The Republic of Ireland has a national public debt of €242 billion, a debt of almost €50,000 on the head of each man, woman and child. This is thanks to the Government’s prodigious spending, and bumped along by the €64 billion bank debt imposed by the EU during the 2011 Euro crisis.
Micheál Martin’s decision to support the EU Recovery Fund last July has the possibility of contributing an additional debt liability of €3,201 on every person in the country. As he boldly admitted at the time, Ireland would be a net contributor to the fund.
His acquiescence to greater EU power gave the European Commission, for the first time, authority to raise money in international markets in its own name, and to give grants and loan to member states in the hope (though not agreed yet) to raise additional funds by instigating more taxes. For example, through digital transactions, plastic waste or — the EU’s new weapon of choice — the carbon tax. But member states would still be separately liable for their part of the €750 billion debt facility.
In the Commission’s working document last year, it was clear that Ireland would be fully liable for a potential debt totalling €18.7 billion and would be receiving €3 billion back. This was overtaken by the European Council’s agreement of July 2020, which was made a binding EU regulation in February this year. The final agreement gave more of the common debt pot to the larger countries such as Germany, France and Italy, while smaller countries like Luxembourg and Ireland would be the largest contributors per capita. The allocation of the €750 billion euro fund is decided by a complex formula making the final outcome obscure.
The EU Recovery Fund represents one of the worst deals ever agreed on behalf of the taxpayer by an Irish Government. The European Commission estimates that Ireland will be liable for €18.7 billion potential debt for the fund, with very little in return. It makes Ireland one of the top net contributors to the fund despite being a tiny fraction of the total EU population.
Under the Recovery and Resilience Facility, Ireland’s current grant allocation is a mere €914.6 million with a possibility of an additional €74.6 million to be confirmed in 2022. This is a total of €0.989 billion euro. So yes we take a liability of €18.7 billion and are guaranteed less that €1 billion back in grants. Any additional money to this would be loans which would have to be paid back to the Commission with interest and conditions attached.
The money Ireland is due back in the form of loans and grants is a mere fraction of the €18.7 billion figure we are potentially liable for.
Even worse, this money is contingent on implementing tax reforms. The European Commission has insisted that the money will not be released unless the Irish Government agrees to “close loopholes in their tax codes, modernise/digitalise tax administration and promote a culture of compliance”.
Tax is an area of national competence, and the renewed pressure from the EU on this matter is clearly unacceptable and a grave threat to the Irish economy. The EU has been fervent in its desire to kill Ireland’s Golden Goose corporate tax regime for years. And now it spots another opportunity to push against our national tax sovereignty. The fact that this slavishly Europhile government was happy to enter into such a bad agreement shows the contempt they have for Irish taxpayers, as well as our rapidly vanishing national sovereignty.
And it gets worse — yes really: two senior Commissioners told the European Parliament committee on Monetary Affairs last week that if the fund goes well they want to make the funding mechanism a permanent instrument in the Commission’s financial tool box.
This has caused great unrest in Finland, even among the Euro-federalist parties, and the vote on approving the EU Recovery Fund in their national parliament could go to the wire. I am very glad to see other net-contributing states push back against this proposal.
Ireland’s fundamental relationship with the EU has changed in recent years. We have been net financial contributors to the EU budget in cash terms since 2013. The European Union now treats Ireland like a compliant cash cow.
According to official Department of Finance figures, Ireland contributed a net €684 million to the EU budget in 2019 and approximates our 2020 net donation at €1.5 billion.
Given that the Irish Finance Department’s website suggests Irish gross contribution will be €3.48 billion in 2020, and €3.67 billion in 2021, this means, as Minister Donohoe suggests, we get €2 billion back from EU every year, and estimates that our gross contributions will rise to €4 billion by 2027.
This would mean our net contributions to EU budgets by the end of the multi annual framework MFF budget in 2027 will be approximately:
2021 – €1.5 bn
2022 – €1.5 bn
2023 – €1.5 bn
2024 – €2 bn
2025 – €2 bn
2026 – €2 bn
2027 – €2 bn
That is a total of €12.5 billion net cash between the years 2021 to 2027.
This is an extraordinary amount of money to be handing over to an organisation in which we have 1% of the voting rights. Surely this money should be spent in Ireland at a time of great financial hardship, debt, and high unemployment. Our national interests are better served by investing in our own economic recovery and dealing with the urgent problems we face, particularly in housing and health.
It is clear the true costs associated with EU membership outweigh any former benefits. It is time for Ireland to have a mature, balanced debate about our continuing membership of this increasingly punishing political union. If we do not have this debate, Ireland as a nation will just dissolve into a permanent, indebted vassal state of a European empire.