In the final part of Kieran Allen’s Brexit pamphlet, he looks at the economic fallout from Brexit and who should pay the cost, and discusses the potential for a 32 county Ireland, post Brexit.
A Weak Northern Economy
In the longer run, Brexit poses major problems for the two economies in Ireland. The North is a much weaker economy because its role in the manufacturing triangle of Manchester, Glasgow and Belfast has disappeared. It is more dependent on subsidies from Westminster than ever – an issue brought to the attention of the British public by the DUP’s success in squeezing another £I billion from the Tories as the price of their support. But EU money has also played an important role.
Roughly £3.5 billion has been allocated to the North in the current round of EU funds covering the period 2014–2020. The bulk of this, about £2.5 billion, comes through the Common Agricultural Payments that is paid directly to farmers. However, as in other parts of the EU, this disproportionately benefits the bigger farmers. Few will shed many tears if Lord Dufferin loses out on his £235,000 subsidy or poor Lord Dunleith misses his £137,000 hand out. But, for many small farmers, it is an entirely different matter, and unless there are other ways of supporting them, it could spell calamity. Other EU grants were used to promote peace and reconciliation. These were often used to fund community and voluntary organisations which play a vital role in working class life.
There will have to be a major struggle to ensure that these funds come directly from Westminster.
The Brexiteers have loudly proclaimed that they will make a saving on Britain’s net contribution to the EU of £9 billion. In rhetoric, they said that a considerable proportion of this would be allocated to the NHS, but the Tories have little desire to fund public services. They will be even less willing to fund a state-dominated economy in the North. They will, quite simply, have to be forced to replace the EU funding.
The North will also be hit disproportionately by the imposition of tariffs on its trade with the South. The scale depends on the nature of the exit – whether there is a reversion to World Trade Organisation (WTO) rules, which imply higher tariffs, or whether Britain stays in the Customs Union. Overall, however, trade with the Republic accounted for 15% of the North’s exports of goods and services. By contrast, only 1% of the Republic’s exports went to the North.
Despite this, Southern capitalism will be hit hard by Brexit in other ways, with the IMF warning of the loss of 50,000 jobs and a reduction in economic growth. There are three main reasons why there are major problems ahead.
Tax Haven Ireland
First, native Irish capitalism is weak and, despite decades of state subsidies, unduly concentrated in the agri-food sector. The Irish rich tend to be risk averse and like to invest their money in property or areas which provide income through guaranteed state tenders. When they take risks and move into production, they tend to concentrate on food. Yet this is precisely the sector that is most dependent on British trade – and most vulnerable to comparatively high tariffs if WTO rules apply. 40% of all agri-food exports go to Britain, and, in sectors such as mushrooms and cheese, it is even higher, at 90% and 60% respectively. Successive government have been championing the beef industry – with no regard for the danger of climate change – but 47% of the exports of this sector go to Britain.
Second, multinationals form the most dynamic sector of the Southern economy. These account for 90% of exports, with the pharma-chemical sector alone responsible for half of all Irish exports. This sector is often reliant on imports for its components, and these often come via Britain. The multinationals locate in Ireland because it offers a platform for exporting to the EU – but this often entails the use of Britain as a land bridge to the continent. In general, the health of the Irish economy rests on its position at the intersection between Anglo-American capitalism and the EU markets. As these pull apart, unforeseen dangers for Irish capitalism lie ahead.
The third problem is largely unspoken about in official circles, but it is probably the most crucial. The ‘success story’ that is Irish capitalism is built around its role as a tax haven for global corporations. Giant US firms get away with paying a tax rate of under 6% on their profits because of the specially created loopholes designed for them by the Irish state. A whole army of accountants, tax planners and solicitors, who have access to the Revenue Commissioners help, point the way to tax-free profits. One result is that Ireland has become an important hub for financial speculation as hedge funds benefit from special Section loopholes to avoid paying hardly any tax.
The Irish state got away with these practices because it was so small that it flew below the radar screen of the other EU states. But there has been growing pressure to change this because countries like France and Germany regard this as tax dumping and as stealing from their state coffers. Up to now, Ireland has been protected by its main ally inside the EU – Britain. With the departure of the main proponent of deregulated finance, Ireland’s role as a tax haven will come under more scrutiny.
All of this means a period of considerable turmoil for Irish capitalism. But who will pay?
The political elite are already preparing the ground for more subsidies to business. The last budget, for example, contained a new €300 million loan guarantee scheme for business and a ‘complementary’ €25 million Agricultural Brexit Loan Scheme. Meanwhile, the Department of Business, Enterprise and Innovation is already claiming there will be a need for wage reductions. A special report it commissioned from private consultants looked at different scenarios and came up with the following:
‘In the WTO scenario, real wages will be 8.7 per cent below the non-Brexit baseline level in 2030 for low skilled workers and 6.5 per cent below the equivalent baseline level for high skilled workers. In the EEA scenario, impacts will be smaller, with real wages being 3.5 per cent below the non-Brexit baseline level in 2030 for low skilled and 2.6 per cent below for high skilled.’
Just as the wealthy used the Celtic Tiger crash – which they caused – to radically change conditions for workers, they will try the same again after Brexit.
Workers will have to resist these attempts to make them pay for the problems of Irish capitalism. Instead of cutting back on wages, we need to move beyond the low pay– high rent recovery that is causing real hardships, particularly for the young. To do so, we will need strong unions that are not wedded to social partnership or run by the Labour Party. We need public investment in jobs so that whole sectors of the Irish economy which are currently neglected by private capital – such as forestry, fisheries, home insulation or the generic pharmaceuticals industry – can provide jobs.
In brief, we will need to resist but do so with a new vision of an Irish economy that puts people before profit.
What to do?
The Tory Brexiteers and their battle with the EU create major problems for Irish working people. But so far, the debate, particularly in the South, has been centered on business interests. There is little talk about how it might affect the living standards of working people or strengthen partition in Ireland. Instead right-wing politicians are determined to use Brexit to strengthen their own positions. In the case of the DUP, this means turning Brexit into a question of ‘defense of the union’. In the case of Varadkar, it means donning the green jersey even as he operates as the puppet of EU leaders.
Against this, the radical left advances a different agenda. Our aim is to weaken and eventually overturn partition. It is to defend the living standards of working people on both sides of the Irish border. This means outright opposition to the DUP and their Tory Brexiteer allies. It also means dispelling any illusion that the EU – which encumbered the Irish population with a €64 billion debt to the banks – has suddenly become our friend.
So what can be done? There are two ways a hard border could happen. Either the British impose one, or the EU insists on it. Either could decide at any point that they want police checks for immigration or customs officials to ensure their tariff regimes are respected. Even if there is a deal on a customs union and backstop, it may be time-limited, and attempts will be made to extend border checks into the future. If there is no deal, either the Tories or the EU could move rapidly to construct border posts. No matter how it might happen, we are for active opposition.
If the posts are imposed on the Northern side, there will be a need for mass civil disobedience. This occurred in the past when British forces cratered unapproved roads in the 1970s and 1980s. They claimed that this was done to stop IRA infiltration, but armed groups of guerrillas could easily take to the fields and be picked up on the other side. In reality, the closure of roads was an attempt to strengthen a physical border and reassure Unionists that they had the support of the British army.
Many people living on the border saw this exactly for what it was. They saw no reason why their day to day lives should be inconvenienced to suit the propaganda of the British state. They organised mass civil resistance and took it upon themselves to reopen roads that were closed of. Tony O’Shea, who was a photographer who documented some of the actions, described what he saw:
‘These obstacles the British army placed couldn’t be moved without great difficulty. But that didn’t stop people trying to shift them, using whatever means they could: tractors, diggers, circular saws, spades, sometimes even their bare hands.’
This type of resistance may be required again, and it will need broad unity between those who oppose partition. Some will claim that mass peaceful civil disobedience will not be effective because it cannot overcome the armed strength of the police and, possibly, the army. Such claims are also likely to come from dissident republicans who think that armed struggle is more effective than mass action. However, the reality is that there are 300 major and minor crossings on the 499 km border. No state force could maintain and secure its posts on all of these. Determined mass action can remove as many as possible.
But it is not just a matter of leaving it to border communities. The trade union movement has opposed a hard border and said it is a threat to workers. They should call mass protests – including strike action – across the island to prevent it happening. This type of all-Ireland action has a history of some success. When tens of thousands of workers gathered outside the British embassy in 1972 and burnt it to the ground, the British state was so frightened that they moved rapidly to prorogue Stormont. Should any attempt be made by the British government to impose a hard border, similar mass action can drive them back again.
The Irish Dáil should be asked to openly support such protests to add to their legitimacy and the numbers involved.
But what if the hard border is imposed by the EU? What if the Southern state decrees that customs posts are necessary?
The Irish government is currently hiring additional customs officials to be deployed at ports and airports and extra staff to carry out checks on agricultural produce and animals travelling between Ireland and the EU after Brexit. It says that these staff will be used at ports and airports – in other, words between Ireland and Britain but not between the North and South of Ireland. But when listening to right-wing politicians, it is always important to look at the exact words they choose. Here is how the Irish Times reported Varadkar’s announcement:
‘The European Union has reassured the Government that no physical checks will be needed on the Border even if Britain crashes out of the union without a deal, Taoiseach Leo Varadkar has said. Mr Varadkar said that such a ‘doomsday scenario’ would mean that the ‘commitments of others’ would have to be relied upon to prevent a hard border on the island of Ireland.’
That was in July 2018. He was basing his claim that there will be no hard border imposed on the Irish side on a reassurance from the EU and on the ‘commitments of others’.
But in November 2018, as he basked in positive publicity after the draft withdrawal deal was announced, he changed his tune. He said ‘I think in a no-deal scenario it would be very difficult to avoid a hard border. As Ireland [is] remaining part of the European Union, we would no doubt be required to implement European law’.
In other words, he was now admitting that the Irish government would follow the orders of the EU and impose a hard border on its side. This, however, is totally unacceptable. To prevent this, we need to build up political pressure on the establishment. Here are a few things we can demand:
1. The Irish government should be forced to declare immediately that it will not cooperate with any border guards. It should state beforehand that no immigration or customs officials will be deployed in a no-deal scenario.
The Irish government should be answerable to the people of this island – rather than serving the EU. Varadkar can talk as much as he likes about ‘his gallant allies’ or his ‘EU partners’, but the reality is that the primary interest of the EU is an economic deal to its advantage.
The Irish people however, have a different interest. Brexit shows in the most glaring fashion the absurdity of partition and no Irish government should be involved in any action to strengthen it. That is why no Irish customs, police or immigration official should be deployed to protect a hard border’.
2. The Irish government should declare now that it intends to hold a referendum on any deal concluded between the EU and Britain as it pertains to Ireland. It should tell the EU that it will not sign up to any deal until its own population agrees.
This is a mechanism to prevent any duplicity and to ensure that, when people say they don’t want a hard border, their wishes will be respected and implemented. A referendum will help stop any backsliding by the Irish political establishment, and, whether they like it or not, it will strengthen their hand in the outcome of negotiations.
In general, EU treaties have to be agreed by a qualified majority of member states, meaning a certain proportion of votes. However, the European Council has also determined that the Brexit deal is a ‘mixed competence’ agreement – meaning, where competence is shared by a member state, ratification is required by the specific state affected, or by all member states. Ireland, therefore, has to ratify any deal in this scenario, for the EU to support it.
The EU and, indeed, the Irish government have already acknowledged that Ireland could veto a deal. Earlier this year, when Varadkar was asked if he would use the veto, he said:
‘A veto is something that you use when you are isolated, when you are on your own and there’s 26 countries against you…It’s the kind of European policy that Margaret Thatcher would have pursued, and we see now where that all ended up.’
Nobody wants anything to do with Thatcher – but Varadkar’s peculiar line of argument acknowledged that an Irish veto is possible. He should state now that he is prepared to use it, if necessary.
Beyond these two measures that the Irish government can adopt, there is a wider issue of democracy and national rights.
While England and Wales voted for Brexit, the people of Scotland and Northern Irelanddid not. The EU is trying to make the UK as a whole vote again – just like they asked the Irish to keep voting on the Lisbon Treaty until they came up with a Yes answer. They are being supported in their efforts by the Blairite wing of the Labour party who are using it as a way of undermining Jeremy Corbyn. The Irish radical left has no interest in asking people in England or Wales to vote again. Our hope is that a Corbyn led Labour Party will come to power and could move that country in a left direction.
It is a different issue in the North of Ireland and Scotland. The votes for Remain were linked to an assertion of national rights to independence in the case of Scotland and a deep distrust of rule from Westminster in the case of the North. At the start of the Brexit negotiations, Theresa May partially acknowledged the divergence within the UK by stating that representatives of Scotland and the North would be consulted on the final outcome. But this was a meaningless platitude. Respect for basic democracy would dictate that the people in these two areas must have a right to vote on the outcome.
In the Irish case, as we have seen, the Tory Brexit has become entangled with the question of partition itself, if for no other reason, because the DUP have framed the issue in these terms! Under the Good Friday Agreement, there is provision for a border poll and, should the majority assent to the ending of partition, the formation of a United Ireland. The problem, however, is that the British Secretary of State must first ascertain if a majority wants to ‘express a wish that Northern Ireland should cease to be part of 28 the United Kingdom and form part of a United Ireland’. This amounts to an effective veto by a British Minister and is unacceptable. At the current juncture, people have every right to hold such a poll. Instead of talking about having to ‘implement EU law’ Varadkar’s government should be telling Britain that it wants an immediate referendum on whether or not the majority in the North want to end partition.
Indeed, when it is conceded, it should be held on an all Ireland basis. In other words, the Southern state should facilitate a similar poll on a United Ireland on the same date. This would send out an important signal that a United Ireland should not be framed as a simple linkage of the North to the current 26 county state. As its own population have long recognised, the South is a corrupt entity where the rich place their favoured politicians in charge and ensure state funds flow to their coffers. It is also a state where the battle to uproot Church control of schools and hospitals has only just begun and needs to be completed. :hat is required, therefore, is a constituent assembly to found a United Ireland on an entirely new basis.
The plain reality is that, while political pressure can eventually force though the holding of a border poll, there is no guarantee that it will be won. This is because the current 26 county state offers little by way of substantial changes to the lives of Protestants. Few will vote for a United Ireland just because it offers a one way ticket into the EU. The prospect of joining an EU army or restricting public spending on schools and hospitals is hardly an attractive one. A long time ago, James Connolly saw this predicament, when he said:
‘When the Sinn Féinner speaks to men who are fighting against low wages and tells them that the Sinn Féin body has promised lots of Irish labour at low wages to any foreign capitalist who wishes to establish in Ireland, what wonder if they come to believe that a change from Toryism to Sinn Féinism would simply be a change from the devil they do know to the devil they do not know!’
Thus, while a border poll is simply a matter of democratic rights, a United Ireland can only come about through a movement from below that uproots the rotten structures of both states. Such a movement would challenge Ireland’s status as a tax haven for global capital and fight for a proper National Health Service, decent creches and a right to a home guaranteed by a state building programme for council housing. It will offer to working people on both sides of the border the prospect of a better life because it will be seen to serve their interests rather than those of the wealthy.
A United Ireland
Can it be done? The first hopeful sign has been the emergence of a county consciousness in new radical social movements. After the disgraceful outcome of the Belfast rape trial and then the Cork rape trial, we saw this. 32 county anger, organising and protest on the streets. Just small beginnings, but they contain within them the seed of an entirely different approach to Irish unity, which we saw too in Repeal. One that will be radical and won’t be about ‘wrapping the green flag around me boys’. It will challenge the awful conservatism embodied in the two partition states and seek to construct a better Ireland. Namely, a socialist Ireland.
Speed the day.