Riding three horses at once: Ireland's EU membership as a national development strategy.
| Author | Hession, Peter |
Simple fables about the Irish Republic's oppression at the hands of the 'Troika' do little to explain its deep commitment to EU membership. This forms part of a decades-long strategy of national economic development, based on reaping the gains of simultaneous exposure to British, US and European capital.
With Brexit pole-axed by the question of the Irish border, the Irish Republic's commitment to EU membership appears stronger than ever. In the aftermath of the Eurozone crisis, which saw unemployment and emigration rates soar and representatives of the EC-IMFECB 'Troika' temporarily strip Ireland of its economic sovereignty, the idea that participation in this multinational union conferred a meaningful form of political independence seemed quixotic. A view of Irish political economy that begins and ends with the fall of the 'Celtic Tiger', however, understates the lasting significance of EU membership for the politics and economics of a peripheral European economy with a long history of underdevelopment and imperial domination.
Ireland's 1973 accession to the European Economic Community (EEC) was designed to enable a reorientation of the Irish economy away from over-dependence on Great Britain. On the eve of its first application to join in 1961, Ireland remained reliant on the UK market for 75 per cent of its exports. (1) As Ireland's ambassador to West Germany surmised a decade later:
[I]t is surely a hard fact of Irish history that the call to 'break the connection with England' and to develop policies based on the philosophy of 'ourselves alone' [has] again and again come up against the dependence of our economy on the British market. The exercise of full political sovereignty has always had to be related to this fact of economic dependence... But with membership of the [European] Communities this British brake on our sovereignty would become instead a shared European commitment. (2) Development or competition state? Ireland and the Single Market
On the eve of the 1987 Single European Act, a leap in integration which aimed to transform the limited Common Market for goods into a fully liberalised Single Market by 1992, the EEC had a mixed record in Ireland. While elites remained supportive, and the Common Agricultural Policy had led to a windfall for Ireland's most traditional sector, the pains of liberalisation were also felt. Writing in 1989, the historian J.J. Lee could recount how as 'job losses mounted throughout the Seventies... there appeared to be little that anybody could do to arrest the decline of Irish-owned business. It is not clear that the government grasped or wanted to grasp the problem'. (3) Despite a 'mini boom' in the 1970s, analysts have tended to isolate the shortcomings of macroeconomic policy - expansion, a wage-price spiral, and debt - as the main sources of Ireland's economic underperformance. Writing on the eve of the Single European Act, two prominent economists could thus bemoan the fact that 'the completion of the internal market pure and simple would leave many of the problems of the Irish economy still unresolved'. (4)
Within less than a decade, the conventional wisdom on this point had undergone a complete reversal; not only had Ireland benefited richly from EU integration at an opportune moment to exploit expanding US FDI, it was also regarded as having helped to address structural issues still seen to dog the economy up to the mid-1980s. Of key importance here was a shift in EU funding initiated during the European Commission presidencies of French socialist Jacques Delors (1985-1994), which prioritised active labour-market policies. This turn peaked with a net transfer to Ireland of 8.3 per cent of GNI in 1991. Crucially, these funds facilitated a period of macroeconomic stabilisation brought about through a programme of austerity and wage restraint via the neo-corporatist 'social partnership' system from 1987 onwards. While EU transfers have sometimes been overemphasised as an early engine of growth, most analysts accept that 'wage moderation was purchased via the promise of future reductions in income taxes... [which] EU initiatives facilitated by relaxing the government budget constraint'. (5) Thus, while the Maastricht criteria served to institutionalise the fiscal disciplines associated with integration 'from without', EU transfers helped to facilitate structural reform of the labour market 'from within' through a major influx of public investment. (6)
This 'two pronged' impact of European integration underlines how EU membership not only 'framed' a new political economy in Ireland, but also helped to embed it. Moreover, the intermediary role played by the state in this process points to tensions within a development strategy 'encased' by the European legal order. (7) For those who see the country as a 'competition state' for example, its market-orientation subordinated social to economic policy by domestically embedding the logic of competition enshrined in the EU as a 'stateless market'. (8) Others analyse Ireland more positively as a 'development state', attracting foreign investments via 'soft' state incentives and agreements among business, unions and government to modernise the economy and redistribute growth. A classic study thus describes the country as a 'development network state' with 'institutions of social partnership extending across all spheres of the political economy integrating local...
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