26 April 2019

Leo Rampant – how Ireland tamed Brexit

By Martin Davison

The UK has been comprehensively outmanoeuvred by Ireland and the European Union over Brexit. Chaos reigns and Brexit may not even happen.

If it does, the Government certainly cannot deliver its clearly stated policy for the UK’s future relationship with the EU. This outcome was determined over six critical months in 2017 by clever and ruthless exploitation of one issue: the post-1998 settlement on the island of Ireland.

In January 2017 Theresa May confirmed that her Government interpreted the referendum result as an instruction to take the UK out of the Single Market and the Customs Union; her ‘red lines’ were drawn and a ‘hard Brexit’ had been chosen.

The Irish Government immediately welcomed May’s pledge to maintain the common travel area and avoid the return to a hard border but did not specifically acknowledge the UK’s intention to leave the Single Market and a full customs union until a speech by Taoiseach Enda Kenny on 15 February 2017.

In the same speech Kenny also described the avoidance of a hard border as “…..a political matter, not a legal or technical matter……” This was intriguing if somewhat opaque. He also referred to the importance of the Good Friday Agreement “in its spirit as well as its letter”, something which the Irish were always confident had full EU support.

In a further speech on 5 April 2017, following circulation of the EU’s draft negotiating guidelines, Kenny emphasised Ireland’s intensive diplomatic engagement with the EU and its fellow EU27 members over Ireland-specific issues: “…..we have highlighted, explained and contextualised the unique circumstances in relation to Ireland, and the need for these to be addressed in the upcoming negotiations”.

Then, as Kenny’s period as Taoiseach drew to a close, his Brexit swansong was the publication on 2 May 2017 of a Government document entitled ‘Ireland and the Negotiations on the UK’s Withdrawal from the European Union: The Government’s Approach’. Chapter 7 analyses the implications and impact of Brexit for the Irish economy and trade. The analysis is stated unambiguously to have been “framed in the context of the UK no longer being a member of the Single Market and, for all intents and purposes, the Customs Union”.

The Government was developing a strategy to mitigate the impact of Brexit, one prong of which was “(t)o leverage our position within the EU27 negotiation team, to shape the EU27 approach to negotiations which includes aiming for the closest possible future relationship between the EU and the UK”.

So, shortly before Leo Varadkar succeeded Enda Kenny as Taoiseach, Ireland was emphasising the need to protect the peace process and the Good Friday Agreement, insisting on the hard border risk being addressed as a political rather than technical and legal matter, and aiming for the closest possible and most friction-free future relationship between the EU and the UK.

However, at this point the Irish government accepted that the UK would not be a member of the Single Market and would not be in a formal customs union with the EU. Nor was there any overt suggestion of the necessity of continued regulatory convergence between north and south, if a hard border were to be avoided.

All this was about to change. Just six months later a very different view was expressed by the European Commission Brexit Task Force in a confidential, but duly leaked, working paper on the Irish issues submitted on 8 November 2017 to the EU27 Working Party on Article 50:

“It consequently seems essential for the UK to commit to ensuring that a hard border on the island of Ireland is avoided, including by ensuring no emergence of regulatory divergence from those rules of the internal market and the Customs Union which are (or may be in the future) necessary for meaningful North South cooperation, the all-island economy and the protection of the Good Friday Agreement.” (Emphasis in the original)

What had happened in those six months to persuade the Commission to reverse Ireland’s original acceptance of the UK’s stance on the Single Market and Customs Union? How could the Commission now so confidently insist that in fact the UK simply could not diverge from the relevant regulations of those EU institutions?

Kenny announced his impending retirement on 17 May 2017 and Leo Varadkar was installed as Taoiseach on 14 June. In the course of his leadership campaign Varadkar had published a ‘Policy Ideas Paper’, ‘Taking Ireland Forward’. In a section headed ‘Global Ireland’ he addressed Brexit and set out five principles underlying his approach. The second of these encompassed:

“(e)nsuring that the border remains invisible. To do so, we will advocate special arrangements for Northern Ireland which respect the democratic vote of people living in the North. We will argue for Northern Ireland to remain in the Single Market, Common Agricultural Policy, Interreg, Erasmus and other programmes.”

This was an arresting clarion call but, interestingly, Varadkar had already broken ranks over Brexit when he was serving as one of Kenny’s ministers. Over the weekend of 13/14 May 2017 he told a Fine Gael meeting: “There should be no economic border at all between the North and South. We should advocate that the North should stay in the customs union and the single market……”

When this striking pronouncement was put to Kenny in the Dáil on 16 May 2017, the Taoiseach declined to endorse it. Then, some weeks later on 22 June 2017, Varadkar’s deputy Frances Fitzgerald was put under similar pressure to confirm that the position he had advocated in his leadership campaign now represented government policy.

Having prevaricated as much as she could, the deputy Taoiseach eventually conceded that of course the Taoiseach’s position was that of his government and that Varadkar had already very clearly outlined this approach. When pressed specifically on the question of the Customs Union policy, she replied: “It is that we do not want to see a hard Border and that everything will be done to avoid that.”

Her mention of what Varadkar had already outlined was a reference to his contribution to a joint press conference with Theresa May, whom he had visited on 19 June 2017. This is what he had said:

“……we want to ensure as much as is possible that while there may be a political border between our two countries, there should not be an economic border, and that any border that does exist, should be invisible.”

This was a more nuanced pronouncement than that made a month before in the party meeting. Nevertheless, it included the key statement that “there should not be an economic border”. That this was Varadkar’s code for Northern Ireland remaining in the Single Market and the Customs Union is evident from the use of the same phrase in the earlier speech. Varadkar’s unambiguous equation of a ‘hard border’ with an ‘economic border’ was an important new development.

Nine days after his Downing Street statement Varadkar spoke at the opening of the National Economic Dialogue on 28 June 2017 and revisited the developing ‘new’ policy. This time he went even further:

“….. the Irish issues, including avoiding an economic border, will not be easy to solve…..I want to keep the door open to the Customs Union, Single Market and the EU itself.”

Varadkar had been too tactful to say this in Downing Street and Kenny had always been punctilious in stating that the Irish government accepted and respected, even if it regretted, the decision taken by the people of the UK to leave the EU.

On 16 August 2017 the UK published its Position Paper on Northern Ireland and Ireland. This assumed that there would inevitably be new controls placed on the movement of goods between the UK and the EU, while emphasising that they could not be allowed to result in the imposition of a hard border. Clearly the UK did not share Varadkar’s equation of an economic border with a hard border. Equally clearly there was no retreat from the decision to quit the Single Market and Customs Union.

There was no official Irish response to the UK’s Position Paper, possibly because it had been preempted by an outspoken press conference given by Varadkar on 28 July 2017, followed by a forthright speech delivered in Belfast on 4 August 2017.

In his press conference Varadkar said he certainly wasn’t going to help the UK devise smart new technological solutions:

“Currently there is no economic border…..there shouldn’t be an economic border. We don’t want one…..That is our position. It’s our position in negotiations with the British Government and it’s the very clear position that we have when we engage with the task force that is negotiating on our behalf with the United Kingdom.”

In his Belfast speech Varadkar observed that:

“…..I do not want there to be an economic border on our island nor do I want one between Ireland and Britain. By economic border, I am not talking about currency or variation in tax rates. I am talking about a barrier to free trade and commerce.” Varadkar’s clear logic was that any such barrier would put up an economic border and thus lead to the return of a hard border.

Varadkar heaped scorn on hard Brexiteers who wanted a trade border between the UK and the EU but had no idea how to avoid a hard border on the island of Ireland. Warming to his theme, he suggested that they might therefore like to consider establishing a customs union between the UK and the EU, not to mention rejoining EFTA and entering into “a deep Free Trade Agreement with the EU”. This was uncompromising stuff.

It is noteworthy that, in his 28 July press conference, Varadkar emphasised that he had set out his very clear position on the ‘economic border’ issue in engagement with the EU Task Force. Here we can surely discern the origins of the argument made by the Task Force in its leaked paper. The Irish position was firmly restated – and confirmed to be aligned with that of the Task Force – by Varadkar’s new deputy Simon Coveney in a parliamentary answer given on 16 November 2017:

“…..in order for North-South co-operation to function in the future, consistent with the Good Friday Agreement, we need to ensure there is no regulatory divergence on one part of the island versus the other.”

This was the culmination of Leo Varadkar’s decisive gear change in June 2017, reasserting his insistence on “no economic border, therefore continued Single Market and Customs Union”. Between June and December, in collaboration with the Task Force, this argument was powerfully leveraged by reference to the commitments Theresa May herself had given in respect of the Good Friday Agreement and in particular the North-South cooperation arrangements derived from it.

The mapping exercise referred to and relied on in the Task Force paper had revealed that North-South cooperation depended to a significant extent on a common EU legal and policy framework both north and south of the border, a finding that put the UK at a severe disadvantage first in the December 2017 Joint Report and eventually in the November 2018 Withdrawal Agreement.

UK reaction to the Task Force paper was incredulity at its insolence. The Irish wondered why the UK was surprised and suggested, with some justification, that it might not have been paying full attention. And, of course, the initial incredulity passed through a stage of impotent rage and then one year later petered out into resigned acceptance.

Conspiracy theorists refuse to believe that UK negotiators can have been so humiliatingly and disastrously outfoxed by the Irish and the EU, preferring to see collusion by Olly Robbins and his Remainer civil servants. Indiscreet remarks by Robbins, and also by Michel Barnier’s deputy, Sabine Weyand, have fuelled suspicions that the whole thing might have been deliberately concocted by the two sides’ ‘sherpas’.

Some even point the finger at Theresa May herself, a lukewarm pre-referendum Remainer and even cooler post-referendum Leaver. Had the Prime Minister all along been implementing a cunning plan to soften Brexit or even kill it off altogether? That is hardly credible.

But cock-up almost invariably trumps conspiracy and there has been no shortage at all of the former on the UK side. Kudos to Ireland, however, and in particular to Leo Varadkar.

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Martin Davison is a retired tax consultant, who now studies independently and writes on a wide variety of issues.