THE BREXIT “BACKSTOP” CONUNDRUM – A Personal Northern Ireland Perspective By Michael Cairns, COO, Advanced Markets

The United Kingdom is scheduled to leave the European Union on March 29th of this year and, as I write, there is still no viable exit agreement in place. Forget about trying to agree terms with Europe itself, the British government cannot even come up with a plan that will be accepted by its own parliament! It’s hard to believe that the British people voted to leave the European Union with a vote on June 23rd, 2016 and now, two and a half years later they’re still waiting to hear how that departure will be achieved and what life after Europe will look like.

The main sticking point? Northern Ireland and its land border with the Republic of Ireland. Once Brexit occurs that currently open border will take on a whole new dimension aside, that is, from the decades-old political arguments and battles that have in recent history resulted in extreme sectarian violence.

I was born in Belfast and grew up in Northern Ireland through the worst of the “troubles”. Bombings, murders and British soldiers on the streets were unfortunately a part of daily life and the border was dotted with military and police checkpoints, and watchtowers, along with customs stations. The military installations themselves became targets for those looking to somehow force the British army out of Ireland.

Thankfully, due to The Good Friday Agreement, a peace accord signed by the vast majority of the opposing parties in April of 1998, Northern Ireland has experienced peace and a massive resurgence in its economy and infrastructure. There’s a vibrancy now that was missing for many years. The peace agreement covered, amongst many other things, aspects of the relationship between Northern Ireland and the Republic of Ireland and, also, Northern Ireland’s position within the United Kingdom. Importantly, in the current Brexit discussion, one thing that was agreed upon was that there would never again be a “hard” border between the two parts of Ireland, no physical or military barriers.

So, with Brexit nearly upon us, how does Britain police the movement of goods (and people) across an open border? As an example, there are landowners with farms and property in both countries, straddling the border with half in the Republic of Ireland and half in Northern Ireland. Realizing that coming up with a solution to this problem would effectively delay or even derail Brexit, Theresa May, the British Prime Minister, came up with a plan that would provide a “backstop” that would remain in place until such times as a permanent solution could be found. This plan was ratified by Europe and is viewed by them as the only agreed-upon way that Britain’s exit will work.

The reality is that, in December of last year, the British government agreed that Northern Ireland would comply with all of the EU’s customs regulations, and single market rules for an undisclosed period of time. The eventual, actual, wording put forward from Brussels went further and basically stated that Northern Ireland would remain as part of the EU customs framework and that this would allow for the free movement of goods and services across the border. This effectively would treat Northern Ireland differently than the rest of the U.K. post-Brexit, with an invisible border along the Irish Sea, something that was subsequently deemed unacceptable by Theresa May. Her hand was most likely forced by Northern Ireland’s pro-union, Democratic Unionist Party (DUP) whose 10 MPs (votes) are all that currently stand between Theresa May and a general election. The Conservative government relies on these votes to remain in power and this alliance further clouds the path to a resolution of the border problem.

The U.K.’s counter proposal is that the whole of the UK would agree to a short-term customs agreement with the EU post Brexit, still allowing it to pursue its own new trade agreements. However, the main drawback with this setup is that none of these new trade agreements could come into effect while Britain was still sitting within the EU trade and customs union! The idea is that this temporary solution would only remain in place until a final customs agreement could be found (the UK estimate for this is the end of 2021). The problem, and the reason why the Prime Minister can’t get this ratified by her own parliament, is that there is no clarity on when the backstop will be removed and on who has the power to call time on it, the UK or Europe? Bear in mind that this is a British counter proposal that has not even been agreed by Europe (who had thought that they already had an agreement back in December) and, more to the point, it seems that Europe will not agree to the whole of the UK remaining in a customs union without their remaining within the European Union as a whole (in other words scrap Brexit!).

So, is there a solution that can be found with time fast running out, or is Britain destined to jump ship with no deal in place, a situation that, by all accounts, would come with devastating economic and political consequences? I wish I knew the answer to that very question, but I don’t. There has been talk of utilizing some sort of “technology-based” solution on the border incorporating drones/sensors/surveillance cameras but there is no concrete proposal on the table and, to be perfectly honest, the very mention of surveillance cameras is a non-starter given the area’s history. Regardless, any technology approach could take years to put in place.

One thing that I do believe, however, is that Europe is secretly relishing watching the British PM and government squirm but what is needed instead is a pragmatic, conciliatory approach by all sides to get a resolution in place. There needs to be compromise as, in my opinion, there will be no winners should Britain walk away without a deal, at least not in the short term, and one of the areas that would suffer most would be Northern Ireland.