12 November 2017

Financial Times: Ireland dispute stokes concerns about no deal on Brexit

[...] European governments and business should “get prepared” for a no-deal Brexit scenario, the EU’s chief negotiator has said, as talks over Britain’s departure from the bloc become increasingly clouded by disagreements over Northern Ireland.

Michel Barnier warned that a British hard exit was “a possibility” that cannot be ignored, with disruption to everything from airlines to the right of “cats and dogs to cross the Channel”.

“Everyone should get prepared for it, governments, companies — we are getting prepared technically,” he told Journal du Dimanche, the French newspaper. “On 29 March 2019, the UK will become a third-party country.”

The call for EU “preparedness” comes as Mr Barnier gave Britain two weeks to make a big financial offer — estimated to be up to €40bn — and as Dublin steps up its political demands over the future of Northern Ireland after Brexit.

With a deal on citizens’ rights in sight and an increased UK financial offer in prospect, Dublin’s hardening position has prompted questions as to whether the Irish question — the last of the three principal issues in the divorce talks — becomes the most intractable of all at a crunch summit in December.

The government of Leo Varadkar, the Irish prime minister, doubled down on its demands last week. It called for a five-year transition period and pressed for Northern Ireland to remain under the writ of EU customs and internal market rules — after the UK leaves the bloc.

Dublin is anxious about the lack of concrete proposals from London to avoid border checks on the Northern Irish frontier that could undermine the 1998 Good Friday peace pact.

However, Ireland has much to lose if Brexit talks fail and Britain leaves the EU without a deal. Steep WTO tariffs on €65bn in bilateral trade with the UK would deal a severe blow to the Irish economy.

“Strategically Ireland is in a difficult situation requiring very skilful diplomacy and politicking,” said Stephen Donnelly, Brexit spokesman for the opposition Fianna Fáil party.

“On the one hand it is in Ireland’s interests to say there is no moving on to phase two until we sort out the border, essentially calling out the UK . . . On the other hand, the longer it takes to get to the trade talks, the higher the probability of a disorderly Brexit which would be catastrophic for Ireland and Northern Ireland.”  [...]

Brussels has provided support for Dublin, circulating a paper that argued that Northern Ireland may need to remain inside the EU customs union and internal market to avoid a hard border. London immediately rejected the idea, saying the “maximalist” Irish stance came as a surprise.

[...] The tension in the Irish position was made clear on Friday when Brian Hayes, a senior MEP in Mr Varadkar’s party, hit out at the EU’s “uncompromising stance” and called for trade talks to begin quickly. “We cannot settle Northern Ireland and border issues without moving on to trade talks,” Mr Hayes said in a speech. However, the gulf between the Irish and UK governments seems to be widening. As part of a push to avoid any customs checks on the Irish border Mr Varadkar has called for “specific assurances and written guarantees”. [...]

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