The Irish border and Brexit: Here's what you need to know

Key Points
  • The EU and U.K. are at odds over the outcome of the 310-mile Irish border
  • The U.K.'s aim to leave the EU customs union has cast doubt over the island's economic and political future
  • The current impasse has evoked memories of a darker time
Ireland's prime minister (Taoiseach) Leo Varadkar statement on Phase I of the Brexit negotiations was postponed as Northern Ireland's DUP expresses doubts about UK-EU post-Brexit Irish border deal. Monday, 4 December 2017, in Dublin, Ireland.
Photo by Artur Widak | NurPhoto

The question of the border separating the Irish Republic and the U.K. province of Northern Ireland has thrown a massive — and for some, emotional — wrench in the British government's plans to move Brexit talks along.

The European Union (EU) and U.K. are at odds over the outcome of the 310-mile Irish border, with Dublin strongly opposing a potential hard border separating Ireland and Northern Ireland over fears it could undermine the 1998 Good Friday Agreement, which ended three decades of sectarian violence.

The U.K.'s aim to leave the EU customs union — which enables free movement of goods and people across all EU countries — has cast doubt over the island's economic and political future. Open trade relations are crucial to Ireland's economy, and the U.K. is its second-largest trading partner.

A British Army mobile patrol moves past IRA graffiti in the Republican Ardoyne district of north Belfast, 19th April 1976.
Alex Bowie | Getty Images

The gridlock threatens progress on Brexit talks between the EU and the U.K as British Prime Minister Theresa May scrambles to find consensus within her government to support an agreement with EU leaders. Ireland has threatened to veto any further talks on a trade deal for the U.K. if it feels its demands on the border have not been met.

The current impasse has evoked memories of a darker time before the peace agreement was signed. Concerns about renewed sectarian tensions and political divisions surrounding a possible border have returned to the fore.

Decades-old wounds

The lengthy guerrilla war over Northern Ireland's constitutional status, which began officially in 1969, saw more than 3,500 people lose their lives in bombings, indiscriminate shootings and assassinations.

While the opposing sides consisted largely of Catholics (a minority in Northern Ireland), who wanted a united Ireland, versus Protestants, who saw themselves as citizens of Britain, the conflict was not a religious one, but rather an issue of territory and identity.

A republican mural close to the home of the late Martin McGuinness can be seen as mourners pay their respects at the home of Martin McGuinness on March 22, 2017 in Londonderry, Northern Ireland. Northern Ireland's Former Deputy First Minister Martin McGuinness died overnight on Monday 20th March 2017. He was once chief of staff of the IRA and became Sinn Fein's chief negotiator in the ta
Charles McQuillan | Getty Images

Although Ireland gained its independence from Britain in 1922 and declared itself a Republic in 1949, Northern Ireland remained a province under the British crown. The spark for what would become known as "The Troubles" came in the summer of 1969, when Catholic groups staged protests against discrimination by the government on their housing, voting and employment rights. Physical retaliation by some Protestant residents and police rapidly escalated into full-blown fighting.

The violence of the subsequent decades was largely carried out by both Irish nationalist and Northern Irish loyalist paramilitaries, such as the Irish Republican Army (IRA), the Ulster Volunteer Force and the Ulster Defense Association, among others. British troops were deployed to the conflict as a stabilizing force, but ended up fueling further fighting in what would be Britain's longest-ever military deployment, ending only in 2007.

A hard-earned recovery

By the end of the 1980s, it was clear to both the British government and the IRA that a military solution was not possible. What resulted after years of work and secret negotiations involving U.K. and Irish leaders, the EU, and the U.S. government was the Good Friday Agreement of 1998, which established a regional governing system based on power sharing by all parties — even the political wing of the IRA, Sinn Fein.

Today, relations in Northern Ireland are largely peaceful and investment and commerce have returned in force to its previously embattled cities. But pockets of trouble still remain, says Peter Sheridan, a former police officer with the Police Service Northern Ireland.

The 'Peace Line' fence is seen on February 9, 2005 that stretches between the Catholic and Protestant areas of West Belfast, Northern Ireland.
Christopher Furlong | Getty Images

"The violence is certainly reduced, but it still exists," Sheridan told CNBC. Some paramilitary groups still retain coercive control over certain communities, and 95 percent of social housing is segregated along religious lines, Sheridan said. "Sectarianism is alive and well."

In some towns along the border, bomb scares continued past 2010. Evidence of past hostilities line many residential streets in the form of "peace walls" dividing neighborhoods and large murals depicting rifle-wielding paramilitaries.

Protecting the peace

"I think that any attempt at replacing borders on the island of Ireland is a mistake, not just because it's a threat to the peace process, but because it damages the process of reconciliation, of the healing of wounds, of building a new type of society," Mairtin O Muilleoir, Sinn Fein lawmaker and former Belfast mayor, told CNBC.

During the Brexit vote in June 2016, 56 percent of Northern Ireland voted to remain in the EU.

Others, meanwhile, don't see the same level of threat. Northern Ireland's Ulster Unionist Party leader Robin Swann rejected the possibility of revived sectarian conflict. "That's what we hoped the last 20 years would be about — moving away from that civil conflict. I think we're far enough, we're mature enough in Northern Ireland to realize that this has to be solved politically," he said.

Today, lawmakers are pushing for a political compromise amid disagreements on both sides.

Efforts toward an agreement on the border's status hit a standstill Monday after Northern Ireland's Democratic Unionist Party (DUP), which is pro-Brexit and a crucial political support to May's government, refused to accept a deal that May brokered with European Commission President Jean-Claude Juncker in Brussels, Belgium.

Four boys sitting beneath a unionist mural showing four masked unionist fighters in Belfast. The Northern Ireland peace talks have inspired many murals around the country, where unionists often feel the peace agreement is a betrayal and a sell out to the IRA.
Robert Wallis | Corbis via Getty Images

The agreement would have seen Northern Ireland remain in the EU customs union — the DUP, however, vehemently rejects any arrangement that treats it differently from the rest of the U.K. May faces tough negotiations in the coming days if she hopes to break the impasse, with a number of possible scenarios up for discussion.

At this juncture, the government in Dublin holds significant leverage over Westminster, which must placate the DUP in order to move forward. Confidence is shaky in the U.K.'s ability to agree a transition deal before a key EU summit on December 14. Any outcome resulting in "no deal" would severely impact both the U.K. and Irish economies.

"If there is no deal reached next week, May will come under significant pressure to walk away from Article 50 negotiations," said Mujtaba Rahman, Eurasia Group's managing director for Europe. "In this scenario, the odds of a cliff-edge or WTO outcome would increase as well," he said, referring to a potential return to WTO tariffs, which many warn would cripple trade.

European Council President Donald Tusk, speaking from Ireland last Friday, may have had it right: "The key to the U.K.'s future lies — in some ways — in Dublin, at least as long as Brexit negotiations continue."