When the UK and the European Union signed a trade deal late last year, few expected the new relationship to be straightforward. And as with many divorces, the antagonism between the parties has refused to fade.
Among the most sensitive issues is Northern Ireland, and tensions rose sharply this week when the The UK announced that it will ignore some crucial obligations under the Brexit deal and the EU responded with a dramatic threat of legal action.
With Prime Minister Boris Johnson already under pressure from members of his own party to break the Northern Ireland deal, the risk is a further escalation that erodes relations. That could have repercussions far beyond politics, and the ongoing saga is a frustration for business. The huge UK finance industry, for example, is seeing the potential for beneficial trade deals. little by little it was reduced by endless political disputes.
For its part, the EU had already turned up the heat when it controversially suggested in January, albeit briefly, that it could use an emergency clause in the Northern Ireland deal as part of vaccine export controls.
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European Commission Vice President Maros Sefcovic told the Financial Times on Thursday that the EU would initiate legal action “very soon”. This It would be just the first step in a long dispute process set out in the Brexit deal that could last for months but could ultimately impose trade tariffs or other sanctions on the UK.
The tensions over the fragile compromise over Northern Ireland are particularly dangerous and threaten stability in a region that has suffered decades of bloodshed. The Irish News reported that some groups loyal to paramilitaries in the region are withdrawing their support for the Good Friday peace agreement, which largely ended the violence.
The agreement signed by Johnson avoids border controls on the island of Ireland and keeps Northern Ireland within the EU customs union and much of its single market. That means that the border and accompanying controls are effectively in the Irish Sea, between Northern Ireland and the rest of the UK.
To facilitate adjustment for businesses, not all trade controls on goods moving between Northern Ireland and the rest of the UK were introduced at the end of the post-Brexit transition period. But now the UK has extended the waiver until October, beyond the March 31 date agreed with the bloc.
Irish Foreign Minister Simon Coveney called the move “deeply useless.” Johnson said Thursday that these were “temporary technical measures” to help trade.
“I’m sure that with a little good will and common sense, all these problems are eminently soluble,” he said.
On Wednesday, Johnson had told Parliament that the government would act as necessary to guarantee Northern Ireland’s position within the UK domestic market, and “we left nothing off the table.”
Northern Ireland is just one example of the tension inherent in the deals that established the post-Brexit relationship. Given the necessary almost four years of complicated, moody and sometimes chaotic negotiations, there is a sense of foreboding behind the scenes in London and Brussels.
Within Johnson’s Conservative Party, some members want him to invoke the agreement Article 16, which gives both parties unilateral power to take action if its application creates “serious economic, social or environmental difficulties that may persist or divert trade.” It is considered by the architects of the agreement on both sides as the nuclear option that was never expected to be used.
Many in Brussels believe it is in the Johnson government’s best interest to constantly poke holes in the deal, in what is apparently a post-Brexit rally of the way the UK blamed the EU before the split. But the EU’s mistake in January, which Commission President Ursula von der Leyen said she regretted, has given the UK a reason to push the issue forward.
For the UK, there is frustration with the position in Brussels. An official with knowledge of the discussions said it was clear that EU figures see the issue solely from the perspective of the Republic of Ireland and are overly sympathetic to the nationalist community in Northern Ireland.
Dealing with the province is not the only source of contention. There is also finance, a vital sector for the UK economy and one that the EU would like to loot for loot. The City of London has already seen some stocks and swaps disappear, and a slow exodus of bankers is expected to continue. Last month, Bank of England Governor Andrew Bailey warned the EU not to require euro derivatives to be settled by clearing houses within the bloc, saying such a move would be a climbing.”
The two sides have also discussed the prohibition of seafood exports. And the Johnson government is the only one in the world that refuses to grant full diplomatic status to the EU ambassador in London.
Adding to the tension is the appointment of David Frost, Johnson’s former chief negotiator, as minister in charge of EU relations. It is considered a hard liner who, in private meetings in Brussels, has made clear his dislike of the Northern Ireland Protocol, despite helping to negotiate it. He has also spoken several times about the need to prioritize sovereignty over short-term economic benefits.
Mujtaba Rahman, director of the political risk consultancy Eurasia, recently summed it up in a note to clients: “Permanent conflict will be the new normal.”
– With assistance from Dara Doyle
(Updates with Sefcovic’s comment in the fifth paragraph.)