By: Will Diem, Contributor

The English parliament has until April 12th to find a solution to the problem posed by the Irish border. The issue of the Irish border received little attention in the run-up to the 2016 referendum to withdraw from the EU, but it has ultimately proven to be the single most difficult issue to resolve as the UK seeks to negotiate a divorce agreement with the remaining 27 members of the economic bloc.

The UK shares a single land-border with the EU. While Northern Ireland is part of the UK, the Republic of Ireland is a member of the EU. If the UK is to withdraw from the EU in a way that satisfies the core demands of the “Leave” campaign, it must impose a border with the EU and regulate the flow of people and goods across its border–including the land-border between Northern Ireland and the Republic of Ireland.

There is widespread fear that reimposing a hard border with physical checkpoints in Ireland would reignite violence between the nationalists, who favored a united island, and the unionists, who wish for Northern Ireland to remain closely united to Great Britain.

This border was opened up as part of the 1998 Good Friday Agreement that ended the Troubles–the bloody conflict between nationalists and unionists that claimed 3,600 lives between 1968 and 1998. The militarized border between the Republic of Ireland and Northern Ireland had been a natural flashpoint during the three decades of violent conflict–it was the very embodiment of what the nationalists were fighting: a foreign, occupying, military force dividing the island.

Further complicating the situation is the fact that the economy of Northern Ireland depends heavily on trade with the Republic of Ireland. The Belfast Telegraph reports that “Northern Ireland exports to Ireland were worth some £3.9bn to the local economy in 2017, with 758,000 cross-border deliveries.”  Both the time-cost of border checks (as truckers are forced to wait in line at checkpoints) and the direct economic cost of tariffs (assessed on goods passing across the border) have the potential to disrupt the economy of Northern Ireland significantly.

During a visit to Northern Ireland in 2017, shortly after she was elected to succeed David Cameron as Prime Minister, Theresa May promised: “Nobody wants to return to the borders of the past.”

One option would be to leave Northern Ireland broadly aligned with the EU and continue to permit free movement across the Irish border, instead instituting checks on goods and persons as they cross the Irish Sea separating Great Britain from Northern Ireland.

This, however, is not politically feasible; the Irish Democratic Unionist Party (DUP)–the largest political party in Northern Ireland and a key element of May’s coalition government, which holds a slim majority in parliament–refuses to support any plan that treats Northern Ireland differently from the rest of the UK, such as a plan imposing new checks on travel between Northern Ireland and Great Britain or a plan that would leave Northern Ireland under EU regulations that the rest of the UK is not subject to.

The Withdrawal Agreement, put forth by Theresa May after months of intense negotiation with the EU, includes an “Irish backstop,” which would guarantee that the border between Northern Ireland and the Republic of Ireland remains open after the UK leaves the EU. In the plan, Northern Ireland would remain effectively part of the EU–subject to EU regulations, allowing the border with the Republic of Ireland to remain open–while the UK, as a whole, would remain in a customs union with the EU until such time as the EU and the UK agree to a permanent solution to the problem of the Irish border.

The plan has, however, proven unpopular among her own party. In order to keep the border open, Northern Ireland would need to remain generally aligned with relevant EU regulations.  Primary concerns of its detractors are that the Withdrawal Agreement includes no hard deadline for a final separation between the EU and the UK, and that there is no mechanism for the UK to finalize the withdrawal unilaterally should efforts to find a new, permanent agreement with the EU fail. Thus, opponents fear, the backstop could leave the UK indefinitely bound to follow EU rules but deprived of any representation in Brussels that would give them a say in forming the EU rules by which they are required to abide.

Boris Johnson, former Foreign Minister and prominent supporter of the “Leave” campaign tweeted when the plan was introduced that the plan “makes the UK a permanent EU colony. We cannot escape EU laws & ECJ [the European Court of Justice] until they allow us to – which they may never do.“

He added, “This backstop keeps the UK in the Customs Union, keeps Northern Ireland in the single market, and almost certainly enhances NI/GB checks,” before concluding that “this backstop inevitably means . . . staying in both [the customs union and the single market], no say in either, and no right to escape”

Although it has gained supporters over the last three months (including recently gaining the support of Johnson himself) the plan has now been rejected by the UK parliament thrice: once in January, and twice in March.

But while May’s Withdrawal Agreement continues to lack the support necessary to pass in the House of Commons, the EU has repeatedly signaled it is unwilling to negotiate another deal. In November, European Commission President Jean-Claude Juncker said, “this is the only deal possible,” Reuters reported. Since then he has reiterated that no new deal will be negotiated. In January he said the Withdrawal Agreement “remains the best and only deal possible . . . [it] will not be renegotiated,” according to Reuters.

And time is quickly running out to find a way around the political impasse. The current deadline for an agreement to be reached is less than two weeks away. On Wednesday Juncker declined May’s last-minute request for an extension to the deadline. That means that April 12th is a hard deadline: if no deal is reached by then, the UK will automatically cease to be a member of the EU with no trade deal in place. “As things stand now, the no-deal option looks likely, I have to tell you the truth,” EU chief negotiator Michel Barnier warned European legislators on Tuesday, according to reporting by the New York Post.

 

This article was contributed to www.psgclarity.com, a division of Planning Solutions Group, a financial planning firm.  If you would like to discuss your financial goals with Brian Kuhn, CFP® the financial planner quoted in this article you may schedule a time using the online scheduler at this website, or calling 301-543-6035 or emailing him at BKuhn@psgplanning.com.

No portion of the content in this article may be construed as investment or tax advice.

Securities offered through Triad Advisors, Member FINRA / SIPC.  Advisory Services offered through Planning Solutions Group, LLC.  Planning Solutions Group, LLC is not affiliated with Triad Advisors. PSG Clarity is a division of Planning Solutions Group, LLC