Address to IIEA : Brexit and the implications for Ireland and the EU
2 February 2017
I think we are all getting weary of speeches that begin by emphasising the gravity of the challenges we face.
Yet Brexit and the upheaval facing the EU have brought about another series of conversations that sound all too familiar.
A decade ago, we began talking about potentially ruinous levels of banking debt, the resolution of which still haunts our national psyche.
And back then we were just starting the work of putting right the catastrophic mismanagement of our public finances.
Ten years later, though it doesn’t always feel like it, Ireland has emerged reasonably well.
I said during one of my Budget speeches that in time we would, as a people, realise that our recovery from our economic woes was as significant an achievement as our falling into them was a failure. I still believe that. Though that argument may need further time to mature.
Our economy is growing again. Our debt, while high, is at a level that we can grow out of, indeed are growing out of. People are back in work, and wages are beginning to rise.
It would be a brave man who suggests nowadays that we ‘need to keep the recovery going’, but from an Irish perspective I think it is fair to say that we now need to turn our attentions to political rather than economic crises.
It wasn’t always certain that we would get to this point.
I’ve spoken about Greece before. And in truth, I have been critical of Syriza and the forces of populism in that country. But today, we are less than three weeks from yet another deadline for Greece to reach an agreement with her creditors.
Like Ireland, Greece was plunged into crisis in 2008. I think it is fair to say that if Ireland was still imposing further tax increases and spending reductions in 2017, the fabric of our society would be under great threat.
As it is, there is rising support in Greece for that country to exit the EU and reinstate the drachma. That challenge facing Europe is one I will come back to, because I think it is one of the key factors that brought Brexit about.
But my primary topic today if of course to discuss the implications of Brexit for this island.
Government response to Brexit
Over the last few days, we have seen a sudden flurry of activity from Government.
On Monday, some of the detail of Government papers on Brexit was leaked to the Irish Times, in an attempt to rebut suggestions that the Government is not doing enough.
Enda Kenny met with Theresa May in an encounter Miriam Lord has referred to as a ‘vaseline summit’ - free of friction, and indeed largely of meaning.
Also on Monday, Paschal Donohoe – my successor in the Department of Public Expenditure and Reform, and someone for whom I have great admiration, addressed a similar audience to this one on the same theme. I’ll touch upon his comments again towards the end of my remarks.
You might argue that this is good – the Government is finally showing itself to be taking on this most important of issues.
But there are a few problems with blindly accepting such a narrative.
The first is that Government action has only resulted from opposition criticism. As far back as early November, I asked the Taoiseach to provide weekly briefings to opposition parties on Ireland’s preparedness for Brexit, and was assured that such briefings would be provided. Three full months later, opposition parties still read more about our Government’s preparations in the newspapers than we receive from the Taoiseach’s Department.
Ireland and prenegotiations
The second problem with the Government narrative is more fundamental. I accept that the Irish Government is developing a more complete position. And I welcome the fact that we have a little more clarity on Britain’s position – even if it is a position with which I fundamentally disagree. But I don’t accept that the Government is doing enough to influence a shared European position.
We continually hear that negotiations with the UK cannot begin until Article 50 is triggered. But the idea that the 27 member states will only begin discussing what our shared position should be on the day article 50 is triggered, is ludicrous.
Indeed, the fact that the 27 member states met at an informal in December proves the very idea to be nonsensical.
We have a short window before Article 50 is triggered to frame what Ireland requires from a UK exit, and gain support for our requirements.
For example, we have heard over recent months what the EU requires in terms of pension obligations.
But outside of the EU bubble, we need a much better exposition of how all of our interests will be impacted and then protected.
Now is not the time for fire side chats. Now is the time for bold statements and a strategy to avoid collateral damage for Ireland.
Ireland and EU Structures for Brexit
At the informal gathering, the leaders of the 27 agreed that they would oversee the negotiations, and that between meetings of the European Council, a working party (with a permanent chair) would be established to act on their behalf and liaise with and oversee the work of Michel Barnier’s team.
I asked the Taoiseach about this in the Dáil. Specifically, I wanted to know what efforts we were making to have senior representation on this working party, or indeed to secure the permanent chairpersonship of what will effectively be a Brexit oversight body.
When asking, I was conscious of the expertise of Irish people such as Catherine Day, who could clearly fulfil such a role, and balance both a detailed knowledge of Ireland with a deep understanding of EU-wide politics.
As is now becoming customary, the Taoiseach didn’t answer this point, leaving it to Minister of State Dara Murphy to do so. And his response downplayed the importance of this group as merely a gathering of civil servants, and gave absolutely no indication that we were seeking any significant influence.
So, we have a negotiator appointed by the European Commission. His work is to be overseen by the EU Council. But between these meetings, the responsibility will lie with a group that Dara Murphy believes are only lowly functionaries with little influence.
It is little wonder then, that we are not confident in the Government’s state of preparedness. And little wonder that 74% of Irish people are now in agreement with the idea of a dedicated Minister for Brexit – to have someone clearly in charge and on top of all detail.
The previous Government’s response to the financial crisis was to establish the Economic Management Council to coordinate Ireland’s response to that crisis. It was subject to much criticism, most of it nonsensical, but it worked. In contrast, when the Taoiseach met his British counterpart last week, I didn’t see anybody from either of the two economic ministries in the room.
And while I accept Brexit constitutes a gargantuan shift in relations on this island since the Good Friday Agreement, it is also an economic threat. I would like to think our economic departments are as seized of it as the Departments responsible for managing the peace process.
The detailed challenge of Brexit
In truth though, the bigger questions Brexit is asking of us are not questions to which we have really worked out answers yet.
I’ll pick just one example, which is back in the news again, for other reasons. We have had a single, all-island, electricity market since 2007. The market works well, perhaps because it is not subject to day-to-day political control and instead is left largely to those who know the industry.
This all-island market is currently being re-designed, in order to comply with EU rules for a pan-European electricity market. There is to be an EU-wide trading and settlement code, and we must adapt to fit in.
Our own Irish market is also defective - our grid is shaped like a wasp, with a narrow waist joining two larger parts.
The existing interconnector doesn’t have capacity to ship power from where it is generated to where it is needed. And for a long time now we have recognised the need for a second interconnector, to break the logjam.
I want to stress two things. First, the North-South interconnector, as I understand it, is wrongly named. It is not needed in order to connect two networks. It is needed in order to transform two networks into one. Second, the interconnector is needed as a matter of some urgency. Northern Ireland signed up to the all-island single market. It closed ageing power stations. It increasingly relies on power from here to be sent up there, securely and reliably. That is what we promised.
If we don’t build an interconnector reasonably soon, then phased power cuts are in prospect in Northern Ireland. We will have imposed significant social and economic damage on our neighbours.
If we can’t get up to the plate and deliver on this project, then we need to let people know very, very quickly, because urgent alternatives need to be commissioned and installed.
Against this backdrop Brexit materialises. And every aspect of the issue becomes further confused.
What was once a plan to create a real all-island market, as part of a real single European market, now becomes a plan to export electricity, across the border of the European Union. Power will be shipped out of the EU, out of the single market and, most likely, out of the customs union.
All sorts of questions arise. Most centrally, will it be possible to run an all-island single electricity market when part of the market remains in the larger European single market and part of it is outside the Union?
I choose this issue as just one example of the series of major issues that are confronting us, across many areas of administration, in nearly every Government Department.
Instead of grappling with the complexities of these issues, and seeking to chart national responses to them, our Government believes that doing a nationwide roadshow, and repeating the same set of slogans, will suffice.
They seek to reassure us that the big picture will be fine. But in truth, it is the detail that will bog us down for years to come.
The interconnector is also an example of why, I believe, post-Brexit, the notion of adhering to policies designed in Brussels for the single European market needs to be urgently re-examined.
Our aviation, shipping and other transport policies, our energy and energy network policies, even our broadcasting and telecommunications policies no longer make sense when there are 60 million non-EU citizens between us and the rest of the Union.
If the picture didn’t look alarming enough already, the evidence of the former head of the European Commission’s customs procedures to MPs yesterday was further reason to sit up and take note, when he bluntly stated that “if Northern Ireland is not part of the EU customs territory, then there is a customs border”.
The European response to Brexit
The Union needs to recognise this new reality: that there will be a large piece of ‘non-EU’ between us and the rest of Europe. And they will need to change their policies to accommodate that reality.
But, right now, the rest of Europe does not seem to be in a very accommodating mood.
Soon after the Brexit referendum, I remarked that there was pig-headedness in evidence already, on both sides of the debate. I said that some of senior members of the Commission, Council and Parliament seem to have displayed all the capacity of the Bourbons to learn from history.
The Union should not be a sheep pen, into which people are corralled by fear of the consequences of leaving. The last thing we need is a bullyboy determination not just to quickly eject the British, but to make their expulsion immediate and draconian.
One of the dispiriting aspects of debate about Europe, in this country as much as in Britain, is that it is conducted on a rigidly bipolar basis. One is either pro-European or anti, either a Europhile or a Europhobe. Even scepticism is regarded as anti-European, as a betrayal of the great European project.
I regard myself as pro-European, both instinctively and rationally. But I do not surrender my rational capacity to critique Europe and its institutions.
I do not regard myself as anti-European when I point to ‘mission creep’ and empire-building in the European institutions.
It is not anti-European to criticise policies designed on a ‘one size fits all’ basis, that do not even nod in the direction of local conditions.
I would cite rules requiring us to separate our railways from our trains, and our power stations from our power grid, as examples of a theological obsession with the doctrine of competition that shows no appreciation of life as lived on a small island offshore another island, offshore the coast of Europe.
And I would also cite the percentage caps that found their way into the Fiscal Treaty and bind us all as having no real basis other than that they happened to be used by Germany for a couple of decades, and as being clearly unsuited to economies as different from the German economy as are Ireland’s and Italy’s.
Another dispiriting aspect of the debate about Europe is that there might have been some expectation that, by now, there would be some questioning among Europhiles about why a British majority voted to leave. But there has been no such examination. Instead a drawbridge mentality still prevails and indeed seems to be strengthening.
The drawbridge mentality was summarised by Guy Verhofstadt writing in the Los Angeles Times immediately after the referendum result: “But if we’re soft now with Britain, giving it too much wriggle room to extract favours and deals, we will only feed anti-European parties elsewhere in Europe and strengthen the belief of nationalists and populists that the European Union is a walkover”.
Mr Verhofstadt doesn’t seem to have softened that position recently. Mainstream Europe still wants to hammer home the price of leaving, because they think this will contain the risk of Eurosceptic contagion.
Indeed, I listened to him on Newsnight last Monday evening, when his view was that we now need deeper integration.
In my view, Mr. Verhofstadt is utterly deaf to the views of the people. And his approach is a recipe for the implosion of the European project
In truth, I agree with the Polish foreign minister – not someone from my political family - that the referendum result showed “disillusionment with European integration, and declining trust in the EU”.
I think it is long past the time there should be some examination of conscience among all of us, supporters of the European project, as to why that project has lost its appeal.
We have seen some recent good news from Europe. Business sentiment is improving, and our economies are growing again. But it took too long. And poor economic performance has created political problems. Brexit is not an isolated incident. We have also seen the resignation of a reforming Italian Prime Minister, the threat of the far right in France and the Netherlands, and our own inability to elect a majority Government after the election.
I said I would return to Greece earlier in my remarks. And my observation would be this – how can we really suggest that the recession is over, or that creditor countries understand their obligations to debtor countries, while the Greek crisis rumbles on. We’ve been at this for ten years now.
And to make matters worse we have now seen elected a President of the United States who is deeply hostile to the European Union, and indeed friendly towards those in Europe who are also deeply hostile to the European Union. The days when the United States under the rational Presidency of Barack Obama would act as a stabilising force are now gone.
The tragedy for the UK is that at precisely the time it needs its European allies in an effort to deal with the instability in Washington, it has unfortunately seen both pillars of its foreign policy implode at the same time.
And precisely at the time that Europe needs the positive and experienced contribution to international affairs that the UK might have provided, it has lost it.
Towards a social Europe once more
We in Ireland are lucky these days to have a President who often acts as the conscience of our nation.
Earlier this week, he noted that “In Europe and the United States, deepening inequalities have betrayed the commitment to cohesion upon which so many hopes have been placed”.
As he does so often, I think he has once more pointed to the core of the challenges we face.
Winning the citizens of Europe over to the European project once more requires, first, a genuine recommitment to a framework for a Europe based on equality, personal freedom and prosperity.
Second, it means EU institutions and leaders that address the problems pressing heaviest on their citizens – in particular stagnant growth and youth unemployment - a rekindling of hope in the future.
In other words, I believe we need to reinvigorate the notion of a social Europe.
A Europe that does not recognise the dangers of economic underachievement throughout the continent cannot win the support of its people.
We need to debate this and to act now. Prolonged EU austerity can only do further damage to the political fabric of the Union.
As Jean Monnet once argued: “Europe has never existed. One must genuinely create Europe.”
When visionary leaders such as Monnet spoke about a Europe of the future, they spoke about an idea of tremendous power.
The social Europe we created allowed nations to take risks on other nations, knowing that the power of the idea of membership of the European project was such that it could be used to bed down democracy, to maintain peace and stability, and to promote the common good.
Since the European project began, an integration has occurred. We have begun to create Europe.
Without a revitalisation of the social Europe, we surely face a disintegration of that which we value.
Europe needs to recover its spirit and its purpose – to serve its people, not to dictate their futures.
The Union will survive and prosper if it shows it can meet the needs of its people. Right now, this means growth and jobs, and improved standards of living.
There are some moves being led by social democrats across Europe on this agenda.
During 2016, the commission began consulting on the pillar of social rights.
Just last week, the European Parliament endorsed a report on the social pillar produced by the Socialists & Democrats group in the parliament, which argues for decent working conditions, action against inequality, and strong social protections, including for the emerging gig economy.
That report was drafted by Maria Joao Rodrigues, who is also leading another piece of work which I proposed at a meeting of leaders of socialist parties just before Christmas.
That work is focussed on re-examining the rules of the stability and growth pact which, in my view, are preventing Governments such as ours from making an appropriate level of capital and human investment.
During the first half of this year, Maria and a network of economists and financial experts will produce a set of proposed changes, and report back to the group of party leaders so that we can begin seeking their implementation.
The case for social democracy
I mentioned at the outset that I would come back to the comments made here on Monday by Paschal Donohoe.
Anyone who read his address would have to recognise that it was a well-read and thoughtful contribution.
But at the core of his address, he emphasised that “it is so important for centrist politics to assert itself again and tell its story”.
Leaving aside Paschal’s unstated implication that we should all support his Government as the centrist project, I feel his argument is ill conceived as well as self-serving.
I come from an entirely different political family to Paschal. There are profound political differences between us. And I can tell you that they manifested themselves daily during the last Government – our rows on policy issues were often difficult.
We were held together by the sheer gravity of the economic situation we faced. But our difficulties were caused by the fact that our instincts on issues were often so far apart.
We do have in common a willingness to work the levers of Government in our pursuit of the national interest. But to elevate centrism to the level of ideology is a mistake.
I don’t believe that our politics – either domestically or internationally – should aim to be free of values. I don’t believe that we simply need more centrist politicians to project more passion.
I believe we need a continuing clash of ideas. We cannot make blandness a brand. We have to articulate our differences clearly but with respect for those that hold different views.
And for my part, I believe we need a politics that is ambitious for our people, which strives to eliminate injustice wherever we see it, and which implements policies that clearly articulate the values of solidarity, community, equality and democracy.
How we guide an approach to Brexit
I have referred to my ideas of how Europe must change, and the values which I believe should guide our politics.
And I make these points not as tangents from the debate on Brexit, but to argue for how we should approach the vast array of issues that Brexit presents.
At one level, the issues of concern to Ireland are at a level above party politics.
Our priorities are to protect the common travel area and the Good Friday Agreement. We need to make sure the transition, both for the CTA and for the GFA institutions, is as smooth and free from turbulence as our shared commitment and goodwill can make it.
We need also to ensure that the terms of trade, post-Brexit, don’t leave this country disadvantaged as a consequence of leaving Britain disadvantaged. I think our European colleagues understand the former but not necessarily the latter.
And, while we are a Member State in good standing, a member state that has made too many sacrifices in the European interest over the last decade, we need to ensure that these are not just Irish or British-Irish priorities – but that they are European priorities too. These priorities need to be highlighted in the European Council’s negotiation guidelines. And we need to push them relentlessly.
But at another level, we need a debate around what type of Ireland and what type of Europe we will be left with after Brexit.
If solidarity as a notion is not a part of this discussion and British withdrawal becomes British expulsion then, by way of collateral damage, we will be flung from the centre of Europe to its frontiers.
If equality as a notion is not at the heart of our thinking, then what will the implications be for the very many people in Northern Ireland who are EU citizens holding Irish passports?
If community as a notion is not debated by the EU leaders, then what sort of union have we built at all?
We have vital national interests at stake. And we must not allow anyone to forget it. But we also have common cause with people who believe profoundly in these values.
This cannot be a case where we need to defer to the founding six or to the powerhouse three. Our country is the EU member state with most at stake here.
If European values mean anything then they must mean that throughout these talks our voice – the voice of Ireland – must be heard by our colleagues in Europe.
The Schuman declaration, made on the 9th May 1950 barely five years after the end of World War II, begins with “world peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it”.
Robert Schuman envisaged a new Europe where war would be impossible, and the vast engines of production of Europe would be used to eliminate poverty and want, instead of producing the weapons of war.
Creative efforts to pick up the pieces of his dream today must also be proportionate to the dangers which threaten it.