ANN CAHILL: Brexit could have ramifications for the entire continent

British chancellor George Osborne has been appointed as the UK's chief negotiator in any EU treaty talks, meaning business interests may trump all.

The ramifications of Britain leaving the EU are incredibly high for for Ireland and the entire Union, writes Ann Cahill, Europe Correspondent

The question of whether Britain stays in or leaves the EU is about to create perhaps the biggest crisis of the Union since its foundation. David Cameron is expected to announce, through the Queen’s speech on May 27, that there will be a referendum in the next year.

All bets are off, all rules are set aside, all alliances may count for nothing. The only thing that can save the day will be politics. And whether Britain remains part of the EU or not, the greatest of political skills will be needed to bring the issue to a safe conclusion.

The interplay of domestic politics in the 28 member states and the need for a strong viable EU is always a battle as national political parties vie for survival and success at home.

But facilitating Britain may require too much from national leaders and citizens this time around, and achieving a balance that gives everyone what they need will be a near impossibility.

READ MORE: Ireland most to fear in ‘Brexit’

The stakes for Ireland are incredibly high, as the withdrawal of Britain would cost Ireland as much of its GDP and, in some scenarios, more than it would cost Britain.

The ramifications are wide-ranging. For instance, it could mean an Irish referendum in which citizens might reject the deal to keep Britain in — thereby ensuring its departure.

The lingering anger over bankers, politicians, and mortgages could result in citizens voting against their clear economic interest. The Government will hope that employers, nationalists not wanting to see border posts going up around the North, and those who are pro-EU will convince people, however grudgingly, to vote yes.

Sinn Féin, recently converted to pro-EU, would hope that a Brexit would bring a united Ireland closer.

Could Ireland maintain the free-movement area with Britain or would the country opt in completely to Schengen, resulting in full border checks into the North and Britain but passport-free travel throughout the other 26 EU countries? And that is before considering the Scottish question.

If Britain does exit, much will depend on how isolated it wants to be. Would it be content with a similar deal to Norway and Switzerland where it pays a significant sum for access to the single market, adopt a vast amount of legislation related to that and the movement of people, services, and capital — but not sit at the table in Brussels where the decisions are made? Or would it go for what German thinktank Bertelsmann refers to as total isolation, whereby it would need to replace the EU’s 35 trade agreements with other countries, but without the EU’s 500m consumers its clout would be considerably reduced.

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Bertelsmann estimated that Britain could lose up to 14% of its GDP by 2030, with the chemicals industry hit even harder than financial services and the City of London.

While industry and business in the UK is considering its options, Ireland could expect an influx of those for whom free access to the common market and an English speaking workforce is important. However, there will be strong competition from Frankfurt and Paris for financial services.

For more than a decade now, Britain has been pushing for a reformed EU with former Labour prime minister Tony Blair explaining to the European Parliament more or less that its laws and business culture needed to be more in tune with that of the UK. This was a response to the increasingly vociferous euroscepticism of the British public, nurtured over decades by a largely hostile media and an ignorance of how the more continental-style institutions worked.

David Cameron, however, took it all a step further, pushed by the eurosceptics in the party and his need to take support from the nationalistic Ukip. The results of the recent general election shows how spectacularly he failed.

He has ended up with at least 100 eurosceptic MPs within the Tory ranks, according to David Harley, former secretary general of the European Parliament, now living in London.

And while he won an overall majority in the House of Commons, Ukip came second in 120 constituencies, about 75 of them Tory with one in every eight people voting for Ukip.

Who can vote in a referendum is the first battle — Ukip leader Nigel Farage has said he does not want the 4m non-British EU citizens to vote, while the Scottish National Party — SNP — are confident Scotland will vote to remain in the EU.

Getting any agreement through the House of Commons will be difficult. The Labour Party in the past has voted against the government on EU issues which it otherwise supported such as the Maastricht treaty, and the non-Tory dominated House of Lords could not be relied on either.

Peter Hammond has been replaced by the chancellor of the exchequer George Osborne as UK chief negotiator — perhaps an indication that business interests will trump all, and business definitely wants the UK in the EU.

The 32 reports consisting of 2,300 documents that make up the Balance of Competence review drawn up to tease out how Britain actually fares inside the EU were very largely positive, but were quietly buried. Perhaps this is the big weapon in Cameron’s arsenal to win the popular vote?

But then the question arises of how big does the British need the reforms to be? Many of the changes it has looked for are already underway. But if it wants a full drama, that could mean treaty change — and there is nothing more likely to terrify EU politicians than treaty change.

The French will be fearful of giving Marine Le Pen’s National Front a stepping stone to power in the presidential elections in spring of 2017.

Angela Merkel, with elections in 2017, will not be enthusiastic either, although she appears to be the least afraid of treaty change, having said saying many times that it is needed. But while she wants to keep Britain in the EU, staying close to France will be her priority.

As Fabian Zuleeg, the German head of the European Policy Centre who spent a number of years in Scotland, wrote: “UK membership is desirable but not at any price, so the aim should be to keep the UK in, while also ensuring that the principles on which the EU is built are protected”.

But if the EU Treaty is to be opened, then Merkel and many other leaders will have their own list of changes, as will the European Parliament that is drawing up its own reports on the British question.

The parliament could very well insist on treaty change to avoid any agreement being inter-governmental and sidelining them. Some changes to the treaty in Ireland have been considered not to need a referendum — but it all depends on the issues. But one thing is for sure, the Irish practice of running the vote twice to get the right result would not wash in the UK.

READ MORE: Ireland most to fear in ‘Brexit’

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