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Ireland puts €19bn into EU recovery fund, gets….. €2bn back.

Joy unconfined in media and political circles, yesterday, as Ursula Von Der Leyen and Micheál Martin posed for their photo opportunity at which it was announced that Ireland will receive an initial €989million from the European Union’s Covid Recovery fund to, in the words of Frau Von Der Layen,support investments and reforms that will help Ireland emerge stronger from the pandemic”:

Indeed, the €989million is good news. But of course, it is not European Union money. At least, not originally. In fact, Ireland is contributing, over the next thirty years, some nineteen billion Euro of Irish money to this fund. In that same timeframe, we are expected to receive about two billion euros back, as Paschal Donoghue confirmed, all the way back in January:

Ireland will be contributing almost €19bn to the EU’s €750bn Covid-recovery package over the next 30 years and getting only €2bn back in grants, finance minister Paschal Donohoe has confirmed.

In fact, per capita, Ireland will be the largest net contributor to the fund. Italy and Spain, both significantly larger countries, will receive much more from the fund than they contribute.

Of course, there are very reasonable arguments in favour of this situation. Some of those are, in turn, that per capita, at least on paper (before you take into account the distorting effects of Ireland’s tax policies on multinationals harbouring their profits here) Ireland is amongst the richest countries in the EU. Up until very recently, we received more than we contributed. The value of the single market to the Irish economy may well exceed the costs of membership. It is a source of national pride to be able to assist our neighbours and partners. And so on.

Many of those arguments have merit. And, of course, the golden rule in Ireland’s national discourse about the European Union is that a person who expresses any scepticism at all about our contributions to the payroll in Brussels is obviously a fifth column Faragiste who wishes for nothing more than an Irish version of Brexit, and perhaps even ultimate re-unification with Britain. As is intended, this has a tendency to discourage any debate on the topic, and encourage a degree of mindless clapping for everything the European Union does, or proposes.

But all that aside, the bottom line is that the announcement above is simply an announcement that Irish money is coming back to Ireland, minus a huge cut for others. The media could choose to present it, if they wished, as “Ireland donates €17billion to other EU states even at a time when our national debt per capita is the highest in the EU”. Why do they not do that?

They do not do it, of course, because of the terrible, existential fear that it might encourage Euroscepticism amongst you, the voters. As such, the money we receive from the EU must be highlighted at every turn, and, except when absolutely necessary, the money we put in must be played down.

But debate on Ireland’s relationship with the EU need not be a binary stay/leave discussion. There are perfectly reasonable questions to ask. Some of those are:

–          Since Ireland is now a  major net contributor to the EU, shouldn’t our say in how the money is spent also increase, commensurately? Is it unreasonable to demand, given how much we pay into the thing, much more representation and voting power at the table than we presently have? Ireland’s voting weight under Qualified Majority Voting is just 1.11% of the EU total, despite contributing about 2.5% of the total EU recovery fund. In other words, we are paying in more than twice our voting weight in funding.

–          Why is the EU funding tied? What that means is that before we contribute the 19bn, we are free to spend it as we wish. It is, after all, Irish money. But when it comes back from Brussels, the €985m must be spent according to tightly defined Brussels guidelines. Why are we not permitted to spend our own money in areas that we think would be best?

–          Why was our net contribution – which is tied of course to our GDP, which is dependent on our corporate tax rate – not tied to a concession that said tax rate would be off the table in any future negotiations with Brussels? After all, Ireland is presently victim of a three card trick: On the one hand, the revenues generated from that tax rate are used to extract a huge net contribution to the EU. On the other hand, the EU would like to abolish the tax rate.

Those are reasonable questions, and not one of them involves a proposal to leave the European Union. That they are not being asked, or even thought about, in Ireland, is a demonstration of how increasingly dysfunctional and slavishly loyal discussion of that subject is, in our country.

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