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The Irish State could pay Northern Ireland’s EU budget contribution in exchange for Associate EU membership – Hayes

The Irish State could pay Northern Ireland’s EU budget contribution in exchange for Associate EU membership – Hayes

Fine Gael MEP Brian Hayes MEP speech to the Institute of International and European Affairs in Brussels on the issue of challenges to Ireland from Brexit.

Predicting with any degree of certainly what the outcome of Brexit will be for Ireland, the UK or the EU is a very dangerous game. That is especially the case for politicians. However, I think we can all agree with Phillip Hammond, who recently described the upcoming negotiation between the UK and the EU as “a roller coaster ride”. That is putting it mildly.


The EU is a very different place now since June 23rd. We cannot pretend otherwise. Brexit is a major geo political event that cannot be under estimated. Its effects will be felt well beyond the boundary of the EU. The EU will shortly lose not just a Member state, but a big Member State. A Member State that is crucial for investment policy, a Member State that is a net contributor to the EU Budget and a Member State that is only one of five in the EU that has Triple A status. Well for now at least.

Brexit is the greatest foreign policy challenge that Ireland has faced since joining the EEC in 1973. We could only join the EEC when the UK joined in the early 1970s. And the question will inevitably be asked now – can we in Ireland remain in the EU now that the British are leaving?

It is an honest question that many people will ask and it deserves an honest answer. Those of us, who believe that Ireland should remain at the heart of the EU post Brexit and integrate further, need to be able to answer this question openly and honestly. People who ask this question should not be treated as “crazies”. It is a legitimate question to ask and have answered.

So let me set the scene for you. Uncertainty and instability are now present features of the political landscape. Currently Ireland is trying out New Politics for better or for worse. How long this government will last depends upon the principal opposition party in Ireland. What we can predict is that Brexit with its fallout and negotiation – will be a constant in Irish politics in the years to come and will definitely extend beyond the lifetime of this government and Dail.

The cohesion of the UK itself is being loudly questioned in Scotland. Indeed the ongoing standoff between Theresa May and Nicola Sturgeon will be one to watch. The EU is beset by internal and external challenges, which will stretch EU decision making, and the cohesion of the Union to its limits in the years ahead. The centre parties that created and sustained the EU – building from the centre its social market economy – are under assault from the right and from the left.

Britain needs to listen more

In politics language and tone matter. Some British politicians seem to have a tin ear when talking about the EU. The British PM, Theresa May, has said she relishes being called “a bloody difficult woman”. Liam Fox has referred to EU citizens currently working in the UK as “bargaining card” in future negotiations. The new Home Secretary, Amber Rudd, has spoken of requiring companies to keep a list of foreign workers. The head of the London Met has admitted there was a significant spike in reported hate and race related crimes post Brexit.

All of this has made the time since the June 23 a very difficult backdrop to the looming negotiation. Other Member States see all of this and are not impressed. A hard Brexit will be felt most in Ireland and in the U.K. There are no winners from a hard Brexit.  More than 40% of British exports go to the EU and of course, Britain imports more than €200 billion per annum from the EU. Both sides have a clear interest in keeping open trade borders

Currency – The Big Risk

The single biggest risk to Ireland’s economic wellbeing is the Sterling euro exchange rates. This day last year, Sterling was worth €1.36 – today it is about €1.11. A year ago, the Euro was worth around 74p sterling – today’s it is about 90p. It is about a 20% depreciation in a year. These fluctuations, especially for an export country like Ireland, represent a major problem.

When the Euro goes higher than 85p Sterling, the Irish economy begins to hurt.  We were here before in 2008. Then as the economic crisis unfolded, the ECB foolishly raised interest rates driving up the value the Euro. Late in 2008, the Euro almost reached parity with sterling.

Some of you will remember the immediate and very negative consequences for retailers In Dundalk and other border towns. Irish exporters to the UK took a big hit and tourist numbers from the UK showed a sharp decline during 2009 and took several years to recover.

The truth is that for Ireland emerging from the financial crash – we were greatly helped by a weak Euro against both the dollar and sterling. It was a great boost to our exporters. Also the fact that both the UK and the US were growing at a much stronger rate than other Eurozone economies was a crucial element in our economic come back.

Ireland has no control over exchange rates.  We can however do two things. We need to put in place a mechanism where SMEs exporting to the UK can insure against extreme currency fluctuations. Exporters also need help in trying to increase exports by the SME sector to Eurozone countries – we should possible extend the existing tax break for businesses exporting to BRIC countries that was introduced in a previous budget. It is worth highlighting that while the UK is our biggest trading partner – our combined exports to the other 26 EU Member States is actually greater in volume and worth then it is to the UK. It is an indication of the road we have to travel.

Northern Ireland

Last week Charlie Flanagan, Minister for Foreign Affairs, said the Irish government would be seeking a special status for Northern Ireland in the context of the Brexit negotiation. The EU has played a central role, politically and financially in the developed of the peace process.

I believe finding a creative solution to what is a real Irish problem should be central to the negotiation.  At some stage, the Irish government will need to spell out what they mean by a special status for Northern Ireland.

It was interesting to note the positive remarks from Jeffrey Donaldson, DUP MP, to Charlie Flanagan’s interview in the Irish Times. He said and I quote; “what we’re really looking for is a special deal for the island of Ireland which enables free movement of goods and people on the island of Ireland”. I regard this statement by Jeffery Donaldson was very significant in recognising the importance of the all Island economy.

Firstly, the Constitutional position of Northern Ireland is guaranteed under the principal of consent. It is the cornerstone of the Good Friday Agreement and represents the historic settlement of this generation. The only way the status of Northern Ireland can change is by a majority of the people wanting it to change. That is not evident from recent elections and those parties trying to use Brexit to demand a “Border Poll” are once again showboating and playing to the lowest common denominator.

Therefore, the constitutional position of the North is not in question, but the question remains how can Northern Ireland’s economy and the benefits of EU membership be obtained by its citizens if Britain now exits the EU via hard Brexit? If Britain exited without agreement on a customs union – a possible outcome – then the border would become a de facto reality again in terms of customs posts dotted along the border.

Taking up the challenge set by both Minister Flanagan and Jeffrey Donaldson – can a way be found to get a special deal for Northern Ireland?

Would it be possible that some type of EU Associate membership for Northern Ireland could exist along the lines of what Norway has negotiated? Membership of the EEA where possibly the Irish State could pay Northern Ireland’s EU budget contribution in lieu of Northern Ireland being able to trade on full or limited terms into the EU? Are not the arguments for Northern Ireland similar to the arguments for Gibraltar? Both land borders represent a major disruption to trade and the single market in a circumstance where the U.K is leaving the EU.

I believe that all options need to be on the table without questioning the fundamental and overarching reality that Northern Ireland is part of the UK and will be until a majority of its citizens decides otherwise. There are particular arguments about the need to provoke a genuine private sector economy in the case of Northern Ireland as it comes out of 40 years of conflict. These are European regional arguments that the EU fully understands.

Ireland’s role in negotiations

Negotiations on Brexit matter greatly. Of all the 27 remaining Members in the EU we have most to lose if negotiations go sour. There is €1.2 billion of trade between Ireland and the UK every week.

We have a common travel area between our two countries, which pre-date both our entry to the EEC. I think it is very important that Ireland have a senior official as part of the EU Commission negotiating team.

Our aim must be the most amicable divorce possible and Britain and the EU working co-operatively during and after negotiation. In this regard, Ireland needs to build alliances with other EU countries, which will have a particular interest in the Brexit negotiations – Denmark, the Netherlands, Sweden, and Portugal.

The Opportunities

There will be opportunities for Ireland in this new environment. In any period of change, those who survive and prosper are those who best adapt to the changing external environment. I have already spoken about the attracting EU institutions now based in Britain, the European Banking Authority for example, to Ireland. I know for a fact that there is a steady stream of UK solicitors applying for membership of the Incorporated Law Society of Ireland. Other British professional wishing to function in the EU post Brexit may also be looking at membership of Irish regulatory and professional bodies.

And between 5 and 6 million British people are entitled to an Irish passport. After the referendum passport applications from the U.K have surged. If Ireland is to succeed in the challenging times ahead it must remain an open, welcoming, competitive country for FDI and international talent.

I also think we need as a country to revive our 1970s love affair with Europe. We need to bring some sparkle back into the relationship. We have lost a lot of political capital in Europe in recent years, especially recently over the Apple case. There is a lot of fence mending and alliance building to be done by Ireland at EU level.

I think Irish public opinion has also been negatively influenced by almost three decades of vicious anti-EU coverage in some sections of the British media. Membership of the EU has been transformational for Ireland, the Eurozone is our currency, and the EU is our Union. Our future wellbeing is intimately tied to the future of the EU.

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