Tuesday 25 October 2016

As Germany feels the strain, Ireland must learn to think without aid from Brussels

Published 10/02/2016 | 02:30

German Chancellor Angela Merkel; Germany is not only facing a refugee crisis, but is also experiencing strain in its relationship with Europe – a strain that will have significant implications for Ireland in the years ahead. REUTERS/Umit Bektas
German Chancellor Angela Merkel; Germany is not only facing a refugee crisis, but is also experiencing strain in its relationship with Europe – a strain that will have significant implications for Ireland in the years ahead. REUTERS/Umit Bektas

It's impossible to come to Berlin and not be filled with an enormous sense of history. Everywhere there are echoes and reminders of fascism, not least because the Germans have, admirably, come to terms with their own past and made their repentance extremely public and thorough. Public museums, all free, document assiduously the rise of Hitler, the terror of the 1930s followed by the total war of 1939-1944, culminating in Berlin's Götterdämmerung in 1945.

  • Go To

United Germany is now the powerhouse of Europe, the one true European leader. Yet despite the wealth and the prowess, when talking to Germans you get a pervading sense of crisis here.

The refugee crisis is placing great strain on German politics because the notion that Germany will receive every migrant who wants to travel from the Middle East is beginning to scare the average German. Taxi drivers here, mainly from Turkey, claim that right now it's not a problem, but it may well become one if the numbers continue to rise.

This is happening at a time when the German stock market has fallen by 30pc from its peak because of worries about the global economy and global demand. Germany is the world's best exporter and therefore it has most to lose from a global slump. Add to this the Volkswagen debacle that has undermined the 'Made in Germany' brand for quality and honesty.

Meanwhile, Germany's relationship with Europe is coming under strain - and it is a strain that will have significant implications for Ireland in the years ahead.

The first issue is the euro. As Europe's growth rate falters, the ECB will again cut interest rates to further, negative territory.

Europe is now gripped with deflation and the ECB has to respond. Germany insisted that the rest of the Eurozone couldn't raise government spending to get out of the recession, so interest rates have to be cut aggressively. This will send the euro lower, which should benefit German exporters - but the hard-money fanatics of the old Bundesbank will find it very hard to bear. At the moment the debasement of the euro is not a big deal to the Germans, but if it continues, there are plenty of people here who will be uneasy.

The other fear the Germans have is that the euro crisis will reignite, not in Greece but in faltering Italy. Germany could handle Greece, but Italy is a different story.

Furthermore, Germany is now at loggerheads with its former allies in Poland and the other central Europeans who don't want migrants, but it looks like the Germans want everyone to take their share.

Indicative of the neuroses in Berlin are reports in the local papers that Angela Merkel is suggesting that Nato get involved in the refugee crisis in the Aegean.

All the while the EU is taking aim at Ireland and our tax rates, particularly the test case over Apple. The German government wants Apple to pay its taxes simply because Germany, with its massive capital base, has most to lose if the likes of Apple can divert cash through Ireland and avoid taxes. What happens if some massive German companies 'do an Apple' in Ireland? Germany will lose tax revenues. It's not hard to see what side the Germans are on.

Talking of taking sides brings me to our election.

The issue of our relationship with Europe and what choices we have to make in the next Dáil are quite stark - but Europe will hardly be mentioned in the debates.

For years, the EU has been a simple deal for us. It was more or less win-win. We took their money and outsourced critical thinking to Brussels, pretended there were no conflicts of interest and just played the game of being good Europeans without ever really asking what that meant. We sent MEPs to 'the continent' and then forgot about them and adopted a European currency without even a debate.

However, with Germany now looking at our tax base through its collection agent, the EU Commission, and the Brits possibly on their way out, the Irish in Europe becomes a more complex issue. What is it for us now, this EU? If the Brits leave, we could find ourselves having to obey Italian, German or Spanish-imposed trade barriers on our nearest neighbour.

The solutions are not easy.

We can't follow the Brits out the door immediately - because to do so would mean that the past 100 years, all the 1916 stuff, was actually a cruel joke. By leaving with the Brits we would be admitting that we are, and always were, essentially a satellite of London. However, to career off in a continental orbit, pretending that we are not an Atlantic people with deep cultural, familial and economic links to the Anglo/American world, would be financial suicide.

There are two Irelands: commercial Ireland and bureaucratic Ireland. For many years, their interests were aligned. The commercial angle revolved around Ireland having trade links with the EU but with Anglo/American tax policies for capital; the bureaucratic angle involved being pro-European. They complemented each other. Bureaucratic Ireland wanted to curry favour amongst Europeans at the top table, while never really standing up for the citizens of the country. So when, for example, the citizens voted against EU treaties, we were admonished by bureaucratic Ireland to vote again.

This is not the stuff that democracies are made of.

But now, for the first time in years, a conflict exists between commercial Ireland and bureaucratic Ireland.

Commercial Ireland, the Ireland of business, might have to, very quickly, exercise some critical thinking and restraint over bureaucratic Ireland.

Commercial Ireland lives in the real economy, the one that buys and sells, makes profit, employs people, pays wages and is largely held in some way responsible for what it does.

Bureaucratic Ireland inhabits the never-never land of the Dublin-Brussels corridor, which is entirely populated by civil servants and technocrats who have no reason to worry about commercial Ireland because their wages don't depend on commerce. There is no relationship between competence and reward in bureaucratic Ireland. Consider the Central Bankers, Department of Finance heads and regulators whose incompetence helped destroy this economy. Who lost their job? Did anyone lose pensions? No, they were largely rewarded for their failures. At least the politicians were voted out, but the top civil servants remain unscathed.

Now we should be making hard decisions. Outsourcing critical thinking to the EU is no longer an option.

In the years ahead, we need a new plan, which deals with a different world - and if these two sides of the Irish ruling elite have to clash, so be it. The battleground may well be Apple and test cases like it.

With that in mind, as the election looms and we gear up to celebrate our own revolutionary dead in Ireland, here in Rosa Luxemburg Platz in Berlin the words of that German 20th-century revolutionary reverberate: "Freedom is always and exclusively freedom for the one who thinks differently."

And there was me thinking it was Steve Jobs who urged us to "think different"?

Whether the advice comes from a communist revolutionary or a commercial revolutionary, the message is the same. A time comes for hard thinking. For Ireland, that time is now.

Irish Independent

Read More