The Brexit bonanza for border smugglers

As Theresa May meets with representatives of the devolved governments of Scotland, Northern Ireland and Wales today, one key issue she will have to consider is the status of the Irish border after Brexit. Despite Westminster's focus on controlling the movement of people, the movement of goods could be an equally thorny problem

The issue was highlighted recently in a parliamentary question from the Ulster Unionist MP for Fermanagh and South Tyrone:

Tom Elliott: I appreciate the Secretary of State’s point about an open border with the Republic of Ireland, given that four counties of the Republic of Ireland border my constituency, but how does he envisage stopping the smuggling that may take place after Brexit?

David Davis: That is a very good and difficult question. The simple truth is that we have to make a judgment, as is the case with all borders of that nature. Norway and Sweden have a good example of an open border, as do Canada and America. There are small-scale movements, but big-scale movements can be found and dealt with.

There may be good reasons for the Brexit Secretary's preference for an open border given the basic difficulty of mounting physical controls. This is what the British Army had to say on the matter in its review of Operation Banner, it's deployment to Northern Ireland during the Troubles: 

Of the candidate solutions considered, the most common was that of closing the Border with a fence and security force. Estimates of up to 29  battalions were considered to be required for the security force. One proposal was to lay minefields along the Border: that was rapidly dismissed. At various times dozens of minor crossings were closed by Royal Engineer units. After a while this would be found not to work because, if not kept under continuous observation, the local population would lift the obstacles or bypass them. The policy would be discontinued and then ‘rediscovered’ a few years later. Closing Border crossings was generally unpopular with the local population, many of whom had legitimate farming or other business interests and family links on both sides of the Border. The Border between Northern Ireland and the Republic was no more obvious and clearly defined than, say, that between Hampshire and Wiltshire. In places it ran along streams, hedges, the side or middle of roads, and in some places even the middle of farm yards.

Attempts to control the border persisted because the Army saw it as a major operational problem: 'in the late 1970s it was considered that PIRA simply could not survive without refuge in the Republic and the Border also offered opportunities for fundraising from smuggling activities.' The issue was not seen as being any easier to resolve from the other side:

In grand strategic terms a diplomatic stand-off between the UK and Eire on Border issues was not realistic. There was, in addition, no guarantee that any possible Dublin Government measures in the Border areas would have been effective: the Garda and Irish Army forces available were small, and republican extremism was a destabilising factor, and a potential threat, to the Dublin Government. Those living in the Border areas had ideas for their future governance that were unacceptable to both the Westminster and Dublin Governments. The alternative, patient diplomacy and political engagement over the long term, proved effective, and local cooperation between the RUC and the Garda improved progressively. 

Such precedents suggest that David Davis is right to reject a hard border, but it may not follow that smuggling can easily be confined to 'small-scale movements' by other means. As the Borderlands website at Queen Mary, University of London records, there is a long history of illicit traffic in the area:

Differing payments due from or awarded to farmers for the export of livestock under European Union policy led to farm animals being smuggled between Northern Ireland and Ireland in the 1970s and 1980s.

By the 1970s the smuggling of goods for personal use had largely ended as restrictions were withdrawn, personal entitlements were increased and travel across the border became much harder. Since the European single market was established in 1993 the border is no longer a custom barrier. However, the organised commercial smuggling of diesel continues in order to profit from differences in the price and regulation of the use of agricultural diesel.

The existing reality of diesel smuggling suggests Davis' confidence that 'big-scale movements can be found and dealt with' is misplaced. A 2012 report by the Northern Ireland Affairs Committee found that 'the land border with the Republic of Ireland provides a differential in prices between the two jurisdictions, and thus an opportunity for profit, and also the existence of different jurisdictions makes it easier to evade the law.'

The report did not suggest a small-scale issue:

Criminal activity involving fuel fraud is a major problem in Northern Ireland and is proportionately three times larger than similar fuel crime in Great Britain. It deprives the Exchequer of millions of pounds in lost excise duty, it takes business away from legitimate organisations, and leaves environmental waste to pollute and scar the countryside. It funds organised crime in Northern Ireland. It also feeds the attitude that some crimes create no victims because ‘it’s only taking from the taxman’, but taking from the taxman reduces the amount of revenue raised by Her Majesty’s Revenue and Customs (HMRC) and, therefore, the money available to spend on public services not only in Northern Ireland, but also in Scotland, England and Wales.

Fuel was not the only problem area: 

While the primary focus of the inquiry has been on fuel fraud, we also received evidence on other forms of tax evasion that reduce the UK revenue: tobacco smuggling in Northern Ireland, which may be carried out or funded by the same criminal gangs, is estimated to cost around £42 million a year in lost revenue and between £1 billion–£3 billion for the UK as a whole.2 Tobacco smugglers can make up to £1.5 million profit per container lorry coming into the UK.3 A similar level of crime also affects the Republic of Ireland.

While police on either side of the border have since had successes, a 2015 estimate nevertheless put the total cost of fuel and tobacco smuggling on the island of Ireland at €1 billion a year. An Irish Times report suggested difficulties in tackling the problem that, to say the least, aren't fully reflected in David Davis' answer to Tom Elliott:

“It’s a difficult area in which to maintain evidential integrity and it’s also a difficult area in which to protect officers,” as one senior PSNI officer recently told The Irish Times with a degree of understatement.

In other words, it may be feasible for the revenue investigators supported by Garda and PSNI officers to pounce on fuel- laundering plants, but along the Border and particularly in south Armagh it is plain dangerous to engage in time-consuming, painstaking investigations. That is a fact of life. The dissidents are a serious threat.

Remember too this is the land of omerta, hard to breach, notwithstanding the British- Irish Parliamentary Assembly’s call for a multidisciplinary attack on this crime.

Recent weeks have seen some allegations and plenty of suspicions that the Provisional IRA is implicated. This is vehemently rejected by Sinn Féin. Moreover, the Garda and the PSNI are making no such claims.

You will hear some local comment that the “dissidents run the tobacco and the old Provos hang on to the diesel”, but so far, officially, you won’t hear anything that goes much beyond such anecdotal remarks.

Certainly, there is strong structure and organisation behind this crime – a form of organisation that it is probably safe to say has its origins in how the Provisional IRA ran its operations along the Border.

But throughout the peace process it was always a given that the Provisional IRA going out of business didn’t mean an end to Border criminality.
It’s a simple truth that as long as the Border can make profits for criminals there will be criminals, whatever their origins, to make those mind-boggling profits. (Irish Times, 24 February 2015).

 Short of ending the border, the most reliable way of tackling cross-border smuggling is by harmonising regulations on either side of the border to minimise the scope for profitable arbitrage. Britain's departure from the European Union will make that more difficult. It's departure from the single market and the customs union would make it harder still, opening up new opportunities for smugglers and new challenges to the rule of law.

 Enthusiasts for a hard Brexit in Britain should consider who the primary beneficiaries will be in Ireland.

Other related links

Gareth McKeown, Brexit could lead to more smuggling, EU Commissioner says, Irish News, 10 May 2016.
Evan Smith, Brexit and the history of policing the Irish border, History and Policy, 20 July 2016.

Comments

[Customs training]

1.

Are there any updated statistics regarding the number of smuggled goods? I know imports and exports slowed, and I'm guessing there's a connection between them.