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Diplomacy will dominate once this election is over

Dan O'Brien

The next government will have to hit the ground running on Brexit and international profit tax plans


Donald and Melania Trump

Donald and Melania Trump

AFP via Getty Images

Donald and Melania Trump

Foreign issues are rarely to the fore in European countries' elections. The Irish electoral system makes local issues even more important in national elections than in most other countries. Questions about foreign affairs tend to squeezed out as a result.

But they need consideration. For a country that will be affected by Brexit more than any other; for one which has pooled sovereignty with its continental neighbours over half a century and will likely continue to do so in the future; and for one which is among the most economically globalised in the world, choice around foreign policy is even more important for Ireland than for many other countries.

The much more difficult international environment in which Ireland finds itself is another reason that decisions around foreign policy need plenty of thought. Compared to when Bill Clinton was in the White House, Tony Blair was in Number 10 and deep fissures had yet to emerge in the EU - Ireland's external environment in that period around the turn of the century was the most benign in this State's history - one can see how much more challenging Ireland's world has become over the past two decades.

And it is not only Brexit, Donald Trump and new divisions in a bigger and more heterogeneous EU that have made Ireland's world a more difficult place. Other developments which have made it less benign include: a more disruptive Russia; failed states in the Middle East and North Africa causing, among other things, more migration flows into Europe; a more aggressive and at times threatening China; climate change; new cyber security threats; rising protectionism; and seemingly ever-growing international pressure on Ireland over the activities of multinational companies located here.

The next government will have to hit the ground running on many of these issues. Brexit will be front and centre, despite Britain having formally left the EU on Friday night.

Ireland's relations with our immediate region have been made permanently more complicated by Brexit. Having Britain in the European state system levelled the playing field with our much larger neighbour.

As keeping the playing field as level as possible with Britain is a core objective of all 27 members of the EU, expect to hear 'level playing field' discussed endlessly over 2020 and its abbreviation (LPF) soon enter the everyday.

The EU-UK talks on what happens when the transition period (of de facto UK membership) finishes at the end of the year will be fraught. They may fail, as European commissioner Phil Hogan correctly if inappropriately (given the election campaign) highlighted last week. The dreaded no-deal Brexit hasn't gone away.

Another immediate for the next government will be to work out how the economic border between Northern Ireland and Britain functions. The British prime minister's occasional interventions on that matter have raised questions about his understanding of what was agreed late last year, and even whether he will keep his word.

The next government will also have to work with London to keep the North's wobbly devolved institutions on the rails. The wild card for Northern Irish politics and its institution is if Sinn Fein becomes a coalition partner in Dublin after the general election.

When Theresa May's government came to depend on the DUP to stay in power, it undermined London's position as an honest broker in the North. Sinn Fein in government in the Republic could only have the same effect, and probably even more so as the party has said any government of which it forms a part will have to commit to holding a border poll and prepare actively for an end to partition.

These will not be the only non-domestic issues the next government will have to deal with from Day 1.

Last Friday in Paris, dozens of countries agreed to keep working on an international deal on taxing multinational companies. Much as is the case with Brexit, this is a damage limitation exercise for Ireland.

The huge increases in the amounts multinational companies have paid to the Irish exchequer are small in a European context, never mind a global context - the European Commission estimates that EU governments lose a lot more from non-payment of Value Added Tax than the OECD estimates every government in the world combined loses from profit tax avoidance.

But even if the issue is exaggerated, it is a problem and it should be addressed. If the Paris-centred talks produce a deal, the Irish exchequer will lose out to the tune of €2bn annually, according to the Department of Finance. That is manageable, particularly as implementation of the accord will be rolled out over years and there will be time to prepare. This is probably the best achievable outcome.

If the Paris process fails to deliver a deal, however, the attention of European countries will turn to Brussels, and there will be a fresh onslaught to limit member countries' freedom to determine their own profit tax regimes. It will be led by France and Germany. Britain will not be at the table to act as a brake on the Europeanisation of the issue.

Ireland will not be alone in resisting EU-level tax change. As such it is unlikely to have to exercise the veto all 27 countries wield over changes in the area of taxes. But the next government could quickly come under more pressure on the issue than ever before.

Another big foreign affairs matter looming is the US presidential election. The re-election of Donald Trump later in the year will come as a shock to Europe even if the polls are showing that his prospects are good, and will improve further if the Democrats don't chose a centrist to run against him.

European governments and officials are running down the clock in many areas of dispute with the US in the hope that anyone but Trump gets elected in November. If he is re-elected, it will no longer be possible for Europeans to play for time or to dismiss his presidency as an aberration. There will be no return to transatlantic 'normality'.

For a president who has shown little sign of restraint over his first term to win a second and final one, and not have to consider re-election, could well make him more radical than he has been to date.

Whether an emboldened Trump takes his past positions on a range of issues to new levels remains to be seen. But Europeans know that there is a risk he will. Nowhere are the stakes higher than the security of the continent.

Nato and the EU have been the two great institutional frameworks of the European state system in the post-World War II era. Unlike the EU, the US has been the beating heart of Nato since it was founded 70 years ago.

Donald Trump has questioned the US's role in the alliance in a way that would have been unthinkable under any previous administration. That means that US commitments to defend Nato members if they are attacked are a lot less credible than in the past. They could disappear during a second Trump term.

This would drive Europeans in the direction of self-reliance when it comes to their own security. The most obvious institution in which to do that is the EU.

If security and defence becomes a focus of deeper European integration, will the next government do what Britain did when the euro was created and stand aside, or will it seek to remain at the centre of things and sign up to a watering down of Irish neutrality? Neutrality is one of the few foreign affairs issues that brings out strong emotions, for a significant chunk of the electorate at any rate. The next government may have difficult choices to make on this issue. It could potentially have to fight a referendum on it. As the Lisbon and Nice votes showed, it is never a foregone conclusion that the electorate will back deeper European integration.

Sunday Independent