Fianna Fáil and its discontents – the Eurosceptic opportunity

By Aidan Harkin

At the time of writing Fianna Fáil (FF) is struggling to re-assert itself as the prominent force in Irish politics. The 2016 election was a moment of promise for FF who experienced considerable gains from its disastrous 2011 election performance, resulting in a difference of only six seats between them and the governing party Fine Gael (FG). This rise coupled with the implosion of the Irish labour party has meant both FF and FG now co-exist uncomfortably in government under a confidence and supply arrangement. Initially this arrangement looked favourable to FF who seemed to be waiting for the right moment to call another election and reclaim their throne as the natural party of government, however this moment has never arrived. This reflects FF’s inability to capitalise on FG government weaknesses, especially whilst the Fine Gael administration has governed capably and with some notable achievements, including success in the equal marriage referendum, the abortion referendum and thus far Brexit. One such potentially lucrative weakness, yet to emerge, is FG’s appeasement of the EU threatening Ireland’s success as a hub for investment.

Irish media is currently saturated with footage of Leo Varadkar and Simon Coveney visited by EU negotiators and officials, confirming their position as comfortable members of the European establishment. This serves to reinforce the perception of Ireland as a ‘model citizen’ within the EU, toeing the line and generally content with its place within the European Union. This has been dramatically emphasised given the tumultuous Brexit negotiations. Ireland is an important ally for the EU and its negotiators, especially given the intractable difficulties surrounding the NI ‘backstop’. However, when the dust settles and Brexit is out of the spotlight, greater Euroscepticism may provide an opportunity for the opposition in Ireland and specifically Fianna Fáil to reassert itself.

Those two points may seem contradictory and perhaps even unnecessary, the Irish population has been historically very pro-EU and thus far Ireland has reaped great benefits from its membership, playing no small part in making the country wealthier than its hitherto known. Further, any party to date standing on a Eurosceptic platform in Ireland has failed to achieve any real political success. However, the concept of Ireland as a model EU citizen ignores the inherent contradiction of its success within Europe, as a low tax, pro-market nation, that benefits from the current autonomy it enjoys over its fiscal policies. Therefore Ireland would most likely lose out in a more integrated or federalised Europe.

Greater federalisation is being trumpeted by many authority figures within Europe including Emmanuel Macron, Angela Merkel and Jean-Claude Juncker. The rise of populism across Europe has done little to deter moves towards greater integration and if anything has accelerated the process. Prominently, Mr Juncker, President of the European Commission, has indicated a need to reduce the power of individual EU states and in his recent State of the Union address declared that ‘the time for European sovereignty has come’. Macron’s ambitions include creating a larger Eurozone budget, an EU finance minister post and an administrative body that would oversee economic policy in the zone. The French finance minister has said he wants EU countries to sign up by mid-2019 to harmonised corporate tax rules that would calculate multinational tax bills across the bloc and split the dividend among member states based on the company’s assets, employees and sales in each county. Further, the European Commission has proposed a new tax regime for the digital sector and has recently included Ireland in a list of countries that facilitates ‘aggressive tax planning’. The Irish Fiscal Advisory council has indicated that tax harmonisation plans across the euro zone pose a bigger threat to Ireland than Brexit.

These changes would undoubtedly put strain on Fine Gael and could culminate in a decision to side with the EU or with Irish self-interest. Fine Gael to date has resisted such moves, with Finance Minister Paschal Donohoe warning that Ireland ‘will not participate’ in a EU wide corporate tax rate. However, the pressure on them to abide would be tremendous given the dynamics of post-Brexit Europe in which Ireland will inevitably be more dependent on the EU. Significantly, given the size of Ireland, its representation in the European parliament is limited making it more of a rule-taker than maker. Brexit will also mean Ireland loses an important ally on this issue, especially if there’s a bad deal for Britain or if it ‘crashes out’. So the question arises would the government be willing to take the appropriate steps to resist such change? Any economic hit on Ireland from stricter tax rules and greater federalisation would undoubtedly serve to reduce its political capital. This provides the opportunity for Fianna Fáil to position itself as defender of Ireland’s competitive advantage, as a low tax, competitive country.

These claims are speculative but Ireland’s relationship with Europe has repeatedly been questioned when it has not suited its narrow economic interests, reinforcing the relationship as one of convenience, not a deeply entrenched European ethos. The economic reality is Ireland relies heavily on the EU economically and integration has served to diversify the Irish economy away from British dependence and helped foster its attractiveness as a target for international investment. However, when the dynamics shift so that these economic benefits are dampened or reversed, it will be natural for Ireland to pushback and resist. Such friction is not entirely novel and has arisen from FF administrations in the past.

Specifically, the FF-PD administration questioned the EU on numerous occasions, marking an end to the ‘European consensus’ in Ireland. This resulted from a combination of Fianna Fáil’s fiscal policies, the tiger economy and the ideological influence of the Progressive Democrats. Notably, Ireland was singled out for sanctioning by the European Commission and EU finance ministers over its 2000 budget, this was an unprecedented reprimand that the Irish authorities received for breaching EU Economic Policy guidelines. Minister for Finance, Charlie McCreevy, was quick to come to Ireland’s defence asserting that the EU had gone too far. The rise of the Boston/Berlin debate, sparked by Mary Harney, Tainaste and deputy leader of the Progressive Democrats, further questioned the relationship. She disputed the nature of Ireland’s economic philosophy, and whether its affinity was to America’s rugged individualism rather than Europe’s social democracy. More poignantly Sile De Valera, Fianna Fáil TD and granddaughter of Eamonn De Valera, asserted that the EU ‘is not the cornerstone of what our nation is ’ and instead Brussels often ‘seriously impinge[s] on our identity, culture and traditions’.

Further, the Irish population rejected both the Nice and Lisbon treaties through referenda. It is important to note that turnout was low and margins were tight, but this also reflects the fact that these referenda were not well understood. The Lisbon treaty specifically is notoriously indecipherable. Charlie McCreevy admitted he had not read it cover-to-cover and that that nobody ‘sane’ would do so. In his notoriously frank approach, McCreevy further stated that if put to the popular vote in other countries, 95% would have voted the same way as Ireland, rejecting it outright.

Of course, anything analysed during the Celtic Tiger years need to be seen through a lens of ignorant domestic spending and a lack of regulation that failed to limit the worst excesses of the boom. Especially given the attitude and appetite of politicians at the time. Recall Bertie Ahern suggesting that he did not know how people who complained about the economy did not commit suicide.

Even given these obstacles however, remember the general trend of GDP/wealth creation in Ireland. In 1998 the Economist undertook a study that titled Ireland the ‘poorest of the rich’, highlighting the nation’s weaknesses such as high levels of borrowing, unemployment, inflation, taxation and generally living beyond its means. By 2004 however it printed a very different story, ‘the luck of the Irish’, emphasising the countries enviably low unemployment, inflation, tax burden and ‘tiny public debt’. Fianna Fáil would be wise to harness this appetite for success that Irish people crave and resist attempts to challenge it.

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