NOT SINGLE SPIES 1612 XCVI

NOT SINGLE SPIES

Just when the public, and the government, began waking up to the potential  extent of the difficulties posed by Brexit,  involving Ireland’s largest trading partner, along comes Donald Trump, with a hard- nosed programme part of which at least could impact on Ireland’s fragile prosperity by  threatening  inward investment  from Ireland’s largest source of FDI.

And as if that were not enough there are noises from a freshly emboldened EU Commission about a major push on removing tax sovereignty from member states and vesting it in a ”European sovereignty.”  With the heavy hitter against such a move in the departure lounge, holding the line on tax could prove fraught. The apparent certainties on which the current inter party governmental arrangement, cobbled painstakingly together six months ago, was based are no longer there. One of the adapted jingoes going the rounds here takes inspiration from the 70s hit “Stuck in the Middle with You” – “Trump to the Left of Us, Brexit to the Right….” All we need now is Tarantino.

It will be some time before the extent of any damage done to us by Brexit becomes clear, with the exit waters generally muddied considerably by a Court decision, currently under appeal, requiring consent by  Britain’s Parliament before the process of leaving can begin. As I write, a leaked consultant’s study has shown official disarray, lack of organisation and a paucity of qualified (or trained ) negotiators and staff to handle the complex process of unravelling forty plus years of EC membership with its thousands of directives, regulations and transposed  legislation. Factor in some evidently lukewarm British Ministers and the exiting process could involve hard pounding for some considerable time. Even after the Article 50 process is initiated, the two year timescale envisaged looks wildly optimistic (Who thought of that period anyway? Some fool in Brussels?)

But damage there will be, and already is. At my son’s wedding two weeks ago a young farmer who exports beef to Northern Ireland told me of his woes, with margins disappearing as sterling plummeted against the euro – a vista looming right across the foodstuff  sector, heavily dependent on exports to Britain. The Irish consumer is already voting with her feet by heading north to avail of lower prices as the busy Christmas holiday season approaches. Our tourism figures from our largest market seem destined to take a hammering. That’s just some of the economic aspects. A territorial squabble is threatened over the “ownership” of Lough Foyle, with Britain seeking to claim the lot. And, while we have tended to focus on the border problems likely to be posed for us by a hard Brexit, there is also the likely stance of EU partners and institutions that will baulk at Britain using the Border as a convenient back door for exports into the EU free of EU regulations.

Bertie Ahern told a British Parliamentary Committee recently that, such was the importance of the threat posed by Brexit right across our economy and institutions, the government should appoint a special Ministerial supremo for Brexit. He modestly did not suggest himself for the role. The suggestion was not taken up but perhaps should be looked at again, and one properly resourced, now that there will be additionally a new and radically different US President come January. Our bureaucracy is a small one and fighting on two fronts, three if the Commission gets bolshie over tax, may well be a step too far.  There’s already a small but vocal group now questioning whether we should not follow Britain out of the EU. Small, arguably insignificant at present, but we have seen how things can change quickly.

So far Ireland has avoided contagion from that sense of alienation which bred Brexit, Trump’s election and threatens to impact decisively in elections in several EU states, but these sands could be shifting. February’s election demonstrated record levels of rejection for Ireland’s traditional political parties and we should not forget that  the core anti-EU vote, as measured in various referenda over the years,  is certainly 30% or more.

The anti- EU argument as most recently elaborated is a variation of the “what have you done for me lately?” line. The answer as trotted out is “Not Much.”  We are now net contributors to the EU budget (a constant compelling whinge of the Brexiteers), something likely to increase. The €40-odd billion we have received from the EU over the years is more than offset by the €60-odd billion we paid to bail out the banks – at Brussels’ ( or worse, Frankfurt’s) insistence. Our own profligate spending on public sector wages and unsustainable social welfare benefits together with a populist erosion of the tax base during the Noughties is ignored or discounted as is the fact that the EU dug us out of a hole, sustaining us when no one else would lend us money to keep the country afloat.

Our near neighbour, major market and co-guarantor of the Peace Process is departing and, geopolitical considerations being what they are, our role and influence in the European Institutions is diminishing (12 out of 751 members of the European Parliament, plus more and more issues in Council decided by QMV) while we have no guarantee that our critical national interests will be fought for during the Brexit negotiations to come. Simplistic, yes; but as Brexit and the Trump election have shown, simple messages get across. Remember our own Nice and Lisbon experiences. And being bullied over tax sovereignty will not help.

Trump’s election platform promise to slash U.S.  Corporation Tax rates from 35% to 15%, in a bid to stem or reverse the flow of US companies overseas, poses a threat of a different order.   Ireland has been remarkably successful in attracting investment from US multinationals, based in no small part on the very attractive 12.5% company tax rate on offer. For several years  we have been in the sights of US officialdom and politicians over what are seen as tax avoidance schemes (remember the “Double Irish”) and as constituting a type of tax haven.

Up to now there has been much talk but little action. This may now change, but to what extent existing US investment here will be affected is unclear. The tax break was just one of the planks in our investment package and arguably in the high-tech sector we have achieved critical mass. It’s difficult to see some of our Silicon Valley offshoots relocating to Youngstown Ohio, or elsewhere in the Rust Belt. But new investment COULD be affected – big time. These are very early days, and, as with Brexit, it could be several years before the effects on Ireland are felt. Meanwhile we in in Ireland watch in fascination as the Trump Era unfolds.

Heading into the New Year there are more clear and present dangers to face, particularly in the industrial relations area where a cave –in to the police on pay  is prompting  widespread copycat demands across both public and private sectors. That and the other known and threatened knowns requiring resolution promise an interesting 2017. Still, it will be difficult to top 2016 which was quite a year.  Whether watershed or aberration remains to be seen.

19/11/2016

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IRELAND: WHERE WE ARE AT 1611(2) XCV (2)

IRELAND: WHERE WE ARE AT

To recap. Last February’s general election produced no clear winner, with Fine Gael, the largest party, winning less than a third of the seats (FG 50, FF 44, SF 23, Lab 7, Others 34). Taoiseach Enda Kenny was eventually re-elected after concluding a “Confidence and Supply” arrangement with Fianna Fail under which it agreed to abstain on major issues provided its specified interests were taken into account.

While this was criticised at the time as inherently unstable, the Kenny government in early October successfully negotiated its first signposted hurdle – the 2017 budget.  With little change in the opinion polls and no enthusiasm among the major parties for another election, some pundits are talking about the possibility that the government will last the three budgets foreseen in the arrangement.

The arguments in favour, apart from nobody wanting an election, are that the economy is still performing at least as well as could be expected, that there is wide acknowledgement  that there are no magic bullets to solve at a stroke the housing and health issues which dominate domestic politics and that an election is unlikely to change much.

Others are less sanguine. The bookies are giving odds on an election next year with the next government a grand coalition of the two main parties. Certainly there are major issues pending.

The slow burner, which only arose after the May agreement, is the effect of Brexit, now looming ever larger. The first tangible outcome has been the significant fall in the value of sterling, making Irish goods and services more expensive in what is by far the largest market for Irish indigenous industries. And already the-canary-in-the-coal-mine has sounded, with several of Ireland’s mushroom producers, dependent on the UK market, closed down.  There are fears of, if not a tsunami, then substantial job losses and business closures as Irish firms are priced out. Sterling’s fall has also heralded a return of the cross border shopping effect with southern shoppers heading north, as in the past, to take advantage of cheaper prices, and not just on high excise items like alcohol. And Ireland is now more expensive for British visitors, our largest tourist market.

Still unquantifiable, and likely to remain so for some time, is the effect of Brexit on the Common Travel Area between Britain and Ireland, with all the possible implications for relations between the two parts of the island. Given the centrality of the issue of migration into Britain in the Brexit vote, there is increasing concern over where Britain will situate its border controls. It is hardly going to allow unrestricted access from Ireland into the North or via ship or plane to Britain if this provides a back door for third country nationals to enter. The alternatives are to position border controls on the border with the south – which, however organised, will greatly inhibit and discommode cross border movement of Irish people – or require Dublin to impose additional border controls at Irish ports of entry. Neither is very palatable to politicians here, with the additional possibility of a large pool of wannabe migrants to Britain congregating in the south.

It will be mid-2019 at the earliest before Brexit becomes a reality. In the meantime there are more clear and present dangers. Ireland has bounced back well from the Crash. Always a good indicator, registration of new private cars in 2015, at 121,110, was up 30% on 2014 and heading towards the pre-bust record figure. The population is increasing, the economic indicators are generally good and the only damper on house sales are the Central Bank’s restrictions on credit, introduced to prevent  a repetition of the disastrous property bubble of the Noughties. Whether the politicians will continue to hold the line on this in the face of increasing public demand for relaxing the rules remains to be seen. While there is no quick fix to the housing shortage, public opinion is fickle. The government could well be wrong-footed on the issue, particularly if Fianna Fail were to embrace it as an election issue.

As I write, the government is facing a slow revolt over public sector pay, with a winter of discontent expected. Pay in the public sector was cut during the Recession, as a quid pro quo for maintaining existing jobs, but with the fatal promise that the cuts would be restored when the economy recovered. Cue the recovery. A cave-in to the (private sector) Luas tram drivers last summer demanding  a pay increase was followed by another cave-in, this time to the ( arguably more deserving) state sector bus drivers. Predictably the queue of state employees seeking restoration of cuts is mounting, with, as I write, the Government facing an unprecedented strike by the Gardai, with all that that implies, in November.

This is a tricky one. There IS a formula for restoring cuts in full, over time as the economy improves and finances permit.  Most of the public sector unions have bought in, so what to do about those who haven’t?  What about those who want more than just restoration? And where should public sector employees, regarded with resentment as having guaranteed jobs for life, come in the queue for restoring other cuts imposed during the recession, including some of the cruel cuts in health and welfare services? All this is negotiable, given luck and no economic setbacks or another worldwide recession. It could go right, but it could go horribly wrong.

One area where the government will definitely run out of wiggle room is that of Irish Water. The issue of paying for water is politically toxic, yet Fine Gael seem unable to grasp this and have saddled themselves – and the country – with another year of wrangling.  To preserve the government the can was kicked down the road last summer with the establishment of an “Expert Commission” to examine all aspects of water in Ireland and report back to a special committee of parliamentarians early in 2017, with a further delay before definite proposals are put to the Dail in mid-2017!

Since Fianna Fail subsequently came out in favour of abolishing charges the issue now is simple: either Fine Gael caves in next year or the government falls. This would be laughable were it not also serious. And waiting in the wings is the issue of increased charges for garbage collection, postponed for a year until July next. Well might a friend remark to me that the country is becoming all but ungovernable, while another friend added more caustically that the country is ungoverned!

As if this were not enough the Abortion issue has slunk back in with increased demands for a referendum to repeal the Eight Amendment outlawing abortion.  A “Citizens’ Assembly” – another delaying device – is to report back on options by mid- 2017. While there is considerable public support for abortion in the case of fatal foetal abnormalities, the small print has yet to be worked out. The battle lines are already drawn and a nasty and emotional debate can be foreseen. One thing is certain. It will not be a shoe-in like last year’s vote on same sex marriage.

All told then, an interesting few months lies ahead.

25/10/16

 

 

 

ONE FOR (NEARLY) EVERYBODY IN THE AUDIENCE 1611 XCV

ONE FOR (NEARLY) EVERYBODY IN THE AUDIENCE

There was very little doubt that the 2017 Budget would pass. Nobody wanted another election. The shaky, unlikely coalition that is Enda Kenny’s government looks set to last at least until the middle of 2017 when a number of issues are scheduled to come to a head.  Kenny himself shows no sign of quitting.

This should not be taken necessarily as a sign that the “new politics” is working, just that neither of the two main parties saw anything to be gained in facing the electors again so soon. It’s been as you were politically since February. While Fianna Fail has been doing relatively well in the polls, consolidating its slight post –election lead over Fine Gael, an opinion poll before the Budget showed both main parties neck and neck with 26% each. These figures were marginally up on the election outcome but fell far short of enough support to govern.  Unless the two parties were to merge – still a favourite with the bookies.

Such a merger may eventually take place, but not before a lot of soul searching by both parties. Not only is it off the table as long as one party – Fianna Fail – thinks it can regain its dominant position in Irish politics, far-fetched but believable by the party faithful, but also because it would replace the current mild ideological party political set up with a more sharply defined Right –Left one. Not surprisingly Sinn Fein and its leftist fellow travellers have been clamouring for this as the obvious beneficiaries. But  between them Sinn Fein and the hard left constitute  less than 20% of the votes and seats;  they have clearly some distance to travel before being serious contenders for power. Any FF-FG merger would give Sinn Fein a major leg up, something neither party seems disposed to do.

There’s no doubt that the Recession and its aftermath severely damaged the neat pre-2008 arrangement of two broadly centrist parties, with a makeweight less-than-radical Labour party . Sinn Fein has been the chief beneficiary, siphoning support from Fianna Fail and Labour, which has also lost out to the Left.  There’s been a major rise in the number of Independents yet it would be premature to write off the major parties yet. Together with Labour they make up roughly 60% of the vote (and seats) and it’s been pointed out that many of the Independents have FF/FG DNA in their veins.

Passage of the Budget was helped enormously by the fact that it was basically uncontroversial and involved no hard choices. Revenue figures were buoyant, no tax increases were imposed beyond the ritual rise in cigarette tax, and no expenditure cuts were necessary. Indeed there was money – not a lot – to spread largesse around the system with a little for most pressure groups. Some progress was made on restoring some of the cruel cuts to welfare services, particularly in health, made during the austerity years and there were very modest cuts in taxation. There was precious little for the squeezed middle, something which may yet return to haunt, but, in the short term at least, economic hardship of itself looks unlikely to bring the Government down.

The Budget had two items of note, apart from the fact that the billion plus handouts were financed by borrowing (still!). A first step was made to introduce childcare subsidies to meet the demands of a particularly vocal lobby group – working parents – and a new income tax rebate scheme of up to €20,000 was announced for first time buyers of new houses. The childcare subsidy has been received with satisfaction by some (a “welcome first step”), demands for more by others and criticism from the much-less-vocal stay at home mothers lobby, demanding parity (watch this space when the subsidies are increased).

The tax rebate scheme has been received with derision and dismay by most economists and a large segment of the public as doing nothing to solve the housing supply logjam. This is an issue that seems likely to run. The government sought to appease the first time buyers lobby who are complaining over the amount of the cash deposit required to get on the housing ladder, thanks in part to the “stable door” lending restrictions imposed by the Central Bank to prevent a repetition of the disastrous property bubble that laid the country low in 2008. With new housing starts stalled or low in volume the sanguine hope is that having more people with money to spend will stimulate supply. Economists argue that it will merely push up the prices of new houses. Public reaction is to complain that the measure applies only to new houses, whereas often older houses are cheaper. There may be pressure to extend the scheme before the Finance Act is passed.

Thus far it has been the Government of Easy Options, with anything remotely controversial kicked into 2017. One Minister has been reported as stating that there was no point in attempting to introduce any measure that involved an additional charge or tax as it would not get through the Dail. But even prevarication has its limits. The water charge fiasco remains unresolved with an expert committee due to report next March. With Fianna Fail now committed to abolishing charges, either the diehards in Fine Gael agree or the Government will collapse. Bin charges, a lesser fiasco, will also heat up next year when the Government moratorium lapses in July.

Right now the sands are running out on another major headache for the Government – Public Sector Pay. This was cut during the Recession, as a quid pro quo for maintaining existing jobs, but with the fatal promise that the cuts would be restored when the economy recovered. Cue the recovery. A cave in to the (private sector) Luas tram drivers last summer was followed by another cave in, this time to the ( arguably more deserving) state sector bus drivers. Predictably the queue of state employees demanding restoration of cuts is mounting, with, as I write, the Government facing an unprecedented strike by the Gardai , with all that that implies, in November. The careful construct of public sector pay controls, essential to continued economic recovery and control of public spending , appears close to collapse. One friend has remarked that the country is becoming all but ungovernable. Another friend added more caustically that the country is ungoverned!

In 2017, also, the Brexit process will get under way. Already it has dawned on politicians here that the effects could be very serious for Ireland. The first jobs have been lost in the food sector as Irish producers struggle to cope with the slump in sterling. More will follow as Irish business tries to compete with suddenly cheaper British rivals. The North threatens to become again  a Mecca for southern shoppers,  and not just for  high excise items like alcohol, with the knock –on effect felt throughout the economy.

Even worse as a political headache, the Abortion issue is slinking back. The battle lines are being drawn (”Repeal the Eighth”), and, again, the “Citizens Assembly “will report on the issue in 2017.

2017: Chinese Year of the Rooster – when the chickens come home!

18/10/16

 

 

ROTTEN TO THE CORE 1610 XCIV

ROTTEN TO THE CORE

In recent weeks the ordinary Irish punter has received a crash course in corporate taxation courtesy of the European Commission and the Apple Corporation.

This lesson has underlined the reality that taxes, like death, may be inevitable, but who pays them and how much varies greatly.  In Ireland, as in every country, a complicated structure of rates, allowances and exemptions provides lucrative careers for armies of accountants, tax specialists and lawyers employed expressly to minimise the amount of tax paid. And the general conclusion, here as elsewhere, is that the wealthier the client, the better help can be hired and the smaller the resultant tax bill.

There’s nothing fair or equitable about the Irish tax system, notwithstanding official claims that it is among the most “progressive” tax regimes in Europe. Possibly it is, in the narrow sense that once an individual’s income for tax purposes has been determined, taxation at a rapidly increasing rate is applied, so the more you “earn” the more you pay. The devil however is very much in the detail of determining just what you “earn” for tax purposes, with the legislation a mishmash covering personal and company tax law as it has evolved over the last century.  The lines between tax avoidance – permissible – and tax evasion – illegal – can be blurred, and tax defaulters rarely if ever face jail, which hardly encourages compliance.

The elements parcelled together in Irish tax law reflect a mixture of government policy and the fruits of special interest lobbying over decades. Inter alia there are provisions governing non residence, policies of disregarding certain income entirely and others favouring certain groups of taxpayers. Much of the legislation and provisions (or exemptions!) were drafted initially in tandem with and with an eye on other government laws and policy objectives.

The result, on the personal tax side, has been something to annoy everybody. Why should certain people receive a $50,000 plus exemption on income received for writing a book or selling a painting? Why should people receiving one payment from the state pay tax on it while people receiving a different payment do not? Why should some people charge the cost for travelling to work while others cannot? Why should those caught in the PAYE net alone have tax deducted right away?  And why should persons – invariably wealthy – pay no tax in Ireland if they are deemed “non-resident for tax purposes” which is liberally interpreted to apply to anyone not proven to reside here for 184 days in any one year?

One question rarely asked is about Ireland’s low rate of corporation tax. At 12.5% – much lower than that on individuals – the CPT rate has become one of Ireland’s sacred cows, to be defended as fiercely as the level of the Old Age Pension. The reason is simple. That low rate has been identified as one of the major factors in successfully attracting and keeping foreign industrial investment here. And, while other factors making Ireland attractive can be cited, few doubt the importance of the low tax rate. It had its origins half a century ago when Ireland was struggling to establish a manufacturing export oriented industrial base and was attempting to attract inward industrial investment.

We have come a long way since then but the tax rate continues to matter. Any doubts on that score can be dispelled quickly by viewing the various attempts and pressures put on Ireland by the Commission and individual EU states to force a change. Under sustained pressure from the Commission the Government increased the rate to 12.5% some decades ago amid allegations from several EU states that Ireland was poaching jobs and investment.  When we were on our uppers several years ago, requiring a bail out from Europe, concerted and determined pressure to change was again exerted by the Commission and several member States, including France. We held firm on the grounds that national taxation was a matter for member states and not within Commission competency.

We were supported back then by several smaller member states which themselves were applying low rates, again to encourage inward investment. I recall in 2002 Estonian Prime Minister Kallas discussing Estonia’s low tax rate and asking me, rhetorically, what else a small country on Europe’s periphery had to offer. Indeed. The peripherality argument is one that has never been teased out fully within the EU, where there are massive cost savings and advantages to companies (and countries) close to the EU’s centre. And, very importantly, one of the EU’s heavy hitters, Britain, was firmly and resolutely opposed to any encroachment by the Commission into the area of national taxation.

Cue August 30, Apple, and the European Commission, which found under the EU’s “state aid” rules, that Apple, one of the world’s major corporations, had paid little or no tax on billions of earnings through channelling huge sums in complicated fashion through Ireland. There is no doubt that this took place and the Commission called the Irish government complicit in facilitating Apple’s arrangements, instructing it to claw back €13 billion plus interest in taxes dodged by Apple since 2003. The government is appealing the ruling and the matter is likely to drag on for several years.

There are a number of dogs in this particular complicated fight. There is the multi- layered issue of EU – US trade relations, affecting both sides, and involving the relationships between both tax systems and multinational companies, with agreement for once between the USA and Europe that the multinationals need to have their wings clipped – and their profits taxed. There is, internally in Europe, the complicated issue of what constitutes state aids. There is the separate issue of whether the Commission is trying by subterfuge to extend its competence into national tax policy.  Despite Commission denials, given the history on this one, there cannot but be suspicions that this ruling, if left unchallenged, could prove to be the thin end of a long term wedge.

Then there is the domestic Irish dimension. For decades the long suffering Irish taxpayer has put up with a Faustian –type pact under which it was accepted that multinationals paid less tax in exchange for bringing the jobs, and certainly they have. But this episode has revealed that Apple – and probably other multinationals – has been paying substantially less than the accepted 12.5% rate; indeed creative accounting on a worldwide basis has involved Apple “paying” at less than 1%. The Irish left has been shouting for years that something like this was the case and has constructed marvellous economic plans factoring in missing billions which they allege should be due.

For a cash-strapped economy and taxpayers punch drunk after years of austerity, the prospect of a windfall infusion of up to €19 billion with interest, was, briefly, tempting. But enthusiasm faded quickly as it became clear that other countries could well demand a share. And who, after all, would want to rock the boat of Ireland’s relationship with the multinational sector?  Factor in that this could well have been a glowing and gilded Trojan Horse planted by the Commission and surely the government was right to reject the money and appeal. “Timeo Daneos” indeed.

19/09/16

THE FORTY FIFTH U.S. PRESIDENT

THE FORTY FIFTH U.S. PRESIDENT

I was asked,at short notice, to write a piece for the PSEU Review magazine on the prospects for the forthcoming U.S. Presidential Election and any likely implications for Ireland from the outcome.

“Like most people this side of the Atlantic, I’ve watched with fascination the developing race for the U.S. Presidency.

The emergence of Donald Trump as Republican candidate has been astonishing. The only person now standing between him and the White House is Hilary Clinton, who if elected will make history as the USA’s first female President. Trump’s candidacy seemed initially bizarre and unlikely, but, as I write, with less than seven weeks to polling day, the outcome is currently too close to call, with Trump having reeled in Hilary’s lead in dramatic fashion in recent weeks.

There is still a long way to go, and, with the caveat that a major terrorist attack could prove a game changer, much may hinge on the outcome of the televised debates, or the emergence of some currently unknown unknown – two weeks ago who could have forecast Hilary’s pneumonia? Or again, one candidate (which most pundits assume will be Clinton) may start to pull ahead in the final few weeks as the undecided make up their minds. But right now in terms of secured states Clinton has a far from decisive lead, with Trump ahead or level in a number of crucial states including Ohio, Iowa, Florida and North Carolina, while the Clinton lead in Pennsylvania is diminishing. Either way one of them will be the next President. What can we forecast about the new administration’s policies and does who wins matter for Ireland?

Taking the easy one, Hilary Clinton, first. She is a Democrat, succeeding another Democrat, for whom she worked as Secretary of State. She is widely experienced in what can and cannot be achieved in terms of getting things done domestically and internationally. Expect therefore more of the same as we have seen from Obama. The main domestic issues are likely to be consolidating the improving economy as well as the healthcare system and attempting again to sort out some form of immigration reform, perhaps helped by a stronger Democratic presence on Capitol Hill.

In the foreign policy area she will push on with closing Guantanamo, and continuing the thawing of relations with Cuba. Outside the hemisphere she will continue with current US policy in the Middle East, attempting to sort out the mess that is Iraq and Syria and further pressing on ISIS. Her options are limited. Much will depend on the relationship with Putin. Ireland is unlikely to figure largely unless there is action to curb “corporate inversion”, where US companies have their headquarters overseas to avoid US taxes, something both Clinton and Trump have called for. She could be involved were there to be an impasse on negotiations over the open Border issue in the context of Brexit; a role here for Bill, perhaps? We could well be in for a Presidential visit.

Trump is another story, and at this stage very difficult to predict. He captured the Republican nomination by being outrageous and stoking passions which appealed to an inchoate coalition of right wingers, Tea Party members and disillusioned blue collar elements. In so doing he alienated many traditional moderate Republicans and his chances of winning rest on how many of them will trickle back. He has recently changed his campaign team, hiring Steve Bannon to intensify attacks on Clinton, but also giving some hints of toning down his rhetoric, perhaps in an attempt to broaden his appeal.The run-in to the actual vote will be interesting.

Should he win, bear in mind that everyone loves a winner! An early indication of how he will proceed will be in Cabinet formation, particularly who he nominates for Secretaries of State, Defence and Homeland Security. But several things can be predicted with some confidence. There will be no deportation of millions to Mexico or anywhere else. Quite simply the US administration does not have the resources to undertake the process. Tens of thousands of additional staff would have to be recruited, vetted and trained, from border patrol officers to judges and clerks to run the new courts required, to detention centre staff to hold the throngs awaiting deportation. Former head of Homeland Security Michael Chertoff commented that without suspending the Constitution and the police acting like North Koreans “it ain’t happening.” Even targeting only criminals would require an exponential ramping up of resources.

Similarly impractical are suggestions to ban Muslims from entering the USA, while the physical problems and costs associated with the Wall idea, including managing the water flows, rule this out except as a long term aspirational project. In Foreign Policy, Trump, for all the rhetoric, will be tied largely by where the USA is “at” currently in the Middle East. A close examination of recent remarks suggests that, stripped of rhetoric, he will adhere to current policy in broadest terms; there are few options to do more. Trump’s unpredictability is legend but whether, faced by reality, his loud mouth threats will come to anything is questionable.

On internal and economic affairs Trump is standard right wing Republican. His “magical thinking” tax plans will reward the rich by cuts, without spending cuts to balance. As well as corporate inversion, of interest to Ireland is his proposal to cut US corporate tax from 35% to 15%. Whether any of this, or renegotiation of NAFTA , will pass Congress is doubtful, while “getting tough with China” and backing out of the TPP could backfire and will probably just amount to empty rhetoric.

One point to interest over-taxed Irish readers. Trump proposes a top tax rate of 33% for those earning over $154,000 pa. Clinton’s sliding scale reaches 33% at $190,150, remains at that up to $ 413,350 and includes a 39% band from $415,050 to $5 million pa!

S.F.
22/9

ISIS 1609 XCIII

ISIS

There IS a militant Islamic presence in Ireland. On July 6 a Jordanian living in Ireland since 2000 was deported. What made this gentleman special (300 odd have been deported this year ) is  that his deportation came after a lengthy legal battle, held in camera, in which the judge was finally convinced by the State that he was the main recruiter for ISIS in Ireland and  “ the foremost organiser and facilitator of travel “ for would-be ISIS fighters. His claim to reside in Ireland was on the basis of an Irish born son. While here he had been living on Irish Social Welfare. Justice Minister  Frances Fitzgerald made clear afterwards that the Government would deport as necessary where matters of national security were involved.

The deportation came a week before the mass murder in Nice of eighty five by an ISIS sympathiser. The spate of recent lone wolf terror attacks, including the horrendous Bastille Day massacre, has left much of Europe on edge wondering whether anywhere is safe. The simple answer is “Nowhere” but clearly there are degrees of threat. As elsewhere, threat assessment is being conducted here.

Irish people have had several brushes with Middle Eastern terrorism. Three Irish holiday makers were among those murdered in Tunisia last year and Irish people were among those wounded in the Paris Bataclan massacre last November. The roll call of murders and beheadings in Iraq included a couple of Irish citizens. And, going back a generation, in 1986, a young, totally innocent, Irish woman in London was duped by her Jordanian fiancée into attempting to carry a bomb disguised in a suitcase onto an EL AL 747.

It would be surprising if there weren’t some elements of radical Islam here, given the proximity of Britain, Ireland’s relatively easy going and open society and the number of immigrants to arrive since the Millenium. The official line is that threat of a direct terror attack here is moderate. This despite a bragging ISIS video last November which identified Ireland as part of the “kuffars” ( the n-word favoured by ISIS to describe Christians and others)forming the global “Coalition of Devils” opposed to the Islamic State. This may just mean that we are, like all infidels, fair game and clearly the possibility of a lone wolf attack can never be discounted totally. However, with this caveat, the official threat assessment looks reasonable for several reasons.

Realistically there are easier and more obvious targets. Ireland is not a NATO member; we are a militarily neutral country and not part of the coalition fighting ISIS ( a reason cited by ISIS when claiming different terrorist atrocities). It is true that Ireland permits US troops to stopover at Shannon Airport, but, against that, geographically Ireland is remote, an offshore island behind an offshore island, rendering logistics for any attack that more difficult. Moreover, for what it’s worth, Ireland has been seen as pro-Palestinian and Irish troops on UN Peacekeeping operations in the region have a high reputation.

The nature and position of the Muslim community in Ireland are also factors. Mao’s aphorism that a “guerrilla must move among the people as a fish swims in the sea” is relevant here. While there are a small numbers of ISIS activists known or suspected to be living here – the deportee was reported to be one of a group of about thirteen –   the overwhelming majority of the Muslim community in Ireland, as elsewhere,  are law abiding and have no truck with ISIS or militant Islam. The community is numerically small, roughly 50,000 or 1% of the population in the 2011 census, and, therefore hardly constituting a critical mass within which ISIS – or Al Qaida – could move with impunity. Indeed in Western Europe only Finland, Portugal and the Baltics have less Muslims, numerically and proportionately.

Moreover, Islam in Ireland, which is mainly of recent origin, has developed in a different pattern to those other European countries with large Muslim communities.  In Germany most are Turks, in France and Belgium most are from North Africa, in Britain most are from the Indian sub-Continent.  Muslims here appear more diverse in terms of race and ethnic origin and most came with established skill sets and for specific purposes rather than as refugees or economic migrants. An important consequence is that Ireland has no predominantly Muslim or immigrant ghettoes akin to Molenbeek  in Brussels or  one of the Parisian banlieues , where extremism flourishes among sections of the alienated young ( or indeed to Leeds, where three of the London Tube bombers grew up) . There is no sense or feeling that a separate community within the community is evolving here.

Yet a problem, however small, clearly exists and with alarm bells ringing in the aftermath of the July terror attacks,  the facts such as they are are being picked over by the media here . Security briefings suggest that up to fifty young Irish Muslims have gone to fight for ISIS. While this could be partly written off as rebellious and impressionable youth, there have also been calls in recent months from some of the Imams here  for closer engagement by the authorities with their communities as well as claims by them that extremists are active, lecturing and proselytising.  One factor is that  the common travel area with Britain makes it easy for radical preachers and recruiters  to travel here and hold private sessions. And, as experience elsewhere has shown, grooming over the Internet is virtually impossible to monitor.

The adequacy of our surveillance measures to combat any threat, particularly for a police force shredded by cuts since 2008, has been questioned. More resources have been promised to the Gardai to beef up the existing structures but these have yet to come on stream and there has been criticism from some Garda representatives that the force is ill prepared to deal with an atrocity.

There have been complaints also about the  lack of information and transparency on Ireland’s anti-terrorist security structures and operations  generally, in contrast to Britain. This, and the sharing of information with other security services, is clearly a delicate issue. Surveillance of terrorists here has traditionally been directed at republican terrorism , where for various reasons very little was divulged publicly and old habits die hard. Moreover, the threat from dissident republicans remains a real one, with men, weapons and explosives very much here on the island and constituting a real quantifiable threat.

Indeed the proximity of Britain adds another worrying dimension. Up to now attention and resources in the North have concentrated on dissident republicans, who constitute a clear and present danger,  both locally and in terms of possible infiltration, into Britain. There is now the additional possibility of Ireland being used as a base by Islamic extremists from which to plan or even mount an attack against Britain. However remote this may appear the British have been worried enough to brief at (anonymous)Ministerial level pointing out that Northern Ireland is not part of the U.K.’s “Prevent” strategy to combat violent extremism. Thrillers have been written around the subject. With increased vigilance let’s hope that nightmare scenario remains in the realm of fiction.

16/8

 

 

BRITAIN PUTS THE CLOCK BACK 1608 XCII

BRITAIN PUTS THE CLOCK BACK

BREXIT. Occasionally an event of major significance occurs. After it things are never the same.  In Ireland we’ve just finished celebrating the centenary of one such event – the Easter Rising. Hiroshima was another, the fall of the Berlin Wall a third, Nine Eleven a fourth.  On June 23 arguably another such event happened when Britain, the world’s fifth economic power, voted – narrowly – to quit the European Union. As I write the shock waves internationally, not least in Ireland, show no sign of diminishing. A new, ostensibly gung-ho government is in power in London, determined to push through with exiting, a process likely to take several years.

The inquests and recriminations are well under way. Europe’s establishments and chattering classes, including in Britain itself, are baffled and dismayed. Britain was seen as a sometimes petulant but important partner, not only as one of the Big Four but also as providing an important counterweight in internal policy discussions, usually to be found on the side resisting further or speedier European integration. Its EU credentials were never in doubt even though it maintained a semi-detached position on key EU areas like the Euro and the Schengen common travel zone, stances it could more easily take given the financial clout of the City of London and Britain’s position as an island.

Britain’s increasingly vocal Eurosceptic wing, represented by UKIP and a sizeable minority within the Conservative Party, was ignored or discounted. Britain was regarded as too deeply embedded within Europe for trade, investment and social reasons, seriously to contemplate the leap in the dark that leaving constituted. The warning signs were ascribed to the same mixture of discontent, disillusionment, dissatisfaction with the status quo and vague xenophobia evident in a number of other member States, where right wing parties were starting to garner significant electoral support. All true, no doubt. What made the British situation unique was that, staggeringly, a country with little or no tradition of deciding important matters by referendum,  was asked to vote a simple yes or no on a proposal to undo involvement in almost half a century of  political and social construction and cooperation within Europe. The resulting Mother of all Protest Votes was then compounded by the (narrow) victors proclaiming there could be no going back on the result.

The “Why” has been parsed and analysed since. The philosopher Roger Scruton, in a brilliant article in Prospect Magazine, has traced the alienation of the English working class in recent years, and their feeling that, above all, their sense of identity was being eroded. In a striking phrase he has identified a vital flaw in the EU as it is: “the European people have not been merely SUBJECT  to a treaty, but GOVERNED  by it.” Add the hubris of a wealthy faction in Britain, convinced that the country would do better “going it alone.” As far back as 1994 a junior British Tory Minister explained this attitude in detail to me; depressing but prophetic. Taken together, and in a campaign notable for its chauvinism and churlishness as well as its deceitfulness, the mix proved a potent one.

The referendum outcome has shattered the comfortable Establishment near-consensus of a Europe moving steadily if slowly towards an “ever closer union” a vision which has sustained Europhiles for over half a century. This cosy vision has it that the then EC, when Britain joined  in January 1973, was  little more than a post-war free trade area between six members, with one or two transnational dimensions, in coal, steel and a limited number of agricultural products. It had aspirations to be a lot more, and wording in its treaties to allow for organic growth. And, over the decades, it HAS grown, dramatically, sometimes lopsidedly, changed its name and now comprises a shaky and incomplete union of five hundred million spread over twenty eight countries. It has established a zone of unprecedented economic and prosperity across Europe with landmark standards in human and related social rights. A queue of countries waits to join.

With up to twenty eight countries, each with its own national priorities and particular requirements, for the EU getting to where it is has not been easy. Progress has been slow and tortuous. There IS a common currency – the EURO, but not all twenty eight are members. There IS a Common Travel Area – Schengen – but again some countries -Britain and Ireland – are outside. There are serious differences evident over national attitudes to the Refugee problem. There is serious economic imbalance between the wealthier North and the poorer South, something exacerbated by the 2008 Financial Crisis. Yet overall the consensus has it that Europe has muddled through and worked hard at solutions. The various landmark Enlargements, culminating in the 2004 admission of the Central Europeans, are testimony to the vibrant European idea. And significant progress has been made in making the EU more democratically accountable, a process that is ongoing. Throughout, Britain has been an important and valued component in the evolution of the Union.

That vision now lies in tatters. What happens next is unclear. We are now in a kind of phoney war situation. The process for exiting the EU, stuck in as an afterthought as Article 50 of the Lisbon Treaty, must first be initiated by the UK, with afterwards a two year “sunset period” to complete the separating process. How quickly the new British government acts to invoke Article 50 remains to be seen. Teresa May has appointed Brexiteers to lead the exit charge, which could be a Machiavellian tactic, though others see it as filling the posts with what remained after the purge of the pro-Europeans.

Thus far these have made predictable noises about negotiating bilateral trade deals with third countries. Yet eight of Britain’s top ten markets, including Ireland, are EU or EEA members, accounting for the bulk of her exports. Britain already has thriving trade with all major third countries, on foot of existing trade deals negotiated by the EU Commission; whether any new deals will prove more fruitful or beneficial for Britain must be moot. There’s no pot of gold out there that the evil EU has been withholding. A lot of similar hard economic realities are likely to be aired in the coming months as the small print of Britain’s economic and social entanglement with the EU is picked over. And politically there’s Scotland, which voted 62% to remain, with every prospect of a constitutional crisis before long.

For Ireland the issues are profound. We have major concerns, quite apart from the economic ones which are potentially more serious for us than for the other EU members.  The Common Travel Area – a vital element in our bilateral relationship with Britain – is under serious threat. The EU’s one land frontier with Britain is within Ireland. Given the posturing of the Brexiteers over curbing immigration from the EU, that Border – and with it that special relationship – is now an issue. Arguably the Common Travel Area has sugared the bitter pill of Partition over the years and is part of the fabric underpinning the Peace Process. Is it possible that the casual passing whim of English voters will “do” for Ireland yet again? Perfidious Albion?

20/7