They had a choice, as far as the rules were concerned anyway. There just wasn't a huge degree of awareness about it and there was no right to switch association once until 2004, so if a player was selected at youth level by the IFA prior to then, he was cap-tied for good.
As for Declan Rice, I have a good feeling about him and wouldn't be concerned. He sounds very keen, committed and proud of his roots any time I've heard him. I think the media are making a bit more out of Southgate's words than is warranted. There's no suggestion or indication that Rice has even had his head turned. Southgate pretty much just said England were aware of the player after, it seemed, he was specifically asked about the player by an interviewer. At least, the way Southgate phrased his answer would suggest to me that someone else raised the topic of Rice to Southgate rather than Southgate just mentioning Rice out of the blue. It would lead me to think that the FA probably aren't focusing on Rice as intensely as the headlines would suggest.
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