Thursday 22 March 2018

Without UK buffer, Ireland faces struggle to punch above its weight

Taoiseach Enda Kenny leaves the EU Summit in Brussels during the week Picture: REUTERS/Francois Lenoir
Taoiseach Enda Kenny leaves the EU Summit in Brussels during the week Picture: REUTERS/Francois Lenoir

Sarah Collins

The balance of power in Europe is shifting, and Ireland will no longer be able to rely on Britain to help secure its national interest.

The Government will now have to build on the alliances it has forged with like-minded Nordic, Baltic and eastern European countries.

The Brexit spectre will overshadow day-to-day lawmaking even though EU leaders insist it will be business as usual until the UK finalises its divorce settlement with Europe.

Britain's EU Commissioner Jonathan Hill has recused himself, and, in private, British officials are fearful for their future. The situation leaves Ireland, the EU's ninth-smallest country in population, unable to rely on an influential ally in Europe.

Britain has acted as a counterbalance to the EU's main "motors", Germany and France, who have pushed for more integration and shared sovereignty, particularly during the financial crisis.

Their hegemony is being challenged by an emergent but increasingly vocal bloc known as the Visegrad group, comprising Poland, Hungary, the Czech Republic and Slovakia, who are ardent critics of the EU's approach to the migration crisis.

"Crucial decisions on the future of Europe cannot be defined by one or two member states, or the founding member states of the EU," said Slovak prime minister Robert Fico, whose country takes over the EU's rotating presidency today. "The same applies to our common stance on such important events as Brexit."

There are two other EU blocs that hold sway: the 19-member eurozone, of which Ireland is a member, and the 26-country Schengen travel zone, of which it is not. The UK has acted as a buffer between all of these competing interests and, Irish diplomats say, an important source of information on complex EU banking and tax files.

As the world's largest exporter of financial services, the UK was an important powerbroker and support during the banking crisis.

In future, Ireland may have to rely more on Denmark and Sweden, who have been sensitive to Irish banking woes and contributed bilateral loans as part of the 2010 bailout.

On tax, Ireland may have to look further east.

France is in favour of tax harmonisation, and famously went after Ireland's 12.5pc corporate tax rate during the bailout. It is now, along with Germany, Italy, Spain and six other countries, pursuing a limited financial transactions tax, something Ireland opposes.

Latvia, Lithuania, Bulgaria and Romania, by virtue of being the lowest-tax jurisdictions in the EU along with Ireland, are generally onside in tax talks, as are Cyprus and Malta.

On single market regulation, Ireland can rely on the Netherlands, Poland, Sweden and some other eastern European and Nordic countries.

On agriculture, Ireland, France and the EU's "older" member states tend to favour a well-funded Common Agricultural Policy, but Denmark and the Netherlands are emerging as more sympathetic allies in the dairy market crisis.

And as the talks on a divorce settlement with the UK continue, Ireland will have an uphill struggle to protect its national interests, given its size and weight in the EU.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Also in this section