The Irish government are entitled to congratulate themselves on their achievement in persuading the EU 26 to declare that if the North joined the Republic the new state would automatically inherit the Republic’s membership. Dublin hastens to add that this incorporates the consent principle enshrined in the GFA and they are opposed to an early border poll.
But the future of the open border is a completely different issue. Irish Times coverage ranges from euphoria about the declaration to nervousness about the EU’s opening position on the Brexit negotiations. This from Cliff Taylor headlined:. Is Ireland really top of May and Merkel’s Brexit agenda?
But the problem is that when the talks get down and dirty as it will – it is not clear how much this will count. There is a significant risk that the Brexit negotiations could hit trouble early on, over the size of the Brexit divorce bill which Britain must pay. And beyond that there is a complete lack of clarity over whether Theresa May’s government is willing to make the kind of concessions which would make a softer Brexit possible.
If the talks dictate a “hard” Brexit – either via negotiations or worse via a collapse of negotiations – then we will be exposed. We need a plan B to try to limit the damage – and to capitalise where we can in areas such as the attraction of financial services. And a taoiseach heading for the exit door is not in a position to lead the urgent development of this.
In the case of a hard Brexit, a Border of some kind will return. And the outlook for trade with the UK will be severely damaged. This is why part of the Irish case is to push the EU not to go too hard on the UK in relation to the exit bill. We need these talks to stay on the rails.
On Radio 4 ‘s Today programme David Trimble in mischievous mood, pointed out that as the UK was going for completely free trade, it would be the EU and not the UK that would levy tariffs. Any customs checks therefore would be imposed south and not north of the border.
As for Irish unification, Dublin’s argument in favour of the of precedent of German reunification is impressive but not altogether helpful. This article in Der Spiegel typifies the general verdict and draws attention to daunting economic problems that identity junkies tend to ignore.
The year after the Berlin Wall fell, East Germans got “shock therapy” in the form of abrupt capitalism after 40 years of a state-controlled economy. Twenty-five years ago today, East Germans adopted the West’s Deutschmark as the fiscal stage of the country’s reunification began, and the effects are still felt today. As Greece grapples with possible default and an exit from the euro zone, it’s the perfect time to remember the lessons from the Deutschmark.
When the idea of fiscal unification first started floating around in early 1990, a popular chant arose in East Germany: “Kommt die D-Mark, bleiben wir, kommt sie nicht, geh’n wir zu ihr!” (If the Deutschmark comes, we’ll stay here; if it doesn’t, we’ll go to her).
The public demanded a one-to-one exchange, and on July 1, 1990, the banks in the former GDR opened to lines people waiting to get their hands on Deutschmarks at the unbelievable exchange rate of 1:1.
The radical privatization and rapid introduction of foreign trade constituted a deadly one-two punch to the East German economy. By the mid-’90s, East German industrial production had fallen 27 percent from 1988 levels, Ther writes. Thousands of enterprises went bankrupt, and in many regions unemployment rose to more than 30 percent.
Fiscal reunification wasn’t an easy ride.
In the four years after reunification, 1.4 million East Germans left their homes, negating the common assumption that a fast fiscal reunification would prevent a mass exodus from the GDR. The crash of the East German economy overwhelmed the federal budget and taxed the already overloaded social system. A sharp increase in social inequality was the price of reunification, along with an economic gap between old and new German states that has still not evened out.