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Damien Kiberd: Ireland's real friend in Europe is not who you think

When the chips are down, Ireland has always been able to count on Britain – so why don’t we support them if they want to leave the EU?

David Cameron and Enda Kenny at Government Buildings.
David Cameron and Enda Kenny at Government Buildings.
Image: Maxwells/PA Wire

SHOULD THE DUBLIN government not be supporting London fully as it seeks to make the European Union, at last, accountable to the people it purports to serve?

Unlike the EC’s top brass, the British and other Nordic states have given enormous support to Ireland during its recent financial crisis.

They were under no obligation to assist us. Directly or indirectly the British alone may have provided more than €30 billion to help deal with Ireland’s biggest ever financial difficulty.

They did this unconditionally and without complaint. Unlike the leaders of the EU and Eurozone who think we did a disservice to Europe by borrowing money to repay the debts of private banks to European lenders. So who are our real friends?

More than one hundred British MPs –including six ministers- told prime minister David Cameron last week that their parliament should be able to block government by decree from Brussels. They are sick of top-down diktats coming from the European bureaucracy.

Even before the promised UK referendum on EU membership they want the House of Commons to be given a veto over EU imposed laws.

This has provoked rage among the all-powerful European elite.


Our own most fanatical Europhile John Bruton, who recently served as EU ambassador to the United States for five years, has suggested that the demands from these MPs could result in ‘total withdrawal’ of Britain from the Union.

Bruton boasted last week that it would be ‘easier to negotiate’ a British exit than it would be to permit London to alter any of the European treaties. He warned that the end result could be the introduction of a land border and passport controls between the Republic and Northern Ireland and the possible exclusion of Britain from the common trade area.

Bruton may be crying wolf. But his latest salvo – recycled uncritically by the Irish Times – shows that many members of the European elite would rather dump Britain out of Europe than temper the drive towards rule from Brussels.

The Kenny/Gilmore government, after from three years of micro-management by the Troika, seems most likely to bend the knee again to Europe if Britain presses its case. In other words we would support the unaccountable trio of Jose Manuel Barroso, Olli Rehn and Herman von Rompuy in any showdown with Cameron and Osborne.

This will inevitably damage our relationship with the UK. But should we permit this to happen?

Who are Ireland’s real friends?

Recent evidence suggests that when the chips are down, Ireland can count on London and on the likes of Denmark and Sweden for unconditional support. The opposite is the case with the EU elite.

European Commission president Barroso, who grew up during the military dictatorship in Portugal, let his guard slip just before Christmas when he warned that ‘it was wrong to suggest that Europe had created a problem for Ireland’ during the banking crash.

The opposite was the case, he said. Ireland had caused ‘major destabilisation of the Euro area.’ This was the responsibility of the Irish government and it was therefore wrong to suggest that ‘Europe has to help Ireland.’

In other words Barroso thinks Ireland wronged Europe by socialising its bank debt and paying €64 billion to creditors of private banks.

The logic of this has never been explained. But his remarks suggest that the EU elite regards Ireland as a sort of wayward child. Barroso was really setting out for Dublin the nature of the power relationships that exists between Brussels and Dublin.

They dictate. Our elected government follows.

Bullying approach

The same reality was evident in 2011 when former European Central Bank president Jean Claude Trichet told incoming finance minister Michael Noonan that if he tried to burn any of those holding bonds issued by Irish banks the ECB would cut Ireland adrift and ‘the bomb will go off.’

Noonan had just been elected by the Irish people and would become finance minister. Trichet was not elected by anyone, yet he could tell Noonan what to do.

Trichet’s policy was a completely illogical way of dealing with problem banks and has now been reversed by the EC/ECB.

This means that Noonan was correct in wanting to burn some bondholders to minimise the cost of bank rescues. Sadly for us it’s all too late. We took orders from Trichet then and we will pay the cost now.

Contrast the mean-minded, bullying approach of Europe with that of Britain and our other friends in northern Europe.

‘Second bank bailout’

Britain provided bilateral loans of €4 billion towards the Irish bank rescue. Sweden and Denmark, not members of the Eurozone, chipped in another €1 billion, also in bilateral loans.

But Britain through its nationalised banks also pumped vast sums into Ireland’s financial system. RBS has put just under €17 billion into the Ulster Bank since 2008. This is one third of the total cost of sorting out the entire problem at the RBS group, one of the world’s biggest banks.

Lloyds put €8 billion into Bank of Scotland Ireland (BoSI) in the initial period from 2008 to 2010 before turning its operation here into a fully underwritten run-off bank. Danske Bank picked up the entire tab for sorting out the National Irish Bank.

In these instances both RBS and Lloyds should be seen as proxies for the UK government.

This ‘second bank bailout’ was funded by Britain obviously because it had direct responsibility for banks under its own regulatory control. But the bill was also paid because the English speaking peoples have always felt a certain obligation towards each other in times of crisis.


The same English speaking peoples – including the US – doubtless agreed at the IMF, where they control almost 30 per cent of voting power, to provide Ireland with emergency finance of €22 billion as part of the late 2010 bailout.

What the British really object to in Europe is, of course, the suffocating power of the state- in this case the emerging European superstate – to tell a sovereign people how to behave.

The statist approach of Europe to economic management and problem solving has frequently been the source of some of vast problems. It turned into fascism in central Europe in the 1920s and 1930s.

The same statist mentality created the ludicrously inflexible system of the single European currency in the 1990s.


The power relationships that comes with a construct such as the Euro should have been obvious to us after late 1992 and early 1993 when Ireland tried to maintain the value of the Irish punt within the the Exchange Rate Mechanism (ERM) for four terrible months.

Market forces suggested that the ERM would burst apart and that currencies like the Irish punt would fall in value. Irish businesses crashed, Irish borrowers were destroyed as the cost of money in Dublin shot up to over 30 per cent. Yet to discharge our duty to Europe we persisted with a ruinous policy. Finally, in the face of economic collapse, we were forced to devalue unilaterally by 10 per cent.

Four days after our humiliation the Germans organised a complete realignment of the ERM currencies in which we might have reduced the value of our currency quietly and professionally. That is, if the Germans and French had a sufficient sense of collegiality to tell us that a realignment was coming.

Instead they stuffed us once, and then they stuffed us again.

In retrospect we should have realised how Europe works as long ago as 1993. If we had, we might have given the Euro a wide berth in 2000 and 2001, just like the Danes, the Swedes and the British.

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