The past six months have seen Ireland vote yes in a referendum on the fiscal compact and a return to the long term bond markets for the country for the first time in two years. Paul Gillespie writes that the eurozone crisis and its effects on Ireland have led to increased public debates on European integration and Irish nationalism, especially as European integration was originally driven by a desire to escape from Britain’s post-colonial constraints. Ireland must now decide if it is continue in a more integrated eurozone, or if it should begin to gravitate back to an increasingly Eurosceptic Britain.
This article was first published on the LSE’s EUROPP blog
A game changer. That was how several Irish ministers described the agreement reached early on Friday 29th June to allow the European Stability Mechanism to recapitalise eurozone banks directly, without adding to sovereign debt, once a single European bank supervisory system is put in place. Since then, some €64 billion has been added to Ireland’s sovereign debt exactly because such direct recapitalisation was not previously permitted. Their reaction is understandable.
The decision arose from Spain’s dire need of financial help with its banks and the realisation that its state indebtedness could not be increased. At the summit Ireland stitched in a commitment to similarly examine its financial sector, resulting, ministers hope, in an eventual reduction from 120 to 85 per cent of its debt to GDP ratio. They argued plausibly that the move justified their strategy of dealing with the eurozone crisis in multilevel fashion as a fully participating member of the eurozone rather than acting unilaterally in reach of its rules or outside its remit. Their case was made effectively during the Irish referendum campaign on the fiscal compact in May 2012, helping to secure a 60-40 majority in its favour.
Since then the Irish minister for finance Michael Noonan has redoubled his efforts to deliver on the commitment. It is a difficult task, since several governments, particularly Germany’s, are not convinced Ireland should secure debt relief ahead of Italy or Spain and still fear setting a precedent that would destabilise the euro or confuse markets.
The threefold crisis assailing Ireland’s economy since 2008 – a banking collapse, a collapse of state revenues and a rapid fall in competitiveness – threw out a huge debt burden along with falling living standards, unemployment and returning emigration. The intense and wrenching sense of economic failure among elites and citizens alike was accentuated by a growing realisation that all paths led to Brussels for a solution, when the crisis turned from one of liquidity into one of solvency. Brussels privileged protection of the euro, and the wholesale risk capital that had funded the Irish boom, above debt relief. Not surprisingly these large financial, economic and political imbalances and asymmetries exercised Irish public debates on the causes of and solutions to the crisis. They contributed to the widespread sense of injustice felt by ordinary citizens vis-à-vis the banks, regulatory institutions, business leaders, politicians and EU leaderships seen as responsible. Europeanisation and politicisation thereby went hand in hand as the country’s fate became entangled with that of the larger European project.
Foundational, strategic and tactical questions should be distinguished in examining Ireland’s public debates on European integration. The foundational level relates to long-standing and abiding approaches towards Europe, which historically provided the setting for the development of Irish nationalism and the principal context in which it sought allies against Ireland’s conquest by Britain from the sixteenth century onwards. Ireland applied to join the EEC in 1962 when the UK did; but increasingly through the following decades political elites aimed to develop and modernise in a larger European context.
Ireland’s policy towards European integration has been driven since the 1960s by a prolonged effort to escape from continuing over-dependence and over-reliance on Britain. Accession to the European community in the 1970s was experienced as liberation from postcolonial constraints by policy-makers and as a broadening horizon by the mass public, underlying the generally positive attitudes which find Irish people among the most convinced they are beneficiaries of EEC/EU membership and that it is a good thing.
Much of Ireland’s debate on European integration is between those who argue that pooling sovereignty enhances real independence of action and sovereigntists who deny this and argue that the state cannot develop without the ability to determine much more of national policy than Brussels allows. Explicitly or implicitly this debate concerns relations with the UK – would an Ireland positioned less within the EU’s inner core not then gravitate back towards an increasingly Eurosceptic Britain, thereby undermining the basic thrust of policy since the 1960s? Or maybe this is the better way now that Ireland and Britain share a lot more policy on open markets, liberal economics and legal culture on top of the undoubted transformation of their relationship following the power-sharing Northern Ireland settlement?
Tossed into the maelstrom of financial and debt crises over the last four years these foundational values have taken a battering from a more affected, attentive and informed public and been reconfigured in response. They have been recast into three major axes of strategic and tactical argument on the role Ireland should play and the optimal direction of policy.
In the general election of February 2011 Europe’s role loomed large following the €85 billion rescue package mounted by the Troika (the European Commission, European Central Bank and the International Monetary Fund) the previous November. The main opposition parties demanded that its terms on debt repayments and write downs be renegotiated and pledged to do so if victorious, the first axis of argument. After they won the election decisively and formed a coalition between the centre right Fine Gael party and the Labour Party the new government faced into the second axis of argument on whether to adopt multilateral or unilateral strategies in pursuing that renegotiation. The third axis of debate concerns whether and when Ireland can expect to return to the markets for its state funding requirements, and not continue to rely on the Troika programme. Each of these three arguments also figured prominently in the public debates during the referendum campaign on the fiscal compact treaty in May this year.
The government’s parliamentary and political critics say the willingness of Greece, Spain and Italy to bargain robustly with the EU/IMF is the better way, showing greater courage and leadership. Repaying loans in full is unfair and unethical because they were originally lent as a risk and have since been profited on in secondary trading.
Ireland’s experience as a referendum state adds another distinctive dimension to its EU profile. The electorate clearly feels that in troubled times it is safer to be an integral part of the European Union than not, as shown in the decisive swing towards the ‘Yes’ side in the second Lisbon referendum of October 2009 and then in the 60/40 passage of the fiscal compact treaty in May 2012 on a 50.6 per cent turnout. Surveys show Irish voters are comparatively well engaged with European issues and have a relatively good knowledge of them, based on the direct experience of the last four years of crisis in which they are intimately entangled through political argument, daily media exposure and periodic elections and referendums.
A more integrated eurozone would pose a particularly difficult choice for Ireland given the closer relationship politically with the UK following the Belfast Agreement. So the strategic impulse that originally attracted Ireland towards EEC/EU membership in the 1960s and 1970s as a means of reducing dependence on the UK resurfaces now that the euro is facing an existential crisis requiring deeper integration to save the euro. Ireland will find it more difficult to marry its EU and UK policies in this setting.
It is important to distinguish sovereignty from nationalism in understanding Ireland’s approach. Pooling legal sovereignty is required for integration, whether inter-governmentally, confederally or federally, a point that is well understood by the Irish political parties which support the project – as by those which oppose it. Abandoning nationalism is a much more demanding condition – indeed an unacceptable one – for a country which sees it as a liberating force from imperialism and therefore as a means of realising the international. Imperial and anti-imperial nationalism are quite distinct forces in European history. It therefore makes much more sense to talk of a post-sovereign than of a post-national Europe in the Irish imaginary of a refounded project.
Official and popular Ireland is more at home with a confederal inter-governmentalism than with a fully fledged federalism substituting European for national identifications and political structures. This, it suspects, would be tantamount to another empire. The raw power politics that emerged in the last two years of scrambling to save the euro created that impression – and not only through media simplifications, although visions of a lurid German neo-imperialism resonate there too, echoing British Euro-scepticism, but actually coming from a different experience.
Most Irish voters do not want to revert to a separatist sovereignty and see the need for transnational politics and governance to manage and regulate capitalist globalisation. But, as in other EU Member States, it is a selective commitment. Ireland’s choice would be for a third way between inter-governmentalism and federalism. Its natural preference is for a “demoi-cracy”, or entangled post-sovereign Europe, which properly understands the distinction between using federal methods and creating a federal super state.
Europe needs to make that jump and Ireland is so far willing to go with it, as is clear from its political discourse and public opinion. They recognise the need for smart politics and bargaining to achieve central influence as a small prosperous state no longer reconciled to peripherality. There too is the necessary fear of failure, which could well reverse the modernisation and European interdependence so important for Ireland’s development over the last two generations. That would be a much bigger game changer.
This piece is a shortened version of the article, Ireland and the Big Game Changer published by the Heinrich Boll Stiftung in Brussels.
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Paul Gillespie – University College Dublin
Dr Paul Gillespie is a columnist and writer on international affairs for The Irish Times, from which he retired as foreign policy editor in 2009. He lectures in European politics and comparative regionalism at the School of Politics and International Relations, University College Dublin. In 2010 he was a visiting fellow at the Robert Schuman Centre for Advanced Studies at the European University Institute in Florence. His current research is on political identities in Europe, Irish foreign policy and regions in a multi-polar world.