Thursday 21 March 2019

Brussels plays risky game in post-Brexit world

Former president of the EU Commission Jacques Delors. Photo by Rafa Samano/Cover/Getty Images
Former president of the EU Commission Jacques Delors. Photo by Rafa Samano/Cover/Getty Images
John Downing

John Downing

It is over 21 years since French political strongman Jacques Delors stepped down as president of the EU Commission. Delors's 10 years at the helm were a period of innovation and creation, including agreement on the creation of a common currency. The two decades since then have been, at kindest estimate, a period of consolidation, and by a more frank judgement, a time of sclerosis, mistakes and downright chaos.

Suffice to say now that it has been a long time since the EU policy shapers were so clearly trying to set a global agenda in either economics and politics. But the Apple €13bn ruling changed all that with one fell swoop.

Just hark at this extraordinary statistic. The EU Commission has delivered verdicts in 254 cases since 2000. The total value of all those 16 years' worth of corrections and/or penalties comes to under €11bn. That is a nice bit short of the one case involving Apple, which has launched Ireland into the middle of a huge EU legal battle; a domestic political row; and the grave risk of this country becoming the meat in the sandwich of a bitter transatlantic war between the EU and the USA.

EU Competition Commissioner Margrethe Vestager concluded that Ireland's tax treatment of Apple constituted an illegal state aid and promoted unfair competition. The Dublin Government is not the only one to believe that Ms Vestager's conclusion is a bit of a stretch.

"Apple and Ireland is mainly about US taxes which have been foregone. That is really no business of the EU Commission. Remedies for unpaid taxes lie elsewhere," one experienced Brussels lawyer told this writer.

But that would now appear to be a matter for the EU Courts in a process which will take years.

The ongoing realpolitik is that Ireland has long been in the crosshairs of other EU member states in this regard. This country's success in attracting in multinationals has long been the envy of our EU neighbours; the 12.5pc company tax rate has been the target of criticism from the highest levels.

The tone of Ireland's response to Brussels has also moved up a couple of octaves. It is markedly different from the parlous position this country was in in 2011/2012 when Ireland was denied the authority to "burn" bank bondholders by Brussels and Frankfurt. But we must also factor in that Ireland's travails, vital though they are to all of us, in all of this are and will remain small beer at the EU and global level.

The bigger picture here is that the EU Commission has collectively decided to take on the multinationals, and very likely, the US government. This is no solo run by the EU Competition Commissioner - she has the backing of the entire 28-member Commission in this matter.

It is a big fight which could lose, not just Ireland, but bigger EU economies investment and jobs. The Brussels sally forth comes in the wake of the Brexit vote.

There is no doubt that the multinationals need to be confronted. But it is a question of tactics in a dangerous post-Brexit world.

Irish Independent

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