John Bruton

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Category: John Bruton (Page 1 of 4)

“THERE IS NO SUCH THING AS FREE WATER”

I visited Washington this week and was here for an eventful week.

At a time when there is persuasive evidence that drought is causing a huge famine in East Africa. Yet the Trump Administration is announcing plans to scale back America’s already modest contribution to the battle against man made global warming.

Under the Paris Agreement of 2015, the US committed itself to cutting its CO2 emissions by 26/28% compared to 2005 levels.

The new Administration wants to increase fossil fuel production in the US.

The limitations on CO2 emissions by US power plants will be cut.

Coal production will be boosted .

One study suggests that the policy changes will mean that the US will only cut its CO2 emissions to 14% below  2005 levels , rather than  26/28% below as it had promised under the Paris  Accord.

Meanwhile in East Africa, lack of water is causing crops to wither and animals to die of thirst. I heard former Vice President Al Gore claim recently that a similar drought in the Middle East contributed to the start of the Syrian Civil War because of the hardship it caused. Lack of water leads to poor sanitation. This, in turn, leads to diseases like cholera.  This risk is especially high in camps, where climate refugees congregate.

A human being can survive for weeks without food, but can only survive for five days without water.

And global warming evaporates water. That is the price paid for  CO2 emissions in wealthy, water rich, countries.

As Isaac Nur Abdi, a nomad in Southern Sudan, said

“There is no such thing as free water”

A FAILURE ON HEALTHCARE

Meanwhile President Trump has had to withdraw his Health legislation because of a lack of support.

There is no doubt that US health policy is in need of reform.

It is exceptionally costly.

The incentives in the system are often perverse.  Over prescription of painkilling pharmaceuticals is generating major addiction problems.

The proposed reforms would have put some check on the open ended growth of the cost of Medicaid, a health programme for lower income families. There would have been losers from this.

But the cost of Medicaid has risen from $180 billion in 2005 to almost $360 billion today, but without any clear evidence that it improved health outcomes.

The cost of providing health care for ageing populations will eventually pose a threat to western democracies, because democracies have difficulty making choices in this field, as demonstrated again in Washington this week.

SAUDI ARABIA

I visited Saudi Arabia recently on business. It is a country that is going through a fiscal crisis because of the fall in the price of oil, the main source of government revenues. As a result the government’s budget deficit reached 15% of GDP in 2015. That said, the country has large financial reserves.

Salaries have been cut and subsidies on fuel, food, water and electricity are also being reduced. VAT and a tax on undeveloped land are being introduced.

The State sector is 60% of the economy and the government is committed to increasing the role of the private sector.

 It is also committed to increasing the proportion of women in the paid workforce from 22% to 30%. The position of women is anomalous. They are not allowed to drive a car, but make up more than half of students in higher education.

Meanwhile Saudi Arabia is the third biggest military spender in the world, and is engaged in an expensive civil war in neighbouring Yemen.

In the longer run the prospects for Saudi Arabia are good.

As well as oil, it has large untapped reserves of aluminium, gold, copper and uranium.

It has a very large immigrant population. Only one fifth of the people working in the retail sector are Saudi natives. But the question must be asked if Saudis would work at the prevailing wage level in the sector, and , if not, if Saudi consumers would willingly pay the higher prices that would arise if immigrant workers were replace by Saudis. A similar debate is taking place in the UK and the US, where curbs on immigration are being advocated.

Immigrants in Saudi Arabia send home $38 billion in remittance to families in their home countries,. So a downturn in the Saudi economy is keenly felt in countries like Egypt, Yemen, Lebanon and Jordan.

Saudi Arabia is a relatively recent creation, dating from the early 20th century.

The Al Saud family were dominant in the peninsula in the 18th century, and were at the time allied itself with the Wahabi branch of Islam which came into being around then, an alliance that continues to this day.

 But the Al Saud family lost their strong position in the 19th century, eventually finding themselves exiles in the British protectorate of Kuwait. It was from there that they launched their comeback in 1902.

Starting in Riyadh, the family, led by Abdul Aziz, gradually conquered most of the peninsula by a combination of force, guile and religious fervour.

The only areas they did not eventually take over were Yemen and the British protectorates along the Gulf (now UAE and Oman).

Then oil was discovered and their position was immensely strengthened. Initially much of the benefit of the oil discoveries went to the US investors, but following the oil crisis of 1973, Saudi Arabia took control of its oil.

Saudi Arabia, is a mix of tradition and modernity. There are brutal aspects to its traditions, like the extensive use of the death penalty. It has a very youthful population, some of whom have been attracted to terrorism. The country needs to find a more constructive outlet for their energies. So the country’s successful economic transformation is politically important for the world.

PETER  MATTHEWS RIP

 

I would like to join the many, well deserved, tributes to the late Peter Matthews. He was a brave, good humoured and principled politician.  He always had the best interests of his country at heart. He served as a member of  Dail Eireann for a relatively short time, but made a major impact.

TWO GREAT DEMOCRACIES….VERY DIFFERENT MOODS

I visited India in the past week on business.

India is the largest democracy in the world.

The United States is the second largest.

Politics is robust in both countries, but in India the mood is one of increasing openness towards the rest of the world, whereas that in the United States is in favour of building walls.

India is a good vantage point from which to contemplate the moral content of the anti globalisation rhetoric of Donald Trump, Bernie Sanders and their followers.  

Given that the United States is one of the richest and best endowed countries in the world, “America First” seems to me to be a particularly selfish motto for a great country. Yet it is espoused by left wing anti trade Democrats, just as much as it is by the new President

Looking at this from the standpoint of India, one realises that it is thanks in part to globalisation, to  the opening of markets, and to the transfer of western technology to the country, that in India

  •   its economy is growing at  7.5% pa, faster than China
  •   85 million people  exited poverty in India in  the three years from 2010 to 2012
  •   life expectancy  has doubled from  31 years  in 1947 to  65 today
  •   trade represents a higher share of India’s GDP than it does of China.

India is urbanising rapidly. It is estimated that another 250 million people will arrive in India’s overcrowded cities in the next 20 years.

8 million young people enter the Indian workforce every year, many in rural areas where few job opportunities exist outside agriculture. In fact only 16% of India’s existing workforce is in waged employment.

The opportunities to invest in the development of India’s infrastructure are enormous. Sanitary services and road building are seriously deficient. Air pollution and unsanitary living conditions continue to damage the health of many Indians.

Europe needs to work with India to protect the open global economy, while enabling states to put in place robust taxation systems that can distribute the fruits of  globalisation fairly.

 

POPULISM IS A CRISIS OF ENTITLEMENT, AND HIGHER INTEREST WILL SQUEEZE SOME COUNTRIES MORE THAN OTHERS

The Federal Reserve Bank of the United States raised interest rates last December. This was the first rate rise in almost ten years. At the time three more rate increases were forecast this year. The Federal Reserve’s policy on interest rates can have a global effect.

Ireland’s fiscal squeeze of the 1980 to 1987 period, of which I had direct experience, was caused  by the Federal Reserve’s decision to tackle  US inflation by raising interest rates and restricting the money supply.

A rise in interest rates this year would affect countries differently.

If a country has a big government debt, by comparison with its annual tax revenue, it will have to make more cuts or tax increases to accommodate to a higher interest rate.

If a country’s economy is growing slowly, and it  has low future growth potential, because it has an ageing society, the effect of an interest rate rise will be even more severe.

Goldman Sachs recently compared the situations of Germany, France , Italy and Spain.

If there was a 100 basis points increase in interest rates ,

+ Germany would have to trim its budget by 0.5% of GDP,

+ France and Spain by 0.75% of their GDP, but

+ Italy would have to trim its budget by 1%.

This is because the

+ Italian government debt is 140% of the Italian annual GDP,

+  the French and Spanish debts around 100% of their GDP while

+  Germany’s is only around 75%

These effects would come about slowly. If countries have debts with long maturities , it will take a while for a rise in interest rates to have their full effect. General inflation is not a problem today, but sectors of the global economy can become over heated.

Goldman Sachs did not do similar calculations for smaller countries like Greece, which has a debt/ GDP ratio of 180%, or for the UK, whose ratio is 90%.

But both countries are facing difficult futures, partly because of their own freely taken  democratic decisions, in Greece’s case quite long ago, but in the UK’s case very recently. Euro zone countries are able to keep interest rates low because the ECB is buying their bonds, but there are prudential limits to this. If a country’s banks buy an undue amount of  their  own government’s bonds, that can create an unhealthy linkage between to solvency of the banks and the solvency of the government.

The Goldman Sachs calculations do not take full account of human factors like the lack of dynamism which can arise when countries come to believe they are “entitled “ to a certain standard of income, without taking account of the value of what they can sell to the rest of the world.

Ageing societies, with large retired populations, are particularly prone to this sense of entitlement because they feel that the work that they did in the past, entitles them to a good standard of living today. Unfortunately the money their work earned is long spent, and pensions can only be paid out of what can be earned in the future.

If that money does not come in, people will look for someone to blame. Often the blame takers are immigrants, even though these immigrants are often the ones who are paying the taxes and earning the money ,that support the entitlements of many native residents. For example , EU immigrants in the UK pay much more in taxes than they take out in benefits, but that was ignored by UK voters.

This gap between expectations and what can be afforded , is the explanation for the so called “populism” we see among ageing populations in the UK, the US and elsewhere.

Populism is really a crisis of entitlement.  

Populism will become more severe if ,  and when, interest rates rise.

We need an informed electorate that votes knowledgeably, an electorate that accepts that  interest rates, free trade, immigration and demographics are all interlinked with one another.

We need  to  find better ways of explaining the links between

+   the prospect of  higher international interest rates, and the desirability of reducing government debt levels

+   the importance of preserving open markets and overseas earnings  if we are to afford decent pensions,

+    the link  between allowing immigration, and having enough young people to work and pay taxes in future

+    the fact that  decisions, twenty years ago,  to have fewer children, are liable to  affect what  welfare  states will be able to afford , twenty years from now

 

DERMOT GALLAGHER   RIP

I wish to express a deep sense of loss on hearing of the death of former Ambassador, Dermot Gallagher, who I consider to have been a great friend and neighbour, as well as a brilliant servant of Ireland.

Dermot was Irish Ambassador in the United States during my time as Taoiseach.

On my first arrival in Washington as Taoiseach in March 1995, I was immediately struck by the depth of the links all over the United States, but particularly in policy making circles in Washington, that Dermot, and indeed his wife Maeve, had built up on behalf of Ireland.

These links extended right across both US political parties, and across all three branches of the US government.  This influence on behalf of Ireland was the result of immensely hard work and patience on Dermot’s part. He was instrumental in securing US support for the process of peace building in Ireland, and notably in securing the services of Senator George Mitchell.

He was a model Ambassador. He provided very valuable advice to me when it was my honour to fill a similar role subsequently.

Finola joins me in extending heartfelt sympathy to Maeve and his grieving family

Statement by John Bruton, former Taoiseach

CHINA TRANSFORMED …..A NEW BALANCE OF POWER

china-flag-mapThe economic transformation of China is the most important global economic event of the past forty years. It has changed the balance of power on the Eurasian landmass, in ways we are only beginning to comprehend.

The economic transformation of China happened because, since 1979, there has been lively economic competition within China, something that was not allowed in the Soviet model.  China’s economy grew, while the centralised Soviet system stagnated. This explains why Communism survived in China, but collapsed in the Soviet sphere. China also grew thanks to the opening up of global trade, under successive rounds of trade liberalisation, which allowed China to build a powerful export sector.

Now China is having to transform itself again. Its export led model has reached its limits. Labour costs are rising because the big transfer of labour from farming to industry is over, and the Chinese population is beginning to age. The working age population of China peaked in 2015 and will decline from now on. Chinese exporters are being undercut by lower wage economies like Vietnam.

The Chinese economy has also reached environmental limits. The pollution level in some cities is dreadful, and the air is dangerous to breathe, even on an apparently clear day. I  experienced  this for myself when I visited China in the past fortnight on business.  Environmental losses reduce China’s GDP by 10%.

The proportion of its population living in cities will grow from 20% in 1978, to 50% today, and to 75% by 2030. This will lead to even more pollution, unless the cities are built to a different model. China is devoting a lot of research to this and may soon become an exporter of green technology. Necessity is the mother of invention.

Meanwhile China has an increasing number of well off, high spending, consumers. The Boston Consulting Group recently estimated that what it calls the “upper middle class” ( a group that can afford regular foreign holidays) will rise from 53 million today, to 102 million by 2020. Interestingly it estimates that, by 2020, the upper middle class in will reach 73 million in Indonesia, 32 million in India, and 21 million in Thailand.

At the other end of the scale, China has not got a well developed welfare system. The income gap is very wide. Stress is high. Parents are left looking after grandchildren back in rural China while sons and daughters seek work in the cities. There is a two tier labour market, under which long established city residents qualify for social supports, but recent arrivals in cities do not, and can remain in a precarious situation for years.

Nationalism is very strong in China, and one can foresee a clash between the American nationalism of Donald Trump, and the Chinese nationalism of the Communist party.

Both can exploit suspicion of the other, to rally political support internally.

The United States should be cautious. The abandonment of the Trans Pacific Partnership, by both Donald Trump and Hillary Clinton, will leave China in the driving seat, as far as trade policy in East Asia is concerned.  It is ironic that China increasingly sees itself as the defender of an open world trading system, while the United States adopts protectionist rhetoric.  Adding a conflict over the status of Taiwan to this mix could have unpredictable results.

If, under Donald Trump, the US moves closer to Russia, the EU may find its interests aligned more with those of China in some fields, like climate change.  This will be reinforced by the anxiety many of the central European members of the EU feel about Russian intentions, and Russia’s view that some of them should properly belong in a Russian sphere of influence, rather than being so closely aligned with Western Europe through the EU. Russian support for west European politicians like Marine le Pen is part of a strategy to undermine the EU.

Historically, China has been a supporter of EU integration, while Russia has been hostile, because it felt itself excluded from pan European security structures.  Russia feels itself hemmed in. Russia’s seizure of Crimea, and its involvement in the Syrian Civil War, can also be seen as attempts to break out of its strategic isolation and gain access to the Black Sea and the Mediterranean.

It is also to break out of its sense of isolation, that China has promoted its “one Belt, One Road” policy to link itself with Western Europe.

As a continuing member of the European Union, it will be in  Ireland’s economic and political interests  to play its full part in building a  balanced structure of peace on the Eurasian land mass, that protects the rights of small states, but  which also one that ensures that no great power feels itself hemmed in, or isolated. For that is how wars start.

 

THE VERDICT ON DAVID CAMERON’S PRIME MINISTERSHIP

cameron-at-10I read “Cameron at 10…the Verdict”, by Anthony Seldon and Peter Snowdon, over the summer, to understand how the UK came to hold a referendum on leaving the European Union, whose aftermath will bog down the UK and the EU in unproductive work, for years to come.

The first thing to say is that this is a good and well researched book.

It shows how the Liberal Democrat /Conservative Coalition came together in an atmosphere of good will and cordiality. It was bedded down by good institutional arrangements, which held it together right to the end.

But the cordiality disappeared when the Conservatives campaigned, with venom, to defeat the referendum on the Alternative Vote (PR in a single member constituency).

It is interesting to note that the Lib Dems loyally supported the austerity policies of the government, including on tuition fees which did them a great deal of electoral damage.

The reforms introduced by the Coalition, in education, health and welfare were important, and enduring. But they were not very different from what might have been done by a government led by Tony Blair. Cameron’s military intervention in Libya, for which he was a much greater cheerleader than Obama, was just as much a disaster as Blair’s intervention in Iraq. But Cameron knew what had happened in Iraq, so there is less excuse for him.

Cameron’s idea of a “Big Society”, where local communities take over responsibilities from government, never amounted to much. As one critic said “most people I know do not want to run their local library or school, they just want the service to work”.

Cameron’s problem with the European Union was not so much that he was a Eurosceptic, but that, like many Britons, he just did not find the EU interesting at all. Like his compatriots, he thought the EU was something external to the UK, with which the UK did business on an arm’s length basis, rather than something of which the UK was a full member.

He did not invest time in it, and thought that problems could simply be sorted out by a chat with Angela Merkel, as if the other countries would always do what she told them.  Merkel for her part thought Cameron was “apt to make his mind up too quickly”, and ask for more than he could ever hope to get. She preferred to start her negotiations with modest demands and build on them.

In 2007, as a newly elected leader of his Party, he had promised a referendum on the Lisbon Treaty, but by the time he came into office it was too late for that, because the Treaty had been already ratified. But his failure to keep that so called “promise” left him with problems with his backbenchers for the rest of his career.

The same backbenchers were also, of course, angry with him because he had not won the election in 2011, and instead had to opt for a Coalition with the Europhile Liberal Democrats.

The authors of this book think that Cameron’s position was so weak that he had no option, in 2013, but to promise an In/Out referendum. I disagree.  While there was a real threat from UKIP, I do not believe his party would have brought him down over this issue. There is no evidence that Cameron gave any serious thought to what ought to be done if the people voted for “Leave”.

When he came to fight the Referendum itself, he chose to appeal only to people’s pockets, and not to their hearts, or to their sense of self respect.

He could have pointed out that in 1914, Britain went to war, not for its Empire, but for Europe…to defend Belgian neutrality.

He could have reminded his fellow citizen that Britons went to war in 1939, also for Europe, to defend Poland.

 He did not do so.

Such an appeal to patriotism could have countered the xenophobia that occupied the emotional space,  that his materialistic campaign left unoccupied.

But then it emerges in this book that Cameron himself sincerely believed in having a cap on immigration, including from Poland, the country Britain went to war to defend in 1939.

In 2010, he had said “Kick us out in 5 years, if we don’t deliver a cap on immigration”. A well informed Party Leader would have known, even then, that such a promise was incompatible with his country’s obligations as an EU member!

REMEMBERING JOHN DILLON MP

john_dillon_1851-1927I spoke at a Seminar organised by the Reform Group in Wynn’s Hotel in Dublin on John Dillon MP , the last leader of the Irish Parliamentary Party (IPP), who was the father of James Dillon TD, who was leader of Fine Gael from 1959 to 1965. John Dillon died in 1927 having lost his seat in the 1918 General Election.

A soundtrack of the seminar can be accessed through the Reform Group website at

http://www.reform.org/site/2016/10/15/forgotten-patriots-seminar-15-oct-2016/

As well as Dillon, the seminar dealt with the DD Sheehan MP, who was a member of  The” All for Ireland”  League, set up by William O Brien MP, who was one of the few Irish Nationalists of the time to make a serious effort to understand the concerns of Ulster Unionists.

O Brien and Dillon, once close friends and allies, became rivals later in their careers, although both of them shared a belief in the Home Rule cause, and in exclusively constitutional and peaceful agitation to achieve their goals.

Grandchildren of both men were present at the seminar.

THE LAND QUESTION, RIGHTLY, CAME FIRST

John Dillon was first elected to Parliament in 1880 and, from the outset, he pressed the cause of land reform, which, along with the enactment of Home Rule into law in September 1914, was to be a crowning achievement of the IPP.

In looking for rent reductions, and the eventual transfer of Irish land ownership from landlords to their tenants, Dillon had to contend with claims that this involved breaching contracts and property rights, which were then, and still are, regarded as central to the market economy.

Yet, if the land question had not been solved prior to Irish independence, the resultant struggles might have been so severe as to undermine the democratic character of the state, something that happened in some central European countries ,who gained independence in the early 1920’s without prior land reform.

PARTY DISCIPLINE

Dillon, from the beginning, also believed in party discipline, and in the central control of candidate selection. In this, he clashed with Tim Healy MP and with William O Brien.

He believed, rightly, that discipline was vital if the Irish nationalist minority in the House of Commons was to achieve anything. In a parliamentary democracy, party discipline is of abiding value in achieving coherent outcomes, something Irish voters are inclined to forget nowadays.

COULD NORTH EAST ULSTER EVER HAVE BEEN COERCED INTO A UNITED IRELAND?

Like many Irish nationalists, then and since, Dillon had difficulty facing up to the reality that Ulster unionists could not, in practice, be coerced into a United Ireland.

Arguing publicly for something, that one knows in ones heart cannot be achieved in practice, is bad political leadership.

Successive Irish governments gave bad leadership on the question of how a united Ireland might come about, until the principle of consent was belatedly accepted in the 1970’s.

In Dillon’s case, he gave a speech in Belfast in March 1915 in which, on the question of a possible partition, to exclude part of Ulster from Home Rule, he said

“We will never agree to divide this nation”.

That remained the position of the IPP.

But Tim Healy claimed, in a letter to his brother Maurice in 1914, quoted in Frank Callanan’s excellent biography of Healy, that Dillon was privately of a more realistic opinion

“Dillon is going about (the House of Commons) talking to the Liberals in favour of the exclusion of Ulster “

Healy claimed Dillon was justifying this by saying

“How can we coerce Ulster with our record against coercion and that we cannot face civil war as a beginning to Home Rule”.

If Healy is to be believed, and he was no friend of Dillon, then Dillon was more realistic in private, than he was in public.

Healy, himself , thought the Ulster Unionists were only bluffing, and could be coerced. This is a nonsensical belief, but it is the unstated assumption of most modern day critics of the Home Rule  policy, including Sinn Fein and some historians.

At least in private,  John Dillon was a realist.

This gap between public rhetoric, and private belief, about the feasibility of enforcing a united Ireland, has proven very costly ever since.

This sort of self deluding rhetoric may become prevalent again in nationalist circles, if Theresa May persists in her “hard Brexit” policy.

COMMEMORATION ……WHAT CRITERIA SHOULD WE USE?

I believe official commemorations, of their nature, have to be selective.

So what criteria should guide our selection of the events to be singled out for commemoration in government ceremonies, postage stamps and public sculptures?

Commemorations cannot change the past.

All they can do is influence how we think about the future.

So government should select things to commemorate that will help us use historical event that help us manage foreseeable future challenges.

Thus I believe the focus of official commemorations on violent events, like the Howth gun running, the 1916 Rebellion and ambushes, is wrong.

These events have little of use to teach us about what we need to do in the future Ireland of the 21st century.

In contrast, the careers of men like John Dillon, his agitation, his compromises and his peaceful achievements, have much more to teach us ,about what is relevant to today and tomorrow.

WHO WILL PROTECT IRISH AND OTHER EU FIRMS DOING BUSINESS IN THE UK AGAINST DISCRIMINATION, AFTER BREXIT?

cropped-European-Union-flag-006-1.jpgMany Irish firms, and firms from other EU states, have extensive investments and trading interests in the UK. Indeed this must one of the most intense investment relationships in the world.

For the past 40 years, these investments have been protected by UK membership of the EU, which allowed firms, who might feel they were being discriminated against, in favour of British owned competitors, to appeal not only to the UK Courts, but also to the European Court of Justice(ECJ)

Yesterday the UK Prime Minister announced that , once the UK leaves the EU, the jurisdiction of the ECJ in the UK would be ended. Thus there will no longer be any, non UK controlled, arbiter to protect Irish or other EU investors in the UK against discriminatory laws by a future UK government. The UK has no written constitution.

Therefore it will be important that there be a robust independent investor protection disputes mechanism, capable of overturning discriminatory decisions that might be taken by the UK courts against the interests of EU owned firms.

 This must take immediate effect the day the UK leaves the EU.

It cannot wait for the longer term trade agreement the EU negotiates with the UK, which may take years to finalise. Investor protection clauses can be controversial, as we have seen with the TTIP negotiation, and are a reduction of “sovereignty” in the abstract sense.

But , given three factors

  • the highly nationalistic tenor of UK politics at the moment,
  • the dramatic ideological trends in the Labour  party, and
  • the likelihood of trade tensions between the UK and the EU,

Irish and other EU firms doing, or intending to do, business in the UK will need a very robust independent investor protection regime.  These three phenomena must be confronted realistically. We must not assume that everything will work out in the end. It may not!

Unless Irish and other European firms have concrete assurances that they will not face discrimination of any kind in  their activities in the UK after Brexit, they may have to commence disinvestment to protect their shareholders’ legitimate interests. The proposed “Great Repeal Bill”, reversing EU law in the UK, will need to scrutinised with immense care by  Irish and other European investors in Britain. Political assurances will not be good enough.

In the present atmosphere of UK politics, it is all too easy to envisage calls for discrimination in favour of UK firms in contracts with UK local authorities, in access to certain public services, and in standards for goods and services. All would be done, of course, in the name of “protecting British jobs”, or “defending British standards”.

If the ECJ is no available to protect Irish and EU firms from discriminatory practices on the UK market, alternatives will have to be agreed with the UK. These alternative mechanisms, investor courts in other words, will have to have the power, like the ECJ, of striking down UK decisions, including UK court decisions,  that they deem to be discriminatory against the interests of an EU investor.

These mechanisms are known as  an Investor-state dispute settlement (ISDS) or an  investment court system (ICS). They are an instrument of public international law and  grant an investor the right to use dispute settlement proceedings against a country’s government.

Provisions for ISDS are contained in a number of bilateral investment treaties, in certain international trade treaties, such as the North American Free Trade Agreement (chapter 11), the Trans-Pacific Partnership (chapters 9 and 28) and the Comprehensive Economic and Trade Agreement (sections 3 and 4). ISDS is also found in international investment agreements, such as the Energy Charter Treaty.

If an investor from one country (the “home state”) invests in another country (the “host state”), both of which have agreed to ISDS, and the host state violates the rights granted to the investor under public international law, then that investor may bring the matter before an arbitral tribunal.

The prospect of having to use such cumbersome procedures will undoubtedly be daunting and difficult for small firms.

This will be particularly difficult for Irish firms who have been used to treating the UK as part of their “home market” since 1966 and the Anglo Irish Free Trade Agreement.

In the aftermath of the original referendum decision, soothing statements were made by British Ministers about the position of Ireland, and about there being no “hard border. But Prime Minister May’s speech to her Party Conference yesterday represents a major shift in position. She is going for a “hard Brexit”, which inevitably means a “hard border”. She offered no assurances to Ireland.

Indeed it is hard to see how the UK could offer special protection to Irish firms investing in the UK that it was not also offering to French or Romanian firms.

The Irish food industry is heavily invested in the UK market. Before it joined the EU, the UK discriminated heavily in favour of UK farmers and against Irish exports. The food industry is far more complex now than it was forty years ago, and the opportunities for discrimination more subtle and more numerous.

The European Union will need to adopt a tough line on investor protection in the forthcoming negotiations and make sure these protections apply in full from the moment the UK leaves, and are not left to a wider long term negotiation.

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