Café Bazar in Salzburg may seem an unusual spot to consider Ireland’s future economic choices, but it could be a perfect place to start. After the British leave the EU, Ireland will need a new friend or a series of new friends within the European Union. This will involve hard choices and possibly some unpleasant trade-offs. Let’s call this challenge the Irish dilemma.

As long as the UK was in the EU, Ireland played a canny, if slightly duplicitous, game. We could appear in Brussels to be good Europeans, giggling derisively at the isolated British, safe in the knowledge that those same friendless British shared many of our interests and would therefore stand up for us.

In protecting their own interests they also protected our low-tax, American-focused economic model without our having to lift a finger. The Brits could do the heavy lifting while we played both sides. Within the EU gang we could remain friends with everyone, as long as Britain remained friends with nobody.

This is a triangular dynamic that you see in most primary-school playgrounds. Children instinctively understand this game, its limits and its benefits. The aloof but powerful loner regularly protects weaker lads from the periodic maliciousness of the gang. We elevated this common facet of group psychology to become a cornerstone of national diplomacy. But that era is over.

Today we face a conundrum: how can we remain a fully-fledged member of the EU while preserving the Anglo-American economic model that underpins our prosperity? Being net contributors to the EU also changes the game.

For as long as Ireland was benefiting from EU largesse, the case was open and shut. But conditions are changing fast. In the past few days, politics in Germany, just kilometres north of Salzburg, has added a worrying dimension to the Irish dilemma.

The Blueprint

The blueprint for Germany’s “grand coalition“ between Angela Merkel’s centre-right Christian Democratic Union and Martin Schulz’s centre-left Social Democrats constitutes the clearest drive towards European integration since Jacques Delors ran the European Commission. This is not good news for Ireland – and coming so soon after Brexit it constitutes a double whammy to Irish diplomacy.

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