Dr Brendan Halligan

President of the Institute of International & European Affairs, former Senator, former Gen. Sec, the Labour Party

 

I suffer, as I mentioned this morning, from a deficiency in that I do take titles seriously and the one given to us to which I’m going to respond is that at the centre of the union, Ireland can and must play a full part.

My starting point is that a union without Britain is a challenge in its own right. Ireland playing a full part in that union only magnifies what is already a huge challenge, the biggest since 1939. In considering how we respond I want to start with what the union is and what is meant by being at the centre. The union is a Franco-German project; they are building a home together. Other countries may join in but must obey the rules. Joining is voluntary, you don’t have to join. Membership is voluntary, you don’t have to stay. You can leave if you want to. And if you misbehave you may be asked to leave.

The European Union was famously described by Andrew Shonfield in his Reith lecture given in 1972 as a journey to an unknown destination. As a journey, it has a history of progressively enlarging its membership, extending its activities and deepening the interdependence of its members. Progress goes forward in spurts, sometimes at speed. And I suspect we are now at such a moment. One thing is clear from the nature of the enterprise; you can’t say – to echo the words of Parnell in a sense – you can’t say thus far have we come and we’re going no further, as the UK tried to do repeatedly. You can minimize your engagement as the Scandinavians have done, or you can optimise it as Benelux has done – your choice.

The organisers have asked the panel to consider how Ireland might be an active participant at the centre of this union. So the previous observations constitute the framework of the following reply. As for the centre – I think it’s very easy to define what is meant by the centre of the union – a list of common policy areas could be read out; membership of the customs union, membership of the common market, the single market, the Eurozone, the Schengen area, justice and home affairs and so on. Each of these could be regarded as a sine qua non for being at the heart of the union. But there’s no need to be so cumbersome. In reality the centre is easily defined, it’s what France and Germany do together. If you want to be at the centre then you join in. All comes back to the fact that it’s a Franco-German enterprise. Garret FitzGerald understood this instinctively and built Ireland’s European policy on that very principle in 1973. The key was to understand what the Franco-German agenda was, to adopt it and adapt it to your own needs, provided they agreed.

So that’s my starting point. And I think there are three things we have to tackle if we want to play a full part at the centre of the union that’s about to emerge. These are security and defence, corporate taxation, and separation from Britain. These issues are the legacy of history and if not addressed and rectified then they will prevent us from being fully paid up members of the centre. That could have very unpleasant consequences because we will need help to counteract the asymmetric shock that Brexit will impose on the Irish economy; help from the Union, which in practical terms means financial help from Germany, and that’s where this presentation will finish up.

So let’s recall why we volunteered in the first place to join the Union and how the legacy issues emerged, and how they have remained unresolved. Now it’s true that Ireland had no option other than to join the EEC – to apply for membership in 1961 – when the UK did so, but there was no guarantee that having applied, we would be accepted. In fact, our application was unwanted and lay unopened for months. Lemass had to fight to get a hearing, which he did months after discussions had commenced with the other applicants.

 

A Common Defence Policy

There were doubts, indeed opposition, to our application under three headings: non-membership of NATO, economic underdevelopment, and political over-dependence on Britain. And, of these, non-membership of NATO was the biggest drawback. Lemass took this head on, and asserted that we – Ireland – have always agreed with the general aims of the NATO Treaty i.e. that we were not neutral in the conflict between democracy and communism and that we would be prepared to join in the common defence of the EEC if admitted as a member. He did so using these words when launching Ireland’s application for membership before the Council of Ministers in Brussels in January 1962. He repeated that line in the Dáil, at press conferences and during the tour of EEC capitals. In my opinion, the commitment to common defence got lost due to the outbreak of violence in the North from 1968 onwards as well as the effects of the first oil shock of 1973. It has been forgotten. The issue was never discussed and in fact is off limits. As a result, we have not refined our concept of neutrality as the Finns and the Swedes have done. We are stuck in a time warp, or at least pretty close to it.

Lemass was open to new thinking because he was haunted by the spectre of isolation. He knew that we could not survive on the basis of ourselves alone; that is, survive economically or politically. That is why he almost broke down the doors in Brussels to join this new community. We should take his thinking about isolation as a starting point in defining what it means to play a full part at the centre of the Union.

We should also take the views of Chancellor Merkel and President Macron as the other starting point. For them, Cold War certainties are now past and Europe has to start looking after itself in terms of defence. That’s why this is one of these moments when Europe is about to lurch forward and the common agenda about to be enlarged. Proposals on defence and security will emerge shortly from the Franco-German alliance for which we are not prepared. And they could undo any ambition that we would have to be at the centre of the Union. Consequently, a rethink of the national policy on defence is unavoidable in that we need to distinguish between membership of NATO, which is not at issue, and what Lemass called the duties and obligations of EU membership. The former is an alliance led by the United States – a military alliance; the latter arises from the principle of solidarity whenever national or European security is threatened from whatever source – conventional, terrorist or cyber. And it’s best summed up in the solidarity clause of the Lisbon Treaty which is a straightforward commitment to protect democratic institutions and civilian populations throughout the Union.

We need to follow the logic of what is in the Treaty, remind ourselves that this is a Treaty to which we have already agreed and then to act on that logic. And that will mean being proactive in devising and implementing a common defence policy that leads on to common defence. It’s obvious that the Franco-German security cooperation will speed up after the forthcoming federal elections in Germany, and will redefine what is meant by being at the centre of the Union. And if we wish to be there, we’ll have to do our own bit of redefining. This is number one issue on the new agenda. It’s going to be a very painful exercise to think anew, because neutrality in my lifetime has become a matter of theology rather than that of international politics.

 

A Common Consolidated Corporate Tax Base

Now if defence remains a big obstacle to our being at the centre, then corporate taxation is another. So what started as a very sensible policy of taxing export profits was later refined into a very sophisticated policy on encouraging foreign direct investment. It was a huge gamble and it has proven to be a huge success for which Ruairí Quinn has got to take primary credit. However, this policy, this very successful policy, was never intended to be a means whereby international business avoided paying corporate taxes at the appropriate level. And Ireland did not set out to become a tax haven. But in the eyes of many, this policy that we have now has become an instrument for circumventing the tax obligations and in lowering corporate tax burdens particularly on multinationals, mainly American. There is now a perception held by many that Ireland facilitates what the OECD calls ‘profit shifting’. Rightfully or wrongly this is a problem for us and it has to be addressed if we are to be at the centre of the Union. And I think that means accepting the principles behind the Commission’s proposals on the common consolidated corporate tax base. It also means signing on for the fiscal transaction tax especially as it is so favoured by Germany and it figures in the CDU’s programme for government. Otherwise our continued opposition to both these proposals will be taken as a defence of unacceptable practices. However unfair that might be, it’s what others will be, and are, thinking. So I think that our stance on corporate taxation has to be modified if we wish to play a full part at the centre of the Union – intelligently modified, but modified, nonetheless.

 

A Hard Brexit Will Mean a Hard Border

And then there is the question of the political dependence on Britain, or of being seen to be a satellite of Britain or of being treated as such. It’s ironic that the record actually points in the opposite direction. Take, for example, Jack Lynch deciding that Ireland would join the EMS in 1979 when Britain did not, Garret FitzGerald voting for the intergovernmental conference on the single market in 1985 when Mrs. Thatcher opposed it and Albert Reynolds committing Ireland in 1992 to membership of the EMU when John Major demanded and secured an opt-out for the United Kingdom. And, of course, we have the example of Enda Kenny signing on to the fiscal compact in 2012 when David Cameron not only refused to commit the United Kingdom but refused to allow the compact to become part of the law governing the Union itself. So what I’ve just recited is an honourable record to which many other examples could be added. But it’s not completely convincing.

Here again, perception is political reality. Rejecting the Schengen Agreement to sustain the common travel area is one example of Ireland consciously prioritizing Anglo-centrism over Euro-centrism. Non-participation in the full suite of the justice and home affairs provisions is another example. There will be a choice to be made, and made pretty soon, over which border is to be prioritized. If the United Kingdom goes for the hard Brexit that the Tory government has spelled out in recent months and still spells out to this very day (July 2017), leaving the customs union and the single market in order for the United Kingdom to be a global player, to do global trade deals and control immigration from the European Union this will lead to customs and frontier controls between the United Kingdom and the European Union, between the Republic and the North. In common parlance, where they are heading is for a hard Brexit and that means a hard border. If it comes to it, and it probably will, then we will have to choose between a hard border with Britain and a hard border with the European Union. If the choice were for a hard border with the European Union, the consequences would be very clear and immediate – they don’t have to be spelled out. Yet many will baulk at the choice to impose a hard border with Britain and the North, one that unwinds the past and that weaves a new future. But accepting the consequences of a hard border with the North and the island of Britain is unavoidable if we want to become centre stage inside of the Union. Perhaps the tooth fairy will conjure up a seamless and invisible border on this island but I doubt it.

So in sum, playing a full part at the centre of the Union means playing a full part in the future common foreign and defence and security policy, playing a full part in creating a fiscal union involving corporate tax harmonization, playing a full part in the Franco-German relaunch of Europe and ending our psychological dependence on Britain; it means finally cutting the umbilical cord.

 

Showing Leadership

Now these are not easy choices; they go against the grain of custom and practice, they mean replacing inertia with initiative, with changing direction and with explaining why, and with winning popular support for what will start out as unpopular measures. And that puts a premium on leadership. So it is misleading to say that Lemass showed leadership in lodging the application for membership in 1961. He didn’t, he accepted the inevitable. But he showed leadership in reversing the very policy he himself had introduced thirty years earlier in order for Ireland to join the EEC – to make membership possible – by going against the instincts of his own party in committing Ireland to interdependence and to be at the centre of the new Europe, to act in the spirit of what he called loyal and constructive cooperation with the other member states, and above all he showed leadership in accepting the duties, obligations and responsibilities which European unity would impose (his own words at the Council of Ministers meeting in 1962), and by accepting them as he did then, without qualification or caveat.

Now a new Europe – and I think we all in this room know – is being constructed today in front of our very eyes; a European renaissance is underway. The centre has held and it is the best who are full of passionate intensity, not the worst. Things are taking their course, as Beckett says. We need at this moment, therefore, the same pragmatic determination to accept the inevitable, the same leadership to deal with the unavoidable, and the same willingness to make difficult decisions, the same capacity to be visionary as Lemass exemplified. All very well, but there is one eminently pragmatic reason to be at the centre and for doing all of this, and it is economic. The disruption from Brexit will be widespread and will be long lasting, and far greater than in any other European country. In the words economists like to use, Brexit constitutes an asymmetric shock for Ireland; one that will necessitate a long and difficult period of adjustment somewhat analogous to that experience during the first decade of our membership of the EEC from 1973 to the mid 80s.

We will inevitably be looking for assistance on grounds of solidarity, but to win solidarity you must show solidarity and solidarity is a two way street as has been said earlier, and that is why playing a full part at the centre of the Union is more than a matter of sentiment or altruism; it’s an exercise in realpolitik. Without sympathy and goodwill from the other fellow member states we will suffer far more than we need to. With both, we can come through this, the biggest challenge since 1939. Realpolitik should dictate national policy from yet another perspective. The European Union is not going to go away or to implode, as populists pronounce, and as Anglo-Saxon propaganda predicts. It will endure; it will continue to deepen, to widen, to record concrete achievements and to build the de facto solidarity foreseen in the Schumann declaration. There will, of course, be predictions to the contrary, and there will be siren calls to join the United Kingdom as it abandons the European home of which we are now a member, and for us to reverse history to become a province once again. Mad as it sounds, it will be pushed with a fervour through a combination of economic illiteracy and political idiocy, a fervor that will grow all the more intense as it becomes clearer that the United Kingdom is indeed heading for a hard Brexit, as it is.

Neither the isolation that Lemass feared nor the reincorporation into the United Kingdom, as some people might desire, is compatible, as Pat Cox has said, with the path Ireland chose a hundred years ago. Along the way, we opted to join what John Hume called the greatest peace project in the history of the world. It was our salvation. The European Union was the friend we were always looking for said Garret FitzGerald. Joining it would be a psychological liberation he forecast four decades ago now, and he was right on both counts. Playing a full role at the centre of the Union, having the courage to follow the commitments on which we joined would be consistent with the path upon which Lemass embarked which would provide us with a future imbued with honour and with hope.

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