Brexit bomb

10 December 2017

Irish border will explode

By: Karsten Riise

The issue of the Irish border will explode in the Brexit process. The question is only how the border-issue will explode. The Republic of Ireland must unbendingly leverage her key-role to peace.

Border issue will go up again

In the Brexit talks between London and Brussels, the issue of the Irish border was not solved. The border issue was simply sidestepped, fudged, swept under the rug – kicked down the road.

The Irish border issue will resurface, in an extremely inconvenient way and moment.

Impossible UK commitments

The UK Prime Minister Ms. May has committed herself to the impossible:
  1. “no hard border” in Ireland,
  2. “same regulatory regime” on both sides of the Irish border,

    where the side of the Republic of Ireland continues in the EU Single Market and Customs Union,
  3. “same regulatory regime” between Northern Ireland and the rest of the UK,

    where Ms. May has promised to exit the EU Single Market and Customs Union.

This just does not hold.

Ms. May knows it. Brussels knows it, but has accepted it, to get on with business. The Republic of Ireland also knows it, and has been pressed by the other parties not to stall the negotiations.

As Ms. May will have to break one (or more) of her promises – better for peace, if Ms. May is pressed not to break promises no. 1 & 2  above.

Bloody explosion is about to happen

The Irish border issue is now at risk of “sleeping”, until the UK’s future relationship with the EU has been negotiated in the now upcoming second stage of the Brexit negotiations.

It is most likely, that the UK will get a “transition” period of two years – which really is nothing else than Brexit speak for a continued UK membership on “Norwegian” terms: Continued full EU membership, just without UK voting rights. During such a “transition” period, the soft Irish border can continue to work as until now – troubles are bound to come after that.

Only after a “transition” period ends in 2021 comes the hard point: The UK will leave the EU, probably with not much more than a limited trade agreement like the Canadian CETA-agreement. No later than in 2021, the Irish border issue is about to explode on the ground.

Explosion on the ground is to be taken literally here. The last Irish war lasted for 30 years. It was one of Europe’s deepest bloody conflicts, and the soft Irish border between the two parts of Ireland is a corner-stone of the peace-deal. If the Irish border issue is allowed to explode on the ground again in 2021, we can have a new real Irish war, with bombs in Belfast and London, shootings, armored cars in the streets - and bloody victims.

Let issue explode at the table – not the ground

The Irish border issue WILL explode. The question is how.

It is important, that the coming explosion of the Irish border issue happens without bloodshed already at the negotiating table, and not with physical victims on the ground in 2021. Sadly, the prospect of an Irish war in 2021 may be too remote for Ms. May and Brussels, that they can be expected to feel enough pressed to take sufficiently far-reaching steps.

The Democratic Unionist Party DUP, of Ireland has the same interests in peace in Ireland, and in a continued connection with the EU (Northern Ireland voted Remain to the EU). But the DUP, however, legitimately has a priority of the cultural connection of their 400 year old Irish constituency with Britain. Scotland has been sidelined, and English Brexiteers will just wash their hands.

The ultimate responsibility, that the coming Irish border explosion happens bloodlessly already at the table, and not later with physical casualties, therefore falls upon the Republic of Ireland.

In 2018, the content of the future UK arrangement with the EU must be finalized to give room for a final 6 months EU-member state approval procedure. In the final approval procedure, the remaining 27 EU members must reach a unanimous agreement on the UKs future relationship with the EU. No future UK-deal without the Republic of Ireland.

The Republic of Ireland has a veto-right – and must dare the political risk to make maximum use of it.

Playing out its veto, the Republic of Ireland must not be afraid to “explode” and completely demolish the Brexit negotiations in the UK’s future with the EU.

Maybe airlines to London will be stopped, and banks flee the UK. So be it. Ireland must be unafraid of being pressured, and threatened to be frozen-out by the rest of the EU, or even become object of hate by the UK-Brexiteers.  The Republic of Ireland should also not accept to be “bribed” to give in, with minor advantages offered by the UK and the EU.

The Republic of Ireland must with all heart and spirit be prepared to act on the aim, that the Irish border issue must either be solved completely and for real at the table in 2018 – or that the UK leaves the EU in 2019 with NO future deal.

Such a stubborn stance by a smaller EU member may earn the Republic of Ireland few friends now – but the Republic of Ireland has overwhelming legitimate reasons to be so tough.

Signal open toughness all the way

For the Brexit negotiation not to run down the wrong track during the next 9 months, it is important that the Republic of Ireland sends sufficiently tough signals - now.

Ireland must signal the toughness, if needed, to let the border issue explode and break UK’s new deal with all the EU, even in the last minute at the table, no matter the cost.

To avoid worse explosion on the ground later - Ireland must timely and unbendingly leverage its key-role. How can the Republic of Ireland send a strong-enough signal?

Only one way: The Republic of Ireland must create even more crisis at the table – better safe now, than sorry later - to demonstrate that the Republic of Ireland seriously will take no more fudge all the way to the end.

Karsten Riise
Partner & Editor



She took the bullet

15 November 2017

UK minister Piti Pratel took the bullet for her boss

By: Karsten Riise

With much media attention, UK “development” minister Ms. Piti Pratel had to resign from the UK government, after her unofficial meetings with the Israeli Prime Minister and other high-ranking Israelis, during her “vacation” in Israel.

The only logical explanation

The word “development minister” had to be put into quotation marks in the case of former UK minister Piti Pratel.

Because Piti Pratel, sometimes acting abroad in tandem with Exchequer Philip Hammond, was one of the UK’s two ablest builders of UK trade relations.

In their ability and energy to “open doors” for UK trade, the couple Piti and Philip by far surpassed the UK official trade minister. In doing so, Piti and Philip have generally operated a bit “below the radar” of media. Their (official) travels were of course routinely reported in media, but trade often being the real purpose of their travels, was under-reported.
Brexit is at risk of developing into a catastrophe for the UK.

In trade, the UK will have to “do with whomever” in “whatever way” – including with Israel. And on Israel’s terms. In trade, the UK may need Israel more than the other way around. This must be the judgment of the UK government.

It is simply not believable, that Piti Pratel should have made her “holiday-mission” to Israel so extremely trade-intensive and at such high diplomatic levels, without full knowledge, approval and direct support from her Prime Minister.

Israel and her activities are, as everybody knows, a very divisive issue in much of the world, including the UK.

The task of Piti Pratel to advance UK trade interests in Israel in this rather unorthodox way was, of course, to keep everything unknown and officially “deniable”.

With 99.9% probability, everything which Piti Pratel did on her “holiday-trade-mission” to Israel has been fully organized and approved by Prime Minister May as well as all the inner circle of the UK government.
In withdrawing herself after this story came up, Piti Pratel simply “took the media-bullet” for her boss, Prime Minister Theresa May. 

Karsten Riise
Partner & Editor



Brexit - what should have been done

Unfortunately, this suggestion for an optimal Brexit was never followed.

11 July 2016

Brexit - what must be done

By: Karsten Riise

Vision in this situation counts heavier than leadership. Without vision no leadership. I have seen no prime-minister hopeful present a vision for UK after Brexit. But the array of Prime Ministers the coming decade(s) should ideally continue a shared vision.

Leave graciously
Activate the clause for exit of the EU immediately. There is no going back. “Burn the ships”. Any attempts to drag on the feet, to gain “concessions”, will only be interpreted by the EU as attempts at extortion, and the payback will be bitter. The UK needs good relations with the EU for all time, so leave as a faithful partner - to be trusted for the future. Leaving quickly, will financially be a very “cold turkey”, but the great pain (though long) will be shorter than otherwise. Leaving quickly is the right thing to do – it will demonstrate leadership, and induce the country to march forward.

The Scots and the North Irish voted “stay”. The UK consists of different legal national entities. Explore, if there is a legal way for Scotland and Northern Ireland to remain in the EU, while England and Wales leave. There is a precedence the other way around: Greenland is a part of Denmark’s “Realm Commonwealth” (Rigsfællesskab), Greenland has its own rule, and Greenland left the EU while the remainder of Denmark stayed. So legally it is thinkable. The practicability of a legal model where Scotland could vote to stay in the EU while remaining in the UK, should be explored.

East-European workers in the UK pay triple for their presence: First, they perform valuable work. Second, they pay UK taxes – and third but not least: their home countries are the fastest growing markets in the EU for British products, helped by remittances from workers in the UK to their home countries. According to the UK’s National Statistics Office, Poland in 2014 was nearly as big a market for UK products as Denmark, but unlike Denmark, UK exports to Poland have from 1999 to 2014 been growing at a fast rate of 9.2% per year (current prices). If the UK had stayed in the EU, the East European countries would in 5 years (taken together) buy as much British exports as Italy, half as much as France, or one third of Germany. In a populist UK policy, it would be tempting to reduce the presence of East European workers as fast as possible.

But such action will come at a costly reaction from the EU, driven by East European members. As East European workers are one of the main issues of the “leave” voters, the dilemma that quickly reducing the number of East-workers will be legally difficult and largely self-defeating for the UK, this leaves (sic) the UK in as very embarrassing situation, where many “leave” voters must be disappointed.

To continue with access to the EU market, the UK Parliament will in the future (like in Norway) have to act as a rubberstamp for most EU legislation and EU standards to be introduced in the UK. In the world of exports, there are two dominating standards, EU and US; to further its exports, the UK should better keep EU standards. Except for drinking pints of beer, and driving miles-per-hour, as they already do, the “leave” voters may once again be disappointed by keeping EU sausages and the metrics system. Be honest about this to the public.

Setup council for EU-UK relations.

Losing market shares in the EU, it will be tempting for the UK to focus one-eyed on the other big world market, the USA. Exporting to USA is fine, but should not lead to a new dependency, where the UK will be more vulnerable to protectionist whims of the US Congress or of a Trump presidency. If Donald Trump is not elected, another Trump-alike can be president on a protectionist ticket bad for British exports in 4, 8 or 12 years. The “leave” majority voted for maximum independence. The UK should therefore not replace a EU dependency (though it will largely persist) with a big US dependency. Norway, Switzerland, Australia, and especially Canada also have UK export potential, but only to a certain degree.

Consequently, the UK must spread and diversify UK trade and interests to the non-Western world. Figures from the UK National Bureau of Statistics show that such a UK export diversification is already under way since 15 years. But after Brexit it must be forcibly accelerated. The UK can no more conquer or manipulate non-Western market-countries the way they did the Raj of India, the Ming of China, the Arabs, Persians, or the Africans – the UK must serve the non-West with products, services, and expertise.

Serve the World

The EU (ex UK) makes for nearly 20% of world GDP (IMF data). A rather fast and substantial loss of export-opportunities in the EU can of course over time be compensated in the other 80% of world markets. The question is, however, how slow, at how low prices (incl. exchange rates), and on what terms & conditions it will take to serve more to predominantly non-European buyers. Also high-paid specialists will see their jobs moving out of the UK. Hardship can become very dire, and for lack of social programs, social unrest and ethnic violence (individual acts and riots in neighborhoods) can become more common among those who feel underprivileged, before the harvest of new tough efforts can make up for the losses.

Outside the EU, the UK will be hard pressed to earn an increasing share of exports from the growing non-white, non-Christian, Muslim, Asian, and African markets, and the British will be the ones to ring the door and hat-in-hand ask for permission to enter. England must adjust. India and China with Japan and Korea will become indispensable. Russia was, before sanctions, a very important growth market for the UK. Pressed for alternative markets to the EU, even with Russia, the UK must face a time for adjustment.

In Japan and Korea, UK exports are, according to data from the UK National Statistics Office, going well forward. But compared to the relative size of the individual markets’ economies (IMF data), UK exports are underperforming in important markets like Indonesia, Taiwan, Brazil, México, and even Canada. Given time, sufficient effort, and maybe a needed new attitude to speaking other languages (e.g. Portuguese, Spanish), large potentials around the globe for UK export increases to counter future EU-export difficulties, do exist. Strategic alliances must be built out, with a non-imperial selling UK attitude. China, and not least India, are evident partners. Africa is growing fast, so an African alliance with the UK is also called for. Learn French, Arabic and read the Quran to socialize with big parts of Africa. Not least, the City of London should in the finance sector make itself the driving force of a world-wide alliance on confidential overseas banking with countries like Cyprus, Panamá, the Caribbean, Singapore, and Hong Kong.

The UK is world class in science, international business leadership, finance, professional services including lawyers, architects, engineers, and medicine, music, fashion and IT (to some degree), pharmaceuticals, and diplomacy. Also, with its airports and sea-lines, the UK is one of the main hubs to the world. Continue to improve communication lines. Improvements also must be addressed in production, foreign languages, and general education. Keep taxes low. Given the right development in attitudes, this leaves the UK with many long-term options.

Growth in the world really does not happen in the EU or the USA, but in those places which the UK will now be forced to serve more intensely, including Muslim countries, Asia, and Africa. If Brexit for many years will have a down-side of losses, being forced to diversify to non-Western markets can for the UK become the long-term up-side of the coin.

The positive prospects of Brexit are, that when the UK’s forced reorientation has gone on for 10-20 years, the UK (or what remains of it) can have a much broader and therefore more robust and flexible export base, and a more open relationship with the world than any other country on the planet. These are rewarding perspectives – but they must be earned.

Prepare the Public
It is going to be a tough journey, with no immediate net-advantages coming for years. EU-legislation will continue to be a dominant part of Parliament rubber-stamping. More East-workers will stay and serve England, than the “leavers” promised. Great dependence will continue to be on exports to the EU, and these EU-exports will be severely hampered. Nobody in the world is waiting with open arms to compensate the UK for self-induced losses of business in Europe. The pound must fall (more than it already did), real estate will be depressed, the City of London may panic, and a financial and economic crash and flight of work places is likely. Hardship will be deep, long and difficult. Prepare the UK public for a rough ride.

One attitude of probably many conservatives and “leave” voters may be “scratch the back of an Englishman, and you’ll find an imperialist.”. Any “imperial” arrogance is defunct and must be discredited. If the UK wants to replace lost EU exports with more business in the developing markets after Brexit, an attitude of serving the world is needed.

Inspire the public. With hard work, perseverance, creative thinking, and a more open view embracing the world, especially in that developing part of the world which belongs to other religions, cultures and ethnicities, which many of the “leavers” have tried to turn their back on, there is a future for the UK. Gone is “empire”, it will be no more. But by serving the whole world, with more sensitivity to “non-Protestants” and “non-Whites” and perhaps 1% of humbleness – on a more equal footing, there IS a future. That will be a future worth winning.

Karsten Riise
Partner & Editor



The biggest Loss

1 July 2016

England’s biggest Loss after Brexit

By: Karsten Riise

The biggest loss for England after Brexit is their pathetic lack of direction - lack of leadership.

The whole English people’s lack of knowing themselves, lack of facing the situation THEY themselves and nobody else has created for them.

Ever since they went into EEC (later EU) the English have ballyhooed craving a “special status” for England in Europe. For no particular reason, actually, except that the English believed that they of all people on the Earth were sooo special.

Now they got their way – and they crack up.

The Labour party is cracking up. The conservative party is cracking up. And even more telling: The loud-shouting “nay-sayers” are cracking up, not wanting to face the responsibility of their own “leave” campaign - even with big-Boris quitting.

Gone is the “stiff upperlip” – nowhere to be seen.

Imagine the lack of respect this self-made chaos and pathetic run-for-the-door in England engenders in the world. Particularly among former colonial countries in Asia and Africa. Like China, India, South Africa, Nigeria, Malaysia, Singapore, Iraq. Exactly those markets which England now for lack of the EU will depend more upon.

Face-saving is always important – especially in Asia and Africa.

Englishmen (and women!) right now are more than anything not losing money, or wealth, but something much more important – they are losing face.

Karsten Riise
Partner & Editor



Irish Chances

25 May 2016

Irish chances with Brexit

By: Karsten Riise

I newly attended a conference about the possible exit of Britain from the EU. One of the speakers, a guy from Oxford, claimed to have calculated an effect of ‘Brexit’ of “between 0.1% and 3.9% reduction” in British GDP as far away as 2030. I am always amazed by the hubris of my own profession.  To tell 200+ dignitaries that you can calculate any effect with that precision 15 years into the future requires more than economic insight – it requires that you have a telephone line to God or a crystal ball.

The effect of a ‘Brexit’ to many countries (including Denmark) were according the Oxford-wizard fractions of meticulous calculated decimal-percentages. I would have preferred to say “no measurable effect” - but the illusion of economic wizard-precision obviously had to be showed-off on a slide.

Interestingly, the only country in the world, for which the economic wizard from Oxford could point at a severe effect of ‘Brexit’, was Ireland. Because Ireland has a lot of trade with Britain, the Oxford economist believed in a significant negative net-effect on Ireland of a British exit from EU.

How shortsighted economists can be. Too often, they just project past knowledge into the future instead of looking at new potential developments.

As I see, a ‘Brexit’ will give Ireland at least two great chances to exploit –  at the expense of England:

Ireland can attract more non-European investments

Non-European companies, which seek to enter the EU, will often have preference for an English-speaking country. Especially if they are from USA. Until now, US-American investors had two English speaking EU countries to choose from: the smaller Ireland and the much bigger Britain. After a ‘Brexit’, Ireland will be the only English-speaking country left in the EU. Great for Ireland. ‘Brexit’ for Ireland will mean back to basics. Ireland grew rich by being a base for US American firms wanting to enter EU, and after a ‘Brexit’ Ireland will the next coming 30 years additionally be also one of the most logical places in EU to start for all the up-coming Asian companies which will want to enter the EU.

Ireland can build ‘City of Dublin’

The ‘City of London’ is the biggest capital market in EU. Apart from its size, two of the attractions of the ‘City of London’ are the English language, liberal tax and finance rules, plus of course an infrastructure. If Britain leaves EU, ‘City of Dublin’ should go for the kill – take market shares from ‘City of London’.

The ‘City of Dublin’ has the English language, the islander’s outlook to the whole world, and the ‘City of Dublin’ can copy the tax and financial rules, and the infrastructure, that made ‘City of London’ great. The physical distance is short, and the internet is instantaneous.

I do not envision that ‘City of Dublin’ will overtake ‘City of London’ after a ‘Brexit’. I just believe, that if ‘City of Dublin’ after a ‘Brexit’ can just pick 10% of the enormous financial volume of the ‘City of London’, that would be a fantastic opportunity for Ireland.

‘Brexit’ can be a win for Ireland.

For Britain itself, ‘Brexit’ may have much more negative political and economic impact than the moderate “-0.1% to -3.9%” which the ‘wizard’ foresaw. But that is different story, which I described in harsh colors long ago.

Karsten Riise
Partner & Editor



Goodbye England !

This very frank (and perhaps less diplomatic) analysis, I wrote 3 years before England decided to leave the EU - it still holds.

29 January 2013

Goodbye, England !

By: Karsten Riise

England always sabotaged a united Europe

For nearly 500 years, a primary objective of English foreign policy has always been to oppose all tendencies of continental Europe to become one power(1). The political unification of Europe has always been something, England abhorred. Strongest reason the English officially participate in EU is
to obfuscate Europe’s unity from within.

England alone sinks in the waves

For centuries, England could always support the second powers in Europe to bring down the primary
power on the continent: Spain, France, Germany, or Russia. But today the primary power in Europe
is a democratic Union, and if England leaves that Union, England will stand utterly alone – a small
country of 60 million people (Vietnam has 90 mio and Turkey has 75 mio). Maybe Scotland in its own referendum leaves England and stays in Europe. England will commercially and politically be deeply dependent upon and surrounded by the European Union.

The size of the English economy is 3.5% of the world - slightly less than Brazil(2). Already in 4 years, IMF projects that Brazil will command 12% more of world spending-power than England(3).

Without the dynamic growth, the natural resources and cheap labor-advantages of Brazil, England sinks behind Brazil. By itself, England is a rim-country. In contrast, Brazil grows as the lead nation of
MERCOSUR, the successful free-market center of a South American power-house which holds a
steady 6% of the world economy(4).

It is more than 60 years ago, since England ruled any waves around its island. Without massive
American help, German U-boats would have isolated import-dependent England under World War II.
Ever since, the English Navy is becoming less and less “royal”. Today, England’s two former aircraft
carriers are too old to carry anything else but a bunch of helicopters, and England must cost-cut the
nuclear submarines(5), that once killed the Argentine ship “Belgrano” with 1,095 seamen, while it was outside of the warzone of the Malvinas war (“Falklands”). The sea-lanes of England, a renegade
province of Europe, are internal waters of Europe’s coast-cities in Ireland, continental Europe’s westcoast, and Scotland(6).

Naval strength is very much a function of industrial capacity(7). That is why England in two world
wars could not alone compete with Germany, and was later totally outrun by the US Navy and Soviet
Navy. Without England, the European State will still command 22% of world purchase-power – six
times more strength to upkeep a navy than England(8). The military ship-building capacity of China is of course on an even much higher scale.

Companionless, outside of Europe, England will be a ghostly ex-colonial shadow - neither respected,
nor highly loved by the rising non-western world-majority. The return of Hong Kong to China was an
omen for England’s future. With a rusting navy England will lose the odd collection of islands and
chunks of land, its forefathers hoarded up for generations: The Malvinas ("Falklands") to Argentina, Gibraltar to Europe, Cyprus bases to Turkey, Antarctica and Pitcairn to China (why not?). The list is up for grabs.

Left alone, England will suffer hard on the 50% of its economy that depends on export to Europe, and
England must from an unfavorable bargaining-position renegotiate bilateral trade-agreements with
much of the rest of the world(9). That will be damaging for England. The “missing” monetary EU-contribution from England(10) will for Europe just be a sound investment into a more homogeneous political foundation for European Unity, and a chance for Europe to streamline its costly and market-distorting protectionist agricultural policies.

Win-win for Europe - and lose-lose for England.

England cannot even grow by increasing its dependency as unofficial protectorate of the USA, because the once almighty American Empire is drowning faster than the English Empire did. The
masquerade called “British Commonwealth of Nations” is no factor to waste words on.

European state-building stronger
The real Europe continues its scramble for Statehood, competing with East Asia (centered on China) to become the strongest region in the new world of regions, which is the post-American reality.

Due to economic troubles, South Europe and Ireland will more and more fall into a legal, financial,
political (and soon military) European state-structure with France and Germany. Leading circles in
the Benelux countries are positive to European state-development. The best option of Eastern Europe
will be to follow. European Statehood is the alternative to disintegration and conflict in Europe.
Denmark, the mini camp-follower, can sing, cry or die -- it does not matter. If Denmark vagabonds
with England, Europe will after a few days forget that Denmark even was a member. Who misses
Greenland in Europe? No-one.

Great European leaders see a grand opportunity that England “threatens” to pack and go. Everybody
will say nein-non to concessions to England. Continental Europe is weary of the negative attractiveness England offers. Europe will even cut away the ludicrous aristocratic privileges England
tricked by Margaret Thatcher. England will be served two harsh options: Bow humbly and become
loyal Europeans. Or leave the club – and pay each time England is permitted to the restaurant.

Karsten Riise
Partner & Editor


(1) To be exact, the English policy of playing European powers against each other to divide them has
been an English power-doctrine since the days of Queen Elizabeth I, who reigned 1558-1603. Read
Chapter 1 of “The Rise and Fall Of British Naval Mastery” by Paul M. Kennedy (1982).

(2) Year 2011, on data from The International Monetary Fund, World Economic Outlook database,
October 2012.

(3) Share of World Purchase Power Parity (PPP) – IMF projection for year 2017, on data from The
International Monetary Fund, World Economic Outlook database, October 2012.

(4) Year 2011, on data from The International Monetary Fund, World Economic Outlook database,
October 2012.

(5) Many reports. Read for example “UK and France to share aircraft carriers” The Sun 20100831,
“Britain and France will share aircraft carrier to combat defense cuts “The Mail-Online 20110604, and “Britain may be left without and aircraft carrier all year round” The Sun 20120321.

(6) Study the map. Ocean-access of the all major English ports goes through the Celtic Sea, the
English Channel, or the North Sea – all sovereignty of the emerging European Super-State from the
coast of Ireland and continental Europe. If Scotland leaves England and enters Europe, then England
will be utterly surrounded with Edinburgh added as a continental-European navy-base.

(7) Read Paul M. Kennedy “The Rise and Fall of British Naval Mastery” (1982) – especially the
introductory Chapter.

(8) Year 2011, on data from The International Monetary Fund, World Economic Outlook database,
October 2012.

(9) The Economist 8-14 Dec. 2012 – Leader article.

(10) It is a false image of England as always being a net-contributor to the European budget. Actually, England has in the years 2000-2010 in some years been a net-receiver of EU funds – ref. Danish Parliament source “EU-oplysningen”.