Brexit: an isolated offshore island?

07/04/2018

A reflective article in the Irish Times, written by academic Richard Wynn Jones, points out that the port of Holyhead would be one of the biggest losers from a failure to resolve the Irish question.

That would assume the adoption of the EU's backstop, with full regulatory alignment north and south of the border. With the rest of the UK outside the Single Market, that creates the "hard border" down the Irish Sea, making Holyhead the main portal to the EU's Single Market.

However, for even those lacking direct knowledge of the port facility can readily see from the photograph (above) how limited it is, and how restricted is the scope for expansion. A hard border, therefore, would require a massive expansion of the facilities at Fishguard and Liverpool, the Rosslare and Dublin routes – and even a resumption of services to the Welsh ports at Mostyn and Swansea.

Yet this is somewhat theoretical. Wynn Jones wryly notes that, so far, the UK government has no contingency plans in place to deal with this situation. Indeed, he says, there is no real evidence that planning for the future of any kind has taken place. Instead, there are airy injunctions from the British government's representative in Wales, the secretary of state for the region, Alun Cairns, that all will be well.

Doubtless, the Irish have seen the writing on the wall – and that would explain why they are so keen to see additional ferry services sailing directly from Dublin and other Irish ports to the Continent.

Longer term, expansion of the deep water port at Cork could make it the destination of choice for US traffic heading for Europe, replacing other UK ports such as Southampton. As a distribution hub, it can service the UK and the entire EEA without goods having to make multiple switches between different customs administrations.

There is far more to the story that we looked at yesterday, part of which the Financial Times has caught up with. And, in predictable manner, the Telegraph has lifted that story – as has the Express -demonstrating once again how narrowly-sourced and inward-looking the legacy media are. Anything outside their circle simply doesn't exist.

The thing is, though, that the Telegraph's headline, "Irish shipping to bypass British ports after Brexit", really is only a part of the story – a tiny part. More than anything, it illustrates that Brexit is a dynamic situation with multiple players. And if – as we have now seen too many times – if the UK doesn't take the initiative, other countries will.

Thus, the rest of the world is not going to sit around waiting for Mrs May and her collection of cabinet misfits to make up their minds what they want to do. They will be making their own plans and, in many instances, they will not include the UK. Whatever foreign secretary Johnson might think, we are not at the centre of the known universe.

What is especially interesting now is that evidence of this is now beginning to emerge. While the UK is sitting back, failing to make any contingency plans, The Times is reporting that, as senior officials grow concerned at the lack of progress in behind-the-scenes Brexit talks in Brussels. the Irish government is significantly ramping up its contingency planning.

Front and centre, in response to the inability of the UK to come up with a coherent solution for the border problem, the government is scaling up its plans for a "no-deal" scenario, in anticipation of the talks failing.

The Department of Transport has submitted 54 documents to officials in the Department of Foreign Affairs who are co-ordinating the exercise. These take account of the likelihood that air and freight transport would be severely affected in the event of a hard Brexit.

As part of the same exercise, the Department of Finance has submitted 46 documents of contingency plans, amid warnings that the cost implications of a no-deal scenario on future budgets would be drastic. The Department of Health has prepared 34 documents of plans, not least because thousands of Irish patients could lose the option of being treated in the North in the event of a hard Brexit.

"A massive amount of work has been going on across all Government departments to ensure Ireland is prepared for every eventuality with Brexit", says a spokesman for Tánaiste and Minister for Foreign Affairs and Trade Simon Coveney, who is managing the Government’s Brexit team.

The Irish, of course, have no real option but to take planning into their own hands, Some estimates suggest that the Republic's economy could take a "hit" of €18 billion, causing thousands of job losses and increase the cost of trading with the UK by as much as 30 percent.

Here, the Irish may be in line for considerable financial assistance from the EU, as Brexit is set, unwittingly, to assist the Commission in executing some of its core policies, particularly in the transport field. This could even explain why the EU’s chief Brexit negotiator, Michel Barnier, has accepted yet another invitation to visit Ireland.

He is expected to arrive at the end of the month, going to the Border and possibly Belfast when he visits for the Irish government's next all-island civic dialogue on Brexit, comprising 1,500 civic society and industry representatives, in Dundalk, Co Louth.

Away from Brexit, on broader policy issues – which the EU is keen to address - for some time now, a core objective has been to replace road transport with more resource-efficient transport modes, hence the 2011 White Paper on transport.

The catchphrase now is intermodal transport, where the major part of the journey is by rail, inland waterways or sea and any initial and/or final leg is carried out by road. The key objective is to keep the road legs as short as possible.

Immediately, one sees that elimination of the UK "land bridge", with ferry transport directly from Ireland to the mainland, would fit in very neatly with EU policy, as would using Irish ports as distribution hubs for the Atlantic trade, whence bulk cargoes are broken up for despatch by smaller boats to diverse continental destinations, some with access to the inland waterway system.

With another Combined Transport Directive on the stocks, calculations suggest that there are billions in annual savings to be made from shifting transport modes, substantial reductions in emissions and gains in reduced lorry traffic – both in congestion and savings in infrastructure costs.

From 2007 to 2013, there was already a funding programme, worth billions of euros, called Marco Polo for schemes promoting modal shifts and making supply chains more efficient.

There will most certainly be more EU money available to promote this policy and Member States will be able to attract soft loans from the European Investment Bank. There will also be a relaxation of restrictions on state aid. To that extent, for some Irish enterprises, Brexit could prove to be a bonanza, especially as the funding mechanisms are already in place and would not require new initiatives, with their inherent delays.

Ireland's gain, however, could very well prove to be the UK's loss – especially as the UK could end up paying the EU for some of these developments. And where transport routes are diverted, and new trade patterns emerge, the problem between the Republic and Northern Ireland could solve itself, as the cross-border movement of goods dries up.

With that, there is every prospect of the "remainer" nightmare taking shape – the UK as an isolated, offshore island, bypassed by the mainstream. For sure, the UK, with a population in excess of 60 million, will always be a substantial market, but dreams of the island becoming a major, international trading hub may well founder, brought down by the Irish question.

One should not necessarily take this to be a foregone conclusion, but it is fair to say that the longer the UK takes to come up with its own coherent plans for Brexit, the more likely it is that other countries (and the EU) will step in with their own.