Ireland hits Brexit alarm in biggest foreign issue crisis in 50 years
THE PRIME minister is under pressure, economists are slashing growth forecasts and companies are warning of Brexit’s dire consequences. London? No, Dublin.
The intertwining of trade and finance means no other country is feeling the fallout from the UK’s vote to leave the European Union more than Ireland.
In the year the Irish marked the centenary of their uprising against British rule, the country remains at the mercy of the unfolding drama in its closest neighbour.
“It’s the most serious, difficult issue facing the country for 50 years,” said John Bruton, 69, who was Irish prime minister between 1994 and 1997 and later served as the EU’s ambassador to the US.
Exporters have warned the plummeting pound will erode earnings and economic growth, just as a recovery had taken hold after the 2010 international bailout that followed the banking meltdown.
Irish shares have declined, not least because the UK is the top destination for the country’s exports after the US and the biggest for its services.
Meantime, Prime Minister Enda Kenny is fending off demands by Northern Irish nationalists for a reunification poll as he comes to terms with the loss of a key EU ally and plotters from his own party try to topple him. Then there’s the future of the UK’s only land border with the EU.
“The consequences are mindboggling,” said Eoin Fahy, chief economist at Kleinwort Benson Investors in the Irish capital.
Britain and Ireland joined the European Economic Community in 1973.
Ireland was drawn in part to escape what one politician called “our gate-lodge attitude towards England.”
More than four decades later, the two countries remain woven together economically as well as culturally and linguistically.
Ireland uses the euro, yet does about US$ 45 billion ( RM176 billion) of trade with the UK About 380,000 Irish citizens living in Britain were eligible to vote in the Brexit referendum. Britain also chipped in for Ireland’s bailout six years ago, despite not being part of the euro region.
When Theresa May took over as British prime minister last Wednesday, Kenny was among three leaders she spoke to, along with Germany’s Angela Merkel and Francois Hollande of France. Companies like Netwatch Systems thrived on those ties. From its base in Carlow, southeast Ireland, the video- surveillance company monitors more than 500 sites in cities like Birmingham, Manchester and London, sending live audio warnings to intruders. Netwatch, which ventured into the UK in 2007, generates about a fifth of its sales there.
The eight per cent slump in the pound against the euro since the June 23 referendum has hurt.
“We were all shocked” by the result, said David Walsh, 51, one of Netwatch’s founders. “We’ve come through a fierce recession over the last eight years and now another knock.”
The question is how Ireland’s politicians and executives react to what could be a foreign-policy crisis that eclipses the country’s banking collapse and bailout. It’s this scenario that prompted Kenny to create a government unit as early as 2015 dedicated to developing contingency plans for Brexit.
While proposals involved potential support for some exporters, the government admits it’s hard to prepare detailed plans before the exact nature of the UK’s new relationship with the EU becomes clear.
The most obvious issue is the 310-mile ( 500 kilometre) border between the north and the republic, stretching from about 60 miles up the eastern coast from Dublin to Derry in the north-west.
The annual Unionist celebrations last week in Belfast underscored just how delicate the balance still is in Northern Ireland, which stayed in the UK following Irish independence in 1922.
There were skirmishes between Protestant and Catholic gangs and a fake bomb tossed from a car window into the path of the parade.
The main parties split over Brexit, with the largely Protestant Democratic Unionist Party backing “Leave” and the mainly Catholic Sinn Fein campaigning for “Remain.”
The executive they run together in Belfast as a result of the 1998 Good Friday Agreement, which ended decades of sectarian conflict, had no position on the vote.
Political fault lines between the north and south were exposed days after the vote when Northern Irish opposition forced Kenny to abandon the idea of creating an all-Ireland Brexit forum, a misstep that stoked demands from within his own party to set out a timetable for his departure. — WP-Bloomberg