The Irish government’s failure to embrace political realpolitik ahead of the next Trump administration has been described as a risk to the nation’s financial well-being by the head of Ireland’s leading representative bodies for small and medium-sized businesses.
Chief Executive of ISME, Neil McDonnell, who represents 10,500 domestic businesses, blamed a “lackadaisical attitude” among policymakers for failing to keep track of political circumstances in Europe and America.
“Ireland’s pro-FDI [Foreign Direct Investment] policies, while wildly lucrative in attracting [corporate tax] revenues, have been uniquely successful in annoying both our EU and US allies,” McDonnell outlined, warning that the United States’ trendtowards anti-Chinese protectionism and environmental deregulation were likely part of a systemic change which was potentially here to stay.
The comments come as Minister for Finance Jack Chambers used an interview with the Business Post to mitigate fears about a hard landing for Ireland’s open economy in the face of rising uncertainty abroad.
“The era of friction-free cross-border trade appears to be ending,” Chambers told the Business Post, announcing that a new specialist unit within the National Treasury Management Agency was being established to strategically spend the current windfall from corporation tax receipts to prepare for a potential cliff edge.
Exchequer figures reveal just over a quarter of the Republic’s €108 billion annual tax revenue came directly from multinationals even before the €11 billion from the recent Apple tax ruling.
Trump nominee for the U.S. Commerce Department, Howard Lutnick, is seen as a major challenge for Dublin due to media comments about the Irish tax system, with additional concern being expressed that Ireland’s stance over Palestine, particularly threats to pass the Occupied Territories Bill could elicit economic sanction from Washington.
According to McDonnell, a tendency for government agencies to provide preferential treatment to foreign multinationals has come at the detriment of indigenous companies now struggling with rising operational costs.
To McDonnell, Ireland’s recent history of a property crash meant domestic elites are unable to comprehend the next recession arising from impending geopolitical shocks.
Describing small Irish enterprises as an “economic afterthought” by the government meant only to support peripheral areas, McDonnell told Gript that a moribund Irish stock exchange and failure to develop a comparative Indigenous economy in line with a normal European country posed additional challenges.
Irish concerns over Trump are being compounded by political chaos in France and Germany amid anonymous concerns from Irish officials that Dublin has exhausted its political capital with the European Commission over the past decade.
Ahead of Trump’s inauguration later this month Simon Harris used an op-ed in the Irish Times as a chance to launch a new charm offensive towards the republican president-elect, advocating a mobilization of Ireland’s lobbying networks and a strategic alliance with the newly appointed British ambassador to the U.S Peter Mandelson as key pillars to the Irish strategy.