The European Union and the Irish Peace Process

Journal of Common Market Studies Vol. 34, No. 4 December 1996

The European Union and the Irish Peace Process

PAUL TEAGUE School of Public Policy, Economics and Law,

University of Ulster, Newtownabbey, Co. Antrim BT37 OQB, N. Ireland

Abstract Northern Ireland is caught between war and peace. On the one hand, there is a widespread desire for a permanent end to violence, but on the other hand big political divisions continue to keep unionism and nationalism apart. One issue that divides the two blocs is the role of the EU in Northern Ireland’s economic and political affairs. This article assesses the various arguments made on this issue and suggests that it would be inappropriate for the EU to have a permanent role in the internal governance of the region. The article goes on to show that the debates about neofunctionalism and intergovernmentalism long associated with European integration are now emerging in Ireland with regard to cross- border economic co-operation. It is argued that the EU could play an important role in creating a form of symbiotic co-operation on the island whereby cross- border economic links and political stability in a new Northern Ireland go hand- in- hand.

I. Introduction

Northern Ireland has experienced an uncertain few years. First, the paramilitaries called ceasefires after 25 yearsof conflict and hopes increased that the region was on the threshold of a permanent peace. Then these hopes were dashed when the

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IRA, dissatisfied with the speed and direction of the peace talks, reverted to violent tactics. Much recrimination has taken place, with each side blaming the other for the restart of violence. Behind the heated exchanges, and the despair, what ultimately caused the breakdown of the ceasefires was the wide political differences between nationalism and unionism. These divisions blocked the passage to a quick and final settlement to the conflict. Although a dialogue of sorts is continuing between the main constitutional parties, important issues of principle and detail still keep the two blocs apart. Eventually these differences must be worked out if a political agreement is to be achieved. Before that situation is reached further debate and discussion will be required on a variety of contentious matters.

One issue that divides the parties is the possible role of the European Union (EU) in the Ireland peace process. A European dimension to the resolution of the Northern Irish crisis has emerged as important for three reasons: (1) both the Irish and British governments have signalled in the Framework Documents that EU programmes and activities could be a key way to deepen political and economic ties between the north and south of the island; (2) the EU itself has expressed a strong desire to help moves towards a settlement; and (3) political groups inside N. Ireland have raised the question of EU involvement, some from a positive point of view, others from a negative perspective. While beginning to figure more prominently, much uncertainty remains about the exact nature of a EU intervention. For example, it is unclear whether the EU presence should be short term and limited to providing financial resources to ease the transition to a permanent solution, or more long term by playing a role in any new arrangements that emerge for the governance of N. Ireland.

This article explores the most appropriate form of a EU dimension to the Irish peace process. The intention is not to develop a blueprint, but the article does argue that the EU should have an important and long-term role in N. Ireland. It is organized as follows. The first section assesses the potential contribution the finance package recently agreed by the EU can make in the region. Then an examination is made of arguments that the EU should have a direct role in the governance of N. Ireland. A third section considers whether different approaches to European integration held in London and Dublin may jeopardize attempts to create north-south collaborative connections. The last section examines whether the theory of European integration holds any lessons for the peace process. The conclusion brings together the arguments of the preceding sections.

11. The Peace Money

When the ceasefires were called in 1994, the European Commission immediately sought ways in which it could help the new situation. A special task force was

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THE EU AND THE IRISH PEACE PROCESS 55 1

established and, after wide-ranging consultations, it produced the proposal, A Special Support Programme for Peace and Reconciliation in N . Ireland (CEU, 1995). This document argued that to exploit fully the economic and social opportunities created by the end of violence and to push the region nearer a permanent peace, a package of financial assistance was required from the EU. Five action priorities were set out: employment creation; urban and regional regeneration; cross-border development; social inclusion and investment and industrial development. These categories highlight the emphasis placed in the programme on a twin-tracked economic and social approach. At the December 1994 European Council, the Member States ratified the programme with a budget of f240 million. The British and Irish governments agreed to donate a similar amount.

Known inside N. Ireland as the European peace package, this initiative could have an extensive impact. Because they have endured most of the violence, several communities have developed a deep sense of political and social alienation, as well as experiencing considerable economic hardship. By target- ing money on such areas, the EU may start a process of reconciliation and help lift the cloud of despair from these communities. A second benefit that may arise is the opening of new economic and social policy avenues. Before the outbreak of violence in the late 1960s, the localities along each side of the border represented cohesive economic and social units. As a result of the troubles, however, these connections were badly disrupted due to the closure of some border roads and intense security activity. Insufficient policy attention by government development agencies compounded the problem (O’Dowd, 1994). By making regeneration in border areas a priority action issue, the EU may help reverse years of economic and social deprivation.

The peace package could also positively contribute to the process of inventing democratic and inclusive political structures in the region. Almost immediately after the outbreak of violence, local councils had the majority of their powers removed since they were seen as a site for corrupt and discriminatory practices. A little later the regional government for N. Ireland - Stormont - was prorogued due to the deteriorating security situation. While entirely understandable in the circumstances, such actions caused a huge democratic vacuum in the region. To fill the void, unelected bureaucracies gained considerable powers. Civil servants were given the authority to devise, communicate and carry out policies without being accountable. By insisting that its funded initiatives are embedded in strong local participative structures, the EU may help develop an inclusive democratic agenda. Thus in forthcoming years the EU peace package may promote reconciliation, help create new democratic structures, and widen the repertoire of economic and social policies. In so doing i t can push the region closer to a permanent peace.

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111. The Mistaken Maximalist Position

Although it may have a long lasting impact, the EU peace package has a lifespan of only five years. When the initiative ends it is uncertain whether the EU will revert to administering mainstream programmes like the Structural Funds, or whether it will become involved in the governance of the region on a permanent basis. In recent years, the idea of the EU playing a role in bridging the political divisions in N. Ireland has been promoted. For instance, the Social Democratic and Labour Party (SDLP), the main constitutional nationalist party, has argued that, ‘the European Community institutions offer an accessible and persuasive model of how new arrangements for N. Ireland might be shaped’ (SDLP, 1992). More specifically, the party has suggested that the EU should have a represent- ative on an envisaged six-person Commission that would operate as a type of collective Presidency in the region (Bew and Meehan, 1994). Another proposal is that N. Ireland should become a ‘European region’ (Kearney and Wilson, 1991). The thinking here is that to weaken engrained nationalist and unionist beliefs requires a recasting of the economic and political foundations of N. Ireland. The European Union standing once removed from the conflict yet growing in authority and competence was seen as a suitable institution for such a project.

At a distance, proposals of this kind have a certain appeal, not least because they display an innovative and fresh approach to a complex political problem. Closer up, however, they look less convincing as a number of significant shortcomings become more apparent. First, it is highly questionable whether the EU could operate as the economic guarantor for N. Ireland. For 25 years, the violence went on against the backdrop of rapid deindustrialization, causing a large shrinkage of the local manufacturing base. To compensate for the loss of tradeable activity, the public sector in the local economy was increased substan- tially: an economic crisis on top of political turmoil would have pushed the region into the abyss. Financing this public sector expansion meant a spectacular growth in the UKsubvention to N. Ireland. (The subvention is essentially a fiscal transfer- the gap between what is raised locally in taxes and the amount of public money spent in the local economy.) In the early 1970s the subvention was tiny, reflecting N. Ireland’s almost self-reliant position. By the mid-l990s, however, it was huge, standing at about f3.7 billion.

Whether this subvention has been beneficial to the region is a matter of some dispute. One less than complimentary view is that the enlarged public sector has turned N. Ireland into a workhouse economy which simply sucks in imports from the outside and exports little in return (Rowthorn, 1987). An alternative perspective is that the subvention is neither exceptional nor does it amount to a significant economic problem. It simply reflects the fact that N. Ireland is part

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of a UK-wide economic and political union which has come to the region’s rescue in the face of a double economic shock- deindustrialization and violence (Gudgin, 1994). On this view, the subvention represents the economic and cohesion fund for the UK, just as the Structural Funds aspire to be the same for the EU. It is not appropriate here to adjudicate between these two views. But the scale of the subvention required to sustain existing living standards in the region raises considerable doubt about whether the EU could assume financial and economic responsibility for N. Ireland.

At the moment, EU transfers about f200 million annually to the region, mostly in the form of Structural Fund money. This amount represents only about 0.6 per cent of the fiscal transfer from the UKexchequer. In other words, the EU financial contribution would have to increase by about 200 per cent before it could replace the UK as N. Ireland’s external benefactor. Under existing budgetary conditions it is difficult to see how the EU could increase its level of expenditure to the region. For the period 1994-99, the annual Structural Funds budget is approximately 28.3 billion ECU (at 1992 prices). Servicing the N. Ireland subvention at present levels would result in about 25 per cent of the total going to the region annually. The only way this could be done is if other ‘less favoured’ regions experienced a huge cutback in European money. It is extreme- ly unlikely that Spain, Portugal or any of the financial losers would accept such a cutback. The more likely scenario is that political uproar would prevent the enacting of such a policy.

Another possibility would be to divert money from another part of the EU budget, but the same problem would arise, with potential losers blocking any reallocation. Realistically the only way the EU could take financial responsibility for N. Ireland is if the European budget was enlarged or if some type of special fund were established by the Member States. On an annual basis, the EU budget would have to be increased by roughly ECU 7.5 billion. If this extra financial contribution were to fall on the seven richest Member States, then each would have to find about 1.1 billion ECU each year. In absolute terms this represents a large pot of money, but in the context of national public expenditure it is relatively small. Thus, those who argue that it is financially impractical for the EU to assume responsibility for the N. Ireland subvention may be overestimating the fiscal burden (Gudgin, 1994; McCartney, 1995). Financially it is not outside the bounds of credibility, the problem is with the politics of the matter.

For a group of Member States to hand over about f500 million each year requires a high degree of political commitment. Whether such a commitment exists in relation to the N. Ireland subvention is debatable. Clearly the Member States are eager to see an end to the conflict. At the same time, they are confronted with other equally serious problems that also need support. Easing the transition to market economies in the former communist bloc and stabilizing the peace in


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the former Yugoslavia are just two of the other problem issues facing the EU. Like N. Ireland, these are claimants on EU political and financial resources. In the context of a tight budget, many Member States would query the efficacy of allocating 7.5 billion ECU to cover the N. Ireland subvention which is already being met by the UK. Understandably, many would feel that the money would be better spent on other projects.

More importantly, Member States would be reluctant to take charge of the subvention as it would mark a radical departure for the EU. Until now, the EU has assiduously avoided intervening in the internal affairs of a Member State. Operating the N. Ireland subvention from Brussels would mark a dramatic reversal of this policy. It is doubtful whether any European capital would favour such a move. Thus, the political conditions are not favourable for the EU to take on financial and economic responsibility for N. Ireland. For considerable time to come the region will remain dependent on the UK subvention. In a fairly fluid economic and political situation, this variable is almost sure to remain unchanged.

An equally sceptical note must be expressed about any sizable EU involvement in N. Ireland political affairs. Again this is because the Member States, would be reluctant to break the principle of non-interference in the internal affairs of a EU country. Thus in the early 1990s when the SDLP proposed that a EU nominee be a member of a six-person Commission to govern the region, the European Commission moved fast to downplay the suggestion. In a speech in Belfast in 1992, Jacques Delors ruled out any direct EU involvement in the governance of N. Ireland. Also ill considered is the idea that any new decision- making structures devised for N. Ireland should resemble those of the EU. Kennedy (1994) has carefully dissected this argument, but some of its limitations are immediately obvious. For example, it is perhaps too sanguine to believe that a locally elected assembly would be prepared to accept a role similar to that of the European Parliament. Moreover, it is hard to see a body like the European Commission or the European Council functioning in any coherent or sustainable way in the N. Ireland context. Very quickly the democratic legitimacy of such an arrangement would be called into question. Thus, the maximalist scenario of the EU playing a key role in the political governance of N. Ireland is unconvincing. Even if the opposition inside N. Ireland to the EU playing such a role is left to one side, this position simply overestimates the capacity of Brussels to function as an agent of government in the region.



IV. The EU as a Wedge between the North and South of Ireland

The Monetary Union Question

A contrasting position to the maximalist scenario is the argument that the EU may actually impede moves towards a political settlement. In particular, it is suggested that European integration may hinder deep forms of political and economic collaboration emerging between the north ahd the south. In support of this view some observers point to the sharply contrasting approaches to Europe- an monetary union held in Dublin and London. On the Irish side, there is strong support for moves towards monetary union and greater economic supranational decision-making in the EU. On the British side, the approach is more cautious and equivocal. The calculation is that cross-border collaboration may be squeezed as a result of the two capitals pointing in different directions in relation to a European single currency.

Consider the scenario if the Republic were to join a European monetary union while the UK did not. This situation would most likely reflect the creation of a two-speed Europe, with Ireland at the core and the UK at the periphery. Under such a scenario the economic and political orientation of the Republic would be tied to Germany as the dominant power in the new first division Europe. On the other hand, a contrasting set of priorities would exist for the north by virtue of its being part of outer Europe along with the rest of the UK. As a result the scope may be radically reduced for meaningful economic and political links between the two parts of the island. Thus, moves towards deeper integration in Europe, through adopting a single currency, may put a brake on the very same processes inside Ireland.

Although this scenario cannot be completely dismissed, it is perhaps not very likely to happen. First, though the relations between the Member States are hardly harmonious, the emergence of a two-speed Europe must still be regarded as an outside possibility. None of the big three Member States- Germany, France and the UK - is eager for insiders and outsiders to emerge in the EU. Secondly, even if a European core were to be established, it is far from certain that Ireland would be a member. In the recent past, German officials, on several occasions, have played down Ireland’s ability to function properly in a first-tier Europe. Thirdly, despite the position of the current Conservative government in the UK - and even the opposition Labour Party - it is hard to see a European monetary union without the UKeven if the country is not in at the start. Britain’s economic interests are too bound up with Europe for the country’s powerful financial and commercial lobby to allow that prize to get away. Fourthly, it is even harder to visualize a European monetary union of which Ireland is a member but the UK is not. The economies of the British Isles are too entangled for the monetary authorities of Europe to let this potentially distortionary situation arise. The 0 Blackwell Publishers Ltd 1996

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message from Frankfurt and Brussels is that it would be preferable if lreland joined a single currency club with the rest of the British Isles.

Thus perhaps too much is being made of European monetary integration disrupting moves towards greater connections between the north and the south. This concern arose out of discussions in Dublin about the Republic being in the grip of a double hegemony involving the UK and Germany (Teague, 1993). At the moment, Irish monetary policy is effectively set in Frankfurt while Britain remains the country’s biggest trading partner. Severe strains can be placed on the Irish economy, if these two external connections are not in harmony. A salutary example of this was the turmoil inside the ERM in 1992. As a result of the currency upheavals that occurred then, the UK was forced out of the ERM. Almost immediately sterling depreciated massively against the Deutschmark. At the same time, the puntDeutschmark rate remained unchanged, causing the Irish currency to appreciate against sterling. Of course, this meant that Irish exports became more expensive on the British market. As a result, the Irish government was placed on the horns of a dilemma: should it continue with its ambition to be part of a European core and maintain the puntDeutschmark exchange rate? Or should it give immediate relief to Irish based firms exporting to the UK by depreciating the currency, thereby saving jobs and market share? In the end, the financial markets made up the government’s mind by forcing the devaluation of the punt inside the ERM.

This episode vividly showed the extent to which the Irish economy is caught midstream between Britain and Germany. To the policy elite in Dublin the key lesson was that the country should move even closer to Germany to ease the double hegemony, irrespective of the consequences for other economic policies such as north-south commercial connections. But it is questionable whether Ireland can fully break free of close economic ties with the UK. Consider the matter of trade relations. It is true that since 1970 the Republic has succeeded in reducing trade flows with Britain. In 1970 about 60 per cent of Irish exports went to the British market; however, by 1986 this figure had declined to 32 per cent. This is a pretty large decline, but it will be difficult to push the figure any lower given the well-established, if not engrained, commercial connections between the two islands. Indeed, it is interesting to note that since the mid-l980s, the British share in total Irish exports has remained virtually unchanged. Moreover, if exports from the indigenous sector only are considered, then the share of the total going to Britain increases to 45 per cent. Geographical proximity creates a social underbelly to trading relations that is hard to separate from the political centre.

This analysis casts doubts on the meritsof the external economic policy being pursued in Dublin. On the one hand, the Irish political establishment is deter- mined to push closer to Germany, but it is far from certain that Bonn is eager to

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embrace the country without the UK. On the other hand, it is desperately attempting to divorce the country from the British market even though hard economics suggests that the two islands will remain intimate. In reality, the current policy is unlikely to ease the double hegemony problem. In this situation, it seems questionable whether a European policy, that could add up to little more than a muddling through strategy, should be put before national economic and political reconciliation on the island. In fact an alternative policy avenue is open through which the Irish authorities could at once attempt to ease the double hegemony and contribute to a political settlement in the north. This policy amounts to the Republic re-establishing orderly economic ties with Britain through rejoining a sterling area. Economically, this policy would prevent the Irish punt being buffeted by the ebb and flow of sterling and the Dmark. Moreover, if the above assessment is accurate, it would not seriously damage the country’s chances of joining a monetary union in the future; in some respects it could actually improve the prospects.

Politically, the implications would be far reaching. A common perception among unionists in the north is that nationalist irredentism is still widespread in Irish political life with the UK seen as a jailer, imprisoning the country’s economic fortunes. Rebuilding close economic links between Dublin and London would be a clear signal to the unionist community that the Republic is truly committed to an historic compromise between the different traditions on the island. Clearly a more positive and stable attitude towards Europe in London would make this option more appealing. Realistically it will take a change of government for this type of approach to emerge. Thus Britain could do more to make the policy more attractive to Dublin. At the same time, by pursuing such a course, the Irish government could give the peace process a shot in the arm. Dublin must remember that it too must make sacrifices if it wants to see a settlement in the north. Whether the policy is pursued or not, the bottom line message is that European integration will only pose a threat to deeper north- south co-operation if Dublin allows it to do so.

The Social Chapter Question

Another argument made is that the EU Social Chapter could create a schism between the two Irish labour markets, causing a regime of competitive interdependence to open on the island. The proposition is that as a result of the Republic signing the Social Chapter and N. Ireland remaining outside due to the UK opt- out, a cost-based incentive structure may emerge between the north and south. Firms in the Republic, for example, may move to the north to escape the constraints of tougher labour market regulations. In such circumstances, the climate would be cold for positive cross-border co-operation.

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This argument is not convincing for a number of reasons. First, it overestimates the impact of the legislative programme associated with enacting the Social Chapter. Table 1, which outlines this programme, shows that virtually every measure applies to the UK - and therefore N. Ireland - as well as to the Republic. Only in the case of the European Works Councils Directive has the British government found it necessary to use its opt-out clause. But the general view among business leaders is that the UK will be unable to insulate itself from

Table 1: Social Action Programme Arising from the EU Social Charter

Legislative Issue Applicability

Republic of Ireland Northern Ireland

1. Employment and Renumeration Directive (1991)

Yes Yes

2. Improvement of Living and Yes Yes Working Conditions Directive (1991)

3. Equal Treatment for Yes Yes Men and Women (1992)

4. Health Protection and Safety at the Yes Yes Workplace Programme

(a) Medical Treatment on Yes Yes

(b) Exposure to Asbestos at Yes Yes

(c) Safety Requirements on Yes Yes

Board Vessels Directive (1992)

Work Directive (1991)

Temporary or Mobile Construction Sites Directive (1992)

Health Signs at Work Directive (1992)

in Surface and Underground Mineral Extracting Industries Directive (1992)

Fishing Vessels Directive (1993)

(d) Provision of Safety and/or Yes Yes

(e) Safety and Health Standards for Workers Yes Yes

( f ) Health and Safety on Board Yes Yes

5. Protection of Young People at Work Yes Yes

6. European Works Council (1994) Yes No

7. Imminent Directive on Potentially Potentially

Directive (1994)

indirect Working Conditions Yes



the effects of the directive and eventually will comply with its contents. In other cases, the Conservatives have been untroubled by many of the enacted employment policy directives. When it has been unhappy, important concessions have been secured from Brussels - the controversial directive proposing a maximum working week of 48 hours is a good example.

Two pieces of the legislation yet to be considered by the European Council relate to the regulation of atypical employment. The British government is opposed to the produced draft directives, but it is unlikely that it will escape from EU legislative influences in this area, even if the opt-out is used again. Because of recent rulings by the European Court of Justice, the UK will be obliged to concede certain rights to part-time workers that closely echo those in the draft directives. Thus, in practice the highly vocal UKopposition to the Social Chapter amounts to precious little. Certainly it will not be a source of divergence between the two labour law regimes on the island. As things stand, almost all of EU social legislation is applicable in the north and the south.

Ground-level economic conditions also suggest that the notion of a regime of competitive interdependence in Ireland should be treated with a high degree of scepticism. Even if the argument were accepted that the Social Chapter will put the south at a cost disadvantage compared with the north, this extra burden is unlikely to be enough to trigger social dumping practices between the two parts of the island. This is largely because a large productivity gap exists between the two economies. Figure 1 compares labour productivity for manufacturing activity in the north and south, and shows that the south is outperforming the north. In fact industry in the south is so much more competitive that it would take the costs imposed by the Social Chapter to be huge before companies started to look northwards for regulatory liberation. Thus arguments that EU policies

Productivity, NI manufacturing 25 T - - Productivity, IRL manufacturing

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Figure 1: Labour Productivity in Manufacturing: the Republic of Ireland and Northern Ireland 0 Blackwell Publishers Ltd 1996

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could actually drive an institutional wedge or barrier between the two Irish economies are overblown. Little if any inter-regime competition will arise in Ireland because of European integration.

V. Neofunctionalism and Rolling Integration in Ireland

So far the article has reached two conclusions. First, it has suggested that arguments for a large EU role in the economic and political governance of N. Ireland are misplaced and overambitious. Second, it has been argued that the EU is unlikely to be a barrier to co-operative connections between the two parts of the island. The article now turns to another topical discussion, that of whether European integration, in both theory and practice, holds any lessons for efforts designed to increase cross-border co-operation in Ireland. This matter is important, for in the Joint Framework documents the two governments envisaged the EU playing a role in strengthening ties between the two parts of the island. At the same time, unionist and nationalist opinion inside N. Ireland is divided on the matter. Drawing on the experience of European integration may help us to codify the issues at stake.

Reflecting a widely held nationalist expectation, Rowthorn (1 993) suggests that closer economic co-operation between both parts of the island will induce the unionist community in the north to shift its loyalties away from Britain and towards the Irish Republic. As a result of this gradual process, the political foundations will be laid for the unification of Ireland. This view is best described as the ‘rolling integration’ scenario and it closely resembles the neofunctionalist account of integration inside the European Union. Neofunctionalism sets out to explain the process whereby political actors in separate national settings are persuaded to shift their traditional loyalties, expectations and activities from a well-established political formation towards a new constitutional order. A key proposition of this literature is that once different national political and economic elites decide to deepen co-operation between themselves, even in fairly pre- scribed policy areas, they will find that the scope or boundaries of the integration agenda are expanding quickly.

Haas (1 968), the intellectual founder of neofunctionalism, used the concept of spillover to capture the idea that an integration process is inherently cumula- tive and dynamic. At the start, the integration process is seen as involving governments horse-trading to conclude package deals. Deals of this kind oblige some governments to take action on a particular matter in return for other governments agreeing to do something in an another policy sphere. Because these reciprocal actions invariably have unintended consequences in yet other unrelated areas, governments feel compelled to spread the integration arena further. After a time i t is not only the political and administrative elites who are

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engaged in the integration process, but citizens too. According to Haas, the spillover dynamic created by new centres of decision-making will encourage citizens to turn away upon from existing political jurisdictions. This is largely because their general well-being will be increasingly tied to the integration process. Eventually citizens are persuaded to regard the institutional apparatus associated with integration as representing a legitimate new political community, thereby rendering the old jurisdictions obsolete.

The similarity between the Rowthorn line of argument and neofunctionalism should be apparent. Thus many nationalists view cross-border co-operation as putting in train an integration process which will cause economic and political connections between the north and mainland Britain to atrophy, and similar linkages with the south to hypertrophy. Good grounds exist to be sceptical about such a neofunctionalist project emerging as part of the Irish peace process. First of all, although a neat scenario on paper, it is doubtful whether neofunctionalism has fully emerged in any actual integration experiment. Consider the case of European integration. To be sure the policy-making capacity of the EU has increased considerably since its inception in 1957. At the same time, it is highly questionable whether virtually 40 years of European integration have dented to any great extent national identity across the Member States. Rather than progressing along a smooth integration conveyor belt towards an ever closer union, the EU has evolved in fits and starts like a tempestuous marriage where love, loathing and lethargy are embodied in the one relationship.

Above anything else, the experience of the EU shows that the relationship between politics and economics in an integration process is unpredictable and highly contingent on prevailing circumstances. In the mid-l960s, for example, when economic interdependencies were rapidly being forged between the six original member countries, political relations between them were thrown into turmoil by de Gaulle’s behaviour in the Council of Ministers. More recently, the Maastricht plan for monetary union, rather than triggering a positive spillover process actually had the effect of weakening political commitment to the EU among European citizens. In other words, as Hoffmann argued many years ago, a process of spillback, which refers to the weakening or even rejection of the integration process, is as likely to arise as a spillover dynamic when efforts are made to deepen interdependencies between nation-states (Hoffmann, 1968).

Those who argue that cross-border co-operation in Ireland, involving a strong EU dimension, represents the stepping stones across a river from one constitutional arrangement to another should take note of European integration experience. The unavoidable message is that it is specious to believe (or hope) that economic co-operation between both parts of Ireland will automatically cause the political border to wither away. Another lesson is that to present cross-border connections as a neofunctionalist project runs a huge risk of triggering a


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spillback process. Given the intense loyalty the unionist community has to Britain, deep suspicions exist about whether close economic ties between the north and south is the backdoor to the political unification of the island. Portraying cross-border institutional connections as exactly that type of process will almost certainly cause the unionist bloc to withhold support. Put simply, the commitment of most people in N. Ireland to the union with the UK places a big political constraint on a neofunctionalist/rolling integration model underpinning new cross-border relationships.

A further barrier to rolling integration is that 70 years of almost separate development have resulted in distinctive economic and social structures emerging in the two parts of the island. A rolling integration strategy would be easier if there were a high degree of similarity between the north and the south, but this is not the case. Consider the area of the labour market. Figure 2sets out the degree of convergence/divergence in several important labour market areas. The black dot in the middle represents the situation of complete convergence whereas the circumference of the outer circle is total divergence. Overall the figure shows that the two labour markets operate in fairly different ways. Take the matter of the two wage systems. On every score there is considerable divergence between the north and south: in the Republic a national system of pay determination is in place while in the north fragmented, decentralized bargaining is the norm in the private sector. The wage structure, involving such items as wage relativities and dispersion rates between occupations, also shows little sign of convergence. The system of taxation and the charges on labour are yet further sources of difference. Similar asymmetries emerge when other parts of the two economic and social structures are compared. All this suggests that ground-level conditions are inhospitable to a rolling integration scenario taking hold in Ireland.

A third reason to be sceptical about this scenario is that the institutional arrangements conducive to rolling integration are unlikely to emerge on the island. The literature tells us that neofunctionalism is more likely to happen when the integration programme has an autonomous institutional structure and the policy capacities of which are not tightly ring-fenced (Pollack, 1994). With the scope for political and policy entrepreneurship, an ‘integration centre’ can push forward the depth and breath of collaborative measures. Another conducive condition is if the integration project has a legal dimension. Establishing economic and policy interdependencies through the law has the effect of creating a new legal order outside domestic judicial systems. As a result, tensions frequently emerge between the extra-national and national sources of law over which takes precedence. Resolutions to such disputes can strengthen the extra- national legal order. Moreover, citizens of the participating countries may explore ways to use the extra-national sources of laws within the domestic setting thereby deepening ground-level support, for the integration process. Finally, if

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THE EU AND THE IRISH PEACE PROCESS

Figure 2: Labour Market Systems: North and South Taxation

Social changes on labour

Figure 2a: Wage Systems

Institutional similarites

Level of contact

Mainstream programmes

Figure 2b: Dispute Resolution Mechanism 0 Blackwell Publishers Lld 1996

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Wage formation

system

Policy . priorities

564

Coverage of labour law

regime

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Collective labour rights

Policy priorities in labour law

Individual labour rights

Figure 2c: Labour Law Regimes

Institutional similarities

Level of contact

Mainstream programmes Figure 2d: Training Systems

Policy priorities


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the integration process has a budgetary aspect, then the opportunity for side payments-one country getting compensation for agreeing to go along with deep forms of integration - increases.

It is unlikely that such an architecture will be built to house cross-border collaboration in Ireland. Neither the British nor Irish governments appear to regard this type of arrangement as appropriate, if the proposals in the Framework documents are anything to go by. These documents do not envisage the setting- up of an all-Ireland institutional structure with independent policy-making or budgetary powers. Furthermore they do not foresee the need for an all-Ireland legal order. Perhaps the most accurate interpretation of the documents is that the two governments have gone out of their way to prevent the creation of institutions that could be used to push a neofunctionalist/rolling integration agenda. To use the language of another part of the European integration literature, both Dublin and London appear to have come down in favour of an intergovernmental approach to north-south economic and political linkages.

VI. Intergovernmentalism and North-South Connections

Cross-border co-operation organized along intergovernmentalist lines normally has two distinct features (Moravcsik, 1993). One is that the objective of the integration process is not to wither away existing constitutional borders, but the promotion of peaceful co-existence between different nations. Second, the institutional design of intergovernmentalism ensures that the participating countries control the decision-making process. Thus, should any country disap- prove of a specific proposal, it has the capacity to say, ‘no’. In practice, narrow and broad versions of intergovernmentalism can be found. Under the narrow version, the participating countries keep a tight grip on the collaboration process so that no spillover or incremental dynamic comes into play. Although autono- mousorganizational structures can be established, these normally have no strong decision-making powers. Examples of narrow intergovernmentalism would be the Nordic Council which promotes co-operation between the Scandinavian countries and, at the international level, the United Nations.

The broad version of intergovernmentalism is not so tightly controlled by the nations involved. A limited form of autonomy is enjoyed by the integration centre to pursue quasi-independent programmes. Moreover, a range of collaborative economic and social initiatives emerge which are associated with the formal integration project but are not under the direct control of national

Note: The figure measures convergence and divergence between the two Irish labour markets. A scale of 1-5 is used in each figure: a score of 1 which is the black dot in the centre of the circle, represents complete convergence, whereas a score of 5, which is the outer circumference, reflects total divergence. 0 Blackwell Publishers Ltd 1996

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governments. Thus the intergovernmentalist structure is augmented by the activities of interest groups, business lobbies, and so on. As a result, additional support structures for the integration process are created that at once legitimize cross-national collaboration and generate pressure for further initiatives. Over- all, the integration project is made more dynamic and less tied to the interests of governments. In the end, dense commercial, policy and social interdependencies emerge across frontiers. But these interactions are contained inside an institutional structure committed to respecting sovereign boundaries. Perhaps the best example of broad or augmented intergovernmentalism is the EU itself.

The distinction between narrow and broad intergovernmentalism is relevant to discussions about cross-border collaboration in Ireland. Unionist politicians are signalling that they are prepared to accept some form of policy ties between the north and south. But this acceptance is conditional on there being no overarching cross-border institutions and the Irish Dail and any local assembly established in Belfast being in full control. Narrow intergovernmentalism par excellence! But this proposal, frequently called the ‘good neighbours’ model, is unlikely to command widespread political support. Northern nationalists - no matter of what hue - would feel short changed by such an option. The likely response from the SDLP and others would simply be to make such a plan unworkable. Just as rolling integration is constrained by the political sentiments of the unionist community, so narrow intergovernmentalism is made infeasible by nationalist opinion. A fact that must not be overlooked is that, as well as a unionist veto, there is now a nationalist veto over political change in N. Ireland. As a result, for a sustainable political settlement to emerge a genuine equilibrium has to be established between the views of the two communities.

A broad intergovernmental approach to north-south relations potentially represents a compromise position between the nationalist neofunctionalist position and the unionist narrow intergovernmentalist stance. On the one hand, it accepts the present constitutional set-up, while on the other hand it promotes a dynamic approach to cross-border co-operation. European Union programmes and policies could play an important role in this scenario as they represent a ready made agenda for cross-border co-operation. In particular, since they are products of an intergovernmentalist process at the European level, it would be hard to write them off as part of a surreptitious project to do away with the border. Furthermore, the policy styles underpinning many of these programmes could play a positive role in the Irish context. Conflict and confrontation are normally eschewed and the participants are usually sensitive and responsive to each other.

Labour market policy offers a good example of how the EU could help promote the broad intergovernmental approach to north-south co-operation. As mentioned earlier, the two labour markets in Ireland function in highly distinctive ways, reducing the scope for any big programme to create a single

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employment system on the island. At the same time, existing divergence does not mean that no collaborative measures can be enacted. A number of EU social policy programmes could kick start this collaborative process. Consider the area of labour mobility. Ever since the formation of the Common Market in 1957, Brussels has continually pushed for the removal of barriers impeding the free movement of labour. Policies in this area include obtaining the mutual recogni- tion of diplomas and qualifications across frontiers, the portability of pensions across national boundaries, revisions to social security systems that encourage search activity among the unemployed in different Member States. Promoting such policies on an all-Ireland basis appears worthwhile, particularly as labour market flows between the north and south are relatively small.

Another area is health and safety arrangements. The EU has a considerable presence in this part of the labour market largely because it was the first area of European social policy in which the Member States conceded the principle of qualified majority voting. As a result, much of the health and safety policy agenda in Dublin and Belfast has its origins in Brussels. Carrying out such schemes in this area jointly or in a co-operative manner would not only bring the labour market institutions on both sides of the border closer together, it would also contribute to the creation of a commercial level playing field, as all businesses would face the same regulations. A further area is training. Many EU initiatives in the area require the collaboration of enterprises in separate Member States before finance is made available. Encouraging firms north and south to devise collaborative training programmes under the auspices of EU employment policy could lead them to develop deeper commercial synergies and networks. Equal opportunity measures is yet a further area where the EU could operate as a conduit for greater north-south co-operation. Developing cross-border initiatives on equality issues would help create important social foundations to north- south relations. Other examples from the labour market area where the EU could assist in promoting all-island policy communities include higher education, labour law, and long-term unemployment. The EU could play a similar role in other policy areas like transport, the environment, or Structural Fund allocations. All in all, a broad intergovernmentalist approach would enable meaningful connections to open across the entire terrain of policy-making, with the EU being an important catalyst and focal point in the process.

Those of a unionist persuasion may see broad intergovernmentalism simply as a milder form of neofunctionalism or rolling integration. For most unionists, any transfer of authority or responsibility to cross-border economic arrangements dilutes by an equal amount the economic and political status of N. Ireland inside the UK. But such a direct one-to-one trade-off is unlikely to happen in practice. For one thing, not all initiatives - indeed very few - designed to bring different countries closer together through economic co-operation compromise


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the identity, cohesiveness or citizenship of the respective nations. Here it is important to distinguish between inner and outer sovereignty. Most nations have three pillars of inner sovereignty: defence arrangements, internal law and order procedures and taxation. If a system of cross-border co-operation breaks into the zone of inner sovereignty to any great extent, then the distinctive character of a national political formation comes under threat. Some co-operation may be possible on inner sovereignty, but this is normally low grade. Outer sovereignty refers to those government policies and other economic and social arrangements that are important though not pivotal to the distinctiveness of a nation: industrial policy, agricultural policy, and so on. Considerable interdependencies can be established in the realm of outer sovereignty without compromising a particular nationhood.

Examples from the European Union may make the argument clearer. For about ten years the Member States have worked within an arrangement called the European Political Community to promote co-operation on defence matters. But this arrangement proved ineffective when the war in Bosnia broke out: it failed to get the Member States to take decisive action on the issue. Thus whilst co- operation existed in an area of inner sovereignty, when it really counted it amounted to little. Another example is monetary co-operation. Since 1978, most of the Member States co-ordinated their exchange rates through the ERM. Participating in this currency corset did not result in the Member States experiencing a fragmentation of their national economic and political institutions. But when the governments (apart from the UK) agreed to the plan for monetary union at Maastricht, almost immediate opposition emerged from the citizens of the EU. Whereas regulating exchange rates was regarded as compat- ible within separate national economic regimes, creating a single currency was widely interpreted as an invasion into inner sovereignty: the distinctiveness of national systems was seen as coming under threat. A third example is agriculture. For nearly 40 years Brussels has controlled the farming industry in most of Europe, but this has not dented national identities to any great extent. To be sure, people in rural parts of N. Ireland do not seem any less nationalist or unionist due to the operation of the Common Agricultural Policy. Thus the history of the EU suggests that, despite all the integration that has taken place, Member States remain stubbornly intact as political entities. The lesson for unionists is that economic co-operation does not necessarily mean that N. Ireland’s position inside the UKor the Protestant identity in the region, will be compromised to any great extent.

A further lesson from European integration undermines the unionist position to cross-border co-operation even more profoundly. In a brilliant study, Milward (1992) argues that, far from weakening nation-states, European integration has actually strengthened them. Thus he shows how the European Coal and Steel

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Community allowed Belgium to deal more easily with huge over-capacity in its steel industry in the 1950s. Similarly, he highlights how the free movement of labour clauses of the Treaty of Rome helped Italy deal with the chronic unemployment problem in the southern part of the country. The Milward thesis is that European integration is a symbiotic process whereby the EU centre and the national systems are actually reinforcing rather than in collision. If properly designed, cross-border economic co-operation in Ireland could operate in the same way. In particular, a symbiosis could arise whereby north-south co- operation strengthens the political stability of a new N. Ireland. By giving institutional and policy articulation to an important aspiration of the nationalist community in the north, a sustainable political settlement is more assured. Thus cross-border economic co-operation and a new N. Ireland become dependent on each other and the interaction between the two is mutually supporting. Unfortu- nately unionists appear to have neglected the possibilities of this policy avenue.

VII. Conclusions

Several issues arise from the above discussion. First, in the short term the EU peace package can make a positive contribution to local economic and community development. This assessment is relatively uncontroversial, and widespread support exists for the initiative. But, second, the question of a permanent EU role in the governance of N. Ireland is more contentious. For some time now, constitutional nationalists have argued that the EU should play a central role in any new political institutions created in the region. The conclusion of the article is that the political and economic conditions are not present for the EU to take on a role in the internal affairs of N. Ireland, a view which is shared by the European Commission. Third, the article is sceptical about the argument that the dynamics of European integration may place a wedge between the north and south of Ireland, thereby making it difficult to create closer connections between the two. This scenario will unfold only if London and Dublin, but particularly the latter, choose to pursue a European policy that undermines cross-border collaboration in Ireland. In other words, should the EU stand in the way of north-south initiatives, it is more likely that the blame will reside in either of the two national capitals rather than in Brussels. Fourth, the article points out that both nationalism and unionism can use the theory and practice of European integration to bolster their case. At the same time, it argues for a form of north-south co- operation that stands apart from the main nationalist and unionist views on the matter. On the one hand, it rejects the nationalist preference for rolling integration as being neither feasible nor desirable. On the other hand, it sees the unionist position as a rather unsophisticated zero-sum approach to matters such as sovereignty, identity and pooled decision-making. Instead, it argues that the EU


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could help embed a symbiotic approach to north-south relations. This approach offers a possible compromise between the two opposing blocs. Herein lies the key message of the article: if the various protagonists commit themselves to the search for a political settlement and foresake deeply held beliefs, then the EU and European integration can help support the process. But ultimately the EU is only a concerned by-stander which suggests that it is up to those on the ground to secure the permanent peace.

References

Bew, P. and Meehan, E. (1994) ‘Regions and Borders: Controversies in Northern Ireland about the European Union’. Journal of European Public Policy, Vol. 1, No. 1, pp. 47-63.

Commission of the European Union (1995) A Special Support Programme for Peace and Reconciliation in Northern Ireland (Brussels: CEC).

Gudgin, G. (1994) ‘The Economics of the Union’. In Wilson Foster, J. (ed.), The Idea of the Union (Belfast: Belcouver Press).

Haas, E. B. (1968) The Uniting of Europe, Political, Social and Economic Forces, 2950-1957 (Stanford: Stanford University Press).

Hoffmann, S. (1968) ‘Obstinate or Obsolete: The Fate of the Nation-State and the Case of Western Europe’. In Nye, J.S. (ed.), International Regionalism (Boston: Bullinger Press).

Kearney, H. and Wilson, R. (1991) ‘Northern Ireland: A European Region’. In Pollock, A. (ed.), The OpsahL Commission: A Citizen’s Inquiry (Belfast: Lilliput Press).

Kennedy, D. (1994) ‘The European Union and the Northern Ireland Question’. In Roche, P. J. and Barton, B. (eds), The Northern Ireland Question: Perspectives and Policies (Aldershot: Avebury).

McCartney, R. (1995) ‘The Citizens of an Abused Society’. Parliamentary Brief, Spring.

Milward, A. (1992) The European Rescue of the Nation-State (London: Routledge). Moravcsik, A. (1993) ‘Preferences and Power in the European Community: A Liberal

Intergovernmentalist Approach’. Journal of Common Market Studies, Vol. 31, No.

O’Dowd, L. (1994) Souereignfy, Democracy and Economic Integration in Ireland (Belfast: Centre for Research and Documentation).

Pollack, M. (1994) ‘Creeping Competence: The Expanding Agenda of the European Community’. Journal ofpublic Policy, Vol. 14, No. 2.

Rowthorn, R. E. (1987) ‘Northern Ireland: An Economy in Crisis’. In Teague, P. (ed.), Beyond the Rhetoric: Politics, the Economy and Social Policy in Northern Ireland (London: Lawrence & Wishart).

Rowthorn, R. E. (1993) ‘Foreword’. In Munck, R. The Irish Economy (London: Pluto). SDLP (1992) Agreeing New Political Structures (Belfast: SDLP). Teague, P. (1993) ‘ERM, Now What?’, Fortnight, September.

4, pp. 473-524.

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