Ireland in Wonderland: Ten Years in the EEC
On May 1972 Ireland held a referendum on entry to the EEC. Just over 81 % of the voters voted in favour. In the last quarter of 1982 the EEC Commission's twice yearly poll, the Euro-Barometer, shows that only 47% of the Irish electorate believed membership of the Community was "a good thing", one of the lowest figures recorded during the decade.
A clear pattern emerges from the Euro-Barometer of the feeling in Ireland towards the EEC over the past 10 years. Apart from a few peaks like the Irish presidency of the Council of Ministers in 1975 and the European elections in 1979, the supporters of Irish membership hovered above the 50% mark, the opponents averaged 20% and the "don't knows" 30%.
The former Taoiseach, Jack Lynch, who signed us into the EEC writes in the current issue of Community Report:
"Whatever our current economic woes, there is little doubt but that Ireland today would be much worse off were it not for our
membership of the European Community."
The present Taoiseach, Garret FitzGerald, has had to alter his views somewhat from the heady pre-accession period. He told the Dail during the Referendum Bill debate in 1971: "The more 1 look at it the more I feel any estimate I have made of the benefits have been grossly underestimated." Today, writing in Community Report's tenth anniversary issue, he concedes that "the benefits of membership proved less clear-cut than might have been hoped" and that support now may be "less enthusiastic and widespread" than in May 1972. He insists, however, that the experience of the past decade "has not altered the widespread recognition by our people that whatever its defects, the Community offers the most favourable framework within which Ireland can seek to resolve its problems of development." Strangely enough, Margaret Thatcher uses almost the same language to sum up the British sentiment and it would be hard to find two EEC leaders who are further apart on some basic Community issues. It is more revealing to see how the opponents of Irish entry stand today. The Irish Congress of Trade Unions campaigned against Irish membership but its General Secretary, Donal Nevin, now says: "The fundamental fact would appear to be, however, that few indeed would now argue for a withdrawal." He also points out that much of the progressive legislation in the labour field, especially for women, passed by the Dail since 1973, has been due to the EEC.
The Labour Party was the only one in the Dail to oppose full membership uf the EEC but it has long since accepted the verdict of the people and, unlike its British counterpart, played a full role in the Community institutions from day one. The Labour TDs of the time seemed to have little stomach for a campaign which made them temporary allies of both wings of Sinn Fein. As one of them, Conor Cruise 0 'Brien wrote later:
"I felt, and probably looked, like a dog being washed . . . and I disliked our 'allies' more than I disliked even either set of adversaries , , , on May 10 the Irish electorate put me, and a few more like me, out of our misery by voting 'Yes' by more than five to one." He adds: "There were quite a few people who, in their hearts, were frightened at the idea of being locked up alone with Cathleen Ni Houlihan and her memories of the dead."
The Common Market Defence Campaign which has since turned into the Irish Sovereignty Movement was a ginger group of mainly middle class academics, professional people, writers, artists, clerics and trade unionists of left-wing or nationalist leanings who feared the effects of EEC membership on Irish sovereignty in such areas as legislation, neutrality, protection of industry, and cultural matters. Under the direction of its three most active members, Anthony Coughlan, lecturer in TCD, Michael 0 Loinsigh, publisher and Raymond Crotty, economist, the group produced a stream of pamphlets arguing against full EEC mem hership for Ireland and urging more study of alternatives such as associate mem bership or a trade agreement.
An RTE reporter covering the negotiations and early stages of Irish membership used to groan before going on the air to Dublin because he knew the inevitable question would be fired at him as he tried to explain some intricate aspect of EEC rules "But what's in it for us?" The question has become somewhat more sophisticated over the years but the fact is that we do embarrassingly well out of the EEC budget thanks to the Common Agricultural Policy which used to account for 80% of the budget and now about 62% (Garret FitzGerald argues it's really only 50%).
The Government does not exactly run around telling us that the net transfers from the EEC budget represent about £130 for every man, woman and child in the country, especially when the budget is the object of a battle of the Titans inside the Community. The British Government has not the same inhibitions. Its information service has circulated to every corner of Europe an admirably simple brochure called "The Budget Problem" which makes it clear with coloured blocks to even the illiterate that Britain, the fourth poorest country, is helping to subsidise all the others except West Germany.
What emerges equally clearly is that Ireland's net receipts per head are more than ten times greater than those of the two other "poor" countries, Italy and Greece. The CAP is neatly tailored for our kind of agriculture and mops up any surpluses our farmers can turn out at the expense ultimately of the German and British taxpayers. It was too good to last and it's not going to last much longer. There are already price penalties for surpluses, the Americans are threatening to unleash a trade war if the EEC continues to subsidise exports of surplus products and pressure is on to give Mediterranean-type agriculture a fairer share of the CAP as Spain and Portugal jostle for entry. The worrying thing for Ireland is did our farmers cash in sufficiently on the never-to-be-repeated golden days?
The Irish farmer gets an annual rise from Brussels. The Irish farmer pays little or no income tax, not much rates, might even draw the dole, is sure of selling his output even if there's too much of it around. The Irish farmer can boost income by applying for some (or maybe all) of the grants available under: the beef development scheme, the beef cattle incentive scheme, the suckler cow scheme, the calf premium, the calved heifer premium, the expansion of the breeding herd scheme, the skimmed milk subsidy, the aid for private storage of butter and cream, the ewe premium, the lowland hogget ewe subsidy scheme, the accredited pig herd scheme, the lime subsidy scheme, the silage incentive schemes, the farm modernisation scheme, the western drainage scheme, the western development scheme, the EEC interest subsidy scheme, the national interest subsidy scheme, the disadvantaged areas scheme, the Bovine TB eradication scheme, the Brucellosis Herds scheme, the Leukosis eradication scheme and the Hardship Fund. Some years the Irish farmer's good land can be worth up to £3,000 an acre.
The strange thing is that the Irish farmer has lost money in five of the ten years we have been in the Common Market. The statistics are there to prove it. In 1980 family-farm income per head was actually lower, allowing for inflation, than it was in 1972 before the poor devil had got aboard the so-called gravy train. But as always, the figures do not tell the whole story. Irish inflation rates and the soaring cost of farm inputs have more often than not cancelled out the EEC price increases for the small farmer. But the commercial farmer, the big fellow, can beat inflation with his bigger output and more efficient methods.
The performance of Irish agriculture inside the EEC has been something of a mystery even to the experts. Output only managed to grow at an annual average rate of 0.6% over the period 1973-81 in spite of the range of EEC and national aids available. Farmers spent more on improving their dwellings and equipment. Many plunged heavily into debt which became a nightmare as interest rates climbed and inflation negatived the Brussels price increases.
T.J. Maher, formerly head of the Irish Farmers Association and now in the European Parliament, feels that much of the potential gains for Irish agriculture were squandered during the past decade because of lack of an overall plan for the sector. Mark Clinton, who was the Minister during the good years up to 1977, is widely admired for his tough stance in the Council as he fought for green pound devaluations to boost farmers' incomes (and food prices). When there was resistance to letting the Irish green pound break with the British one in 1974, Clinton walked out of the meeting proclaiming that "Ireland is no longer an appendage of the British Empire." He got his devaluation. Clinton believes the Fianna Fail ministers who followed him have not been tough enough and that Irish farmers have suffered as a result.
'The other countries understood you were getting your country up off the floor and that you had to be unreasonable at times", Clinton says.
As Ireland entered the European Monetary System and the green pound adjustments tailed off, Irish farm ministers who followed Clinton found the going much tougher in Brussels. If Ireland was going to tolerate an inflation rate of 20% and over, twice the EEC average, then Irish farmers were going to have to suffer when common prices were set. Compensation was sought in special packages like the western development scheme, calf premiums, interest rebates et cetera. Ray Mac. Sharry, Brian Lenihan and Alan Dukes showed smart footwork in getting such deals through with a helping hand from the Commission. Even these possibilities now seem nearly exhausted. Irish farmers are demanding a pound devaluation to boost the modest price increases expected in 1983.84 but this would increase the very inflation which is undermining their incomes. It's a cruel dilemma, but the message Brian Lenihan was hammering home in his last days in office will continue to be heard - "increase output or else".
There is one aspect of the Irish problem which puzzles officials in Brussels. Irish farmers only get 80% of the target price set for milk while Danish farmers get 102% and the Dutch 100%. T.J. Maher claims that only one-third of the roughly £400 million transferred annually to Ireland under the CAP guarantee and guidance sections gets past the farm gate to individual farmers. The other two-thirds is not lost to the economy and helps finance the various support schemes and incentives but he is waiting for the Commission to explain the disproportion.
Unlike agriculture, Irish industry had no cosy support system to look forward to inside the EEC. In five years after entry tariffs against EEC competitors would disappear, the car assembly industry had 12 years to phase itself out, the export tax relief scheme which helped to attract much foreign investment would also have to go as incompatible with the EEC fair competition rules. Justin Keating had warned of the dangers of the free movement of capital for peripheral EEC areas like Ireland as investment would be naturally drawn to the higher returns in the golden triangle surrounding the Ruhr. In fact, industry performed reasonably well. Irish exports duly diversified away from Britain to the continental EEC countries which now take over 30% of the total compared with 17% before entry. Trade with these countries is usually in surplus which is the opposite of what was feared.
Investment has continued to flow in to total £2.7 billion since 1973, most of it American, attracted in large part by free access for exports to the EEC. The Government and the IDA worked well together to persuade the Commission to allow the tax-free holiday for existing firms to run on until 1990. They also managed to hang on to it as a bait for new firms until 1979 much to the annoyance of rival British organisations.
An even smarter coup was pulled off by the then Minister, Des O 'Malley and the IDA in setting up the replacement scheme of an exceptionally low 10% Corporation tax on manufacturing profits. This combined with certain depreciation allowances can even be a zero tax for a period. The 10% rate was completely out of line, however, with a long-standing Commission proposal to harmonise the rates of Corporation tax at around 45‡55% and the Commissioner in charge was none other than Dick Burke. But Burke was ignored (perhaps intentionally) and O'Malley went to Brussels to see the Commissioner in charge of competition, a Luxembourger, M. Vouel (so reticent that he was nick‡named unkindly by the Economist as the "silent vowel"). The Minister came back to Dublin to tell the press Vouel had agreed to the 10%. When the rest of the Commission woke up to what had happened there was ructions and Vouel said he had been misinterpreted. It was too late, O'Malley and the Taoiseach had gone public and for "political reasons" could not go back on their pledge.
Industry's modest successes could not stem the mounting unemployment from which no EEC country has escaped. In the Community as a whole it has gone from 2.5 million in 1973 to over 11 million today. Much of this increase is accounted for by "babyboom years" - school-leavers coming on the jobs market. But even this does not explain the alarming fact noted by the Commission this year that employment in the EEC over the past decade has not increased at all while North America has managed increases of over 20%, some Scandinavian countries 15% and Japan 10% - all comparable economies. This stagnation is the biggest problem facing the EEC in the 1980s. Ireland, the IDA modestly points out, was the only EEC country to record an increase in manufacturing employment (+24,000) since 1973.
When Ireland joined the EEC in 1973, we became the new "poor" country, displacing Italy just as we are now displaced by Greece. By all the usual indicators we were definitely the poorest - lowest GNP per head, highest unemployment, highest dependency ratio, highest emigration, fewest cars, telephones and TVs. Like the Italians we got a special "Protocol" in our terms of entry spelling out how deserving a case we were for special treatment and incorporating some vague language about "progressively evening out" regional differences.
The protocol was taken to be a commitment by the Community that the gap between the per capita wealth of Hamburg and Dublin would narrow year by year if possible and one day be closed. There is, therefore, some dismay at the fact that the gap has instead appreciably widened in the past ten years. But the GNP yardstick is an extremely crude one and is further distorted by such factors as currency fluctuations and purchasing power parities (a Mars bar might be much cheaper in Dublin than Berlin). As we have seen there is a fairly substantial net transfer of EEC funds to Ireland through the operations of the CAP. We do exceptionally well from the Social Fund (£90 million in 1982). But we were badly let down by the Regional Fund.
The decision to set up the Regional Fund was made at the Paris Summit of 1972 and in the euphoria of that period of "European Union by 1980", a "human face" for the EEC etc, the Fund appeared as the instrument that would transform Ireland into a country of German-level GNP while guarding our unspoilt scenery and natural advantages. After two years of haggling, a fixed quota Fund with money for the rich countries as well as the poor finally emerged. Ireland was to get £35 million spread over three years - a fraction of our capital budget. In recent years, the European Parliament has boosted the Fund's resources and a small non-quota section is slowly growing. But it will never turn Crossmolina into Hamburg.
If the EEC could not give us the money to develop as quickly as we would like, it could lend us money. It had its own European Investment Bank into which we dipped modestly in the early years for part-financing of infrastructure projects. When the first oil shock came in 1973/74, the EEC obligingly set up a special loan facility to help ourselves and the Italians cope with balance of payments problems. Fairly strict conditions about reducing the deficit and restraining borrowing were attached to the Irish loan of £156 million.
When Fianna Fail swept back into power in June 1977 on the basis of a manifesto which was a mandate for more borrowing instead of less, Richie Ryan and Garret FitzGerald cried foul to the EEC Commission but to no avail. Richie still feels so sore about this episode that he has called in the European Parliament, five years later, for an inquiry into the Commission's "irresponsible" attitude at that time. This step was prompted by Charlie Haughey's recent arm-twisting to get Commissioner Ortoli's endorsement for the Fianna Fail plan "The Way Forward", an endorsement then exploited in the election campaign. But it was the same Ortoli who refused to blow the whistle on the borrowing implications of the 1977 manifesto.
A year later, as the National Debt was beginning its steady climb from £1 billion in 1977 to £3.7 billion in 1981, Jack Lynch was informed at the EEC Summit in Bremen that Helmut Schmidt of West Germany and Valery Giscard d 'Estaing of France had plans well advanced to set up a European Monetary System and they would love Ireland to join.
The EMS meant tying the floating Irish (and British) pound into a system of fixed but adjustable parities with the other EEC currencies dominated by the strong mark. Jack Lynch was interested but, as the RTE man would have anticipated, the question arose "what's in it for us?" The stricter monetary disciplines involved for ourselves and the Italians naturally required some compensation and "concurrent studies" were started to work out how much. The British were less keen on joining and if they stayed outside - they did - this was an extra problem for Ireland.
The Department of Finance under George Colley started doing sums and ended up estimating that Ireland would need an extra £650 million in grants for infrastructure development over five years. It was never clear how this figure was arrived at but the Irish minister and officials insisted the aid should be in grant form as the economy was already over-borrowed. There was a hectic tour of foreign capitals by both Lynch and Colley who were by now anticipating that sterling would stay outside the EMS and would depreciate against the newly liberated Irish punt. So if anything we needed more compensation.
It's a long and complicated story but at the end of the day Ireland was in the EMS in return for the privilege of borrowing £1,125 million from the EIB over five years. The grant element of £650 million had shrunk to £225 million in interest subsidies also over five years. It was an extremely disappointing result compared with the opening demand. In view of our already excessive foreign debt, the additional borrowing which was being forced on us to get at the grant element could be said to verge on the irresponsible. The final details were worked out in chaotic conditions at the EEC Summit in Brussels in December 1978 when the Irish journalists accompanying the Taoiseach got their figures hopelessly wrong after a poor briefing by a worn-out Jack Lynch. As a sweetener, some extra bilateral loans were drummed up from Germany, Belgium, Netherlands, France, Denmark and even little Luxembourg. It was a somewhat humiliating episode and France tied its loan to reciprocal purchases in the style of loans to developing countries.
For our small size we are now the best customer of the European Investment Bank as with one per cent of the EEC population we get 10% of its loans. The Irish Vice-President of the EIB, Dr. Noel Whelan, formerly a senior official in the Taoiseach's Department; is proud of the contribution all this money is making to our industrial development and writes that the EIB "has no hesitation in giving further support for Ireland" provided the projects make a sound contribution to our development. It is unlikely that Richie Ryan, who was earmarked for the Vice-President post until the change of government in February 1981 swept him aside, would share that view.
Successive Irish Governments have got themselves into a real bind over Ireland's neutrality in the EEC. When the idea of joining was first mooted in the early 60s, Sean Lemass and other Fianna Fail ministers had no inhibitions about declaring a readiness to play a role in Europe's defence when we were members. Exactly how was never spelled out but we made it clear that Ireland shared those aims of defending western democratic values against totalitarian aggression which led to the setting up of the Atlantic Alliance. Indeed the reason we gave for not joining NATO when invited was partition and not our "neutrality".
As the EEC referendum approached and it was clear that opponents of entry would use the neutrality issue in their campaign, the Government retreated into a negative stance. Where the first White Paper in April 1970 had declared Ireland's readiness to "assist if necessary in defence" of a new Europe, the 1972 White Paper stated firmly that signing the EEC Treaties "do not entail any military or defence commitments". This was of course correct but since joining the Community, successive governments have acted as if this automatically prevented them from even discussing any aspect of European defence in the extra-Treaty forum of European Political Cooperation. EPC is a loose arrangement for trying to coordinate Member States' positions on foreign policy and is also the obvious forum for discussion on how to move towards the unified Europe we have been paying homage to since 1961 if not earlier.
After much song and dance, Ireland has agreed to use EPC for discussions on the "political aspects of security" as distinct from "military" aspects although no one really knows where the line can be drawn. For example, our diplomats will cheerfully discuss disarmament in Europe because that is "political security" but let no one mention missiles because that is "milittary". There are reasons for Irish sensitivities in view of the fact that all the other EEC countries are in the Atlantic Alliance and involved in NATO planning. It would clearly be wrong for Ireland to act at meetings as though we were also in NATO. This is not the point, however. Ireland now seems to have backed itself into a corner over neutrality so that when other countries want to have a genuine discussion about a future unified Europe, such as the Genscher-Colombo proposal for an Act for more effective political integration which we are supposed to favour, the Irish contribution is limited to ensuring the removal of "sensitive" points which infer that such a Europe might have to defend itself.
For some reason Garret FitzGerald seems even more touchy on this subject than Fianna Fail. He and Brian Lenihan had a totally phony clash in the Dail in 1981 over the semantics of "security". When Charles Haughey during the Falklands conflict first agreed to go along with EEC sanctions against Argentina and then withdrew after the sinking of the Belgrano on the pretext that our neutrality was in jeopardy, the confusion over what our neutrality means was only increased. Fine Gael, which got so het up over "security" being discussed in EPC, had apparently no problem in supporting one belligerent against another with economic sanctions.
"We thought the Irish would be fighters in Europe, Instead you were sheep."
This was the unflattering comment made recently to Irish Journalists by a former EEC Commissioner, Altiero Spinelli, now an Italian member of the European Parliament. An ardent supporter of a federal-style Europe, he was no doubt disappointed at the minimal contribution Ireland has made to the "whither Europe" debate since we entered the EEC. Everyone talks about the "marvellous" Irish presidency of the Council of Ministers of Garret FitzGerald in 1975 but ask them what it actually accomplished and they have to think hard.
Having only a little more than 1 % of the Community's population, Irish representatives and officials are scattered very thinly indeed around the EEC institutions. Whether that explains our lack of impact is another question. Our competence is not questioned, unlike in the case of Greece where, two years after entry, administrative chaos over EEC matters is still being sorted out. One or two Irish officials such as Eamonn Gallagher, the Director-General for Fisheries in the Commission, have made a real mark. Several others were clearly unsuitable for the posts they were given, or pushed into by the civil service departments at home which seemed to have little coordination among themselves. Two very senior Irish civil servants once turned up to be interviewed by an embarrassed Commissioner for the top post in his department. Neither one got it.
Of the three Irish Commissioners to date, none of them displayed that capacity for original thought with the ability to articulate it, or the dynamism and energy which are necessary if the handicaps of coming from a small country, and therefore getting the less important portfolios, are to be surmounted. Ministerial experience in the home government is not sufficient in itself. Indeed two of the most successful recent Commissioners, Gundelach from Denmark and Davignon from Belgium, never served in a government at all nor came from a political background.
One senior Commission official describes Irish participation there as "an immense disappointment" and "incredibly discreet". He cites the example of how representatives from tiny Luxembourg have succeeded in making their mark in areas such as competition policy. Interestingly enough, the same observer believes that Michael O'Kennedy would have made a quite good Commissioner if he had got a different portfolio, "but he was also too much the gentleman and not enough a fighter."
Dick Burke, on his second stint at the Commission table, believes that the Irish contribution there has suffered from the lack of continuity and smiles deprecatingly as one who has been "a sinner" in this regard. Burke may be learning something this time around as he has cut up rough at a meeting where his wishes on Greek appointments were over-ruled. He has also let it be known that he voted against the recent Commission farm price proposals thus weakening the "collegiality" tradition whereby each member is supposed to support fully any proposal once it is adopted by the whole body.
Dr. Hillery, Irish Commissioner from January 1973 to November 1976, was a firm adherent of this principle and although he disagreed with Commission proposals on the regional fund and on fisheries, he loyally supported them once adopted. His Social Affairs portfolio was the best one Ireland has so far obtained. It once brought him into an open clash with his own government over the equal pay directive which Richie Ryan as Minister for Finance and the Confederation of Irish Industry sought to have postponed for certain industries. Although Hillery made the most of the equality for women area of social affairs, he too was essentially "discreet" and this trait in Brussels means you are likely to be written off. But Hillery believed this discretion was a virtue in Ireland's case. He told an interviewer early in his term that by consistently supporting Community policies Ireland was virtually sure of being a .net gainer "the worst share-out will give you more than you put in".
The European parliament, directly elected since June 1979, is still threshing around in search of a role with its 434 MEPs facing reelection in 18 months time. The image of the Parliament is poor as the media have concentrated on the "scandals" of poor attendance, junkets, and lavish entertaining and largely ignored the hard slog of committee work between sessions.
The 15 Irish members are scattered around the political groups with the four Fine Gael and four Labour MEPs making up only three per cent of their Christian Democrat and Socialist groups. The five Fianna Fail MEPs are allied with 15 French gaullists, and a Danish and British Independent. Their greater weight within their group and the absence of any Dail commitments gives them more time than the other Irish members to work on Parliament business. But they all have the same problem - what will they have to show their voters when they seek re-election? Their speeches get into the local press but constituency work as the Irish voter understands it hardly figures at all. It would be ironic if the over-extended "dual mandate" Fine Gael and Labour MEPs do better in the 1984 election simply because of their Dail "favours" for the constituency.
It is in the Council of Ministers that Ireland's contribution to Europe or lack of it, can best be judged. A German official says: "Ireland was generally in the mainstream of Community policy. The FitzGerald presidency stands out and the Irish part in the signing of the two Lome Conventions. The absence of Irish ministers from Council meetings has been noticed but the high quality of the officials in the Irish Representation helped to make up for this. Irish neutrality only impinged over the Falklands and then other countries were openly sympathetic to Ireland."
It's not stirring stuff but better than being called "sheep-like". Reading between the lines it says we were good boys most of the time on the big European issues. When ministers did not do their homework they were usually saved from making fools of themselves and the country by watchful officials.