the DUP and Sinn Fein has missed several deadliness. Roszman ruled out an agreement happening in July or August, and O’Leary noted that indications are for talks to resume in September. But that will coincide with the Conservatives’ legislative program that is difficult to manage and “immensely complex,” O’Leary said.

Saving Graces

According to Roszman, “the saving grace” for Northern Ireland was that younger people 18-45 voted to remain in the EU. “There was a backlash among them that leaving the EU meant leaving all sorts of opportunities for people to move around just one market,” he said. “The saving grace is if you are in Northern Ireland you can claim Irish citizenship, which means if one parent of yours could have claimed Irish citizenship, you can as well.”

“The European Union exists because it is impossible to separate business from other social issues.”–Philip Nichols

O’Leary said that the citizenship aspect may pose difficulties. “What [the EU] certainly doesn’t want is a lot of British people somehow obtaining Irish citizenship and then using that to achieve all the rights that they would otherwise lose from leaving the EU,” he added. That would mean more negotiations between the U.K. and EU. “The question is, will the U.K.’s negotiating postures fall immediately on these hurdles? I think it will.”

Nichols framed the issues against a larger backdrop. “The European Union exists because it is impossible to separate business from other social issues,” he said. “Some business people do not want to contemplate that, but the reason that the EU exists is to coordinate social policy so that the members can enjoy a truly common market. The coordination of social policies makes a truly common market possible, and the coordination of social policy and business was the platform on which the GFA was created.”

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