CAIN: Democratic Dialogue: Politics: Continentally Challenged (Report No. 5)

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Continentally Challenged

A smoother road to Dublin

The future of Northern Ireland as an EU region cannot be discussed with out addressing its relationship with the republic. But the republic has two other additional considerations: its relationships with Britain and with the wider union. And it is now frequently asserted that the republic's European aspirations may antagonise Britain, widen the economic and/or social gulf on the island of Ireland and so jeopardise its northern policy.[1]

Economic and monetary union offers an obvious instance, yet it demonstrates that this real concern may be overestimated. The argument goes like this. Suppose the UK decides not to join the euro-zone in 1999. The republic then faces two challenges. On the one hand, its progressive trade diversion from Britain to the wider Europe in recent decades and the political gains of coming out of the British shadow and joining the European core dictate a judgment to join the 'ins' in the first wave - despite the worries about the potential competitive threats to indigenous industry servicing the British market.[2] Commitment to a new, north-south relationship would, on the other hand, favour the minimisation of disharmonies between the two jurisdictions.

Yet no one doubts which of these considerations will prevail. And even the greatest enthusiast for north-south integration, on either side of the border, would have to accept the logic of a decision by the republic to join EMU promptly. As the director of a leading City firm pointed out, if the UK stays out in 1999, it will, in practice, have to operate an economic policy essentially similar to that it would pursue if it were in-would this, he asked, remain a credible stance? And a leading British corporate economist said that if the UK was outside the eurozone, then "the markets will test out sterling very quickly". This would lead to exchange-rate volatility, an interest-rate premium, higher inflation, continuing transaction costs - £30 million per annum going to "greedy bankers", rather than investment, from his company alone-and lower foreign direct investment. All in all, a highly unappealing prospect.

The commission president, Jacques Santer, obviously agrees with this logic. He told the Financial Times in December 1996 that no British government could resist the pressure from the City and big business to join the euro-zone.[3] In that sense, the republic's dilemma is, in the longer run, more apparent than real.

It thus has every reason not to follow its UK partner if the latter stays out in the first wave - even if, as the City man pointed out, this would mean the border for a time becoming a microcosm of the boundary EU-wide between 'ins' and 'outs'. That indeed looks the likeliest outcome, as an incoming Labour government would have to decide within weeks to rejoin the exchange-rate mechanism if it were to meet the requirements of joining the euro-zone on January 1st 1999. Asked about rejoining the ERM, the Labour leader, Tony Blair, told the Financial Times in January 1997: "We have no plans to do that."[4]

It is also true, of course, that a sustained drift towards 'flexibility' in the union could have serious dislocating consequences, were the Irish border to come to represent a major gap in social standards. Thus, there have been recent reports of French firms moving to Britain to avail of lower wage and social costs and a more deregulatory régime. Yet the reality is that Northern Ireland remains a far less attractive investment location than the republic for international capital - partly because of the low corporation tax régime in the south (which some in the EU view as a concealed state aid). And the timidity of the large member states in advancing the social agenda of the EU to date has meant that the impact of the UK's 'opt out' from the Maastricht social chapter has been minimal.

More positively, however, the EU context does help us to get our heads around the theoretical complexities raised by north-south institutions. James Anderson points to the much less propitious circumstances of earlier attempts at such institutional construction. In 1920, when a Council of Ireland was envisaged as part of the partition scheme, "the wider context was not 'Europe' but the British Empire, and the nationalist ideal was enjoying its finest hour as Woodrow Wilson presided over the creation of a battery of new nation states". Even at the time of the 1973-4 rerun, membership of the 'Common Market' was a novelty for both the UK and the republic.[5]

Just as supranationalists and intergovernmentalists are finding themselves frustrated by the 'untidy' evolving EU architecture, so neither nationalists nor unionists in Ireland are finding the evolution of the north-south debate quite to their liking: too pragmatic for the former, who have been very reluctant to flesh out what institutions they want; too robust for the latter, who fear stepping on to a 'slippery slope' to Dublin Rule.

In fact, as Paul Teague has explained, the EU experience provides no evidence for a deterministic assumption that economic co-operation must lead, willy-nilly, to political integration in Ireland. Yet, by the same token, nor does it validate a unionist political style based on "conflict and confrontation" towards the republic. Indeed, on the contrary, thick north-south institutional links could have a symbiotic relationship with the political stability of a new Northern Ireland.

Teague thus argues for

a form of north-south co-operation that stands apart from the main nationalist and unionist views on the matter. On the one hand, it rejects the nationalist preference for rolling integration as being neither feasible nor desirable. On the other hand, it sees the unionist position as a rather unsophisticated zero-sum approach to matters such as sovereignty, identity and pooled decision-making. Instead, it argues that the EU could help embed a symbiotic approach to north-south relations. This approach offers a possible compromise between the two opposing blocs . [I]f the various protagonists commit themselves to the search for a political settlement and forsake deeply held beliefs then the EU and European integration can help support the process. But ultimately the EU is only a concerned by-stander which suggests that it is up to those on the ground to secure the permanent Peace.[6]
Nor should it be assumed that the framework document has resolved these matters. A senior Foreign Office official confided that he had had no idea at the time of drafting how the proposed north-south co-ordination with regard to the EU was to work - the then foreign secretary, Douglas Hurd, had told him that the Northern Ireland secretary, Sir Patrick Mayhew, needed the provision for political reasons.

What help can we derive, then, from specific cross-border initiatives elsewhere in Europe? Sabine Weyand points out that central governments still tend to regard these as part of international relations and that regions can only take responsibility for external policy fields for which they hold internal competence. This highlights the proportionate relationship between the degree of autonomy of any new Northern Ireland administration and its capacity to pursue north-south co-ordination. A useful target of inter-regional agreements in Europe in this context has been to secure, through co-ordination, an outcome no less favourable than would have been achieved had the regions concerned been part of the same member state.[7]

Other, more negative, lessons comes from one of the grandest of inter-regional agreements, the 'Four Motors of Europe'. Founded in 1988, this brought together the powerhouses of Rhône-Alpes, Baden-Württemberg, Lombardy and Catalonia, yet its high expectations for high-tech synergy have not been borne out. In this light, neither the north-south political body envisaged in the framework document, nor unionist resistance to institutional links, stands up very well:

The approach they have taken could be characterised as a 'top-down' approach to co-operation. Projects have in general been conceived at a political level and do not necessarily address any particular need of the regions involved ... Co-operation is thus in effect limited to the public sector; economic and social actors, not to mention the public at large, are not actively involved. Institutions which might help to structure interaction and ensure continuity have not been established. Cooperation has therefore very often taken the form of ad-hoc events such as conferences or exhibitions rather than medium to long-term projects.[8]
By contrast, the longstanding 'SaarLorLux' association - embracing Saarland, Lorraine and Luxembourg-has been more successful. Integration requires 'social learning' on either side of borders, Weyand argues. "Associations such as SarLorLux ... with their extensive involvement of a range of governmental and social actors and their emphasis on creating contacts between the citizens of their regions, thus offer better chances for 'social learning' than purely or predominantly governmental associations, like, for instance, the 'Four Motors of Europe.

The key is to adopt a positive engagement. As Dunford and Hudson put it, urging "development of a Belfast! Dublin axis" on economic grounds, "A frontier location can be as much of an advantage in some circumstances as it can be a problem in others."[10] One European Commission official, while accepting the 'political realities' associated with the massive dependence of Northern Ireland on the Westminster subvention, nevertheless stressed how more could be done on the north-south agenda. While there had been a common chapter in the Single Programming Documents for north and south, determining the allocation of the current tranche of structural funds, this had not been developed. And the north-south socio-economic agenda had largely been left to the private sector, as with the Dublin-Belfast corridor plan.

Perhaps the most profound comment on this whole area came from a senior economist in the republic. Partition, he said, had led to a loss of economic synergies, a lack of inter-firm relationships and a breakdown of trust. These challenges were all tied up with making Northern Ireland a successful economic region. South of the border meanwhile, political energies in the infant Free State had been devoted to independence. Latterly they had focused on reintegration, first into the EU, then the British Isles and now in terms of north and south. It was the wrong way around, but "that's the deal that history cut us". The key concern on that north-south axis was to build personal trust - and in this the EU provided an honest broker.[11]

Here, the Institute for European Affairs has suggested an imaginative response to the wider European 'flexibility' dilemma:

Northern Ireland could be designated as a special region of the Union, entitled as a right to choose whatever Community policies best suited its regional interests from amongst the policy packages applying separately to the Republic and to the UK. This idea has already been advanced on the grounds that economic growth could be enhanced by allowing the Northern Ireland economy to dine à la carte off the EU policy menu.[12]
The head of the Northern Ireland civil service, David Fell, has similarly suggested, with greater reserve:
Some will probably argue that a Northern Ireland administration would be in the best position if it could choose, issue by issue in some form of ingenious variable geometry, whether to align itself with the Irish or the British position-the best of both worlds).[13]
As Dennis Kennedy has pointed out, taken strictly the IEA notion would require amendment of the treaties (since these recognise member states, not regions) and special arrangements for funding within the UK.[14] But if there were to be a relatively autonomous democratic polity in Northern Ireland, with maximum delegation of social and economic powers, then certainly there could be a policy openness, even without a formal EU recognition of special status for Northern Ireland. More difficult would be securing funding for programmes not supported by the British government - the scale of the Westminster subvention to Northern Ireland precisely arises from the longstanding 'step by step' formula of parity of provision with the rest of the UK - especially with the future of the region's 'objective one' status uncertain. The reality would have to be grasped of finding additional revenue internally.[15]

An even more difficult issue is how the republic would react to the sharing of sovereignty with the north implied by any move towards a joint approach to European matters. It was the former taoiseach Garret FitzGerald who first made this proposal, but FitzGerald et al percipiently point out that the framework document did not imply that the envisaged north-south body would deal with industrial promotion-where there could obviously be competition. "Against that somewhat discouraging background," they go on, "how willing would the Irish state be to share with Northern Ireland its sovereignty over the most crucial area of its foreign policy?"[16] In his Charles Carter memorial lecture in Belfast in 1994, Will Hutton astutely pointed out-however bitter a pill it was for his audience to swallow-that the north had come to be seen in the south as "a problem rather than a prize".[17]

What can be said with certainty is that much of this comes down to popular political will. Gerard O'Neill rightly insists:

It is the vision inside the heads of business people and citizens on both sides of the border that is the most important variable shaping the future for this island. A huge potential exists for enhanced cooperation between companies on both sides of the border, sharing marketing costs as well as investment costs. Such networks, successfully employed in Denmark and other European countries, could be put quickly into place, playing a catalytic role in releasing the potential for trade-led growth. It is people who will build the future, not economic models or international funds. Hence a key priority for policy-makers and businesses will be to build cross-border linkages: between educational institutions and enterprises; between voluntary groups and local authorities; and between suppliers and new customers.[18]
But what kind of society would underpin the 'island economy'? That may prove a model question.


1 Paul Gillespie ed, Britain's European Question: The Issues for Ireland, Institute for European Affairs, Dublin 1996, pp 44-5
2 Richard Curran, 'Economists warn on single currency', Sunday Tribune, October 20th 1996
3Lionel Barber and Andrew Gowers, "'Irresistible" pressure on UK over Emu', Financial Times, December 2nd 1996
4Richard Lambert et al, 'Hopes of winning friends', Financial Times, January 16th 1997
5James Anderson, 'Territorial sovereignty and political identity: national problems, transnational solutions?', in Brian Graham ed, In Search of Ireland, Routledge, London, forthcoming
6 Paul Teague, 'The European Union and the Irish peace process', Journal of Common Market Studies, vol 34, no 4, December 1996
7Sabine Weyand, 'Inter-regional associations and the European integration process', Regional and Federal Studies, vol 6, no 2, summer 1996, pp 168, 171. The republic is, in EU terms, a region in its own right. Whether this should be, or will remain, so is another day's work.
8 ibid, p175
9ibid, p180
10 Michael Dunford and Ray Hudson, Successful European Regions: Northern Ireland Learning from Others, Northern Ireland Economic Council research monograph 3, Belfast, 1996, p186
11 DD is planning a major round-table on north-south relationships later in 1997.
12 Institute of European Affairs, 1996 Intergovernmental Conference: Issues, Options, Implications, Dublin, 1995, p226
13 David Fell, 'Northern Ireland in a European Context', one of the seminar papers published in conjunction with Paul Gillespie ed, Britain's European Question: The Issues for Ireland, Institute for European Affairs, Dublin 1996
14 Dennis Kennedy, 'North-south relations in the European context, in Institute of European Studies, Northern Ireland and the European Union, Queen's University, Belfast, 1996, p62
15 Mechanisms for doing so are suggested in Social Exclusion, Social Inclusion, DD report 2, 1995
16 Paul Gillespie ed, op cit, p59.
17 cited by Gerard O'Neill, 'The Northern dimension', in ibid, p139
18 ibid, p142

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