Stephen Collins: UK vote poses enormous challenges for Ireland

Brexit will test the viability of the fragile structure supporting Enda Kenny’s minority government

Mark Paul and Joe Brennan look at how Brexit will affect the Irish economy.

 

There is some irony in the fact that on the 100th anniversary of the 1916 Rising, England has severed its key connection with us. Now, whether we like it or not, we are going to be far more dependent on our “gallant allies in Europe” than ever before in our history as an independent state.

There are many reasons to be apprehensive about what will happen in the years ahead but no reason to panic. Ireland has done far better as a member of the European Union than ever before in its history so there is no dilemma about remaining on despite the departure of our nearest neighbours.

Although we achieved independence in 1922 Ireland remained a poor, impoverished state utterly dependent on the UK until we joined the precursor of the EU in 1973. It was only after we broke the link with sterling in 1979 that Ireland really moved ahead to become a confident, relatively wealthy, modern state.

No serious Irish politician has advocated following the UK down the road to isolationism, so there will be a broad political consensus in favour of doing whatever it takes to stick with the EU regardless of the stresses and strains involved.

However, the decision to leave could have serious consequences for Irish politics. While the impact on the Dáil parties will obviously not be as serious as the political fallout in the UK, it will test the viability of the fragile structure that is supporting Enda Kenny’s Government.

If there is a Europe-wide recession or another banking crisis as a result of the UK decision, the Fine Gael-led minority Government will probably find it impossible to get the support of the Dáil for the appropriate response.

Economic crisis

Political instability now threatens to rear its head across Europe, with a Spanish election in full swing, an Italian referendum on constitutional reform this autumn and elections in France and Germany in the next 18 months.

A series of events outside our control could result in drastic shifts of direction in the EU as it struggles to survive in the brave new world created by the British exit. That in turn could have knock-on effects for us, including a new direction for Northern Ireland.

The decision of the British people to leave was the nightmare scenario feared by the Irish Government ever since David Cameron made the decision to put the issue to a referendum in a misguided effort to appease the Eurosceptics in the Conservative Party.

Ministers gathered for an emergency Cabinet meeting yesterday to assess the potential scale of the damage and the actions this country needs to take to protect its position in the days and weeks ahead. As well as the immediate implications arising from fluctuations in the euro/sterling exchange rate they will have to plot a longer-term strategy to try to protect Irish interests.

Two key elements of the strategy are clear. Ireland must remain in the EU and close to the heart of the project while also doing everything it can to make the British exit as smooth as possible. It is in our interests that the future relationship between the EU and Britain is as good as it is possible to be in the circumstances.

The precise nature of the change in the relationship will take at least two years to negotiate, so there will be time to devise the best possible strategy.

The problem is that a great deal will already have happened by the time the complex negotiations to extract the UK from Europe are concluded.

Dublin MEP Brian Hayes was right to describe the referendum result as “a massive political earthquake” and pointed to the euro/sterling exchange rate as an immediate danger to Ireland.

A steep fall in the value of sterling would have extremely negative consequences for Irish exports to Britain.

The bigger issue is the threat to Ireland if the future of the EU itself is now in doubt and that goes far deeper than trade.

Fianna Fáil leader Micheál Martin has called on the Government to be clear that Ireland will not be following Britain out of the EU, but there is no question of that.

The political, economic and social case for remaining is overwhelming, but the challenge facing the Government is what it can do to minimise the impact of the momentous UK decision.

The fact that the decision will have more impact on Ireland than on any other EU country is well understood in Brussels but it will need to be emphasised at the summit of EU leaders which will take place next Tuesday and Wednesday.

The Irish Government will have to be deeply involved in the complex process of establishing a new political and economic relationship between the EU and the UK.

One of the issues to be considered is that acting as a positive mediator in future British-EU negotiations is very much in Irish interests whatever the immediate fallout for British politics, which will be dominated in the short term by the battle to succeed David Cameron.

Border controls

The future relationship between the two parts of Ireland is another huge challenge. The most likely response of the next UK government to the exit decision will be to impose strict Border controls, but they are likely to be between the two islands rather than along the 499km frontier.

The constitutional position of Northern Ireland will be another live issue. Sinn Féin has been campaigning for a Border poll on the way to a united Ireland and the party will push that agenda much harder now. If there is a referendum on Scotland to leave the UK, it will fuel the demand for a referendum in the North.

The Government and the Irish people face a whole variety of enormous challenges as a result of the UK vote. Calm heads will be needed all round to avoid making an undoubtedly bad situation an irretrievable disaster.

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