No Deal alarm is rising on both sides of the border

Ah the old, old days!

With so much concentration on the Westminster bubble, it’s easy to forget that the pressures of Brexit operate in several directions. Cracks in the facade of unity among EU 27 are appearing on the surface as the prospect of No Deal by default refuses to go away.  Irish alarm is by no means unique. As everybody always knew, solidarity with EU 26 leaves the Republic uniquely exposed to a particularly  inelegant game of  political poker with  huge stakes. Now No Deal in a couple of months time is looming as the horribly real default rather than the negotiating tactic favoured by hard line Brexiteers which Theresa May – even now – refuses to rule out. Hopes are pinned on the prime minister winning MPs’ conditional support for the withdrawal agreement in exchange for still unspecified concessions over the backstop from the EU.  Extending Article 50 might shuffle the pack, but nobody can even guess the winning hand.

The Republic appears helpless, Leo Varadkar’s  “ troops on the border” gaffe, a symptom. But he may have spoken more than he knew, if the Times report is accurate.

MI5 has more than 700 officers stationed in Belfast as part of a huge intelligence operation to combat the threat of dissident republican terrorism. The spy agency’s main target in Northern Ireland is the so-called New IRA, a group of about 40 hardliners that detonated a car bomb outside a courthouse in Londonderry last weekend. The terror group, which is set on exploiting any return of a hard border in Ireland to create “renewed conflict”, is the most active and dangerous paramilitary group in the province.

On the current Brexit standoff, the FT’s overview report states

EU officials are worried about member states conceding too much to Britain, undermining the logic of the single market and the bloc’s bargaining power in future trade negotiations. But, with the scheduled Brexit date of March 29 just nine weeks away, one EU diplomat involved in talks said “self interest” was beginning to prevail for many capitals. A more accommodating approach to contingency measures could provide British hauliers with more operating freedoms within the EU market, as well as granting UK airlines a broader range of flying rights than the basic point-to-point arrangements backed by Brussels.

The central bank of Ireland, the EU27 country most directly affected, warns such a scenario could pose “immense” economic threats….

But the commission’s strict approach to maintaining only “basic” connectivity for planes and trucks — which would only allow such vehicles to go to a single destination and come back — has proved too austere for some member states, which fear it would hurt EU industries and create unnecessary disruption.

Spain urged the EU to avoid being “too rigid” in areas such as airline access, since it would “harm our own citizens and businesses”, according to the diplomatic note of the meeting.

France warned that suddenly removing so-called “cabotage” rights from UK hauliers, which provides more operating freedom within the EU market, would substantially increase traffic flows through the Channel tunnel and cause serious problems. Without offering such rights, EU hauliers could also potentially lose access to intra-UK business, an important market for the French sector. Belgium, the Netherlands, Denmark and Ireland stressed that the remaining 27 EU member states should show discipline and unity over the contingency measures, and avoid “mini-deals” with Britain.

RTE’s Tony Connelly goes to the heart of the dilemma behind the near panic triggered in Dublin by that now notorious statement of the obvious by the Commissions’ chief spokesman.

On Tuesday the European Commission spokesman Margaritis Schinas was pressed by Irish Times journalist Paddy Smyth to spell out what would happen at the Irish border if there was no deal.

“You’d like to push me and speculate on what might happen in a no-deal scenario in Ireland,” said Schinas. “I think it’s pretty obvious – you will have a hard border.

It was instantly awkward for the Irish government

Ireland’s strategy has been to avoid a hard border by convincing the EU to make it a precondition of Britain’s withdrawal. Britain’s resistance to that precondition could bring about the hard border.

This paradox forced Ireland into saying it has no contingency plans as a way to keep pressure on the UK, but also to avoid the obvious political risk at home.

Contingency planning would leave Leo Varadkar exposed to attacks from Sinn Féin and Fianna Fáil.  

Yet, the claims that Dublin is not making contingency plans also plays into the hands of the DUP and assorted Brexiteers who have claimed that because Dublin and Brussels weren’t serious about erecting a border, even in the event of no deal, the backstop was unnecessary and a trap to keep the UK in a permanent customs union.

Before we look at what may happen at the Irish border, let’s look at what will happen at another border, Dover-Calais in the event of no deal

On the UK side, some companies already trade outside the EU so are familiar with customs formalities. HMRC estimates that there are 140,000 companies who only trade with the EU. These are the companies they know about, identifiable because their turnover is above the VAT threshold of £85,000.

There are a further 100,000 companies that they don’t know about. Trucks turning up in Dover without a customs declaration will add to the challenges. Could Calais simply wave stuff through?  The EU customs code says member states bordering third countries must ensure an “adequate degree of control.”

What happens when we transpose Dover-Calais to the Irish border? Officials say there is “no way” the EU can start insisting that Dublin close some of those crossings in the event of no deal.

Yet, under WTO rules the EU and UK will jointly have to define their trading arrangements and their only land border. While Brussels can anticipate – and talk about – the volumetrics of the Dover-Calais crossing and try to prepare accordingly on the EU side, the 500km Irish land border, with its 200 crossings, is an entirely different creature.

In the wake of Tuesday’s remarks, Michel Barnier scrambled to repair the damage – if that is the right word – but only raised further questions.

“We will have to find an operational way of carrying out checks and controls without putting back in place a border,” he said in a speech in Brussels.

However, in an interview with Le Monde, he added:  “We would be obliged to carry out controls on goods arriving in the Republic of Ireland. My team have worked hard to study how controls can be made paperless or decentralised, which will be useful in all circumstances.”

What was he referring to?

Most observers suspect he was referring to the provisions within the Withdrawal Agreement on managing goods moving from Great Britain to Northern Ireland in a backstop scenario, in other words the “dedramatized” light-touch checks which the Commission had highlighted last autumn as a way to make the backstop less intrusive.

Was he now suggesting this method would simply be transposed to the island of Ireland.  Whereas the concept of “away from the border” in the Withdrawal Agreement referred to the Irish Sea (checks would happen “in the market”, in other words away from Liverpool Port), could this mean away from the land border?

EU sources say that in a no deal scenario such an interpretation cannot be excluded.

The European Commission has already notified other member states about no deal planning using a set of six principles, including the insistence that preparations must be unilateral and in the EU’s interests.

“You can use the spirit of the backstop,” suggests one source, “and the kind of methodology it foresees: decentralized, de-dramatized checks, but on things you can do unilaterally, trying to mitigate as much as you can, but with the same principles which are being applied to other member states.”

What would performing checks “away from the border” mean on the island of Ireland?

Irish officials are dismissive of the idea that the Joint Report can be somehow salvaged and applied unilaterally by London if there’s no deal.

They acknowledge that if the UK wants to establish a trade relationship with the EU once the dust of no deal has settled, that the Irish border question will loom large, even as a precondition for talks.

But the acrimony and recrimination from a no deal scenario blamed on the backstop would, according to one UK source, cast it in such a poisonous light that it could take years for the issue to be revisited.

However, a no deal situation could be so corrosive to the UK economy that an entire rethink cannot be ruled out either.

Next week all eyes will be on the amendment by the chairman of the backbench 1922 committee Graham Brady, which says the House of Commons will accept the Withdrawal Agreement if the backstop is removed and replaced by an alternative method of avoiding a hard border.

There are signs that it could command a growing level of support among the Tory backbenches and the DUP, and it could give Theresa May an option to return to Brussels promising that this time she can deliver Parliament.

The misstep (or whatever it was) over the Irish border and no deal has put the wind in the sails of Brexiteers who may well believe the Prime Minister might just pull it off.

Connelly’s analysis is largely endorsed by Cliff Taylor of the Irish Times

The huge stakes at play for Ireland were underlined by the Central Bank, which warned this week that a no-deal Brexit would cost Ireland 4 per cent of GDP in the first year – an €8 billion economic hit including huge disruption. The speed at which it said a no-deal Brexit would hit was particularly notable and it is the first time an Irish official body has done this.

There is a big difference between losing 4 per cent of GDP over 5 years, as the Department of Finance calculated in the case of a softer Brexit, or 4 per cent in one year. One is a nuisance, the other would cost a lot of jobs and likely lead to a supplementary budget.

Plunged into a no-deal scenario, the choices would be stark . Here is the second point where the Taoiseach would face a really big dilemma. The EU will insist that checks and controls are in place on goods entering from the UK.

If we don’t do them, then sooner or later the EU might well say they must take place at continental ports and airports, moving us at least halfway out of the EU trading bloc.

Economically this would be a disaster, putting new barriers up to our biggest market and blowing a big hole in our marketing programme for inward US investment. Where do we fall if we face this choice between peace and profits?

Because this would be so explosive, the Government has been arguing that in the event of a no-deal Brexit there would be pressure on the UK to ensure regulatory alignment North and South to help avoid a hard border.

Perhaps the backstop plan might re-emerge if subsequent talks took place to try to get things back on track, but how things would play out after a crash-out Brexit is anyone’s guess.

Irish politics will thus nervously watch as the House of Commons tries to find a way forward. It has been a tough week for the Government, but it may just be a foretaste of what is to come, unless British politics can somehow find a way to draw back from the brink.

Later 4.30 p.m

Jean-Claude Juncker has told Theresa May in a private phone call that shifting her red lines in favour of a permanent customs union is the price she will need to pay for the EU revising the Irish backstop.

Without a major shift in the prime minister’s position, the European commission president told May that the current terms of the withdrawal agreement were non-negotiable.

Details of the call, contained in a leaked diplomatic note, emerged as Juncker’s deputy, Frans Timmermans, said there had been no weakening of the resolve in Brussels in support of Ireland, and accused the Tory Brexiters of a “cavalier” approach to peace.

“Let me be extremely clear: there is no way I could live in a situation where we throw Ireland under the bus,” Timmermans said. “As far as the European commission is concerned, the backstop is an essential element for showing to Ireland and to the rest of Europe that we are in this together.”

Snap reaction.. this makes the Murrison amendment less of a get out of jail card, if most Tory MPs, the DUP and a few Labour MPs voted for it and the government as expected, accepted it

Tory MP Andrew Murrison’s amendment is arguably Mrs May’s best hope of salvaging her Brexit deal. It demands that the Withdrawal Agreement is amended to include an expiry date of December 31, 2021 for the backstop.

The indefinite nature of the backstop is the main hurdle to many MPs backing the PM’s deal and a sunset clause could be enough to get them on board. The amendment itself, signed by 32 backbench Tories, would not change the Withdrawal Agreement.

But if it was agreed by a majority of MPs, Mrs May could return to Brussels with a mandate for change and to show the EU that a deal is within reach if the bloc scrapped its opposition to renegotiating the Withdrawal Agreement.

It makes passage of the Cooper amendment more likely, especially if May concedes a free vote to Conservative MPs..

The bid to extend Article 50, spearheaded by senior Labour MP Yvette Cooper, is perhaps the most eye-catching of the amendments.

Brexiteers believe its backers actually want to stop Brexit entirely while supporters view it as a crucial safety net to stop a no-deal divorce on March 29.

The amendment would secure time in the House of Commons on Tuesday February 5 to debate a draft law tabled by Ms Cooper which, if agreed, would force the Government to seek an extension to Article 50 in the event no deal has been agreed by February 26.

The bill suggests an extension of nine months to December 31, 2019, but this could be changed.

The amendment has been signed by 78 MPs – mainly Labour backbenchers along with a handful of Europhile Tories – and any vote on it is expected to be tight.

Labour is expected to back it but a significant number of the party’s MPs who represent Leave-voting seats would oppose it. That could be enough to see it fall.