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Will Ireland back down over the border?

Summary:
I discussed this briefly with ‘Oscar D Torson’ on Twitter. It must be the hope of the government and all Brexiters that this is what happens – Ireland backing down.  With no modification of the united EU and Ireland position, the government, and whoever succeeds it, has to concede to leaving the EU in name only, or to erecting a regulatory and customs border around Northern Ireland at the Irish Sea.  Or face the economic disruption of No Deal, which might be catastrophic, not only in economic terms, but in political terms for whoever is deemed responsible for bringing it about. There is what at first might seem a paradoxical quality to the Irish position, as some noted – if I recall correctly Dan Davies was one – in that in order to ensure that the border between the North and South

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I discussed this briefly with ‘Oscar D Torson’ on Twitter.

It must be the hope of the government and all Brexiters that this is what happens – Ireland backing down.  With no modification of the united EU and Ireland position, the government, and whoever succeeds it, has to concede to leaving the EU in name only, or to erecting a regulatory and customs border around Northern Ireland at the Irish Sea.  Or face the economic disruption of No Deal, which might be catastrophic, not only in economic terms, but in political terms for whoever is deemed responsible for bringing it about.

There is what at first might seem a paradoxical quality to the Irish position, as some noted – if I recall correctly Dan Davies was one – in that in order to ensure that the border between the North and South of Ireland stays open, they are threatening to refuse to sign a deal, which means that it would close.

The question as to whether Ireland might back down naturally arises from this paradox.  Another way to keep the border open is not to threaten to close it.

The question also arises from the fact that since the conflicting positions on this became clear, things have moved on.  A rational outsider assessing the UK as a strategic competitor is bound to pick up some changes.

I can think of a few.  Theresa May ‘lost’ the 2017 General Election, in the sense that she lost the ability to figure out her own preferred position amongst those discussed by her party’s competing factions.  This leaves the government as not really a government in the conventional sense, but simply a clearing house for competing discussions amongst the Tory Party factions.  The government might not, if it had control, really want ‘No Deal’, but there is nothing it can do to enforce the implementation of whatever strategic play is necessary to avoid it.

Moreover, two of the factions in and outside of the party are happy about the situation.  The Brexit ultras – who previously scoffed in the strongest terms that No Deal might be a possible outcome, fantasising confidently about ‘the easiest trade deal in history’ [I think that was David Davies on the FTA with the EU [sic]] and the queue of 3rd party applicants for trade deals – have come to positively embrace No Deal, and are engaged in information warfare on the subject on a near Trumpian scale.  For them, it is useless to try to get them to compromise [eg on ‘Chequers’] holding No Deal as a sword over their heads, as they have decided that that is their preferred option, for now.

On top of that, the Labour party itself having multiple internal views on this, prefers not to try to seize the initiative on the topic and is happy to let the government accrue the costs of seeming to be in chaos, and, presumably, the eventual economic costs of no deal.

So, Irish policymakers can conclude that even if at one time there were a rational agent concerned for the welfare of UK citizens, and contemplating the implications of the Irish/EU threat to follow through with No Deal if the backstop is not signed up to on the border issue, that agent is no longer there, and so there is little or no possibility of the UK backing down.

A fall in the probability of the UK backing down reduces the expected payoff from threatening not to back down yourself [at least in this isolated one-off game, and therein lies obvious caveats to this line of thinking].  And that obviously increases the chance of backing down.

Nevertheless, Ireland has its own political calculations to mull, and these are bound up with the longer term constitutional settlement between the UK, itself and Northern Ireland, concerning questions that cannot be weighed so easily by looking at tables breaking down trade by destination.

As Oscar put it in our exchange ‘a border closed due to UK intransigence may be better than one that is part closed because of something Ireland agreed to.’

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Tony Yates
Economist. Consulting, lecturing, a book. Ex Prof at Bham, Ex BoE staffer. Macro, policy, monetary econ, occasional nonsense.

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