John Bruton

Opinions & Ideas

Category: UK (Page 1 of 2)

WHAT LESSON TO DRAW FROM THE NORTHERN IRELAND ASSEMBLY RESULTS?

In the recent Northern Ireland elections, the Democratic Unionists got 28.1% of the vote, Sinn Fein 27.9%,the Ulster Unionists 12.9%, the SDLP 11.9% and the Alliance Party 9.1%.

The fact Sinn Fein increased their share of the vote by a substantial 3.9 percentage points has led some commentators to  interpret this as a mandate to start negotiating towards a united Ireland.

There is some wishful thinking going on here. Of the 90 seats in the new Assembly,

  • 49 were won by parties that broadly support the continuation of the Union with Britain, while only
  • 39 were won by parties who want to replace that with a union with the rest of Ireland.

Incidentally the Alliance and Ulster Unionist Party, both moderate parties, but supportive of the existing constitutional position, increased their vote shares too,  by  2.1 and 0.3 percentage points respectively.

Putting a choice between the two unions, at the heart of the current political debate in Northern Ireland is likely to deepen sectarian divisions there, and make day to day compromise even more difficult to achieve.

To use a word Gerry Adams often used in another context, it is

“not helpful to the peace process”,

if , by ”peace process” we mean, in the first place, a reconciliation between the two communities in Northern Ireland.

Centering debate around whether one is for against a united Ireland, would make any attempt at creating an alternative to the Sinn Fein/DUP duopoly of power in Belfast, like the one attempted without success in the recent elections by the Ulster Unionists and the SDLP, next to impossible.

FREEZING THE SECTARIAN DIVIDE

Indeed that may be one of the reasons the drum is being beaten for a united Ireland.

It is a good way of freezing politico/sectarian divisions. And that suits both Sinn Fein and the DUP.

Of course, as a tactic, it may also help Sinn Fein electorally in the Republic, because distant, unattainable, objectives, like a united Ireland or the restoration of the Irish language, have been useful, and reusable, rallying cries for other parties in the Republic in the past(notably by Fianna Fail when Mr  de Valera led them).

The case that Sinn Fein is making, for immediate agitation towards a united Ireland, was summed up in an article by an Irish Independent columnist, Martina Devlin.

She said

“The Border has to go. The case for Irish reunification is overwhelming – over time, the two parts of this island will be more prosperous together than apart.”

REPLACING THE UK SUBSIDY?

This seems to ignore the huge subsidy Northern Ireland receives from the UK (20% of its GDP), which the Republic, with a much smaller population and tax base, could not replace, especially if it itself  is suffering the huge dislocation of its trade pattern that will result from the island of Britain leaving the EU

Martina Devlin continued

                 “A united Ireland is the clearest way to minimise the fallout from Brexit, provided it can be handled sensitively and a carefully plotted, long-term approach taken.”

I fear this is not so.

A United Ireland would, in the context of Brexit, simply move the border from Newry to Larne. The costs on East/West trade between Ireland and Britain, caused by Brexit would all remain, but the British subsidy to Northern Ireland would be gone.

A UNITED NORTHERN IRELAND MUST COME FIRST

Now I know money is not everything. If the people of Northern Ireland are united in wanting to make new constitutional arrangements (whatever they are) work, they will work.

But Irish unity imposed by a simple majority of the population, overruling a large minority, who still want to stay in the UK, would NOT leave behind a united people, willing make big sacrifices for the common good of a united Ireland.

In my view, a united Northern Ireland must come first, and only when we have such unity can wider constitutional options be considered in a pragmatic way.

The recent Election did not help in that regard, and a Sinn Fein campaign for a united Ireland, will deepen divisions further.  We should recall the futile anti partition campaign of the late 1940’s, which did just that.

WOULD UK REALLY SUBSIDISE SECESSION?

Martina Devlin does try to address the financial problem of replacing the UK subsidy in the event that Northern Ireland  left the UK and joined a united Ireland.

She says

                                       “ An economic stimulus package needs to be put in place and Britain would have a responsibility to contribute. But, however expensive,  there would be an end in sight. The EU would have financial obligations, too. Perhaps Irish-American well-wishers might also put their hands in their pockets. The financial support package would need to cover at least one decade and possibly two, with a variety of targets including reorientating the entire business culture in the North.”

Given the current attitudes in Britain, this seems to me to be wholly naive.

The UK is reluctant to pay its share of the EU bills, contracted while the UK was a full voting member of the EU.

A post Brexit UK will, I believe , be a poorer country than it is today, something Ms Devlin does not address.

So it is hard to see it contributing for years to a place that had seceded from the UK, at the very time when the UK was also trying to prevent the secession of Scotland.

If the UK is unlikely to subsidise the secession of Scotland it is also unlikely to subsidise the secession of Northern Ireland.

SAVINGS?

Ms Devlin thinks there could be savings

       “On the financial front, it’s not all a drain. Economies of scale and merged services could achieve savings – one parliament, one health service, one education service, and so on.”

This is theoretically possible, but it is contrary to the scenario envisaged in the Good Friday Agreement, which provides for the retention of separate Northern institution and guarantees, even if ultimate sovereignty  is transferred from London to Dublin.

THE COST OF SECURITY

One also needs to consider the potential security risks, and consequent increases in police and military spending by our state, if a significant minority in Northern Ireland decided to resist the arrangements Ms Devlin advocates.

Resistance would be geographically concentrated. For example, parties supporting a united Ireland  received

  • only 3% of the vote in East Belfast,
  • 10% in Strangford and
  • 14% in Lagan Valley and East Antrim.

These security costs would fall on the Irish taxpayer.

HOW NOT TO PERSUADE MODERATE UNIONISTS

Finally Ms Devlin  says

             “Meanwhile, there are moderate Unionists who could be convinced about the benefits from reunification. Some of them realise the British have no interest in Northern Ireland and, after all, why be loyal to a government which feels no loyalty in return?”

This is true. I do not sense a deep emotional commitment in Britain to any part of Ireland or to its interests, as the Brexit vote has shown.

Loud talk, and flag waving about a united Ireland by Sinn Fein will undermine these very “moderate” unionists, of whom Ms Devlin writes so hopefully.

One would not just be asking “moderate Unionists” to be reasonable about a pragmatic arrangement. One would be asking them to cease to be Unionist. That would be asking them to change their identity, as they see it. That is no small matter.  There is more urgent work to be done.

Let us hope, now that the elections are over, that a pragmatic and united case can be agreed between Unionists and Nationalists about how to deal with Brexit, and then put  by them to Brussels, London and Dublin.

That is the job of new Assembly, and it should get on with it.

WILL THE 1998 BELFAST AGREEMENT SURVIVE THE  UK GENERAL ELECTION OF 2020?

The Daily Telegraph today says that the UK Prime Minister intends to include in the 2020 Conservative Party General Election Manifesto a promise to pull the UK, including presumably Northern Ireland, out of the European Convention on Human Rights (ECHR).

According to the story, she does not intend to implement this promise until after the UK has left the EU, which she hopes to have achieved before the 2020 Election.

The existing corpus of ECHR law would apparently be incorporated into UK law, but there would no longer be a right of appeal to the European Court on Human Rights, only to the UK Supreme Court.

If implemented, this promise would appear to me to breach the terms of the Belfast Agreement of 1998, which is an international Agreement. On the strength of this international Agreement, Ireland amended its constitution. The Agreement was the fruit of years of work by successive Taoisigh and Prime Ministers.

There is no mention of the inter relationship of the ECHR and the Belfast Agreement, or of any negotiation on it with the parties to the Belfast Agreement, anywhere in the Daily Telegraph article. Yet the  appears to be the result of a very detailed briefing. A purely unilateral UK action seems to be what is envisaged, without reference to the parties, including Ireland.

Adherence to the European Convention by the Northern Ireland Administration, and therefore by the UK unless Northern Ireland’s status changes,  is built explicitly into the terms of the Belfast Agreement.

Paragraphs 5(b) and 5(c) of Strand One of the Agreement require all legislation passed by the Northern Ireland Assembly to adhere to the terms of the ECHR.

There are other references to the ECHR in other parts of the Agreement.

The ECHR is fundamental to all the human rights elements of the Belfast Agreement.

If the UK is no longer a party to ECHR, and no longer subject to the rulings on the European Court on Human Rights, there will no longer be any common basis, between Ireland and the UK, for settling any differences of interpretation that might arise between Ireland and the UK concerning human rights issues in Northern Ireland.

It is important to the sustainability of any international agreement, in this case one between Ireland and the UK, that there be a neutral referee in the case of disputes.

This neutral element was particularly important to nationalist opinion at the time of the finalisation of Agreement, and the referenda which approved it. It remains so to this day.

As far as any disputes might arise about human rights in Northern Ireland, that neutral referee is the European Court of Human Rights. But the UK Prime Minister now apparently intends unilaterally to withdraw Northern Ireland from the ECHR and its court.

I believe this is a very serious issue, and bodes ill for the future.

As a former Home Secretary, the current UK Prime Minister should be aware of the constitutional importance of the Belfast Agreement, and indeed of the referendums approving it, in both parts of Ireland, which ended an historic dispute, dating back a very long time indeed.

We can only ensure that we do not “return to the border of the past” if there is an appreciation at the highest level that party driven initiatives do not undermine hard won negotiated achievements.

 

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!

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.

PULLING OUT THE 40 YEAR OLD THREADS THAT BIND THE UK AND THE EU TOGETHER

8268467475_fc8fb937e8_zDisengaging the UK from the EU will be like undoing all the stitching of a patchwork quilt, and then re stitching some parts of the quilt together, while making a new quilt of the rest. The UK is, at the moment, stitched into thousands of regulations and international treaties, which it made as a member of the EU over the last 43 years. Each piece of stitching will have to be reviewed both on its own merits and  for  the effect rearranging it might have on other parts of the quilt.

This is, first and foremost, a problem for the UK itself.

UK GOALS YET TO BE DETERMINED

We all think we know what UK voters voted against on 23 June. But nobody, even in the Conservative government itself, has a clear idea what UK voters voted FOR.  People voted to leave the EU for contradictory reasons.

Many voted  to leave because they wanted more protection from global competition. On the other hand, many of the Leave campaign leaders wanted to get out of the EU, so they could deregulate their economy, dispense with EU social rights, and promote more global competition and lower costs ( wages) in the UK economy.

The UK government must first decide which of these economic policies it wants and, only when it has done that, can it decide what sort of relationship it wants with the EU.

MUST THE UK BE OUT OF THE EU BEFORE IT MAKES A DEAL?

The 27 EU heads of government, on 29 June, told the UK that any trade agreement with it will be concluded with it “as a third country”.

This could be interpreted as meaning that the UK must first become a “third country”, by withdrawing from the EU, before it can have a trade agreement with the EU. This could mean that the UK would have to be out of the EU, before it knew what terms it might get on trade. This would be a very hard line EU position.

If that is what the 27 leaders meant , it is  probably contrary to Article 50 of the Lisbon Treaty, which says a Withdrawal Treaty must take account of the “ framework” of the withdrawing country’s  ”future relationship” with the EU.

……..OR MUST THERE BE TWO SIMULTANEOUS NEGOTIATIONS?

 I believe Article 50 means that there will be two negotiations,

 one on “Withdrawal” and

 one on the” Framework” of the future relationship.

I believe the two treaties must be negotiated, simultaneously and in parallel, and that the Framework  agreement cannot wait until the UK is already a “third country”, as  seemed to be implied by the 27 leaders on 29 June .

Ireland cannot afford to wait ,until the UK is already a “third country”, before border, travel, and residency issues between Ireland and UK are sorted out. We need these issues sorted out before the UK leaves.

IT WILL BE LIKE A DIVORCE NEGOTIATION

As with a divorce, the Withdrawal Treaty will be about dividing up the property. It may be easy enough to negotiate.

The Framework Treaty will be about the future, and like marital disputes about access to and care for children, will prove to be much more fraught and complex.

The question of whether there is  a “hard border” or not,  will flow from  what the UK  looks for, and what it  gets, in its Framework negotiations.

Nobody knows yet what the UK will look for, so this question is impossible to answer. The 27 EU leaders rightly insisted that the four freedoms – freedom of movement of people, goods, capital  and services- go together. Nobody has any idea yet how the UK will propose to get around that.

UK CANNOT MAKE DEALS WITH OTHERS WHILE IT IS STILL AN EU MEMBER

If the UK were to heed the call of Liam Fox MP, the UK’s new Minister for International Trade, that the UK   leave the EU Customs Union, so it could negotiate trade agreements with countries outside the EU, this would mean an immediate  hard border in Ireland. The Taoiseach’s diplomacy in recent days has probably helped head that threat off. Implementing Minister Fox’s proposal would have breached a UK Treaty obligation, a very serious matter for a country that relies on 30000 international Treaties.

The sort of border we have in Ireland will depend on the shape of the final UK/EU Framework agreement on all the four freedoms. Ireland can do no side deal with the UK.

 And if Ireland is to influence the EU positions in its favour, it has to present its case as  beneficial to Europe as a whole. It cannot be, or be seen to be, on both sides of the table at the same time, in what will prove to be a highly contentious negotiation.

Until it leaves, the UK is still a member of the EU, and is bound by all EU rules. It will fully participate in all key EU decisions, except those concerning  it’s own exit terms.

This means that the UK cannot do trade deals with other countries, while still in the EU.

Indeed it would appear it cannot even enter into commitments about future deals, particularly ones that might undercut EU negotiating positions.

 This is because, as long as it is still an EU member, the UK must, under Article 4 of the Treaty, act in “sincere cooperation” with its EU partners. The meaning of “sincere cooperation” was elaborated by the European Court  in judgements it made on  cases the Commission took against Germany and Greece  ,to overturn separate understandings each had forged  with other countries, on matters that were EU responsibilities without EU involvement .

So, to ensure that he stays within the law, Liam Fox may have to take a Commission official with him on all his trade travels around the globe, at least until the UK has finally left the EU!

THE UK SHOULD NOT BE RUSHED INTO TRIGGERING ARTICLE 50

Indeed the more closely the UK government looks at its options, the longer it may take to decide when to trigger Article 50.

The leaders of the EU 27 should not rush the UK on this.  Short term uncertainty is a very small price to pay for avoiding a botched and ill prepared exit negotiation.  Everyone would lose from that.

The UK civil service did not, after all, expect to find itself in this position. Indeed UK civil service studies, done long before the Referendum, concluded that the UK’s then existing relationship with the EU was just about right. Furthermore, once Article 50 is triggered, the UK cannot, easily or legally, change its mind and revert to the status quo, EVEN after a General Election.

A MAJOR DISTRACTION FROM OTHER  VITAL WORK

Meanwhile, Europe, with so much other work to do, has to turn inwards and devote itself to unravelling 43 years of interweaving between Britain and Europe. All this highly demanding technical work has to be done, at a time when Europe should be looking outwards towards the opportunities and threats of a rapidly changing and unstable world.

WILL BREXIT NEGOTIATIONS BE OVER BEFORE THE 2020 UK  GENERAL ELECTION?

union-jack-1027896_960_720The next UK General Election will be in 2020.  If the Article 50 notice is served in 2017, it is possible that the process of UK withdrawal from the EU will not be concluded before the UK General Election in 2020.

That might allow the UK Electorate to take a second look at their decision of 23 June.

The Article 50 process, once activated, proceeds according to paragraph 2 of  Article 50.

 The mechanics of the negotiation are set out in Article 218 (3), which governs the making in international agreements by the EU.

It provides for the negotiation to be done by the Commission, subject to directives from the European Council. Ireland would formally make its input via the Council.

A key phrase in Article 50 is that the Withdrawal negotiation would be conducted

 “taking account of the future framework of its relationship”

with the country leaving the EU .

In other words, the Withdrawal would take place within a wider framework, which would also be  agreed between the EU and  the UK.

So there would be two parallel processes

  •  a negotiation of a framework of  the future relationship with the UK, and
  •  the Withdrawal negotiation itself.

In effect the two negotiations would be linked.

This is different from what Commissioner Malmstrom said recently.

She said the broader negotiation could not take place until AFTER the Withdrawal agreement with the UK was concluded, and the UK was already outside the EU.

Her interpretation seems to me to be contradicted by the words of Article 50 because it ignores the fact that the reference in Article 50 to a broader framework agreement.

If the  formal  Withdrawal arrangement under Article 218 (3) has to be subject to a wider framework being agreed, the whole process could take a very long time indeed,  and meanwhile the  status quo would continue until both agreements are completed and ratified.

The Withdrawal part could be quickly agreed, but the future framework would be much more difficult and could drag on and on, because it would have to cover all sorts of knotty trade and regulatory issues which could not be settled on the basis of generalities.

That is assuming the UK does not join the EEA, which would simplify these “framework” issues.

It also assumes unanimous consent in 2019 of the 27 EU members to extend the 2 year withdrawal period, but that should not be impossible

Of course, it requires the UK  not to derail the process by unilaterally breaching the Treaties by failing to implement EU law, during the negotiations, Eg by immigration  controls or repealing  some EU legislation on working hours.

It assumes that the UK would be willing to stay in a “half in/ half out” position for a long time, without enjoying the supposed benefits of Withdrawal, but with its influence in the EU diminished.

The UK should probably have given more thought to these complexities before triggering a  referendum.

 But the complexities do allow time for reconsideration, assuming there is, at some time in the next three years, a political willingness to reconsider in the UK.

That does not look likely now, but moods can change.

The UK has a big balance of payments deficit already….Brexit or no Brexit.

The inevitable unwinding of that deficit will reduce economic growth, which normally would also reduce immigration. So opinion may be different in 2020.

That said, other EU countries, including Ireland must prepare our economies on the assumption that full Brexit will happen.

UK GOVERNMENT FIRST STEPS NOW

Now that the UK has voted to leave the EU, the first step has to be taken by the UK Government.

It must decide what sort of relationship it wants to have, trade wise, with the rest of the world.

At the moment, that is governed by agreements negotiated, for the UK, by the EU.

If the UK simply leaves the EU, all those agreements will  fall, as does UK membership of the World Trade Organisation(WTO). Agreements with dozens of non EU countries, will have to be negotiated again, at the same time as negotiating  with the EU. A lot of work.

Basically the UK government will have to choose choice between three options

  • Leave the EU and, like Norway, apply to join the European Economic Area (EEA),
  • Negotiate a new special trade agreement, like the agreement Canada or Switzerland has with the EU
  • Leave the EU without any trade agreement and apply, as a separate country, to join the WTO

The EEA option could be put in place quickly and would not disrupt trade all that much.

The EEA is a readymade model for external association by a non member with the EU. It could be taken down from the shelf, so to speak.  But, as an EEA member, the UK would still have to implement EU regulations and contribute to the EU budget. It would not allow curbs on EU immigration. The EEA option has been dismissed by “Leave“ campaigners, but it does involve leaving the EU, and  complies  with the literal terms of  the  referendum decision.

If the UK experiences severe balance of payments problems over the summer, the EEA option may become attractive. The UK already has a big balance of payments deficit anyway and capital inflows may be inhibited by the Leave vote. The EEA option would buy time, and would not preclude leaving altogether eventually.

The second option, a special trade deal, would be much more difficult.

It would require a detailed negotiation on every type of product or service sale between the UK and the 27 member countries of the EU, including across our border.

Such an agreement would take years to negotiate (probably 7 or 8 years), because it would be subject to domestic political constraints, and political blackmail attempts, in all EU countries, each of whom  would have to ratify it. If it proposed curbs on immigration from the EU, the EU countries affected  would make difficulties with other aspects of the deal, as a bargaining counter.

It is unlikely that a Trade Agreement would allow the UK to sell financial services into the EU. Indeed it would be in the interest of EU countries, that might hope to attract financial services, to make sure the UK got few concessions .

The third option…leaving the EU with no agreement… could come about, either because that was what the UK chose, or because the negotiations on a special trade deal broke down or were not ratified by one or two EU states.

It would require the application of the EU common external tariff to UK or Northern Irish products crossing the border into the Republic.

Average EU tariffs are around 4%, but on agricultural goods the mean tariff is 18%. The imposition of these tariffs is a key part of the Common Agricultural Policy, which protects the incomes of EU farmers. We would have no option but collect them at customs posts along our border. All forms of food manufacture and distribution within the two islands would be disrupted.

The disruption of the complex supply chain of the modern food industry would be dramatic and the knock on effects impossible to calculate.

A similar effect might be felt by the car parts industry, which is subject to tariffs, and is important to some parts of England.

Meanwhile the remaining 27 countries of the EU, and the EU institutions, will have a lot of thinking to do too.

They need to respond decisivly to the (false) claim that the EU is not democratic.

All EU legislation has to be passed by a democratically elected European Parliament, and also by a Council of Ministers who represent the democratically elected governments of the 28 EU countries.

The members of the European Commission must be approved by the democratically elected European Parliament.

But there is room to further  improve  EU democracy.

I  would make two suggestions ,

  • The President of the European Commission should be directly elected by the people of the EU in a two round election , at the same time as the European Parliament Elections every 5 years

2.)To create a closer link between National Parliaments and the EU, a minimum of nine national parliaments agreeing should be sufficient to require the Commission to put forward a proposal on a topic allowed by the EU Treaties . National Parliaments can already delay EU legislation, so they should be free to make positive proposals too.

That said, the EU should avoid over promising, and should not allow itself to be blamed for all the problems people face in their daily lives.

The EU is not an all powerful monolith that can solve the problems caused by technological change and globalisation. It is just a loose voluntary confederation of 28 countries, with no tax raising powers of its own. Nor is the EU responsible for debts mistakenly taken on by its members.

If the losers of globalisation and technological change are to be sheltered from misfortune, it is for the 27 states, not the EU itself, that has the taxing power to redistribute money from the winners from globalisation  to the losers.

The UK has not been particularly generous in this regard.  Its welfare system is modest, and its investment in productivity improvement has been poor.

In some respects, UK voters  have just mistakenly blamed  the EU. for the effects of the  omissions, and under performance, of successive UK governments.

OVERCONFIDENCE CAN LEAD TO POLITICAL, AS WELL AS FINANCIAL, MISTAKES

The-UK-and-EU-flags-010A ballooning current account (or balance of payments) deficit, and an explosion in household borrowing.

These were the two signs of impending difficulty, that Ireland ignored between 2005 and 2008.

 In 2008, Irish public opinion was so optimistic that it felt it could afford to reject an EU Treaty in a referendum, notwithstanding the disproportionate benefits Ireland got from EU membership. It reversed this decision in a subsequent referendum in 2009.

The UK is exhibiting some of the same symptoms of overconfidence at the moment.

The UK current account or balance of payments deficit for the last quarter of 2015 was 7% of GDP – the deepest deficit since 1955.

The UK is spending more abroad than it is earning there.

It is making up the difference with borrowing. A country that is borrowing more abroad must be particularly sensitive to the volatile opinions of foreigners.

UK households now owe almost £1.5 trillion overall, up 4% on a year ago. The vast majority of that debt is in the form of mortgages, where lending growth has been climbing steadily since the start of 2015. Much of that has been driven by the buy-to-let sector.

And now the UK is about to have a referendum on whether it should leave the EU altogether. And in the UK case, unlike Ireland, the government has said firmly that there will be no second referendum

UK voters should be wary of overconfidence. They should remember what happened in Ireland.

The UK needs its neighbours to prosper, just as its neighbours need the UK to prosper.

TED HEATH

book“Edward Heath, the authorised biography” by Philip Ziegler was published by  Harper Press in  2011, but it is even more relevant today, as the UK contemplates whether it should undo the major work of Ted Heath’s career, that of bringing the UK into membership of the European Common Market, now the European Union.

I only met Ted Heath once, in 1997 in the European Parliament, when we both received the Schumann Medal from the European People’s Party.  In my case, it was in recognition of the success of the Irish EU Presidency of 1996.

In his case, it was for something much more significant, and more difficult, reversing the post war isolation of the UK from the task of building an economic base for a peaceful Europe.

In fact Ted Heath had made his maiden speech in the House of Commons in 1950 in the Schuman Plan for unifying Europe’s Coal and Steel industries, in which the then UK Labour Government had refused to take part. He wanted the UK to take part.

I was delighted to meet him, as I had long admired him, not only because of his stance on Europe, but for his pragmatic and non ideological approach to politics.

As Prime Minister, while he favoured competition and trade union law reform, Ted Heath attempted to reach understandings on incomes policy with trades unions and employers, an approach that was reversed by his successor Margaret Thatcher.

She relied on reducing the money supply to bring down inflation, while he hoped it could be achieved by agreement. Her policy worked, but the social cost was high. His policy did not work because some key Unions, notably the miners, refused to cooperate, and the TUC was unable or unwilling to get them to change their minds.

Unlike Margaret Thatcher and all his other successors as Prime Minister, Ted Heath had served as a soldier in World War Two. This direct experience of war, and a pre war visit to Nazi Germany, led him to put great emphasis on the need for Britain to positively contribute to the building of a structure of peace in Europe, as a participant not just as a bystander.

This biography reveals that, when in 1970 he eventually succeeded in overcoming the French veto on UK membership of the Common Market, Heath expected to be pressed to join the proposed common currency as soon as it could be set up. He was for the idea himself, but felt it would not be popular in the UK. By the time the UK eventually joined in 1973, the volatility caused by the oil crisis and the fragility of sterling would have precluded the UK from joining the single currency, if it had in fact been launched then.

This biography explores Ted Heath’s difficult and solitary personality. While he had some very close friends, he never married, and was not gregarious.

He never accepted his ejection from the Conservative Party leadership and this meant that he never regained much positive political influence, despite remaining in the House of Commons until he was 80 years of age.

HOW DIFFICULT WILL IT BE TO KEEP THE UK IN THE EU?

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Prime Minister David Cameron’s letter, to   European Council President Donald Tusk , about  the renegotiation of the  terms of UK membership of the EU, shows that he has invested time in trying to understand the perspective of other EU states. This is good.
 
That said, the timing of this renegotiation is bad, because the EU has so many other politically difficult problems on its plate just now, problems from which the UK has excluded itself, namely
 
+ the refugee crisis and the threat  it poses to free movement within the Schengen zone and 
+ the fact that a number of EU states are at risk of breaching the terms of the fiscal compact on debt reduction and fiscal deficits.
 
A supportive attitude by the UK on the resolution of these EU wide problems would  help create the impression that the UK is, potentially at least, in the EU for the long haul, which would make it worthwhile for other members to go all the way to their bottom lines in attempting to meet the UK’s requests.
 
It is welcome that David Cameron’s letter says that he is open to “different ways of achieving the result” he sets out in his letter.
 
It is also welcome that he seeks to put his proposals in a context of “reforms that would benefit the European Union as a whole”.
 
He further says that it “matters to all of us that the Eurozone succeeds”.
 
Although David Cameron has expressed similar sentiments himself before, these sentiments have not been prominent in much of the general UK debate on the EU, which has often tended to treat the EU as something alien, and a matter of indifference to the UK, which objectively it is not. Occasionally in the UK debate, “schadenfreude” has trumped UK interests.
 
David Cameron’s approach is shaped by the contents of the Conservative Party Manifesto. It is a response to an expression of identity politics, which is a form of politics on which compromise is inherently very difficult indeed, as we know from Irish history.
 
David Cameron’s letter deals with four sets of issue, and I will deal with each in turn.
 
ECONOMIC GOVERNANCE
 
On Economic Governance of the EU, David Cameron  says that
 
+ the integrity of the Single Market for non Eurozone countries must be protected,
+  that non Eurozone countries must not be liable for operations to support the Euro as a currency,
+ that the financial supervision of banks must remain a matter exclusively for national institutions in the non Eurozone countries and that
+  any issues that affect all member states must be decided by all member states.
 
I am not sure that these issues can be as neatly separated, as David Cameron suggests. 
 
For example, the bailout of Greece by the EU and the IMF was not just an operation in “support of the euro as a currency”. 
 
If Greece had gone under, UK banks would have been hit hard.
 
Furthermore it is arguable that, even if it is not in the euro, the UK had a greater obligation to help a fellow EU member, in the situation Greece was in, than had (say) the United States.  
 
After all, the UK, even if not in the euro,  as a member of the EU, had agreed to treat economic policy as a “matter of common concern” with all other EU states, including Greece, under Article 121 of the EU Treaty. 
 
Furthermore, the UK has had power to join fellow members in warning member states like Greece if they were deviating from agreed economic policies under Articles 121 (4), and under Article 126 . Non EU states were not in that position.
 
In light of those articles, it is hard to see that the UK, as an EU non euro member, could say it has no more responsibility for helping Greece, than has a country that is not in the EU at all.
 
If the UK wants that to be the position, its role in EU economic governance under article 120, 121 and subsequent articles of the Treaty should be changed. 
 
David Cameron also asks in his letter that the EU “do more to fulfil its commitment to the free flow of capital”, presumably across the whole of the EU and not just within the Eurozone.  
 
That sits uncomfortably beside his insistence that the Bank of England alone be involved in supervising UK banks lending across borders into the rest of the EU, including the Eurozone. 
 
As we in Ireland know, unsupervised flows of capital can contribute to bubbles in another country, and if those bubbles were to burst, none of the countries involved would escape the pain, including the countries whose banks had been lending the money, even if those countries were not members of the Eurozone.
 
His principle that “any issues that affect all member states must be decided by all member states” is very widely drawn.  Few EU decisions affect all members in precisely the same way.
 
This principle could be interpreted to mean that the UK should have a vote on all Eurozone decisions. Virtually all Euro zone decisions will affect the UK to some limited and indirect extent , not least because the UK does so much business with the Eurozone. This is so even though David Cameron insists the UK will not be financially liable for any of those decisions. 
 
In a sense, his request could amount to the Boston Tea Party demand in reverse, namely as  a demand for “representation without taxation”.
 
COMPETITIVENESS
 
David Cameron makes an interesting proposal under the heading of Competitiveness. It is potentially a big opportunity for Europe. I hope it will be strengthened and emphasised in the negotiations.
 
His proposal  is that the EU should “bring together all the different  proposals , promises and agreements on the Single Market,  on trade and on cutting regulation, into a clear long term commitment to boost the competitiveness of the EU, and drive jobs and growth for all”.
 
This idea of a big competitiveness package, as a price for continuing UK membership of the EU, could be used to drive through changes that have been stalled for years by inertia in individual member states.  In Germany, for example, the implementation of Single Market rules is often blocked at the level of the Lander. France is another country that could do more to open its market to EU competition, to the advantage of French consumers. 
 
If the British are to get a credible package on competitiveness, it may be necessary to demand prior enactment package of measures at national level, in all member states, in the same way as the Greeks had to pass certain laws, before they could get access to bailout funds.
 
There is, however, one aspect of David Cameron’s letter which could potentially run directly counter to his desire to complete the Single Market. 
 
This is a proposal he makes under the heading of  “Sovereignty”.
 
SOVEREIGNTY
 
Under this heading, David Cameron proposes that a group of national parliaments, presumably a minority , should be able to come together to stop what he calls “unwanted” (EU) legislative proposals.
 
This idea that a minority could block a majority would alter the entire dynamic of EU decision making. It would make it hostage to the vagaries of national electoral politics in a new and unpredictable way.  We should not forget that Lord Cockfield, the UK Commissioner, would never have been able to create the EU Single goods market, without the majority voting created by the Single European Act.
 
This proposal is actually as likely to be used against UK interests, as in favour of what the UK wants under the heading of Competiveness.
 
It is easy to envisage such a veto mechanism being used by a sufficient number of national Parliaments of other EU states to block legislative proposals to complete the Single Services Market or the Single Digital Market, both of which David Cameron wants, to protect some national vested interest. 
 
A  solution might be to exempt all Single Market related legislation from this blocking mechanism. 
 
Another solution might be to associate all national parliaments with the EU legislative process in a manner similar to the involvement of the Economic and Social Council or the Committee of the Regions, but without creating a new veto point.
 
David Cameron also wants the UK exempted from the commitment to “ever closer union”. This phrase  has been in all EU Treaties since the UK joined, and was in the EU Treaty when the people of Great Britain and Northern Ireland  voted in a referendum to stay in the EU in 1975. 
 
Essentially the UK wants to “constitutionalise” the idea that there are two types of EU member, 
 

   + those committed to “closer union”, and    + those who are not committed to it. 

 
This is a formal recognition that there is a “two speed” EU. This idea may be welcome by some big states but not by smaller ones. If Britain is exempted from the commitment to ever closer union, it is not hard to imagine that other EU countries will demand a similar exemption.
 
He says he wants this distinction to be “irreversible”, which implies that a future UK government could not decide to commit itself to ever closer union in future, without getting the permission of all other EU states, by means of  a Treaty change, or the amendment of a protocol(which is the same thing legally speaking).
 
This runs counter to David Cameron’s own expressed wish for flexibility in the UKs relationship with the EU. 
 
The notion of legal irreversibility is contrary to the British constitutional tradition itself, which declares that Parliament is not trammelled by external legal constraints.
A legal device can probably be found to accommodate this request but it does raise a wider question of whether the UK will ever be satisfied. 
 
The UK already has special arrangements on the euro, on passport controls, and on Justice and Home Affairs.  The more exemptions it gets, the more exemptions it seems to want. 
 
Will this renegotiation /referendum process result in a full and final settlement, or will it just be an instalment?  This is not a mere debating point. If the UK will keep coming back for more, the EU will never settle down. Indeed other member states may not be prepared to go all the way to their bottom line, if they feel whatever they offer could never satisfy UK public opinion.
 
IMMIGRATION
 
Immigration is the area in David Cameron’s letter which has attracted the most comment.
 
There is no doubt that the UK has been more open to immigration in the past than have many other EU states.  This is partly because English is a second language for people from all over the world. The restraint David Cameron is proposing will not change that.
 
Clearly, if one does not like immigration, the fact that English is a second language for so many of the world’s population has disadvantages, as well as advantages.
 
On the other hand, the cost of living in London and the south east of England is already a strong deterrent to immigration to that part of the UK.
David Cameron wants, if the UK remains in the EU, to be able to require that people, coming to the UK from other EU states (presumably including from Ireland,) must have lived in the UK for four years, before they qualify for in work benefits or social housing.
 
If this four year principle is accepted, it could be implemented in all other EU states for other purposes as well.
 
David Cameron also wants to “end the practice of sending child benefit overseas”, which presumably means that an Irish worker in the UK could no longer get child benefit for his children, if the children are living in Ireland .
 
The principle of not “sending benefits overseas”, if accepted , could conceivably be applied to pensions, which would affect the UK pensioners living in Spain.
 
If one has to live four years in another EU country to get benefits, access to health services could also be denied to people living in another EU country.
 
David Cameron then acknowledges that these issues are “difficult for other member states”.
 
This is a revealingly narrow way of putting it.
 
In his speech, David Cameron mentions “other member states” but does NOT mention Article 45 of the EU Treaty, which covers free movement of workers within the EU. 
 
Article 45 bans
 
“any discrimination based on nationality as regards employment, remuneration and other conditions of work and employment”. 
 
There is no reference in this Treaty Article to any qualifying period of residence to be free of such discrimination.
 
In the UK, tax credit payments are dependent on worker’s hours worked and income, and whether they have children.
 
So restricting them would amount to discrimination in income, between a UK citizen and  EU immigrant, doing the  same job in the UK.  It would presumably apply to Irish workers in the UK who have been there for less than 4 years. It will be difficult for an Irish Government to consent to this.
 
I would have expected David Cameron to have directly addressed the interpretation of Article 45 of the EU Treaties, rather than pretending the difficulty is with “other member states”.
 
By targeting in work benefits so explicitly, David Cameron has left himself very little room for manoeuvre in light of the provisions of that Article.
 
Indeed there were reports on the BBC this morning that the UK Government is now considering applying the 4 year rule to UK residents as well, which could mean that young, new UK born entrants to the UK labour market may not qualify for in work benefits until they have been working for 4 years. That would create a whole new swathe of people inclined to vote for the UK to leave the EU.
 
CONCLUSION
 
This negotiation will not be easy. 
 
Sides have already been taken in the UK , regardless of what may be conceded in response to David Cameron’s letter. 
 
The impact on the EU itself, of a possible UK exit, is incalculable.
 
So also are the effects of the precedent the UK is setting, and the consequences for the EU, of conceding some the UK requests.
Solving this politically generated problem will require statesmanship and imagination of a very high order indeed.  Keeping the UK in the EU is a vital matter for Ireland and for Europe. 
 
……………………………………………………………………………………………………………..
 
 
Speech by John Bruton, former Taoiseach and former EU Ambassador to the United States, at a seminar on “Free Movement and Labour Mobility in the European Union”  organised by the Institute of European Democrats, in NUI Maynooth, at 12.20 pm on Friday 13 November .
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