Opinions & Ideas

Author: John Bruton Page 1 of 66

US MID TERM ELECTIONS….

Latest predictions suggest the Republicans will narrowly win control of the United States House of Representatives but that Democrats will have a one seat majority in the Senate.

This is a significant win for President Biden because many expected a large Republican victory in both Houses of Congress.  That said, the Democrats seem to have lost their majority in the House, which will make it harder for the Administration to pass its favoured legislation.

 Counting is continuing in many places and there will be a run off election for a Senate seat in Georgia. Having won Senate seats  in Arizona and Nevada, Democrats have a Senate majority, even if the run off in Georgia does not go their way.

 It is not surprising that the Democrats lost some ground in the House of Representatives. In the past half century, the party opposing the sitting President has made gains in the Mid Terms three times out of four.

The 8% annual rate of increase in the cost of living in the US also drove voters towards the Republican Party. Inflation is wiped out some of the advantage Democrats should have got from record rates of job creation, and from the passage of some important infrastructure legislation. On the other hand, the abortion issue increased the turn out among women voters and this worked to the advantage of Democrats.

 While voters may rank inflation as their number one issue, it is unclear what Congress can do about it. Indeed some of the fiscal stimulus, given by Congress last year to mitigate the effects of inflation, may have actually over heated an economy that was already running up against capacity limits.

 Not for the first time in history, anti inflation measures have probably added to inflation.

 Donald J Trump played an outsized role in the Republican campaign

He personally endorsed individual Republican candidates in 200 individual races. These candidates did not do particularly well.

  It appears that Donald Trump can mobilize parts of the Republican base, some of which may not have voted at all in past elections.  But meanwhile he has driven away centre ground voters by his divisive rhetoric.

While he has suffered a setback last week, Trump is a formidable, spontaneous, and instinctive campaigner, who gives a voice to deep seated anxieties and prejudices shared by many Americans.

 His ideas will probably shape the Republican message in the 2024 Elections. That would hearten President Putin of Russia. It would encourage him to persist with his war of attrition in Ukraine.

 The bulk of the military aid to Ukraine has come from the US, rather than from Europe, even though Europe has more to lose from Russian success in Ukraine.

President Biden has said he intends to run for a second term. If so, we can expect a Republican majority in the House to launch hostile enquiries into his administration, which will absorb a lot of time unproductively. Already to legislative output of Congress is half what to was 30 years ago.

Rather than seeking a second term, President Biden might be better off seeking to promote his legislative agenda for the next two years, and  devoting time to healing the deep ideological divisions that are weakening the Democratic Party.

A change of control in the House will  lead to some modest changes in US Farm policy.

Climate change mitigation will take a lower profile, but commodity price supports will continue, as will nutrition support programmes for poorer families, which provide a market for US farm products. Indeed more than half of the so called US “Farm Budget” goes on nutrition supports for poorer people living in urban areas.

 One area where Republicans will be conflicted is immigration.

The majority of US farm owners are Republicans. The Republican party nationally takes a hard line against immigration. But 75% of the hired workers on US farms are immigrants, and half of these are illegal.

If Republicans were to implement their rhetoric on immigration, many farms would have to close their present operations

The new Republican Chairman of the House Agriculture Committee will probably be Glen Thompson for Pennsylvania. Interestingly, he does not come from a farming background. He worked in the health sector before being elected to Congress in 2008.

The Chair of the Senate Agriculture Committee will be Debbie Stabenow, a Democrat. She is Senator from Michigan, and a career politician, standing for election for the first time while still in college, and has served at every level of government.

The results of the Mid Term elections have been so close that neither Party has a mandate for radical change, which may be reassuring for America’s allies.

RIP Brigid Hogan O Higgins

I am deeply saddened to learn of the death of Brigid Hogan O Higgins. I extend deep sympathy to all he family.
Brigid was a warm and engaging person and preserved  her youthful enthusiasm to the end of her life.
She was a brave and effective representative of the people of Galway in the Dail , carrying on a tradition established by her father . Had she had the opportunity to serve in government, she would have done so with the same spirit of selfless service, as he did as Minister for Agriculture.
Her family can be very proud of her

IRELAND’S CALL….NAVIGATING BREXIT

I have just finished reading a book with the above title by Stephen Collins, the noted columnist with the “Irish Times”.

It tells the story of how Irish governments led by Enda Kenny, Leo Varadkar and Miceal Martin,  dealt with fall out from the UK decision to leave the EU. There are so many twists and turns in the narrative that a summary is impossible within the scope of a short review. 

The Irish Foreign Minister at the time of the Brexit Referendum in 2016 was Charles Flanagan, and he reacted to the decision with commendable speed and thoroughness.

 He briefed his counterparts in all 26 remaining EU states about Ireland concerns, namely that of keeping the border open between the two parts of the island and preserving the Republic’s position as a full member of the EU Single Market. This laid the foundation of the consistent support Ireland has had for its position from all the EU institutions.

One political figure who does not emerge with much credit from Collins’ account is the current leader of the UK Labour Party, Keir Starmer. 

In her final days as Prime Minister, Theresa May tried to assemble a majority in Parliament for  deal that would have kept the entire UK in the EU Customs Union, thereby mitigating or removing the need for customs post either in  ports, or on the land border. For this, she needed the support or abstention of the opposition Labour Party. 

As Stephen Collins puts it

“ Corbyn was relatively open the deal, but Keir Starmer, who was in theory strongly pro EU, raised obstacles at every turn .”

This was the last chance of a soft Brexit.  Defeating the Tories took a higher priority for Starmer than preserving good international relations. The story does not create much confidence about the level of responsibility one can expect from a Labour government in the UK.

THE PARTITION OF IRELAND…..

ARE THERE TWO NATIONS ON THE ISLAND OF IRELAND, AND COULD THEY BE FUSED INTO ONE? 

I have just finished reading an excellent book on the partition of Ireland, entitled “The Partition, Ireland divided 1885 to 1925”, by Charles Townshend, published by Penguin.

It is highly topical. There are increasingly loud calls to prepare for a border poll, one outcome of which might be the unification of Ireland, the end of partition, and  the end of UK sovereignty over Northern Ireland.

A BORDER POLL?

These calls rely on the provision in the Belfast Agreement of 1998, which says that, if the British Secretary of State is of opinion that a majority in Northern Ireland would support unification with the rest of Ireland, he or she shall hold a poll in Northern Ireland, to allow the electorate there to make that choice.

Apparently, this clause in the Agreement was not the subject of close scrutiny in the final days of the negotiation in 1998. The focus in that week was on North/South institutions, decommissioning of weapons, and prisoner releases.

As a result of this lack of scrutiny, the Agreement provides little guidance as to how, and on what criteria, the Secretary of State might make such a momentous decision.

 Nor is the role of the Irish Government, who would have to absorb Northern Ireland given much attention in the Agreement. The Secretary of State is not even required to consult the Irish government.

 The Irish government would have to decide what special arrangements, if any, they might make to ensure that both communities in Northern Ireland, especially the one that is currently in favour of Union with Britain, is made to feel at home in a united Ireland.

 Nor does the Agreement set out how the public finance and tax implications of such a move would be dealt with. Northern Ireland currently receives a net subvention from London, which, if voters opted for a United Ireland, would thereafter have either to come from Dublin, or be rendered unnecessary by spending reductions on NI services.

 Incidentally, while a large majority (67%) in the Republic told opinion pollsters in 2021 they would vote for a united Ireland, only 41% said they would be prepared to pay higher taxes to accommodate it, and even fewer would be willing to change the national flag or the national anthem to accommodate the British identity of the unionist population. Of course answers to hypothetical poll questions about remote future possibilities are not reliable.

The Good Friday Agreement requires whichever government is sovereign over NI, to exercise its powers “with rigorous impartiality” and  to ensure “just and equal treatment” for the “identities, ethos and aspirations of both communities in” in NI. 

 “Aspirations” is the key word here.

 By definition, unionists and nationalists have different aspirations. One aspires to a united Ireland, the other aspires to continued union with Britain.

 The provision in the Belfast Agreement for border polls seems, in an important sense, to contradict the ” parity of esteem” between “aspirations” that is the underlying motive force of the Agreement.

This is because it provides for a one way street to Irish unity, with no possibility of a reversal of that decision.  While there could be several border polls, where the option of a United Ireland is offered and rejected, if that option is once chosen, in the last of those polls, that would be it. There would be no further Referenda.  The decision in favour on a united Ireland would be final. In that sense there is no parity between the aspirations. I am surprised this anomaly has not got more attention in unionist circles.

If a majority in Northern Ireland voted for a united Ireland in border poll, there would probably still be a significant minority in Northern Ireland who might continue to aspire to rejoin the United Kingdom.

 That aspiration is treated less favourably in the Agreement than is the aspiration of nationalists for a United Ireland.

 One aspiration, once achieved is irreversible. The other possible poll result (remaining in the UK) is reversible, no matter how many border polls confirming it, have taken place.

MAKING IT DIFFICULT TO RESOLVE THE PROTOCOL ISSUE

This border poll issue is, and thus will remain, contentious.

 Indeed the constant publicity about the possibility of a border poll is unsettling.

 It heightens the tension around the Northern Ireland Protocol, which Ulster Unionists wrongly see as a stepping stone to a United Ireland.

Calling for a united Ireland is seen as patriotic and popular in the Republic, even though repeating such calls may actually be a barrier to practical reconciliation between the communities in Northern Ireland.

Under the border poll provisions of the Agreement, a united Ireland could come about by a majority of a mere 51% to 49%,  Once it has happened, it would be irreversible, at least under the terms of the Agreement. This simple majoritarianism seems to me to run counter to something the then Taoiseach, Albert Reynolds, said in the 1993 Downing Street Declaration.

He said

“Stability and wellbeing will not be found under any political system which is refused allegiance or rejected by a significant minority of those governed by it”.

If a united Ireland is carried by 51/49, there would likely be a significant minority in Northern Ireland, who would refuse allegiance to the decision.  This would be geographically concentrated in parts of the province, where they might constitute a local majority. Experience suggest that policing such areas could become difficult for the United Ireland government.

 The framers of the border poll provisions of the Belfast Agreement do not seem to me to have taken sufficient account of Albert Reynolds wise words in the Downing Street Declaration. He saw further than they did.

Those who are interested in the issue of partition, border polls, and reconciliation between the tradition in Ireland should read Charles Townshend’s book.

 This book shows that the partition of Ireland grew out of genuine political difficulties, and out a sincere conflict of allegiances between nationalists and unionists. These are differences that have been mitigated only slightly, and continue to exist today.

THE HISTORICAL AND PHILOSOPHICAL ORIGINS OF PARTITION

Townshend traces the history and origins of the idea of dividing Ireland into

  + a bigger portion which actively wanted Home Rule and freedom from British domination, and

+  smaller portion, in North East Ulster, where a geographically concentrated population wanted continued British rule and rejected rule from Dublin.

Up to 1800, Ireland had had a Parliament of its own, sitting in Dublin.

 But Catholics, the majority population of the island, could not sit the Irish Parliament and the franchise was confined to the very wealthy.

Under the Act of Union of 1800, the Irish and British Parliaments were merged, Ireland having 100 seats and the rest of the now United Kingdom approximately 500 seats.

Catholics eventually were allowed to sit in the Union Parliament in 1829, but the franchise continued to restricted on property grounds.

 Irish MPs in Westminster continued to be a relatively powerless minority, and rarely were Ministers in UK governments.

 The British, or Union state, never truly integrated Ireland into a political unit with England, Scotland, and Wales. It is questionable whether it ever had the capacity or willingness to do so.

 Ireland continued to be administered by a local administration in Dublin which took its orders from London governments, in which Catholic Irish MPs rarely had any say. It was a form of colonial administration, similar to the one in India.

 This failure to integrate Ireland into the Union with England, Scotland and Wales was partly due to the fact that these nations were Protestant in religion, whereas Ireland, outside NE Ulster, was predominantly Catholic.

 The disastrous potato famine of 1845 to 1850, which cost millions of lives in Ireland, and to which the laissez faire economic policies of the Liberal government in London were a totally inadequate response, added to the sense of alienation.

From 1840 onwards there was agitation in Ireland either to repeal the Union, and restoration of  the Irish Parliament or, at least, to grant Ireland Home Rule and a Home Rule Parliament in Dublin with limited powers (excluding foreign affairs, defence and customs).

 Both these proposals envisaged Ireland having a single Parliament for the whole island, without any exclusion of NE Ulster.

From early on, opponents of Home Rule argued that allowing a Dublin Parliament to govern the 4 or 6 counties in NE Ulster, where a majority Protestant population did not want to be ruled by a Dublin Parliament, would be unfair or unworkable.

” Unionists” in NE Ulster did not want to find themselves being continually outvoted in a Dublin Parliament, in the same way as Irish Catholic MPs had become used to being continuously outvoted in the Union Parliament in London.

The first attempt to grant Home Rule to Ireland was put forward by William Gladstone in 1886.

Nationalism was a popular doctrine in the nineteenth century, and John Bright, the British Radical and Liberal statesman opposed Gladstones Home Rule proposal for all Ireland on the ground that there were two nationalities on the island of Ireland.

He said

“Ulster may be deemed a nationality differing from the rest of Ireland as much as Wales differs from England”.

Charles Stewart Parnell recognised there was a problem here. He said

“It is undoubtedly true that until the prejudices of the (Protestant and unionist) majority are conciliated….Ireland can never enjoy full freedom, can never be united”.

He was not, however in a position to put forward a solution to the dilemma that he acknowledged existed. In a sense that dilemma remains unaddressed to this day.

A Third attempt to introduce Home Rule was made in 1912 by a Liberal government led by Herbert Asquith.

Responding to Asquith’s Bill, one of his Liberal backbencher MP s, Thomas Agar Robartes, said that Ulster unionists and Irish nationalists were two different nations with

“different sentiments, character, history and religion”

 and that it would be impossible to fuse these two “incongruous elements” together.

 He proposed an amendment to the Home Rule Bill which would have allowed certain Ulster counties to opt out of Home Rule and continue to be ruled directly from London.

A similar argument was made by the Conservative leader, Arthur Balfour, who also opposed Home Rule for the whole island of Ireland, who said that the Unionists of NE Ulster and the population of the rest of Ireland had

 “two (different) sets of aspirations, two sets of ideals and two sets of historic memories”.

It is hard to say that Balfour was wrong. Shared ideals and  shared historic memories are what shape and sustain nations in difficult times.

Irish nationalists, supporting Home Rule, rejected these arguments.

 John Redmond described the notion that there were two nations on the island of Ireland

“revolting and hateful”.

 But neither he, nor most Irish nationalists, devoted enough thought, or imagination, to devising ways in which the incongruous elements, of Ulster unionists on the one hand, and Irish nationalists on the other, might be fused together in a single nation.

 In fairness to Redmond, it must be said that his support for recruitment to the British Army in 1914 and 1915 was a form of indirect response to Unionist sensibilities. He wanted to show that nationalists and unionists had some aspirations and allegiances in common.

That said the overwhelming majority of nationalists believed that no part of Ireland had a right to opt out.

Ireland was a geographic unit, an island, so, ipso facto, it should be one nation. This put physical geography ahead of human geography.

The only Irish nationalist who took Ulster unionist concerns seriously was the vice President of Sinn Fein, Father Michael O Flanagan, who admitted that

“in the last analysis, the test of nationality is the wish of the people”

And admitted that the Ulster unionists

“had never transferred their love and allegiance to Ireland”

 and said that Irish nationalists

“claim the right to decide what is to be our nation, but refuse them (Ulster Unionists) the same right”.

I am not sure how much influence Father O Flanagan on subsequent Sinn Fein policy although he continued to be active in the party. He seems to have been an eccentric individualist. He opposed the Treaty of 1921.

Going back a bit in time, many nationalists did not take Ulster unionist objections to Home Rule seriously at all.

They thought it was bluff, even when Ulster Unionists, opposed to Home Rule, armed themselves, and set up a Provisional Government to resist Dublin Rule.

The working assumption of Irish nationalists seems to have been that the Liberal government in London would coerce all of Ulster into accepting Home Rule. With hindsight, this seems quite unrealistic. The morality of such a course does not seem to have been explored by nationalist thinkers.

Nationalists argued that the resistance in Ulster to Home Rule was being fanned by elements of the British Conservative Party for domestic purposes. There was truth in this, but it was not determinative, in my opinion.

THE ASSUMPTIONS UNDERLYING IRISH NATIONALISM

Irish nationalism also adopted a rhetoric that did not include Ulster unionist aspirations.

For example, the language of the Irish Gaelic was to be the national language of Ireland, and while some Ulster unionists would have been able to speak Irish, they would not have seen as part of a nation building project that belonged to them.

One nationalist writer, DP Moran said the

“foundation of the Irish is the Gael”

which excluded Ulster unionists (who are not of Gaelic stock) explicitly. 

Symbols, like the monarchy, which meant , and mean, a lot to unionists, were explicitly rejected by Irish Republicans.

 Indeed establishing an Irish Republic, and thus getting rid of the monarchy, seemed to be more important than avoiding partition. 

For example, Eamon de Valera, speaking in the Dail in 1921 during the Truce and before the Treaty negotiations commenced, said that if the Irish Republic was recognised, he would be in favour of

“giving each county the power to vote itself out of the Republic”.

In such a scenario, it is probable that, at the time (1921), Antrim, Down, Armagh and Derry would have voted to exclude themselves.

Back in September 1914, Home Rule for all Ireland was passed into law, but with a reservation that its implementation would be postponed until the World War, that had started a month earlier, was over.

 The issue of excluding parts of NE Ulster from Home Rule was left open to be dealt with in possible amending legislation.

 As a result of the 1916 Rebellion and development in British politics, Home Rule, as enacted in 1914 for all Ireland, was superseded 

+  in 1920, for the 6 counties of Northern Ireland, for the 6 counties of NE Ulster , with a local Parliament with similar powers to those that All Ireland Parliament would have had  under the original Home Rule plan and

 +  in 1921,  for the remaining 26 counties, by the Anglo Irish Treaty of that year whereby the rest of Ireland became a  Free State with its own army and freedom to set its own foreign and defence policy (Dominion status)

These arrangements have survived for the past 100 years. The Free State, now Republic has made good use of its independence, especially since it joined the EU.

 Northern Ireland has had a more difficult time because of a combination of bigotry, insecurity, discrimination, and terrorism.

RECONCILIATION WITHIN NORTHERN IRELAND MUST BE THE PRIORITY

In looking, objectively and clinically, at the possibility of a border poll, people on both sides of the Irish border should ask themselves some difficult questions.

 They must ask themselves honestly if the ideals, historic memories and allegiances of Northern unionists can realistically be reconciled with the ideals, historic memories and allegiances of Irish nationalists. The gap remains wide.

 Can these disparate elements be fused into a new civic patriotism, an identity that all can share?

If people do not believe that is possible, a united Ireland will not work, and it should not be supported in border polls.

The priority now should be reconciliation within Northern Ireland.

The work of reconciliation must be done, in the first place, by the people of Northern Ireland themselves, but with the active support of the Dublin and London governments. It should be seen as an end in itself and not as a preparation for either in united Ireland or continuance of the Union.

This can be brought about by shared achievements, of which all can be proud, which become part of a new shared historic memory, to replace gradually the divisive memories of the past.

Shared ideals must be forged by negotiation at every level among the people of Northern Ireland.

Unionists must begin to imagine themselves into the minds of Nationalists, and Nationalists into those of Unionists.

This requires a conscious and structured effort of the imagination, among every age group among the people of Northern Ireland.

 Instead of being boosters for one side or the other in the constitutional debate, artists, actors, poets and writers in Northern Ireland should lend their talents to this very demanding exercise of the imagination.

AN EU/UK AGREEMENT ON PLANT AND VETERINARY ISSUES COULD UNBLOCK THE PROTOCOL IMPASSE.

There were contradictory signs in the past week about the possibility of resolving the impasse over the Northern Ireland Protocol. 

The prospect of a visit to Britain next spring by United States President, Joe Biden, creates a time line towards which EU and UK negotiators could work, if they can agree to start talking to one another and a minimum level of mutual trust is achieved.

After all , the US is closely allied with both the EU and the UK in its effort to sustain the territorial integrity of Ukraine in the face of Russian invasion.

The US needs the EU and the UK to be seen to be  working together, and pooling their resources, rather than imposing sanctions on one another because of their disagreements over the Protocol. 

Another positive sign was the almost casual announcement, to journalists while on a plane on the way to the US, by the new UK Prime Minister, Liz Truss, that a post Brexit Trade deal by the UK with the US was no longer a realistic prospect.

Former President Obama had told the British public this during the 2016 Referendum campaign but Liz Truss is the first UK Prime Minister to accept it. 

Apart from longstanding Irish American concerns about British policy in regard to Northern Ireland, there is a general reluctance in US public opinion and in Congress the reduce barriers to foreign imports. During its period of rapid growth from the mid nineteenth to the mid twentieth century, the United States remained a highly protectionist country, with high tariffs and regulatory barriers to foreign imports. The UK, in the other hand, was a champion of free trade.

The fact that the UK is now no longer pitching for a trade deal with the US means that it is no longer under pressure from the US to scrap, its still in force and EU originating, bans on Chlorine washed chicken and hormone treated beef.

If, in order to keep open the possibility of a trade deal with the US, the UK were to insist on getting rid of these bans on chlorine washed chicken and hormone treated beef, it would have been impossible for it to negotiate a Plant and Veterinary (SPS) agreement with the EU. A deal on those lines would not pass in the European Parliament.

Plant and Veterinary issues are at the heart of the disagreement over the Protocol.

Denial of access to British sausages and to English garden centres are among the most prominent practical problems cited by Northern Irish objectors to the Protocol . These difficulties would disappear if there was a comprehensive SPS Agreement between the UK and the EU.

But what form might such an Agreement take?

The EU has a land boundary with the UK.  So Plant and animal diseases can pass easily from one jurisdiction to the other. There is a single food chain encompassing both the EU and the UK. The connections are so close that the EU will insist an Agreement under which the EU and the UK would have the same rules governing plant and veterinary health.

The UK, on the other hand, wants an agreement whereby the UK would make its own separate and different rules, but that these British rules would be accepted by the EU as “equivalent “to the EU rules. In other words, the UK rules could be accepted by the EU as “different but just as good”. 

In order to justify Brexit, the present UK government is planning to scrap all EU originating laws, and replace them with British originating laws, by the end of next year. Any EU rule still in place by the end of 2023 will simply lapse.

This process of removing and replacing EU rules will be a hugely burdensome bureaucratic exercise. It will be hard to justify all the effort, if all that emerges, at the end of 2023, are new British laws that are so similar to the EU laws they replace, that they qualify as being “equivalent” to them. 

If that happens, people will ask what was the point of Brexit?

So there is a clash between the rhetoric of Brexit, and reality of trade.

Having a single set of rules for standards of goods across the continent of Europe eases the path for exporters from Britain. But adopting EU rules to achieve this removes the central justification of Brexit.

This is a choice Liz Truss will have to make in coming months. 

THE IRISH TAX AND WELFARE COMMISSION REPORT

The Report of the Commission on Tax and Social Welfare contains some proposals that would have a dramatic effect in rural Ireland.

 The Commission, which reported last week,  was set up in fulfilment of a commitment in the Programme for government. It was given a very tight deadline to complete its work, and this may explain the gaps in its analysis.

UNREPRESENTATIVE MEMBERSHIP

The Commission was chaired by an academic. It had two civil servants in its membership, a tax consultant, an accountant, two members from economic research institutes, one person from a homeless charity, a businesswoman, one from an environmental charity, someone from IBEC…..but NOBODY representing agricultural or rural interests!

In addition, it received at least 28 submissions, mostly from other civil servants, state agency employees and academics but not one, as far as I can see, from the food and agriculture sector. This is surprising.

SPENDING IGNORED

The terms of reference of Commission seem to assume that a steadily rising level of spending by government in Ireland will be necessary, equitable and inevitable.

Its task, as it saw it, was simply to

“ensure sufficient resources would be available to meet the cost of public services” as if that cost was a given that could not be altered.

More “resources” in the form of more taxes are simply assumed to be required.

 Deciding on the details of the tax changes the Commission recommends, as a consequence of this assumption, is to be left to elected representatives.

 The Commission offers them a long , and  unpalatable,  menu of tax changes from which they may  choose.

 But the Commission does not look at the expenditure side of government at all!

 Over the last fifty years, the functions taken on by government have steadily increased. Child care, Free GP services, subsidised elder care, and insurance against use of defective building materials, are examples of responsibilities being shifted onto the shoulders of the general taxpayer in recent years.

 We are also about to substantially increase our armed services, and  to increase benefits for those affected by the energy cost squeeze.

 Do we have an agreed basis for prioritizing these expenditures? I do not think so.

 Should a Commission have provided politicians with advice on how to prioritize spending, before advocating tax increases? Yes, I think it should.

A more balanced approach by the Commission would have started with a rigorous analysis of present and future spending commitments, on the basis of explicit criteria.

 Such an approach might not necessarily have meant the rejection of the Commission’s tax proposals, but it would have made them more understandable.  Ideally, the Commission should have identified different levels of government spending relative to GDP, and what each would have meant in service and taxation levels. 

Unfortunately the tight time limit set for the Commission would not have allowed the time to do an exercise like this.

In fairness to the Commission, it does suggest that our ageing population will mean increases in present levels of health and pension spending. It says adapting to climate change will cost a lot of money. Corporation tax revenues will fall from their presently artificially high levels.

UNPALATABLE PROPOSALS

The Commission report contains a number of unpalatable proposals .

Below are some examples

  • It says a tourist tax should be imposed on accommodation.
  •  PRSI should be extended to incomes below 352 euros per week.
  •  Pensioners should pay PRSI.
  • Capital Gains tax should apply to gains made on the sale of family homes.
  •  The Local Property Tax on houses should be increased and a higher rate of tax applied to second homes.
  • The lower rate of VAT should be increased and zero rate VAT restricted.
  • Parking spaces should be taxed and road use charges introduced.
  • It advocates this on the basis of what it calls the principle of equity.
  •  It defines equity as treating people in similar situations similarly.

DEPENDNENT CHILDREN IGNORED

But it  favours the infamous principle of “individualisation” in the income  the tax code, which does the exact  opposite. A taxpayer on 50000 euros a year with a dependent spouse and 5 dependent children is not in the same position as a single person on 50000 euros a year. But under individualisation they would be treated for income tax purposes as if they were in a similar position.

SEVERE PROPOSALS FOR AGRICULTURE WILL REDUCE THE VALUE OF LAND

Turning to Agriculture, all land, including agricultural land remote from towns, should be subject to a Site Value Tax according to the Commission. This Site Value Tax would eventually be merged with Commercial Rates.

Obviously agricultural land. that had little prospect of being needed for housing or roads , would be valued and taxed at a lower level than agricultural land near a town. .

But land that had the POSSIBILTY of being needed for housing, might go up in value and thus  in tax liability, even though the housing development might never take place .

This proposal amounts to a reintroduction a centrally administer red form of agricultural rates.

Let us not forget that the Site Value tax would have to be paid  out of after tax income, by borrowing or by selling of  land or stock.

 I can see a Site Value Tax becoming the subject of a lot of litigation between landowners, the Valuation office and the Revenue.

 The Commission gives no idea of the likely rate of Site Value Tax….would it be 1%, 2%,  or 0.5% per annum? How might the rates be altered and by whom?

It is impossible to assess the social effect to this proposal without having answers to these questions.

As well as paying the is annual Site Value Tax, the Commission recommends that holders of agricultural land pay substantially more Capital Acquisitions Tax (CAT) on the transfer of the farm to their children.

 The CAT exemption limits for transfers to children would be reduced.  Again the Commission does not say by how much .

 Again the “experts” on the Commission leave that unpalatable task to the politicians!

 The present system, whereby agricultural land is valued at less than market value when it is being passed to a child, whose main assets after the inheritance are agricultural land, is also to be curtailed.

The inheriting child would have to be active in the business to qualify for the relief.

 Again, this additional CAT would have to be paid by the inheriting child by borrowing, by selling property, or out of income saved and not spent in past years.

The combined effect of these proposals, affecting farms, would reduce the value of agricultural land in Ireland quite substantially. The suggested restrictions on livestock production in the interest of reducing methane emissions will push land values down further.

It is unlikely that recommendations of this Commission will be acted upon in the near future. The government has enough on its mind.

 But they will be used in negotiations for the formation of future government. They may also be turned to if a Minister for Finance finds herself short in a particular year.

 Given that the farming community had no input at all to the Commission, their representatives should go through the report with a fine comb to be ready for the arguments of the future.

AUTUMN CHALLENGES FOR THE EU

The European Union is facing some pretty severe challenges this autumn. 

GAS PRICES AND THE GERMAN ECONOMY

 The biggest one is the high price, and insufficient supply, of natural gas.

This will have a disproportionately damaging effect on Germany and Northern Italy, which are the manufacturing hubs of western Europe. Both countries have already been hit by the recession in China and the loss of export markets that that has entailed.

I have always been of opinion that, without Germany, there would  be no such thing as a real European Union. ,

Germany provides the financial backstop on which all the EU’s ambitious plans, including the Green Deal, and the recently acquired capacity of the EU to borrow, rest. Without a healthy German economy, and a Germany that is prepared to think of its neighbours as well as of itself, the EU would wither. Other EU states need to show energy solidarity with Germany during this winter, when its economic model is under particular stress.

Meanwhile, the EU is facing other threats that could also become existential.

One is from Poland, and the other is from the United Kingdom.

POLAND AND AN INDEPENDENT JUDICIARY

In the Polish case, the courts system there has been politicised, to suit the agenda of the ruling Law and Justice Party.

 In effect, Polish Courts are rejecting the primacy of EU over Polish law, in disputes around issues that are within the competence of the EU under the Treaties.

This principle of the primacy of EU law, to be authoritatively interpreted by the European Court of Justice, is not new.

It dates back to European Court of Justice (ECJ) decisions of 1964 and 1970.

 By having a single ultimate interpreter of EU law, namely the ECJ, we have been able to create a Single market with consistent rules, consistently interpreted, and  more or less consistently applied, across all 27 countries of the Union.

The Polish government has interfered with the independence of its Courts by putting in place a Disciplinary Tribunal for Judges, one effect of which has been to encourage a nationalistic and Eurosceptic interpretation of the position of Polish law within the EU.  Some Judges, disliked by the government, were sacked.

Cases on the interpretation of EU laws, as applied in Poland, are not being referred to the ECJ for authoritative interpretation, as is the normal procedure in most EU countries. Thus the primacy of EU law in Poland is being slowly eroded. If a big country, like Poland, gets away with this, there will be many imitators (like Hungary which is an even worse case), and the European Union will begin to decay.

Notwithstanding all this, Poland was, in June 2022, allocated 36 billion euros in EU funds, even though it has not yet dissolved the Disciplinary Tribunal, as required to by previous EU decisions , and had not addressed the primacy of EU law issue at all.

 In a split vote the Von der Leyen Commission voted to release the funds, on the understanding that Poland would meet certain “milestones”, including the abolition of the Disciplinary Tribunal , but not the affirmation of the primacy of EU law.

 Obviously the burden being borne by Poland in aiding Ukraine influenced this decision. But the trade off is fundamentally damaging. The rule of law is one of the EU values for which Ukrainian people are giving their lives, and one the reasons Ukraine and other countries want to join the EU as a full members.

The advantage of the EU, for a small country like Ireland, is that it makes its decisions based on clear rules, and not on the basis of raw power. Ireland should not be indifferent to what is happening in Poland. That said, the EU should also be conservative in asserting what comes within the legal competence of the EU.

Meanwhile the integrity of the Single Market, and the primacy of EU law, is also being challenged, albeit in a less fundamental way, by British tactics over Brexit. 

BRITISH BREXIT TACTICS

 Under the Protocol, and to avoid the need for customs controls on the Irish land border, Northern Ireland is to be allowed unfettered access to both the EU and the UK Single markets.

But the UK says it does not want the ECJ to be the final interpreter of EU rules, as applied in Northern Ireland, and it also wants NI exempted from EU State aid and VAT rules. Such a precedent for a territory within the EU Single Market, if set,  would , like the one the Poles are attempting, undermine the level playing field that is  essential to the EU Single Market.

The incoming UK Prime Minister, Liz Truss, appears willing to provoke a major crisis with the EU on these matters.

 She seems to believe that, if she is strong, the EU will cave in. In a way, the problem is that UK has never taken the EU very seriously and takes a patronising attitude towards it.

So the EU should not wait until the UK has started to disapply the Protocol, to outline to the trade sanctions it would impose on the UK. Once the Protocol disapplication Bill reaches Committee Stage in the House of Lords, the EU Commission should publish the full list of its proposed trade sanctions, to come the day the legislation is implemented. That  advance notice would give time for cooler heads to assert themselves in London.

Meanwhile, I have no doubt that practical compromises can be reached on the implementation of the Protocol.

 In July,  the Europe Committee of the House of Lords published a very interesting report, with the evidence it received, on the Protocol.

It was balanced. It showed that the Protocol had adversely affected the retail sector in NI, but had advantaged manufacturing investment there

I drew two conclusions from reading the report and the evidence.

UK UNLIKELY TO WIN IN COURT

The UK will lose the Court cases it is facing, for attempting to walk away from the Protocol. Under the Vienna Law on Treaties, the UK would have to show it had been suffering from “coercion”, or “improper process”, when it signed and ratified the Protocol. Given that the negotiations had been going on for more than a year, the UK will not be able to do that.,

EU AND UK OFFICIALS SHOULD HOLD JOINT CONSULTATIONS IN NI

The other conclusion I drew was that the best way to find solutions to practical problems thrown up by the Protocol would be for UK and EU officials jointly to meet the various sectors of the NI economy. Each have had separate meetings with the sectors, but that cumbersome format is not conducive to constructive thinking or to problem solving.

One of the advocates of Brexit, Michael Gove, suggested in February 2021 that there be a joint EU/ UK Business Consultative Group of officials,  who would to talk, together in the one room, with all the relevant economic actors in NI. If Liz Truss wants to keep open the option of a negotiated agreement, as she says she does, she should activate this proposal of Michael Gove this week.

Otherwise we are all heading for unnecessary trouble, when we have so many other problems to deal with.

 

 

IS DITCHING THE PROTOCOL GOOD FOR “THE UNION”

uk flag on creased paper

While visiting relatives in London , I was invited to give an interview to Times Radio yesterday .

It was a great chance to speak to to an English audience.

The subject was the stated policy of Liz  Truss  not only to enact , but to implement , the legislation that would unilaterally disapply a Protocol , that the  UK freely agreed to in an international treaty , signed and then ratified by the UK Parliament.

This extraordinary and damaging course , for the UK , is being justified on the grounds that it is good for the Union, by which is meant in this case the union of Britain and Northern Ireland.

Indeed it is being pressed forward by a  self described “Conservative” and supposedly “Unionist” party.

My argument to Times Radio listeners was that this  radical , and deeply unconservative,  attempt to break a solemn treaty , is actually DAMAGING to the Union, for the following reasons

1. It is opposed by a majority in Northern Ireland. A majority there would like changes to the Protocol alright , but do not favour such a radical course as Truss is insisting upon. Adopting a course , in defiance of a majority view in Northern Ireland,  politically weakens “unionist” sentiment there. That should be fairly obvious.

2. Northern Ireland has prospered disproportionately under the Protocol.  

From being one of the worst performing regions of the UK before the Protocol, Northern Ireland has become second best after London , under the Protocol.

Prosperity in Northern Ireland, as part of the UK and under the Protocol , is objectively good for the Union. Business in Northern Ireland knows this. The “ Conservative and Unionist” party in Britain does not seem to care.

Incidentally, the more Northern Ireland prospers under the Protocol, the less subsidisation will it require from London, which also would strengthen the Union.  

3 . Unilaterally ditching the Protocol will initiate a a major trade war between the UK, including Northern Ireland, and the EU. Liz Truss, a former Trade Secretary, knows this.

This trade war will inevitably be disproportionately severe on Northern Ireland , because it is a region  directly on the UK/EU frontier. Again this is obvious.

The consequences of this UK initiated trade war will  thus be bad for the Union because it will hurt the people of Northern Ireland more than anyone else in the UK. Again, that is bad for the Union.

Incidentally, this UK initiated trade war will also weaken the western alliance economic and political capacity to support Ukraine, a concern for democrats everywhere.

4 . Ditching the Protocol will not restore the  economic status quo ante  for Northern Ireland that preceded the Protocol, when it was lagging behind the rest of the UK.

The new situation will be much worse than that for Northern Ireland. This is because the economy there will be engulfed in  new duplicative bureaucracy of a kind never seen before.

Long existing links will be broken.
Supply chains will be destroyed.
Expensive investments will be rendered valueless.

This is because the ditching of the Protocol will allow the UK to impose increasingly different product regulations in Northern Ireland , to the ones it uses at the moment and which allow it free access to the EU market, the only market in the world to which Northern Ireland has  unimpeded road access.

The damage will be be felt especially severely by Northern Ireland’s dairy sector.

 One third of Northern Ireland milk is processed in the EU  ( in Ireland).  There are 5400 dairy businesses in Northern Ireland and the business generates 1.5 billion sterling every year.. This cross border processing  of Northern Ireland milk have to stop if  the milk is longer produced to EU standards. This will be massively disruptive .

 To get around that ,  a special supply chain would have to developed, separate from the one for supply  for milk destined for the NI/ UK .  Northern Ireland Farmers will be forced to choose to be EU or UK suppliers, whereas they can be both at the moment.

 Massive duplication and additional expense would the thus be imposed on dairy producers in Northern Ireland , most of whom  probably vote for “unionist” parties,  and who are enterprising people , and vital contributors to their neighbourhoods. They do not deserve this.

 So ditching  the Protocol will not only be bad for the Union, it will be bad for unionists.

For all these reasons Liz Truss’ policy is not only unConsrvative, it is anti Unionist !

Maybe some her friends listened to Times Radio!

Frank Crowley RIP

I am deeply saddened to learn of the death of Frank Crowley . His formidable vote getting ability was vital to enabling Fine Gael to get into government.
Frank loved North Cork and spoke up for it with deep conviction.
He was very popular with colleagues.

A DANGEROUS WORLD…

illustrations by @liuzishan

There is more to worry about in the world today than in any time in my memory.

I remember the Cuban missile crisis, a very dangerous moment. It was defused by secret diplomacy between the Soviet Union and the US , and the willingness of the US to accept a Communist state in the Western Hemisphere , and of the Soviets to turn their ships back.

If a similar issue arose now , does a basis exist in which Russia and the US could even talk to one another to defuse it?

The US/China confrontation will be more long lasting.

China has dramatically increased its military spending. Confronting China is almost the only thing on which Democrats and Republicans in the US can agree.

The US is pledged to support Taiwan remaining politically separate from China, even though it is part of China, and the US is theoretically prepared to to go to war to defend that position.

 But the US position is ambiguous.  So is the Chinese position.

Ambiguity is often the enemy of peace. World War One arose from ambiguity in the pledges the powers had given to one another in the event of attack. If the pledges had been clearer, the risks might not have been taken.

Inflation , and an artificially induced recession  to cure it , are increasingly expected. Higher interest rates would be the tool used.

 The political effects of this could be very serious , because public opinion is unprepared for it, and the hardships will not be evenly spread.

Inflation hits everybody, though not equally.

High interest rates  are more selective.  

They hit over borrowed states , like Italy,  hardest. They also cause unemployment which hits people with marginal jobs, but leaves those in secure employment with  savings  or low borrowings  unaffected. That is what happened in the 1980s. This leads to political tensions.

The idea that we should tackle inflation by extra state spending ( which can only be paid for either  by taxation now, or by borrowing , which is taxation of our children) does not seem sensible to me. Yet everyone is advocating it.

 The current inflationary surge has come from outside. It has made energy and food importing countries poorer. Attempting to redistribute this poverty through state action raises expectations that cannot be fulfilled , and that will damage democracy. Increasing demand adds to inflation. Increased supply is the cure , but that is not in the gift of any western government.

It is important that voters understand the gravity of the problems we are facing. Populism confuses facts with emotion. Anger is not a policy. Blame is not a policy either.

We need to think things through carefully.

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