November 28, 2017
On the Northern Ireland question
It is not hard to see how the UK/Irish disagreements about the status of Northern Ireland could escalate. We would normally refrain from re-broadcasting soundbites, but this one from eurosceptic Labour MP Kate Hoey - on BBC Radio 4 - is particularly troubling because it plays into Irish conspiracy theories about UK policy. Here is what she said:
"If this ends with a no deal we won't be putting up the border, they'll have to pay for it because it doesn't need to happen".
As Channel 4's political editor Faisal Islam (@faisalislam) points out in a tweet, the Irish perceive this to be the unofficial policy of the UK:
"... leave Customs Union/ SM, change regulations, leave it to Dublin/ Brussels to enforce or not the Union Customs Code - EU gets blame for border."
Our experience with conspiracies is that they (usually) don't exist, but suspicions that they do often given rise to real externalities. We tweeted yesterday that it was wrong to think that the Irish are bluffing, but they may still be miscalculating. If Ireland blocks the second phase of the Brexit talks, we see one of two outcomes as likely: either the EU, frightened at the real prospect of a cliff-edge Brexit, will cave in; or if not, the UK will decide to break off the negotiations with the EU early, and prepare for a hard Brexit.
We agree with James Forsyth in the Spectator, who writes that the British position is not the result of the Conservative/DUP coalition. Even if the Tories had a majority of 100, Theresa May would still not be able to accept an internal customs border within the UK. He reports that this was an issue that united the hard Brexiteers and the Remain-supporters in the Tory party, and he quotes one ministers as saying that Leo Varadkar was playing with fire. This, from Forsyth, sums it up:
"Dublin is taking a huge risk with its hardline approach. No decent UK government could agree to what it is demanding. It is therefore making the collapse of the Brexit talks more likely. If these negotiations do fail, the effect on Ireland’s economy would be dire."
Forsyth also made another interesting observation. The UK may be moving further away from the idea of regulatory equivalence. He quoted Philip Hammond as suggesting that the UK could benefit from regulatory divergence in a few selected industries (see more on the industrial strategy paper below). This is a rare case where Hammond's position is even further away from the EU as that of the Brexit department, which only wants regulatory independence for some service industries.