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EU Affairs

Junker's swansong contained a few bombshells on tax and sovereignty that should make us sit up

True to form, Jean Claude Juncker combined theatricality and vacuous rhetoric as he addressed the European Parliament for his last “State of the Union” speech, entitled “The Hour of European Sovereignty”, on Wednesday. 

And true to form, the parliamentarians for the most part gave his rather elephantine swansong a standing ovation.  Some of them, however, were a little surprised when the amplification system appeared to fortify their ovation by canned applause which lingered after most hands has stopped clapping. 

Among his more gnomic utterances on history, Juncker both informed his audience that “History can also show up unannounced in the life of nations and be slow to leave” and “At times, history moves forward only haltingly but it is always quick to pass us by.”

The constant theme of a somewhat disjointed Juncker address was his plea for the creation of EU sovereignty.  His underlying suggestion was that the EU must become “sovereign” if it is to become a powerful world player - economically, militarily, and diplomatically. 

This demand for EU sovereignty, no matter how unthreatening it sounds, is in fact an appeal for the member states to create an economic, military and diplomatic superpower. 

Referring back to his visit to Washington to meet President Trump, he stated: “The strength of a united Europe, both in principle and in practice, gave me the clout I needed to get tangible results for citizens and businesses alike.  United as a union, Europe is a force to be reckoned with.” 

He stated: “If Europe were to unite all the political, economic and military might of its nations, its role in the world could be strengthened.  We will always be a global payer but it is time we started being a global player too.  That is why – despite great resistance at the time – I reignited the idea of a Europe of Defence as early as 2014.”

No sooner had he uttered them than he added: “Allow me to clarify one important point: we will not militarise the European Union.  What we want is to become more autonomous and live up to our global responsibilities”.

By this gobbledegook he simultaneously engaged in a dog-whistle call for the creation of an EU superpower with military capacity - while disavowing any claim to militarise Europe!

Towards the end of his speech, having spoken about the Commission’s plans to strengthen the international currency role of the Euro, he concerned himself with the difficulties which the EU encounters in adopting a single position on foreign relations.  Citing the question of an arms embargo on Belarus and sanctions on Venezuela, he proposed that QMV should be introduced in specific areas of external relations, suggesting that this should be done by using the passarelle provisions of the Lisbon Treaty which he called a “lost treasure”.

The passarelle provisions allow the surrender of vetoes (including Ireland’s tax veto) by unanimous decision of the Council of Ministers without formal amendment of the Treaties or need for a referendum, but in Ireland’s case must have the prior permission of both Dáil and Seanad resolutions.

Remarkably, at that point, he also threw in an explosive single short sentence as follows: “I also think we should be able to decide on certain tax matters by qualified majority.” Nothing further.

This idea got far less space in his text than a surprisingly lengthy plea for an end to compulsory provisions in relation to putting back our clocks for winter time.   

What are we in Ireland to make of all this? 

As far as the creation of a common EU border and coastguard, Ireland is not obliged to participate.  The idea that such an EU force bearing firearms would be stationed on Irish soil and operate outside the control of the Oireachtas is contrary to our Constitution and would create huge political difficulties for any Irish government.

Nor is Ireland, under the terms of our Constitution, permitted in any way to participate in a common EU defence. Fine Gael MEPs, by the way, want to repeal the constitutional ban on Ireland joining a common EU Defence.

But his one-line comment on taxation deserves our particular attention. 

Let’s be clear about one thing; smaller member states on the geographical periphery of Europe, including Ireland, possess very few instruments to counter the centripetal economic forces which concentrate economic power and activity at the centre.  In a single market where state aid is prohibited, one of the only effective sovereign economic policy implements for a country like Ireland is the autonomous right to determine its taxation system and rates. 

If we were to surrender our tax veto, or to significantly dilute it, whether by treaty change or by adopting the passarelle mechanism, we would be irreversibly depriving ourselves of one of the only means at our disposal of attracting and maintaining many forms of economic activity and manufacturing on our island.

That is why Ireland must be clear, unambiguous and forthright in its rejection of the Juncker proposal for QMV on taxation matters. 

This is not a matter of our being semi-detached from the European ideal.  The EU is not anything more than the creature of its member states; they joined it and remain in it on the basis of self-interest.  If they now permit it to become sovereign - or permit its institutions to become competent to determine the extent of the Union’s own competences and powers - it becomes something entirely different.  It becomes the means whereby the powerful member states create a superpower to act in accordance with their wishes regardless of the smaller and weaker member states’ interests and status. 

Although our diplomatic class will never explicitly admit it, Ireland’s interest lies solidly in the EU remaining a largely inter-governmental treaty organisation – keeping the Council strong and the Commission and Parliament subordinate.

 There is absolutely nothing wrong or undemocratic about the EU remaining inter-governmental in character.  Such a character reflects the radical diversity of its member states’ histories, cultures, interests, economies and values.  It also maximises the capacity of the smaller member states to protect and pursue their competing economic interests and objectives.

The EU Parliament is not a real parliament and its house-trained members can never have the same accountable relationship with the voters that MPs of  member state parliaments enjoy. They live in a bubble. 

With Britain leaving, Ireland faces many, very serious challenges in its future relationships with the UK, the EU and with the other individual member states.  While Juncker pledged his support for Ireland in the context of the Brexit process, we should not fool ourselves. 

Maintenance of the Common Travel Area with the UK means that Ireland will have to stay out of the Schengen arrangements.  The Common Travel Area inevitably means that Ireland will have to coordinate its immigration policy with that of the UK to a considerable extent.  While EU nationals will have freedom of movement to Ireland in the future, that right will not apply to migrants from outside the EU.  Therefore passport controls such as presently exist between Ireland and other EU states will remain in place in all probability. 

This single issue is but part of a far larger and complex set of issues which will flow from the maintenance of an open border between Ireland and the UK no matter how soft the Brexit agreement may turn out to be.  There are other obvious issues such as the viability of radically different income and corporate taxation regimes on either side of the land border with Northern Ireland and the need to have a common approach to state aids on both sides of the border.

We must have maximum fiscal flexibility and autonomy to manage the Ireland-UK relationship into the future. There will always be an inevitable trade-off between our capacity to be “communautaire” in Europe and our need to sustain relations within these islands.   

Anyone who thinks that our problems and challenges will end with the consummation of the Brexit negotiation process some evening in Brussels is deluding himself; keeping the two economies and political systems on this island in any type of harmony and keeping the CTA and the Good Friday Agreement in workable condition, like painting the Forth railway bridge, will be an unending and onerous political task and challenge which simply will not go away.



Photo credit: Twitter





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