When it comes to the cost of Irish unity, maybe it’s okay if the heart overrules the head

Eight key points to bear in mind when weighing up the estimated €20.5 billion per year cost – and the benefits – of a united Ireland

The recent report by the Institute of International and European Affairs (IIEA) on the estimated costs of Irish unity, prepared by John FitzGerald and Edgar Morgenroth, is timely and valuable.

Matthew O’Toole of the SDLP put it well when he said that, while he didn’t necessarily agree with the conclusions of the report, it asks serious questions that need to be answered. It would be foolish to repudiate the report rather than offering, over time, the measured responses that it deserves.

Well-researched, clearly presented reports by distinguished academics like this one will enable Ireland, when the time eventually comes, to avoid the folly of the UK’s Brexit referendum in which experts were dismissed out of hand and the practical consequences of which were contemptuously brushed aside. The IIEA report could be seen as one inoculation, in a long-term vaccination programme, against the Brexit malady.

The core conclusion of the report is that funding Irish unity would put huge financial pressure on Ireland, as much as €20.5 billion a year, resulting in an immediate major reduction in our living standards. However, far from closing off the debate about Irish unity, those somewhat dramatic headline figures should help to stimulate the necessary discussion. That is what seems to be happening.

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The following eight points could usefully be borne in mind in contextualising the report’s findings.

First, a number of other studies have reached different conclusions about the costs of Irish unity. It is not, of course, sufficient to brandish one report with a view to dismissing another. However, further engagement, over time, between the various academics involved will be important.

Second, every study must make certain assumptions. The authors of the IIEA report sensibly mitigate against some of their assumptions by setting out alternative calculations in relation, for example, to who would pay for existing Northern Ireland pensions and for Northern Ireland’s share of existing UK debt.

Third, the report acknowledges that a significant rise in productivity in Northern Ireland could substantially reduce the costs of unification. It is not possible to quantify that effect.

Fourth, FitzGerald and Morgenroth acknowledge that no account is taken of the wider economic effects of Irish unification, which could be both positive and negative. While one should be wary of an optimism bias, it is not impossible that a new, agreed and united Ireland, with a fully integrated economy, would benefit from exceptional economic dynamism and growth.

Fifth, if there is one thing that everyone should be able to conclude from the report, even if they don’t fully agree with certain aspects, it is that Irish unity should not be rushed. Taking time is not only politically wise; it makes economic sense. The report notes that it is likely to be at least two decades before the productivity gap between North and South could be substantially narrowed. In practice, we may well have something not far short of those two decades during which the necessary substantive progress can be made on that productivity gap. Substantial time will be required before any referendum can be held on Irish unity. Moreover, in the event of a positive vote, there would then have to be a further lengthy period of transition before unity would actually take effect.

Sixth, half of the overall additional costs set out in the report relate to increasing Northern Ireland welfare payments and public sector pay rates to bring them into line with those in the South. If the prospect of those additional costs might indeed impact negatively on opinion among southern voters, it is intriguing to reflect on the dramatically positive effect they would have on a unity referendum in Northern Ireland itself.

Seventh, I would not dismiss the idea of significant, if not necessarily game-changing, financial and other support from the European Union. Our EU partners have always generously supported the Northern Ireland peace process. I remember being told at the first small meeting in the European Commission in 1992 to explore possible peace funding, which I attended as a member of Commissioner Ray MacSharry’s cabinet, that the absolute maximum EU funding would amount to €10 million, a figure which later grew to billions. I believe the UK would also be relatively generous in its support for Northern Ireland at least for a long transitional period. US investment could flow like never before.

Finally, most importantly, the decisions that will eventually be taken about Irish unity, both North and South, will be at least as much about politics as economics. Cost factors will understandably play an important role. But historical and international comparisons suggest that profound decisions of this nature can involve heart more than head. It’s useful to recall for example, the permanent refrain of the apartheid regime in South Africa that the non-white population there was better off, economically per capita, than the population of other African countries. That argument counted for nothing.

The people of Northern Ireland will in due course take their own decision about their preferred future. When that happens, issues of identity and allegiance will probably have at least as much influence as economic considerations.

If and when the public in the South has to make its decision, I find it hard to imagine that any factor would weigh more heavily than the weight of history. However, FitzGerald and Morgenroth have helpfully reminded us of some immensely significant economic factors that must be addressed.

Bobby McDonagh is a former ambassador of Ireland to London, Rome and Brussels

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