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Fear is mounting that Brexit’s impact will spill across the Irish Sea

PA - Credit: PA Wire/PA Images

With the clock ticking not only on Article 50, but also a UK general election, is Ireland the part of Europe with most to fear from Brexit’s fallout?

Ireland has long been seen as one of Britain’s closest friends in the EU. Not only do the two countries have longstanding cultural and political ties, which although not always happy have settled significantly in recent decades, but they are also major trading partners.

The Brexit vote has not yet changed this, but Ireland is increasingly nervous about a future without Britain in Europe, something that will have both economic and political implications for the country.

On the economic side of the equation, Brexit is expected to have a clear – and negative – impact on Ireland’s balance of payments. Although recognised mostly for agri-food and tourism exports, Ireland’s largest export by value is, in fact, pharmaceuticals, and the country is also home to significant export-driven software and finance sectors.

On the agri side, too, exports have moved away from livestock on-the-hoof to value-added meat and dairy products. The industry was one of the few to weather the storm and was worth €9 billion euros in exports during the depth of the slump in 2011, which followed the 2008 crash, with 83% of the sector’s exports going to EU countries – with by far the greatest proportion going to the UK. Other statistics – albeit with a slightly different definition of agricultural output – show 37% of exports going to the UK, with 32% to the rest of the EU.

One-fifth of the beef used by McDonald’s in Europe hails from the country, while milk, cheese, and drinks such as Guinness, Baileys, and whiskey are also strong performers. And it produces a tenth of all the baby formula consumed in the world.

Despite no longer being a labour-intensive industry, Irish farms directly employ around 130,000 people, with an estimated 170,000 in related industries and services, and account for 10% of the country’s manufacturing exports.

Britain is Ireland’s largest trading partner by volume, accounting for 36% of the total volume of overall exports, according to the Irish Central Statistics Office, with an estimated 400,000 jobs dependent on the relationship.

Surprisingly, Belgium accounts for a greater value of Irish exports – 14.5 billion euros compared with 13.7 billion euros to the UK – but these figures mask two facts. As much of this trade is pharmaceuticals, it is part of the foreign-direct investment sector into Ireland, and Belgium is not the end destination but the location of many drug companies’ EU headquarters.

Against this backdrop, then, the British Irish Chamber of Commerce faces an immense task to ensure trade between the two is not derailed by Brexit. The introduction of any tariffs, for instance, would be highly damaging for Ireland.

Although, as Gerry Horkan, a member of the senate – Ireland’s upper house of parliament – for centrist party Fianna Fáil, notes, Ireland’s trading relationship with the UK cuts both ways.

‘The UK exports to Ireland are more than Brazil, India and China combined at 1.2 billion euros a week,’ he said.

Horkan says he fears tariffs on beef and dairy products going into the UK could be as high as 50%, and this may drive movement directly to the continent.

And here is the rub. Despite the obvious perils, and the closing of some doors, could Brexit actually open other doors, for more opportunities for Ireland? Well if so, no one is really feeling very confident about it.

While Ireland has sought – thus far largely unsuccessfully – to attract UK finance jobs, Horkan is not optimistic about Brexit banking bonanza for Ireland.

‘It is hard to see that the opportunity from Brexit will outweigh the threats, he said. ‘It will be fundamentally be very difficult for Ireland when Britain leaves the EU.’

The impact of Brexit on Ireland is not only economic, however. Irish politics has been in flux since the 2008 economic crisis and the current government is a minority administration loved and loathed in equal measure for its handling of the events.

It is also under pressure over allegations it mishandled claims that police were over-recording alcohol breath tests in an apparent effort to boost statistics. In addition, there has been significant protests surrounding attempts to impose water taxes, the public transport network was recently beset with strikes, and the capital city Dublin is suffering a chronic housing shortage.

If the impact of Brexit is going to be felt in other European countries – and it will – it will be felt most here. The result came as a shock in Ireland. Despite twice voting against EU treaties, the country has no significant eurosceptic movement and those parties which are critical of the EU, principally on the far-left, tend not to campaign against the bloc.

In fact the EU is widely seen as having contributed significantly to modernising the country, whether through structural funds, the European court judgement decriminalising homosexuality, or simply moving the country away from its isolation on the fringes of the continent.

Some have raised concerns about Brexit fuelling division in Northern Ireland, though it is difficult to see how Britain leaving the EU could spark a return to violence. Nonetheless, it is striking that in Northern Ireland republicans and nationalists have reacted to Brexit with horror and bafflement, whereas unionists have, on the whole, tended to welcome it.

The UK withdrawing from international co-operation is not something that is welcomed by Irish nationalists who have long viewed such arrangements as the next best thing to reunification.

‘It’s not just trade; the ongoing peace attempts through the Belfast Agreement could also be at stake,’ says Horkan.

Current Irish prime minister Enda Kenny has pressed Brussels to include measures in the Brexit deal to allow Northern Ireland to seamlessly enter the EU in the event of Irish reunification. But it is not clear, beyond this, just how much sway the Dublin government will have in Brussels.

In the Republic of Ireland, meanwhile, Brexit has caused much soul searching, asking not only what it will mean to be – with Malta – one of the only English-speaking countries in the EU, but also what it means to be Irish at all.

Since achieving independence from Britain, Ireland has struggled to define itself in the face of its powerful neighbour. As noted commentator Fintan O’Toole pointed out this week in The Irish Times, for decades being Irish meant simply not being British. What was once a nationalistic sentiment has now returned, but, he says, with Britain in the role of the inward-looking country.

Never a power on the international stage, Ireland could now find itself needing to make itself heard or else risk being overlooked by Europe’s major powers.

In this context, as far as many in Ireland are concerned, the softer the Brexit, the better. And recent events have given them little encouragement. Ben Tonra, professor of European politics at University College, Dublin, says he sees no reason to believe that Theresa May’s calling of a snap general election signals a shift away from her Hard Brexit strategy.

‘My money would be on her joining the hard right. There is nothing she has said that gives me the impression that this about gaining more latitude. It may be going too far to say she has the zeal of a convert, but she has been talking on the Hard Brexit side [and a] bigger majority will help her when the costs of a Hard Brexit come.’

So when it comes to Ireland’s Brexit, it really is a case of searching for crumbs of comfort. According to Tonra, one might be that it could force the country to take foreign affairs more seriously.

‘It’s a nightmare for Ireland,’ he says. ‘Our interests have coincided too much with the UK, and we let them do the heavy-lifting while we hid in the shadows It does force us to grow up and do more serious bilateral diplomatic work in [say] France and Spain and Poland.

‘We also have to improve out bilateral relations with the EU rather than relying on the EU for them,’ he adds, likening the Irish approach to pilot fish following sharks to pick-up scraps.

In the end, though, economics remains the principal concern for Ireland. The country has not ignored the single market, but its interaction with it has tended, agri-food aside, to be at the level of exporting the outputs of foreign-direct investment rather than the indigenous sector, which has a focus on the UK.

‘We’ve presented ourselves as the avant-garde of American and Japanese capital in the EU. On the SME [small and medium enterprise] side we have not been so good,’ Tonra says.

Despite the obvious attachment to the UK, and sadness at Brexit, Theresa May’s negotiators can expect no sympathy or sentiment from Ireland, as Britain’s divorce terms are thrashed out.

‘Friendship doesn’t come into it all,’ says Tonra. ‘And, besides, the last thing we want to be seen as is a British lever over the EU 26. We will go to the ends of the earth to stop that happening.’

Jason Walsh is the former Ireland correspondent of the CS Monitor newspaper in Boston, and has written about Ireland for The Irish Examiner, The Independent, The Washington Times, El Mundo and other newspapers. Bryan Fox works in radio in Dublin, and previously worked for WNET 13 and The Irish Voice in New York.

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