Saturday 19 October 2019

After 30 years, our EU structural funds are leaving us

IT is a little moment of history, and no one seems to have noticed.

At the end of this year, Ireland's 30-year love affair with EU money comes to an end. The country's current programme of structural funds comes to an end, and there will not be another one.

Ireland's farmers continue to get substantial EU support. As a result, it will be another couple of years before we actually pay in more than we receive. But the structural funds were once one of the hottest political topics, and people still argue about what they did for the economy.

This is not surprising, given that the total received came to almost ?20bn in today's money. "They were the seed capital of our economic development," says Albert Reynolds who, as Taoiseach in the early 1990s, was most associated with Ireland's success in getting substantial transfers. "They were the foundations on which we built today's economy," he says.

Some commentators, especially abroad, went further, saying the funds were, not the foundations, but the cause of the Celtic Tiger economy. London analysts were prone to say the whole thing would collapse when the funds dried up.

"The British were quite sniffy and the Germans, who paid for most of it, felt they owned a bit of the Celtic Tiger," says John FitzGerald of the Economic and Social Research Institute (ESRI), one of whose tasks was to assess the spending of the funds.

"But it was more the case that the structural funds had a walk-on part in the Irish economic success story. They gave the economy a push, and helped recovery come earlier, but they probably did not change the overall amount of investment by much in the end." German politics played a key role in Mr Reynolds' finest EU hour, when he secured over ?10bn at a fraught EU summit in Edinburgh in 1992, despite widespread scepticism that such a deal could be done.

In the previous phase of funding, that old Francophile Charles Haughey had cultivated Commission President Jacques Delors to secure an average 1.9pc of national income (GNP) for Ireland.

Mr Delors was pushing the single market. But Mr Reynolds did a deal with German Chancellor Helmut Kohl, who wanted the EU to open up to the eastern countries which had just escaped from Soviet domination. The French and British were dubious, but Ireland sided with Germany, and got its reward.

Ireland received over 2pc of GNP annually from 1993-99, with the total hitting 3pc in the early years. That is a lot of money by any standards, but the general view now is that the process did even more good than the money.

Those old enough can remember when government investment in Ireland depended entirely on whether there was a few bob in the annual Budget. Roads would be started, and work might stop for years because budgets got tight. To get EU funding, there had to be a plan.

Brussels officials could also delicately query useless bits of investment inserted for Ministers' favourite constituencies. And then there had to be evaluation, to see how the money had been spent.

Once forced into it, Ireland proved very good at planning. One reason it did so well out of the funds was that Brussels felt the money was better spent than in the other "developing" members, Greece, Portugal and Spain.

Now the fear is not so much that the money is coming to an end, but that the EU oversight is coming to an end as well. Will Irish politicians and civil servants slip back to their bad old ways, the former putting politics above economics, and the latter budgets before development and efficiency?

Certainly, the EU money is no longer a big deal. For the last three years, it has been less than 1pc of GNP, and tailing off as the deadline approaches. Even so, the Border, Midland and Western region may well feel the passing of its under-developed status which allowed bigger EU funding in projects, as well as higher State aid.

But there are few other regrets. "In a sense, it is a coming-of-age for the economy, and people should realise that," says John FitzGerald.

"We are in a very strong position, when you look at where we have come from and where we are today," says Albert Reynolds.

"But, of course, you would always take more money if you could get it."

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