13 March 2019 14:22:16 IST

A management and technology professional with 17 years of experience at Big-4 business consulting firms, and seven years of experience in high-technology manufacturing, Rajkamal Rao is a results-driven strategy expert. A US citizen with OCI (Overseas Citizen of India) privileges that allow him to live and work in India, he divides his time between the two countries. Rao heads Rao Advisors, a firm that counsels students aspiring to study in the United States on ways to maximise their return on investment. He lives with his wife and son in Texas. Rao has been a columnist for from the year the website was launched, in 2015, and writes regularly for BusinessLine as well. Twitter: @rajkamalrao

Brexit and the Irish backstop

A hard Brexit without an Irish backstop would make conditions so harsh, it may force a second Brexit vote

As we approach three years to June 2016, when a seismic referendum resulted in a majority of British voters deciding to leave the European Union, the countries involved have made little progress to honour the vote and enact a graceful Brexit. If negotiations fail, Britain will be forced to exit the EU on March 29 — a key provision of the 2016 referendum.

British PM Theresa May may go down in history as the leader who constantly had a crisis on her hands, and never a single day to relax. She may have to resign, or even be forced out of office, if the forced Brexit option has to be enacted.

This is what happens when everything is governed by the so-called rules-based order. The EU is a huge morass of rules, extremely complicated because it governs the behaviour of all of its member-states that have uniform product standards, a common currency, and no borders. The “no borders” provision allows for free movement of people and goods across the EU without the need for customs checkpoints, tariffs, and duties.

Pride in the pound

Britain has been part of the EU trading bloc for nearly 40 years and the only difference has been that it has held on to its storied currency, the pound. Other EU powerhouses, such as France, Italy, Germany, the Netherlands, Denmark, Spain, and Portugal — all colonial powers — swallowed their collective pride in abdicating their own historic currencies and embracing the Euro in 1999.

Britain’s pride in the pound was a key determinant in the Brexit vote. Supporters of Brexit felt that Britain could trade better with the rest of the world without onerous EU rules handicapping it. Say, Britain wished to trade with Venezuela to buy oil direct, by paying for it in pounds. Under the current set-up, if the EU had an embargo on Venezuela for diplomatic reasons, Britain would be bound to act within those rules. But with Britain out of the EU, the country could enact any deal it pleased, reasserting its sovereignty.

Nationalism, patriotism, and sovereignty were the core ideas behind the Brexit vote, pitted against those who believed that going it alone in today’s interconnected world is far too risky and would cause significant collateral damage.

A vote is sacrosanct

Having a vibrant debate such as this is fine until the day of the vote. But for one of the world’s oldest democracies, continuing to have the debate after the vote is cast — and for opponents of Brexit to use every trick in the EU rule-book to stall progress towards a graceful exit — is despicable. Honouring any vote is a tradition in democracies. Overturning a legitimate vote, however unpopular, is what despot dictatorships do.

The world could have benefited if Brexit happened, at a minimum, as an experiment. No one knows how Brexit will turn out until it is actually tried. Yes, the EU grandly claims that once a nation is out of the EU, it cannot rejoin the union. But this grandstanding would surely give way to practical realities, say five years from now, if Brexit fails miserably. At a minimum, the EU can re-admit Britain with an ‘I told you so!’ smirk. Rules made by humans, after all, can be broken.

On the plus side, a rational, well-organised Brexit that is successful can do the world a lot of good. It will end up showing that the globalised economy as it is currently operating is unfair to millions of people. It will demonstrate that maybe there’s a better way rather than to consolidate all power with unelected bureaucrats and that local governance is the best. There is little doubt that those who fear a loss of power in Brussels are the ones trying to derail Brexit. Their thinking is, if now Britain, who’s next?

Background to the backstop

All of this brings us to the Irish backstop. To understand this confusing term, one must recall the history of the UK and Ireland, because this lies at the heart of the confusion.

The Republic of Ireland, which won its status as a sovereign nation in 1937, has been a predominantly Catholic country. To its north-east lies the relatively small Protestant territory called Northern Ireland, an integral part of the UK.

For nearly 30 years, from the late 1960s to the late 1990s, a conflict based largely on ethnic and national grounds brewed and festered in the region. The so-called Unionists/loyalists wanted Northern Ireland to remain as part of the UK, but the nationalists — those who spoke Irish and shared an Irish culture with their north-eastern neighbours — wanted Northern Ireland to become part of the Republic of Ireland to create a unified Irish state.

The Irish Republican Army (IRA) resorted to the world’s first true terror tactics — mercilessly killing loyalists, innocent Brits and British leaders, including royalty — to help create this unified state. The Good Friday agreement of 1998 ended hostilities and brought peace to both regions — and today’s status quo is a direct result of that agreement: A free and standalone Republic of Ireland; and Northern Ireland as a constituent country, along with Wales, Scotland and England to form the United Kingdom of Great Britain and Northern Ireland.

Long before the UK, the Republic of Ireland was one of the first supporters of the EU, becoming part of the European Community as early as the 1960s. It remains a steadfast supporter of the EU and will be so, long after Brexit.

Because Northern Ireland is part of the UK, this means that when Britain leaves the EU, Northern Ireland will leave too. Goods from the Republic of Ireland made to EU standards and headed to the UK for “export”, will then have to undergo Customs inspections at the land border with Northern Ireland, a prospect that overturns the Good Friday agreement, which, under Strand 2, explicitly defines the relationship between the two Irish peoples. A tariff and inspections border would bring back gory memories of the IRA conflict.

The Irish backstop simply states that as long as there is no long-term trade pact between the UK and the EU, such as a graceful exit which Mrs May and her colleagues have been unable to negotiate for nearly three years, Britain would remain in the European customs union, and Northern Ireland would be bound by most rules of the single market. Such a backstop would ensure that there would be no physical customs border between the Republic of Ireland and the UK.

A second Brexit vote?

This means that if a hard exit were to come on March 29 with the Irish backstop in place, Britain would technically remain a part of the EU forever. This is the equivalent of overturning the Brexit vote. In many ways, it is worse. The UK will be bound by the EU’s rules but because it is technically not part of the EU, it will have no say in those rules (or future rules). It would amount to “taxation without representation”, the worst form of tyranny in modern political discourse.

The most likely outcome, therefore, will be a hard Brexit without an Irish backstop. That would make Brexit so harsh, it would force those on the margins to consider a second Brexit vote, a vote that Brexit opponents always dreamed of. Then the globalists will have asserted their power, firmly entrenching the rules-based global order for generations to come. And the globalists will proudly proclaim, “We told you so!”

This is what the world has come to today: if you don’t like a vote, stall, stall, and stall, and make the outcome of the vote so unbearable that you get a chance for a do-over. In the do-over, vanquish your opponents and win.