In treacherous times, we need to keep our three best friends sweet
BREXIT, Trump and the victory of the profoundly eurocentric and tax-harmonising Macron have focused our attention on exactly what type of economy we have here. What are our alliances? Where does our interest lie and how best should we navigate the next few years? In short, the question now is who, in economic terms, are we?
There has been a lot of commentary on Brexit and how bad it might be for the country. This may turn out to be the case, but we don’t know yet how it will pan out. It is significant that since the Brexit vote, our economy has not spiralled into a tailspin as was predicted by the mainstream; in fact, the opposite has been the case. This economy has been on a roll.
This development alone should be enough to treat much definitive commentary with a pinch of salt.
However, what should shift our credence from a pinch to a mountain of salt is the fact much of this apocalyptic commentary has come from those who could be described as being “on the payroll”.
People “on the payroll” are usually professionals who are paid either by the State, the EU or ancillary professions that depend on the status quo. All these institutions follow a hard editorial line whereby the EU is wonderful in all respects and further European integration is not so much a point of argument as a self-evident truth.
They may be proved right but that outcome is not a given, particularly for an Atlantic economy like ours where non-EU trade and investment links predominate. The facts on the ground indicate that we are as much an Atlantic economy as a continental one.
For example, when you read a tome on the relationship between Ireland and the EU written by, let’s say, the “Jean Monnet Professor of this” or the “Robert Schuman Professor of that”, the editorial clue should be in the title and the narrative is likely to be as objective as a screed on private property written by the “Karl Marx Professor of Economics”.
Thus, in the same way that the Anglo Irish Bank chair in corporate governance might set alarm bells ringing if you were to engage in a discussion on lending, so too should any title that has the forefather of European integration in it when discussing the future relationship of this country and Europe. Who wouldn’t be equally cautious when assessing the judgment of the Clinton Institute of American Politics on the Republican Party?
By the way, when it comes to the EU, there are loads of these academic positions all over Europe. In truth, opinion-forming is an industry like any other and if someone is bought and paid for, they are likely to toe the party line. So we should be vigilant. This is not a slight on the academic integrity of the people involved; rather it is a health warning on objectivity. My father once remarked to me, honestly and without prejudice, that “a man’s view of the world is often determined by who pays his wages”. That sounds fair, don’t you think?
A small suggestion as we go into a debate on the future of the country is when someone is “on the payroll”, this fact should be declared up front so that we can have some objectivity in the crucial national conversation. It’s a modest proposal, if you will.
The reason such disclosures are important is because the debate is so critical.
When we look at the country in the context of the world, we see that Ireland has three enormously important relationships.
Economically, Ireland is a trading nation and we sit atop what was, up to now, a reasonably solid, threelegged stool.
One leg is Britain, the market where a huge amount of our traditional products end up. Forty percent of all our agriculture – our biggest indigenous industry – is consumed by British people. But even more significantly in terms of bonds, our neighbour is a home from home for half a million Irish citizens. Today, there are about as many Irish-born people living in England as there are Irish-born people living in Connacht.
These are blood ties, the product of history, geography and simple proximity. In a sense, these are bonds that we can’t shake off even if we wanted to do so.
The second relationship is with the US, by far and away our biggest investor and the country we built and with which we have deep cultural and historic affinity. To put the commercial relationship in context, US corporations have invested $380bn (€340bn) in foreign investment in Ireland, more than they have invested in the whole of Latin America, or the whole of the Middle East, or more than they’ve invested in China. The latest figures from the American Irish Chamber of Commerce reveal that in 2015, American corporates invested $58bn (€51bn) in one year.
Without American capital, Ireland would be Portugal with poxy weather.
The third relationship, of equal importance, is that with continental Europe. This is a deep political and diplomatic bond, if a somewhat tenuous personal one. For example, while our political class scuttles back and forth to the continent, we don’t. There are close to 500,000 Irish people living in England, there are a mere 13,000 in Germany, Europe’s powerbroker. Therefore, unlike the UK, the EU links are bonds of political strategy, engineered by policy rather than by people.
That said, politically the EU is an anchor for us in the world and one that commercially gives us access to the market of 500 million Europeans.
So all these relationships, the Atlantic and the continental, are equally important and interdependent.
In the years ahead, the clear strategy for Ireland is to maintain all these relationships. If the British look like being frozen out of Europe, through their own bloodymindedness and EU intransigence, we must be prepared to broker a better deal for all, even if that means breaking ranks with the EU 27. Likewise, if there are moves to harmonise tax – and Mr Macron seems keen to do this – we have to use our veto in Europe. Finally, if the American political class moves towards protectionism, we have got to reassure US corporates that Ireland is the place they can invest and get a better return on equity here than in the US. It is that reassurance, not executive orders scribbled by The Donald, which will be the key long-term metric in determining capital flows.
Money is like water: it flows to the place of least resistance. We should be that place because that’s the key to prosperity.
There’s every reason to be positive. There’s every reason to back ourselves. However, juggling all these interests will demand adroitness and common sense. In terms of the national conversation, it would be unforgivable to allow the future debate to be dominated by voices that are already bought and paid for.
Without American capital, Ireland would just be Portugal with poxy weather