How Brexit could lead to a united Ireland - and wage cuts for thousands

This week’s Brexit vote could have profound implications for Great Britain’s next door neighbor, the island of Ireland, including a possible reunification of its 32 counties, but the specifics have become a murky, contentious part of a debate which has produced strange bedfellows.

While conservative British loyalists and Irish republican nationalists have been enemies for centuries, some of them have found common ground over the possibility of the UK leaving the European Union.

The Republic of Ireland is the only country in the EU which has a land border with the United Kingdom, specifically the six counties of Northern Ireland which Irish nationalists consider to be occupied by a foreign queen.

If the vote results in a Brexit, there are several aspects of the relationship between the Republic and “the North” that will come under intense scrutiny.

The Dublin-London route is Europe’s busiest air corridor, and the second busiest in the world, next to Hong Kong-Taipei.

With around half a million Irish people living in the UK and 300,000 British people in the Republic, a Brexit would have a serious impact that could take years, maybe decades, to sort out.

The Good Friday Agreement & a united Ireland

Perhaps most affected would be the Good Friday Agreement, the peace treaty that brought an end to the decades-long conflict in Northern Ireland, but according to those on the ‘Remain’ side, the all-important agreement would be under severe pressure by what it could trigger.

The two main parties in Northern Ireland are divided on the issue, with the loyalist Democratic Unionist Party backing a Brexit and the republicans of Sinn Féin in the ‘Remain’ camp, despite the latter party’s previous opposition to pro-EU referenda such as the Lisbon Treaty.

Sinn Féin leaders have already signaled that if Northern Ireland is no longer part of the EU, the party will call for a vote on reunification with the 26 counties, as is their right under the terms of the Good Friday Agreement.

“If the North are dragged out on the coat-tails of the decision taken in Britain, then we think the democratic imperative is that there should be a vote on partition, a vote on the border, and on the future of the island,” Sinn Fein president Gerry Adams said on Thursday.

This echoes the sentiments of Martin McGuinness, Deputy First Minister of Northern Ireland, who in March said it would be a  “democratic imperative” to hold a vote on reunification if Brexit happens.

EU money in Northern Ireland

Much like the Republic, the EU has been a windfall for Northern Ireland.

Brussels bucks account for 8.4 percent of NI’s annual GDP and is, according to the pro-EU side, “much needed.”

Between 2007 and 2013, NI received over £2.4 billion (US$3.5 billion) from the EU while another £2 billion ($3 billion) is expected to be dispatched to the North between now and 2020.

Controversially, a staggering 87 percent of NI farmer incomes come from EU grants.

Such money is designed to subsidize the economy by creating jobs and, to an extent, maintaining the fragile peace.

Pro-Brexit campaigners argue the £350 million ($513 million) currently paid by the UK to the EU every week, which others say is closer to £190 million ($278 million), would cover any loss of financial support for NI from Brussels, on top of the £11 billion ($16 billion) per year that Westminster already sends to Belfast.

Border checkpoints

The return of border checkpoints found during the height of ‘The Troubles’ remains a giant question mark that campaigners on both sides have failed to clarify or confirm.

Under EU law, a border would be required, which would be a massive hindrance for the six million or so people on the island.

While the free movement of people is an important pillar of the EU, those in the ‘Remain’ camp say such a situation would not be tenable if Britain exits.

The divided island of Cyprus and the post-9/11 US borders with Mexico and Canada could provide some clues as to how it might all play out.

Taoiseach (Irish Prime Minister) Enda Kenny says there would be some sort of border and, even if “new administrative arrangements could be worked out,” it “would be a step backwards.”

“My fear is that it would play into an old narrative – one of division, isolation and difference,” Kenny added.

Brexit advocates argue differently, however, citing the Common Travel Area (CTA) agreement which has been in place between Ireland and the UK since 1923, long before the European Union or Schengen Area existed.

The unbinding arrangement between the Irish and British governments allows residents of both counties to move freely across the border without a passport and has been revised on a number of occasions since its inception.

Representatives of both governments said in 2011, after the last revision, that it “reflects ties of history and kinship and also labor market and business needs” and that it’s “of immense importance to the economic, social and cultural wellbeing of both jurisdictions."

Those calling for Britain to leave say the CTA will prevent any need for such border checkpoints, although one clause of the agreement does state that it "is not intended to create legally binding obligations, nor to create or confer any right, privilege or benefit on any person or party, private or public.”

Trade between Ireland and UK

Beyond the sticky issue of Northern Ireland, the millions of Irish people living in the other 26 counties will likely see an impact on all the products they import from the UK, such as food, energy (specifically, most of its natural gas), and electronics with the bulky three-prong plug versus the more elegant two-prong EU standard.

Around £900 million ($1.3 billion) worth of goods are traded between the two countries each week, even though bad weather on the Irish Sea can often leave shelves in the Republic under stocked.

For Ireland, this equates to around £25 billion ($37 billion) worth of exports and £20 billion ($29 billion) in imports from the UK.

Irish farms exported more than £3.8 billion ($5.6 billion) in produce to Britain last year.

Research from the Republic’s Economic and Social Research Institute (ESRI) predicts that in the short term, a vote for Brexit could result in bilateral trade being reduced by 20 percent, equaling a loss of around £184 million ($270 million) a month, or around £2.2 billion ($3.2 billion) per year.

If this becomes reality, ESRI predicts around 60,000 people will suffer wage cuts between 4 and 5 percent.

Ireland is the UK’s fifth largest export market and the largest for food and the Emerald Isle’s famous drink. In 2013 alone, according to the Irish Department of Foreign Affairs and Trade, the UK bought half of Ireland’s beef exports.

The UK also invests heavily in companies in Ireland, the third largest behind the US and Germany.

It’s not all doom and gloom for Ireland as there would be a few silver linings if  the UK referendum passes, besides potential reunification.

ESRI published research last Tuesday outlining how Brexit could place the Republic in a better position to attract foreign direct investment.

With Britain out of the equation Ireland would be the biggest English-speaking country with access to the European Single Market, with its controversial low corporate tax rates and loopholes already a big draw.

Of course, freedom from Brussels could prompt Britain to alter its tax rate and attract tax dodgers such as Apple, Facebook, and Google, kicking off another kind of war between the two islands.