MATT COOPER: With friends like the EU and the ECB, who needs enemies?

ONCE upon a time our political classes bowed to Rome. Now they do so to Brussels and Frankfurt.

The power and influence of the Vatican has been replaced by the European Commission and European Central Bank. Now it’s they who tell us what to do. The servility towards them is appalling and embarrassing. It may politic and it may be polite but the genuflection towards Jean Claude Trichet, the head of the ECB, recently has been embarrassing, although explained somewhat by the fact that he has the country caught in a vice-like financial grip.

And few are worse than the Irish who have profited by being part of the elite within the European system: they patronise us ungrateful malcontents for not knowing our place and for not appreciating how much we owe Europe. Any critique or criticism, no matter how well argued or factual, runs the danger of being labelled excessive in a cunning ploy to make the advocates seem like loonies.

I remember well what it was likely for the small number of journalists and economists who did not support the rush to join the euro uncritically. To point out that the euro was riddled with illogical inconsistencies — its central bank did not have a government it could fall back upon to raise taxes if necessary, a monetary union is at risk if it is not complimented by a fiscal one, that interest rates could not be set centrally to suit all member states — was to run the risk of being portrayed as small-minded or economically illiterate.

Our EU commissioner Máire Geoghegan-Quinn has been prominent in defending the body of which she is a member recently, which is to be expected, but she has taken things a stage further than that. She had claimed the presence of “anti-European sentiment” in the debate on the bailout and argued that Ireland’s membership of the euro “saved the country” as our financial crisis took hold, saying we would be in a “much, much worse” position now were it not for EU membership.

This resembles the line that goes: “It could have been worse, we could have been Iceland which is what would have happened if we had not been in the euro.” Well, it seems that Iceland, outside of the EU and the euro, is doing a better job of dealing with its crisis than we are.

“There seems to be a lot of tabloid-like coverage — anti-European sentiment coverage — which is directing everything at Brussels and when people think of Brussels in Ireland they think of the commission,” she said. “I think the coverage has to be fair-minded, and I think it has to be true coverage, in other words, what is happening and what is being done for Ireland, regardless of which of the institutions you’re talking about. I was born in the west of Ireland and for years we blamed Dublin for everything. In a way I see what’s happening now as kind of similar to that. Blame Brussels, and Brussels is an all-inclusive catchphrase for everything.”

It is a deft way of dismissing criticism and she was at it again during the risible Europe Day celebrations in the Dáil last Monday, repeating many of the same sentiments in different language. She said her commission colleagues had been “attentive, concerned and understanding” when discussing Ireland’s problems.

Well, with friends like those, who needs enemies? But she said one thing that astonished me. “Let me be clear and unequivocal about one issue... There can be no change in the rate of corporation tax in Ireland or any other EU country without the unanimous agreement of all 27 member states of the EU. This is the clear legal position as set out by the EU states,” she said.

Well, my understanding is that she is clearly and unequivocally wrong in that. Ireland is entitled to change its corporation tax rate, or any other rate of tax, if it so wishes, as long as it does so upwards. If Ireland announced tomorrow that it was changing its rate to 15% or 20% it would be congratulated for doing so. There would be trouble only if it went below 12.5%. The agreement that we have with the European Union — and which we have written confirmation of, due to the inclusion of a special codicil to the Lisbon Treaty — is that we cannot have changes forced upon us by way of votes at the council or parliament, or decision by the commission.

But let’s get real here. If sufficient pressure is brought to bear then we will be forced to increase our corporation tax rates. It’ll be just like what happened with the IMF/ECB/EU deal agreed in November when we were not only bounced into doing something we didn’t want but were forced to claim that we had not just asked for it but had done so under no duress whatsoever. A gun would be put to our government’s head — something dreadful will happen if we don’t acquiesce — and it would emerge to announce that it is seeking to increase our corporation tax rate, entirely at our own volition.

Whatever about the merits of making the corporation tax rate a red-line issue — and is it really likely that a four-year increase to 15% would scare away investment? — the principle of no longer bending the knee to Brussels (and Frankfurt) is not a bad one.

It will be accompanied though by continued due deference. On Monday our Taoiseach said he was “greatly saddened” that the “shine” had gone off Ireland “and that we are not regarded as good team players any more by some of our European colleagues”.

It is not hard in such circumstances to have sympathy with the views expressed by some of the left-wing members of the opposition in the Dáil during the week. United Left Alliance’s Richard Boyd Barrett may have a gift for hyperbole but he had a point when he said: “When I heard we would be celebrating our EU membership with a special sitting of the Dáil, I thought it was a sick joke. It just beggars belief that when this country is being crucified by an EU-IMF deal, the Government thinks we should celebrate our membership of the EU. It is beyond pathetic — the sick joke of a bankrupt Government. If this gathering were truly to reflect our current relationship with the European Union, Jean-Claude Trichet of the ECB would be sitting in the Taoiseach’s seat, flanked by the heads of the Bundesbank and the other big European banks, and all the public representatives in this chamber would be bound and gagged”.

Even Michael Martin, the Fianna Fáil leader is starting to call things as they are. He said the ECB “does not appear to have the humility required to evolve or the diversity to encourage rigorous debate on policy alternatives. Its defensiveness in the face of criticism serves no positive public purpose.” He pointed out correctly that “raising interest rates after a crisis has begun and doing so again before it is over has deeply damaged the credibility of both the mandate given to the bank and its often rigid orthodoxies”. Yet our new government keeps insisting publicly that Trichet is a fine fellow.

Last Monday there was a special Europe Day “street party” in Dublin outside its Molesworth Street offices. Bands played eastern European gypsy music and passers-by were offered free lunchtime snacks and “information on the European project”. You could hardly make this up. Bread and circuses and fiddling as Ireland, not the bondholders, burns.

The Last Word with Matt Cooper is broadcast on 100-102 Today FM, Monday to Friday, 4.30pm to 7pm.


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