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Proposal of an independent Northern Ireland

Even as his government deployed troops in August 1969, Wilson ordered a secret study of whether the British military could withdraw from Northern Ireland, including all 45 bases, such as the submarine school in Derry. The study concluded that the military could do so in three months, but if increased violence collapsed civil society, Britain would have to send in troops again. Without bases, to do so would be an invasion of Ireland; Wilson thus decided against a withdrawal.

Wilson's cabinet discussed the more drastic step of complete British withdrawal from an independent Northern Ireland as early as February 1969, as one of various possibilities for the region including direct rule. He wrote in 1971 that Britain had "responsibility without power" there, and secretly met with the IRA that year while leader of the opposition; his government in late 1974 and early 1975 again met with the IRA to negotiate a ceasefire. During the meetings, the parties discussed complete British withdrawal. Although the British government publicly stated that troops would stay as long as necessary, widespread fear from the Birmingham pub bombings and other IRA attacks in Britain itself increased support among MPs and the public for a military withdrawal.

The failure of Sunningdale and the effectiveness of the UWC strike against British authority were more evidence to Wilson of his 1971 statement. They led to the serious consideration in London of independence until November 1975. Had the withdrawal occurred – which Wilson supported but others, including James Callaghan, opposed – the region would have become a separate dominion. According to the secret plan, codenamed "Doomsday", Britain would have had as little to do with the new "Ulster Dominion" as possible, with financial subsidies ending within five years. It would not have been an associated state, with Britain in control only of foreign relations, because a war between Ulster and the Republic would involve Britain. The dominion would also not have been a member of the British Commonwealth. The Northern Ireland Office cited the 1948 Newfoundland referendums – in which the island voluntarily joined Canada, its larger neighbor – as an example that divided Ireland might hopefully follow.

The British negotiations with the IRA, an illegal organisation, angered the Republic's government. It did not know what was discussed but feared that the British were considering abandoning Northern Ireland. Irish Foreign Minister Garret FitzGerald discussed in a memorandum of June 1975 the possibilities of orderly withdrawal and independence, repartition of the island, or a collapse of Northern Ireland into civil war and anarchy. The memorandum preferred a negotiated independence as the best of the three "worst case scenarios", but concluded that the Irish government could do little.

The Irish government had already failed to prevent a crowd from the burning of British Embassy, Dublin in 1972. It believed that Ireland could not enlarge the country's small army of 12,500 men without negative consequences. A civil war in Northern Ireland would cause many deaths there and severe consequences for the Republic, as the public would demand that it intervene to protect nationalists. FitzGerald warned Callaghan that the failure to intervene, despite Ireland's inability to do so, would "threaten democratic government in the Republic", which would jeopardise British and European security against Communist and other foreign nations.

Wilson's aides had in 1969 come to a similar conclusion, telling him that removing Northern Ireland from the United Kingdom would cause violence and a military intervention by the Republic that would not allow the removal of British troops. Loyalist leader Glen Barr said in 2008 that a British withdrawal would have caused civil war, as Loyalists would have expected the Republic to invade Northern Ireland. Peter Ramsbotham, British Ambassador to the United States, warned of a hostile American reaction.

Wilson's desire to extricate the British government from Northern Ireland was ultimately stymied by the fear that doing so might lead to catastrophe. The Irish government so dreaded the consequences that FitzGerald refused to ask Britain not to withdraw – as he feared that openly discussing the issue could permit the British to proceed – and other members of government opposed the Irish Cabinet even discussing what FitzGerald referred to as a "doomsday scenario". He wrote in 2006 that "Neither then nor since has public opinion in Ireland realised how close to disaster our whole island came during the last two years of Harold Wilson's premiership", and in 2008 said that the Republic "was more at risk then than at any time since our formation".