“Closer to Boston than Berlin” was the declaration of an Tanaiste about Ireland’s psychological orientation to a group of visiting US lawyers. This was followed by our Finance Minister’s feisty dismissal of Commissioner Solbe’s criticism of our brilliant macro economic management. “You’ll never beat the Irish” could have applied to the world of economic development if one were to believe the nonsense trotted out by one political wunderkind after another only a year ago. Many people did, and so did not bother to vote. Others decided to teach our presumptuous politicians and the European hegemonists a lesson by voting no, putting a halt, incidentally, to the aspirations of many Eastern Europeans. The promotion of the Government’s position, pro-Nice despite some signs of dissent by at least one junior Minister, was hampered by the McKenna judgement, which seems to require Irish officialdom to speak out of both sides of the mouth at the same time.
Given the Government’s maladroit behaviour, the result of the vote was hardly surprising. The rerun is now set up with the neutrality issue where it should be – on the sideline. The rerun is so important to so many people that it deserves serious consideration. Broadly speaking, a no vote means that Ireland is single handedly blocking the way to aspiring European nations from joining the European community. A no vote means that Ireland loses friends and influence in Europe where we have, since 1973, enjoyed an influence and economic benefits completely disproportionate to our size. To take one not very widely known example – Irish consultants have received over 10% of the consultancy contracts awarded under the PHARE and TACIS programmes. These were established to help former USSR countries with their economic recovery. (Ireland has 1% of the total EU population).
So what are the concerns in relation to Nice? They can be summarised under three headings – economics, influence, and immigration. Economics involves trade, foreign direct investment (FDI) and agricultural grants. On the trade side, an additional market of 74 million people should be important but their spending power is low. This will of course change, once those countries become integrated into the EU, so the future is positive. Meanwhile many of our manufacturing companies are sourcing components there in order to enhance our competitiveness. They are increasingly becoming part of our supply chain.
Will they represent competition for our suppliers at home? Probably yes, but competition from new suppliers will help to protect the Irish consumer from rising inflation. The classical economists viewed international trade as a means of importing what could be made more efficiently elsewhere. Exports were needed to pay for those imports. This is the whole basis of international trade, contrary to what politicians say.
The applicant countries are already competing with Ireland for US investment. In fact Hungary emerges ahead of Ireland in terms of return on US investment in a recent Competitiveness Council report. There are other important factors, which weigh heavily in our favour- mainly cultural and political – in the attraction of FDI. The major threats to us are loss of competitiveness from poor infrastructure, rising services and other input costs, and the attitude of our EU partners to our tax regime. A no vote would render us less attractive in the eyes of US investors.
A concern of the farming community relates to sharing the Common Agricultural Policy (CAP) funds with two million Polish and other Eastern European farmers. We know that some 50% of our farmers’ incomes now derive from EU funds so farmers are right to be worried. Reform of the CAP has been underway for some years and will continue. The pressure will come, not from new EU adherents but from Europe’s non-farming community and World Trade Organisation (WTO) members. In the WTO discussions Ireland shares the doubtful distinction of partnering France in opposing reform of the system. There is no doubt however that the CAP will change whatever the outcome of the Nice referendum.
In terms of influence, all existing members must expect a dilution in a club, which grows from fifteen to twenty seven members. The proposed arrangement however will still allow Ireland a disproportionately high degree of influence. If the club is expanded with Ireland only grudgingly accepting expansion, we will certainly lose influence, not least with the new adherents.
Some people believe that immigration will rise rapidly, particularly as Ireland is one of four countries, which will not have a transition arrangement. The spectre of thousands or hundreds of thousands of Eastern Europeans flooding in here is manifestly off the wall. Informed commentators consider that Eastern European migrants will accouint for 1% of the EU population by the year 2030, with countries like Germany bearing the brunt of population movements.
If we give another thumbs down to Nice we may seriously prejudice the wellbeing of millions of people. Nobody who visited Eastern Europe in the bad old days of communism can forget the gloom and greyness imposed by the system on people who were exploited and deprived of opportunity under a truly awful regime. Schemers and politicians rose to the top, daily life was a living lie, dissent was ruthlessly punished, creativity was stifled. There was no unemployment – everybody was employed by the State. The same State also provided living accommodation, which was a further means of ensuring compliance. All foreign trade was conducted by the State owned Foreign Trade Organisations, now abolished and leaving a vacuum in the trading infrastructure. These countries need access to foreign markets, to technical and financial assistance to undo two generations of isolation. They need the same opportunities as we got thirty years ago
Are we, the champions of freedom and individualism, to deny them the opportunity to advance?
Colum MacDonnell The writer is President of the Irish Coalition of Service Industries and Chairman of the electronic Business School International.