Gerard Howlin: EU deal about so much more than the money


Gerard Howlin: EU deal about so much more than the money
European Commission President Ursula von der Leyen and European Council president Charles Michel bump elbows after addressing a media conference at an EU summit in Brussels on Tuesday. Picture: Stephanie Lecocq/AP

The ‘Deal!’ that EU Council president Charles Michel announced in a one-word tweet early yesterday morning is historic. There will be much talk of the money involved to rescue Europe from the deepest recession since the 1930s. 

More important than the money, however, is the modality. 

For the first time, the European Commission will borrow money. Deficits for this intra-national organisation are now the new normal. That debt will be mutualised among the member states.

The amount of money, €360bn in loans plus €390bn in grants, is significant in the greater scheme of things, even among 27 states. 

What is of historical importance is that the EU has taken on another aspect of statehood. It is not of itself decisive, but it is an appreciable move-on in a more federal direction. 

All of its ultimate consequences are unknowable, but I clearly sense it is a major change in how the EU will work in future.

It is a 'what-if' now whether this would have passed if the UK were still a member state. What is certain is that it was an enormously significant change of position by Germany which made it possible. 

Partial regime change in Berlin with a Social Democrat finance minister, coupled with political cover from the Covid emergency within her own party, allowed Angela Merkel to lead a historic about-turn in German policy.

There was also a realisation in Berlin and elsewhere that a repetition of the austerity-based response to the last economic crisis was unthinkable — at least politically. 

This left the so-called frugal four of Austria, Denmark, the Netherlands, and Sweden opposed to the deal — belligerent, but ultimately isolated. 

Interestingly, Ireland had previously parted company from the so-called New Hanseatic League of northern states, which included three of the four, on this issue already. 

Although significant concessions were grafted around their objections, the ultimate isolation of the four should be a warning to Ireland for the future. 

The League was intended to give cohesion on shared concerns after Brexit. In fact, what is underlined now is the rejuvenation of the Franco-German alliance and a historic change of direction. 

The mutualisation of debt, the consequent requirement to submit national plans, the ability of those plans to be referred back to the European Council, and the always-on Brussels agenda on tax mean that whatever the merits of yesterday’s deal, its full effects will only be understood years from now. 

The deal was not just an answer to Covid, it was a change of context for the EU forever.

European Commission President Ursula von der Leyen and European Council President Charles Michel address a media conference at an EU summit in Brussels. Weary European Union leaders finally clinched an unprecedented budget and coronavirus recovery fund yesterday Photo: Stephanie Lecocq/AP
European Commission President Ursula von der Leyen and European Council President Charles Michel address a media conference at an EU summit in Brussels. Weary European Union leaders finally clinched an unprecedented budget and coronavirus recovery fund yesterday Photo: Stephanie Lecocq/AP

For the founding six members of the then EEC, and its predecessor European Coal and Steel Community, Europe has always primarily been a political project. 

Others since have shared that vision with varying degrees of enthusiasm. Britain is the most obvious outlier. 

Economically, it has been an astonishingly successful project, however. 

Politically, Europe has served us well in giving a small country, only recently de-colonised, a major multilateral platform to pursue our mission as an independent state. 

Inextricably linked now to the EU, we should be both clear as to its obvious advantages and clear-eyed on what are likely to be increased challenges in pursuing our future objectives. 

Having taken the momentous step of taking on debt, and mutualising it, the harmonisation of taxation will now be resurrected as a concurrent requirement. The need for a revived New Hanseatic League seems clear, but prospects for its cohesion and effectiveness much less so.

Yesterday’s decision is comparable in its consequences with the Van Gend & Loos case in 1963. The case itself was insignificant and to do with a Dutch haulage firm aggrieved over customs levied on plastics it imported from Germany. 

The key point is that the European Court accepted jurisdiction in a case between a member state and one of its citizens. The states, in turn, accepted the jurisdiction of the court and a new judicial order came into being. 

It has since resulted in a slew of critically important cases, including the Apple case. It was a progenitor of both a vastly enhanced EU. 

That court case, like yesterday's deal, came from circumstances of chance, remoulded into a vision for the future of Europe present from its foundation in the late 1940s and early 1950s.

Just as the states accepted the jurisdiction of the European Court in 1963, they have now accorded what is one critical aspect of sovereign power to the European Commission, namely the capacity to raise debt on the international money markets. 

The governance arrangements are such that while, theoretically, the issues of ultimate power are opaque, in practice it may be much simpler. 

We have just passed through a moment when, as in 1963, an apparently specific remedy — in this case for the economic consequences of Covid — will ultimately have far wider consequences than even the incoming recession.

The big money decided on in Brussels, of course, was the seven-year multi-annual Financial Framework of €1.8 trillion. With Britain gone, and a hole to fill, it was a considerable achievement getting this agreed at all. The hole was simply filled in by making cuts to the EU budget.

Some €10bn is gone from funds to assist with climate change, €15bn gone from rural development, and more. In a game of snakes and ladders, a €5bn Brexit Adjustment Fund was created. 

Ireland can hope to do well out of this. That’s the good news.

The challenge will be for our national Government to backfill cuts to the Common Agriculture Policy. 

Expect farmers to ask pointed questions of Government about how what was decided in Brussels shakes out in the farmyard and what national contribution will be made here. 

And that agenda runs in parallel to something called 'internal integration', which means that, over time, all farmers are paid equally per hectare. That means a redistribution of payments from the east to the west of the country and from bigger to smaller farmers. It’s fraught — and on farming especially, the devil will be in detail that has yet to arrive.

The EU has demonstrated again that it can work for its citizens. The summit was a triumph for Angela Merkel and a political victory for Germany and France. It showed how, after a mere four days and months of preparation, major change and compromise could be effected. 

The messiness makes for good media. In fact, endless fudging and compromising displays extraordinary agility over time to steer and advance an unprecedently complex mechanism of 27 states that is overwhelmingly for the good. 

It is now also fundamentally different. 

The UK is gone, and the EU has radically expanded its footprint. Ireland faces new challenges in Brussels.

More in this section