This weekend you can expect to queue five-deep for a pint at Patsy Dans pub on the main street of Dunfanaghy, County Donegal, Ireland.
Dunfanaghy is a quiet spot, situated in a hollow between Mount Muckish and Sheephaven Bay.
For a long time it was just one idyllic coastal town of many on the Donegal coast. But a lot has changed in the last twenty years.
After the peace process in the late 1990s the border between Donegal and Northern Ireland opened up. People from Derry, Belfast and Down started heading to Dunfanaghy in big numbers. They built holiday homes, and some stayed around for good.
Now Dunfanaghy has gotten to the point where its five pubs can’t handle the volume of customers on busy weekends. And this weekend is the busiest of the lot — it’s the 10th annual Dunfanaghy Jazz and Blues Festival.
Dunfanaghy’s pubs have been big winners from the open border between Northern Ireland and the Republic.
But Brexit is coming. Will the Jazz and Blues festival still be packing them in in two years’ time?
The border matters
Here’s what’s at stake: in 18 months Northern Ireland won’t be in the EU, and the Republic of Ireland will be. There’s a 310-mile border between the two countries.
At the moment the border is “invisible”. There are millions of border crossings every year; billions of pounds’ worth of goods cross over.
But the border is a function of EU membership. When Britain leaves the EU, what’ll happen?
There are roughly three options.
- A hard border: big checkpoints at all roads that cross the Northern Irish border, with long queues and lots of hassle. This will badly damage the Northern Irish economy and cost the UK taxpayer lots of money to implement.
- An invisible border: the current setup
- The “Norway solution”: fancy technology tracking to minimise hassle, while maintaining control over the border.
Now on the face of it, the border seems like a straightforward issue. The UK doesn’t want a hard border. Ireland doesn’t want a hard border. And the EU doesn’t want a hard border. So there shouldn’t be a hard border! It seems like common sense.
This is what I’ll call the “Boris Johnson position”. Johnson has said it should not be “beyond the wit of man” to solve this problem.
The problem is, common sense will only get you so far with a complicated beast like the EU customs union. The Irish border is a part of a seriously knotty problem.
How customs unions work
The idea of a customs union is fundamental to the EU. What it means is that EU members agree on a common tariff, which is enforced on their border with the rest of the world.
Why do EU members tie their hands in this manner, and give up the freedom to choose their own tariffs with other countries? Because without the common external tariff, the entire system would collapse.
If there’s an open border between countries (as there is between all EU countries), then all external tariffs must be set at the same rate. If they weren’t set at the same rate, it would be possible to get around paying tariffs by importing goods via another EU country.
To take an example: let’s say the UK wanted to protect its steel industry, so it put 50% tariffs on all steel imports. But the EU doesn’t care about protecting its steel industry, so its steel tariff is 20%.
With an open border, it would be possible to import steel into the UK via the EU, which would wreck the UK’s plan to protect the steel industry.
It follows that a country can’t logically have both an open border anddifferent trade policies. If the UK wants to leave the EU and control its own trade policy, then it has to have control over the border.
The Swiss and the Norwegians are familiar with this problem. They run independent trade policies and have long borders with EU countries. Their solution is basically to “make the best of it”: they use (expensive) high-tech kit to track border crossings, check a lot of lorries, and build big checkpoints to segment and check the traffic (I happened to be stopped at one of those while crossing into Switzerland last week. It was huge).
So nobody wants a hard border, not least the people of Northern Ireland.
But if Britain really wants out of the customs union, it might be necessary.
No easy option
Fast forward to last week, when the EU released its first ever position paper on the Irish border. This is important because it shows how much the EU cares about the issue. The paper says,
“The invisible border on the island of Ireland is one of the major achievements and societal benefits of the Peace Process. Border issues are broader than economic questions. The physical border itself was a symbol of division and conflict…”
“In view of the unique circumstances on the island of Ireland, flexible and imaginative solutions will be required to avoid a hard border, including any physical border infrastructure.”
This is important. What the EU is saying here is, the UK can’t have its cake and eat it too. No “physical border infrastructure” means no easy compromise solution.
It’s another point of leverage the EU has over the UK. And it’s another factor pushing the UK towards a soft Brexit, within the customs union. It puts more pressure on Therese May to either step back from hard Brexit, or at least kick to touch for a couple of years by seeking a “transitional arrangement” which keeps the status quo in place.
This obviously matters to the owner of Patsy Dan’s in Dunfanaghy. But a lot of people don’t realise how important — and how lucrative — Brexit could be for them. As in, them personally.
That’s because an overlooked scheme gives ordinary Brits a chance to cash in on the Brexit mess. My colleague Duncan Moreland calls it “Brexit severance cheques”.
There’s a lot of money at stake here — thousands of pounds in cash payouts.