RPT: REVIEW - European Commission Drawing Up Aid Package For Ireland In Case Of No-Deal Brexit

BRUSSELS (UrduPoint News / Sputnik - 23rd July, 2019) The European Commission is preparing a multibillion-pound aid package for Ireland to compensate for the economic damage from a possible no-deal Brexit on October 31, The Times newspaper reported as the United Kingdom is about to get a new prime minister.

The Times newspaper reported earlier in the day, citing a senior EU diplomat, that Brussels would "spend whatever was necessary" to support the Irish government in case of any disruption of trade.

On Tuesday, either former London Mayor Boris Johnson or UK Foreign Secretary Jeremy Hunt will be named as the country's new prime minister. Both men said they wanted to change the UK-EU withdrawal deal and the Irish backstop proposal, keeping a no-deal scenario on the table.

In the meantime, Ireland's deputy prime minister, Simon Coveney, has described a no-deal Brexit as an "ugly prospect" that would force Ireland to impose customs checks on its trade with Northern Ireland, putting many businesses and political relationships on the island "under a great deal of strain."

IRELAND HISTORICALLY ONE OF LARGEST BENEFICIARIES OF EU FUNDS

Ireland joined the European Economic Community, now known as the European Union, in 1973. According to the European Commission, about 978,000 jobs were created and trade increased 150-fold during the years of the country's membership in the European Union.

The commission said citing Ireland's Finance Department that between 1973 and 2015, the country received more than 74.3 billion Euros ($83.4 billion) from the European Union, and contributed about 32 billion euros ($36 billion) to the EU budget.

"The Irish story is a great success of what the injection of European public funds could provide to transform a country ... From a very poor country, with high poverty, unemployment, inflation and low growth, without any infrastructure, the republic of Ireland managed to become the 'Celtic tiger' that grew very fast until the major 2008 recession," Etienne Davignon, a former vice-president of the European Commission, told Sputnik.

In June, the European Union agreed an aid package of 50 million euros ($56 million) to support Irish beef farmers, affected by market uncertainty because of Brexit, as the country's beef sector is hugely dependent on exports.

"The Irish farming lobby has again been very convincing in Brussels, persuading the commission to devote 50 million to this single issue of the Irish farmers. Very efficient, I must admit, but, of course, the Agriculture and Rural Development Commissioner in Brussels is an Irishman, Phil Hogan, and today, the European Commission is not under normal scrutiny, since the parliamentary elections took place on May 26.

Maybe this explains this sudden funding 'to face market uncertainty,'" Dominique Bilde, a member of the European Parliament's Identity and Democracy political group from the French National Rally party, told Sputnik.

IRISH BACKSTOP STILL BIGGEST STUMBLING BLOCK

A border that separates Northern Ireland and the Republic of Ireland was one of the key parts of the Brexit negotiations. Due to its great political and diplomatic sensitivity, the European Union and the United Kingdom agreed it would be better to avoid physical checks at the Irish border.

But the catch is that, in order to keep the border fluid, Northern Ireland would have a special status, different from the rest of the United Kingdom, in a way "remaining" within the EU single market and its customs union. The Brexiteers like leader of the Brexit Party, Nigel Farage, or Boris Johnson, have never agreed with complicated solutions negotiated by UK outgoing Prime Minister Theresa May.

The backstop would mean that the United Kingdom staying in a very close relationship with the European Union for an indefinite period.

"The backstop is nearly impossible to accept for the UK. Although it is described as temporary (if no agreement is found by end 2020), it would apply indefinitely, unless and until another agreement is reached. Neither party has a right to terminate or amend it without the agreement of the other," Victoria Hewson, a senior counsel at the International Trade and Competition Unit of London Institute of Economic Affairs, told Sputnik.

And while both sides said they wanted to avoid it, there is a "real prospect" of the backstop being implemented since the parties have been unable to agree upon other solutions to make sure there is no physical infrastructure on the Irish border, according to Hewson.

"Worse still: the Protocol comprises the whole of the UK being in a customs union with the EU, and Northern Ireland being directly part of the EU customs territory and subject to EU single market regulation on goods. Because of the backstop, even the UK would have to respect EU provisions on tax, the environment, labor, competition and state aid," she stressed.

Both Johnson and Hunt have declared the backstop deal "dead" and promised to remove it from any deal they negotiate with the European Union. Brussels, on its part, has insisted that any Brexit agreement must contain the backstop.

Coveney, on his part, has warned that "we're all in trouble" if a new UK prime minister decided to rip up the Brexit deal.