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November 24, 2017

Irish snap elections in January?

The allegations against the Irish deputy PM Frances Fitzgerald may mark the beginning of the end of the Irish government. And this in the midst of complicated diplomatic manoeuvres over Northern Ireland in the Brexit talks. We often argue that minority governments are surprisingly stable. But this relates to governments that are supported by small or regional groups, as is the case in the UK and Portugal. Ireland's minority government is backed by the other main opposition party, Fianna Fail, it is thus more comparable to an indirect grand coalition. 

The mood between the two main parties Fianna Fáil and Fine Gael has clearly soured, and the former's good will in support for a minority government has evaporated in no time. Leo Varadkar raised the stakes last night when he rejected calls by opposition MPs that he remove Fitzgerald from the government, amid allegations that she was aware of a smear campaign to discredit whistle-blowing police sergeant Maurice McCabe. Fitzgerald gave a passionate defence, saying that she could not have interfered in a legal procedure. To no avail, Fianna Fail MPs still want to see her gone.

Fianna Fáil had confirmed earlier that the party would support a no-confidence motion against Fitzgerald. Justice spokesman Jim O’Callaghan said the party holds the unambiguous view that Fitzgerald must go and, if general elections are the result, so be it. The party's leader Micheál Martin has yet to speak, but the mood in the party is confrontational and some MPs already warn that he would lose support within his party if he were to back the government on this.

The Irish Times has learned that the Fine Gael executive council will meet next week, and party officials are preparing to have the organisation election-ready for mid-January. Some suggested to hold snap elections already in December, but this would interfere with the EU summit on December 15th. Another fine mess.

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November 24, 2017

Alternatives to single market membership

Are there shades of grey in the Brexit debate between the single market and an ordinary third-country trade agreement? Jean-Claude Piris has argued that there are none. So have we. 

We noted a letter to the FT in response to Piris by Michael Emerson, who pointed out two alternatives to the corner options. One possible model is the deep and comprehensive free trade area (DCFTA) with Ukraine, which includes the possibility of what is described in the treaty as "full internal market treatment" for financial services, and some other services. The second model is the "Agreement on Conformity Analysis and Acceptance of Industrial Products" (ACAA) with Israel, which provides for mutual recognition of certified goods, without further checks.

The DCFTA requires Ukraine to accept EU rules unilaterally, while the ACAA is restricted to goods. We think the first would be even more problematic for the UK as it would allow no say in the regulatory process whatsoever. Ukraine has no financial services exports, but the UK is different. If the EU ever contemplated such an agreement, it would at the very least require the UK to maintain free movement of labour - which is why the DCFTA cannot be a model. A free-trade deal may incorporate elements of an ACAA deal for certain sectors, but it would not include services. The ACAA is thus not really a shade of grey, but a shade of black. It is a third-country trade agreement, only a little deeper.

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November 24, 2017

Are the Irish bluffing?

The BBC's political editor Laura Kuennsberg has a habit of infuriating some people, and she has done so again with an article in which she merely discusses the question of to which extent the Irish and the British are bluffing when it comes to the role of Northern Ireland in the Brexit negotiations. We think this is a perfectly legitimate question to ask. As we among many other observers have been pointing out, the British position on Northern Internal is internally inconsistent. It is impossible to have the UK exit from the customs union and the single market, no hard border between Northern Ireland and the Republic of Ireland, and no border in the Irish Sea. One of the three will have to be dropped. If the UK leaves the customs union, the EU will need to erect a hard external border somewhere. 

Kuennsberg observes that there are conspiracy theories on both sides of the debate. The conspiracy theory of the Brexiteers is that the EU is choosing Northern Ireland as the perfect anti-UK issue. The Brexiteers believe that the EU will, of course, not allow the negotiations to fail over Northern Ireland, so they will drop their demands at the last minute to pretend that they have made a substantive concession. She reports on rumours that the previous Irish government had negotiated some potential solutions to the Irish problem, but that these talks have since been abandoned. The Brexiteers suspect that this was done for political reasons - to keep an ace up their sleeve to bully the British before agreeing to move the Brexit talks to the next stage. Kuennsberg distances herself from those specific conspiracy theories, but does make the point that in any negotiation both sides are looking for leverage, and that outside appearances are often not a correct reflection of true negotiating positions. Both those observations are undoubtedly true.

Our main concern here is the risk of an accident. We have noted before that both sides are not always well informed about each other's political circumstances. The EU knows very little about the history of Northern Ireland, though they might be aware that the government of Theresa May is supported by a Northern Irish protestant party. If the EU puts its foot down - there are some indications that they might - the UK government could walk out, try to blame the EU for the breakdown, and prepare for a hard Brexit. This could then easily turn into a self-fulfilling prophecy, as many companies may then immediately trigger their Brexit plans. The UK underestimates the EU's solidarity with Ireland, and the EU underestimates how this could galvanise the hard Brexit lobby in the UK.

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