At the outset I wish to give the usual notice on mobile telephones. Those present should please remove mobile telephones and turn them off, stamp them out or decommission them as the case may be. We have a special guest speaker to address us on a very important subject. The first item on the agenda is, No. 1, is Looking to the Future, the EU in 20 Years' Time. We have Mr. Brendan Halligan of the Institute for International and European Affairs, IIEA, to address the committee today. I am delighted to welcome him to today's meeting. He is a man of stature. He is chairman of the IIEA and a former general secretary of the Labour Party. He was appointed to Seanad Éireann in 1973, all that time ago. I cannot even remember back that far. He was elected to Dáil Éireann in 1976. I cannot remember that. He later became a Member of the European Parliament. He founded the Institute of International and European Affairs in 1990. Members will be aware that yesterday was Europe Day. The event was celebrated this week by a number of debates in both Houses and in committees. This committee's contribution is to host a discussion on the topic, Looking to the Future, the EU in 20 Years' Time. Given Mr. Halligan's CV, his long experience and his commitment to the visions and ideals originally cited by the founding fathers of modern Europe, it is entirely appropriate that we would have the honour of having him with us. I will not go through the ordinary privilege notice as I know that Mr. Halligan is fully aware of it. I invite him to address the committee.
Looking to the Future, the EU in 20 Years’ Time: Discussion
Mr. Brendan Halligan
I thank the Chairman for the overly kind introduction. It was too historical; there was no need to go back so far. I understand the context in which I have been asked to talk about the interesting topic of the European Union in 20 years. I have been given about ten minutes so I will try to keep to that timeframe.
In looking to the future, it is always a good starting point to look to the past, identify the forces that have created the present and ask whether they are still relevant. Would one have predicted the world of 1992? The answer is both "Yes" and "No". We could, for example, have predicted the creation of the Internal Market as an inevitable consequence of the Common Market. We could have predicted, in turn, that the Internal Market would lead to the economic and monetary union, which now exists and which is the subject of much debate. Even in 1992, we would have been surprised at the collapse of the Soviet Union and the re-emergence of eastern and central Europe into the civilised world, leading to important developments such as the unification of Germany. Nobody foresaw this in 1989. These contrasting events - the emergence of the Internal Market leading to the economic and monetary union and the collapse of the Soviet empire – are a graphic reminder that we can only predict so much and that politics is always dominated by the unexpected.
We have been dealing since 2007 with the collapse of the international financial system created by President Nixon in 1971 following the collapse of the Bretton Woods agreement. We have also been dealing with the re-emergence of China on the world stage. Few predicted the international financial crisis and fewer still were prepared for the re-emergence of China, although, in retrospect, both seem to have been inevitable.
What can we classify as inevitable in 20 years and what do we regard as possibilities? It is inevitable that the European Union will still exist. That is an important starting point. The euro will also exist; that is the other important starting point.
Within the European integration process, the Monnet method will continue to apply. By that I mean the development of solutions designed to solve real-life crises which, when implemented, change practices forever. They change practices because of the relevance to the crisis with which one must deal. Monnet said that politicians only act in response to crises and that, when a crisis occurs, it is imperative to have a solution that is directly relevant and that will be implemented as a consequence.
On the basis of Monnet's methodology, which was very clearly spelled out in his memoirs and through his actions, we foresee that the process of integration will be iterative, with each stage building on the previous one in a series of building blocks. For that, Monnet stated one needs people with ideas and institutions to manage the decision-making process. In a memorable phrase, he said nothing succeeds without people and nothing endures without institutions. The question is whether we now have the people to deal with the crises at hand.
What are the main crises we must deal with in respect of the Monnet methods and where will we be led in terms of institution building? We can say with reasonable certainty that the process of geographic expansion of the Union is finished. It will be completed with the admission of the Balkan states, which, in itself, will be historic. The echoes of the shot that rang around the world in 1914 will, for the first time, end. In all likelihood, Norway and Switzerland will still be outside the Union in 20 years and it will have become accepted that membership will not be open to the Ukraine, Turkey or countries in the Caucasus. There will be no political imperative, as there has been over the past 20 years, to expand the Union geographically. That will enable the Union to focus increasingly on its internal governance and, in all probability, the centrepiece of this will be the completion of the economic union and the commencement of the building of a fiscal union.
Twenty years from now, I believe it will be an accepted feature of political life that public finances will be run in accordance with the golden rule of balanced budgets and that debt levels will have been reduced to and kept below 60% of GDP. This is in response to what one can only call the debt crisis that is currently afflicting western capitalism.
As is evident from the legislation already adopted, budgetary policies will be subject to common surveillance, but individual member states will still be able to pursue different social models. The Scandinavians, for example, will have high expenditure levels but these will be funded with high levels of revenue. Others will opt for a low-tax, low-spend model. The only proviso that will apply in all cases is that the budget must be balanced.
It will have been accepted that an economic and monetary union needs to be underpinned by a fiscal union involving fiscal transfers from the richer to the poorer regions. That was clearly understood, particularly by former President of the Commission, Jacques Delors, when preparations were being made for the creation of an Internal Market. That understanding will have been re-established and it will mean an increase in the size of the EU budget. Given that discussions are about to commence on the size of the budget, that might seem a fanciful prediction because the pressure will be on to keep it down to a level below the current level. I suspect this will be the case and I will be thinking about an EU budget that would at least rise above 2.5% of the EU GDP, or even higher.
The most obvious change in 20 years will be in the area of the common financial institutions we have created, including the ECB, ESM and EIB. It seems inevitable that, following the completion of the economic union, the ECB will take on all the traditional functions of a central bank. It would become the lender of last resort, for example.
We must examine carefully the ESM. In 20 years, it will have emerged as the European equivalent of the IMF, which is the intention in any case. This European equivalent of the IMF is essential not only for assisting member states in financial difficulty in order to head off crises, such as that in Greece, but also because the IMF will have been transformed into a global organisation that will be far less available to European countries. These countries, after all, are rich by comparison with China and India and countries in Africa and South America. The current debate in the IMF about the increase in quotas is proof of that point. We have even heard comments in this regard by the Canadian Minister of Finance who, despite his Irish background, is pointing out the reality of the world ahead.
Twenty years from now, all EU member states will be members of the euro, with the exception of Britain. At present, seven of the ten member states outside the euro area are in the course of transition to full membership.
This is a function of the accession treaties. The only issue will be the extent to which they meet the criteria which I suspect will be subject to greater scrutiny than was applied to Greece. That process will be completed by 2032.
The other three member states, Sweden, Denmark and the Czech Republic, will have resolved their ideological or cultural difficulties with membership simply under the pressure of circumstances. I believe the United Kingdom will remain outside the euro. However, I would offer the caveat that it is more probable that in the next 20 years Scotland will become independent, leaving England, along with Wales, as a separate state. Scotland can be expected to join the euro. This reality may have its own impact on English attitudes towards euro membership. England and Wales without Scotland will, of course, be permanently run by Conservative Governments unless there is some political convulsion against continued economic failure. One will also have to take into account the reaction in Wales to Scottish independence and a similar impulse for independence there.
The governance of the euro area and the governance of the European Union will become one and the same, proof that the Monnet method will still have been at work. That will pose problems for Britain and for any member state that wishes to follow her. There will be an interesting series of constellations of membership such as a core group comprising euro area members. There are also possibilities of a member of the euro area which has not ratified the European Stability Mechanism, ESM, member states still having cultural difficulties with joining up to the euro and, of course, member states that have precluded themselves for reasons they best understand. In this scenario, the marginalisation of a member state outside the euro area is inevitable.
By 2020, the euro will have been well established as a reserve currency. Along with the dollar and the renminbi, they will dominate the international financial order. China will, of course, have become the largest economy in the world and will dominate international finance and world trade. For these reasons alone, the European Union will require strong internal cohesion with its economy resting on sound economic and monetary policies so that it can bargain from strength with China and the US. The European Investment Bank, EIB, will have become progressively involved in project financing not only as part of Europe's response to the economic crises but also as a response to the economic needs of the 21st century.
For example, as part of the fight against global warming, all power generation will have to come from renewable energy sources by 2050. This will require the construction of both land and marine based supergrids to handle wind and solar power, backed up by other renewables like biomass, geothermal and waste to energy. A single European electricity market will have been completed 20 years from now and will offer enormous export possibilities to this country because of our offshore wind resources. The European supergrids will be connected with north African solar supergrids which will create a new positive relationship with the Arab world. These developments will bind the economies of Europe together in a similar way as the common currency has done.
It is also inevitable in 20 years from now that the EU will continue to be the global leader in the fight against climate change. Along with China, it will be setting the pace in new green technologies which will also revive the European economies and restore Europe's leadership role in technological innovation. The Commission has described this as the new industrial revolution. It is probable that Europe and China will have established a global carbon trading system which will have implications for world trade.
The impact of immigration on the politics of the more advanced member states has to be taken into account when projecting Europe in the future. There are few positive trends to be detected and right-wing forces will become progressively stronger. It follows these forces are strongly nationalistic and, hence, anti-European. It may be the case they will frustrate, if not reverse, the trends I have identified in the direction of deeper integration. Recent elections have shown the right is emerging in areas of the electorate not previously penetrated by it.
Germany and France will remain central to the pace and direction of European interdependence. That alliance, created over 20 years ago, will have endured and strengthened. Between them, a new economic policy paradigm will have emerged, marrying prudent public financing with social equity and economic innovation. It seems inevitable that economic, monetary and fiscal integration will continue and that the euro will be at the very heart of the EU. The euro will have become a dominant global currency alongside the renminbi and dollar. Co-operation with China will become stronger, particularly in international finance, world trade and combating global warming. Europe will be a global leader in the transition to a low-carbon society exemplified by a single electricity market, the electrification of the economy and the creation of supergrids, all of which will offer Ireland great export possibilities. The governance of the EU will continue to revolve around France and Germany with the UK likely to play a progressively lesser role, especially if Scotland goes independent.
On the downside, the unknown is the impact of immigration on democratic politics, alongside the unknown effects of the Arab spring. For Ireland, as for other small European countries, the choice is between full involvement in this complex process of sharing sovereignty or some degree of exclusion or marginalisation. I hope these few thoughts are of value to the committee. I admit they are very partial and apologise they may not be as complete as they might be.
Indeed, they are well focused and, as appropriate from someone of Mr. Halligan's experience, are thought provoking as well. A number of the committee members wish to respond and Mr. Halligan may wish to respond to them in a final closure. We will try to keep the contributions as short as possible. Deputies O'Reilly and Kyne and Senator Colm Burke, in that order, and Senator Fidelma Healy Eames.
Given that I was late, for which I apologise, I would rather take a listening brief.
I thank the Acting Chairman for the opportunity to speak and for letting me in early. Unfortunately, I must leave but, hopefully, I will be able to read Mr. Halligan's responses and comments tomorrow, although what he stated is so comprehensive already.
It was good to hear Mr. Halligan's perspectives on the future. Those of us who have any knowledge of current affairs and contemporary Ireland are very much aware of his significant contribution to date. For that reason, what he stated is all the more interesting. It is prescient and appreciated.
It is interesting that Mr. Halligan makes the major point that the process of monetary integration and fiscal governance will strengthen and continue in future. That, based on my limited knowledge, is a thesis with which I would readily agree. All factors would suggest that such is the case. As he stated at the end of his presentation, it behoves us, with that realisation, to do the right thing on 31 May. I make no apologies for saying publicly that a "Yes" vote on 31 May is critical for the future of this country. When one considers that in the view of somebody as experienced as Mr. Halligan, the process of European integration and fiscal control will continue with or without us, it would be bizarre for an island nation on the periphery of Europe to cast itself adrift, both literally and metaphorically, from all of that. Such a course would be unsustainable. Mr. Halligan's contribution brings into focus all the more sharply the need for a "Yes" vote. Mr. Halligan stated that the entire process of cohesion will continue, and I think that is inevitable.
I am fascinated by the remarks Mr. Halligan made on green energy, which offers this country considerable possibilities. Mr. Halligan may want in his summation to make suggestions as to how. While there are moves afoot, it is incumbent on us now to prepare ourselves to benefit from that.
It is distressing what Mr. Halligan stated about the possible emergence of the right, of neo-Nazis or that sort of movement. Let us hope that the other forces he identified earlier will outweigh that. One would like to think they will.
I was also interested in Mr. Halligan's view that Scotland will break from the United Kingdom, or from England as such. That begs the question, is it likely that with the process of cohesion, integration and the common marketplace, it will become attractive and almost inevitable, despite the issue of being outside the euro, that we will arrive at Irish unity? What perspective would he have on that? That would interest many of us, particularly somebody from a Border constituency. Will we achieve Irish unity within that 20 years?
I will leave it at that. I wanted to acknowledge the excellent presentation and say that I consider it a great honour to be here to hear it. The challenge implicit in all of Mr. Halligan's remarks is that we do the right thing and that we stay on the European train and do not set the clock back for our country.
I thank Mr. Halligan for his thought-provoking presentation. He began with the inevitability that the EU will still exist and so will the euro, and I hope that will be the case. Certainly, as Deputy O'Reilly stated, this treaty and various European treaties are playing a significant and important part in that process.
Mr. Halligan mentioned that 20 years ago one would not have imagined where we would be. We also would not have imagined how we would get to where we are. He referred to 20 years from now and spoke of euro area expansion, when currently the talk is of euro collapse. Over the next 20 years, how does he see the process progressing in terms of the procedures there?
On the present diversion between northern European countries and some of the Mediterranean or southern European countries, will there be a greater diversion in their economies or a contraction? Will there be a greater internal migration, from south to north, within the European Union?
Finally, Mr. Halligan mentioned China and that there would not be any further expansion of the European Union into the Eastern Bloc. What will be the role of Russia and the eastern states in the world? They lie between China and the European Union. What role will they have in terms of a more transparent democratic process, how will that aid their expansion, the well-being of their people and the growth of their economies, and what will be the knock-on effect for the European Union?
I thank Mr. Halligan for his presentation and his contribution on the ideal of the European Union over the past 25 or 30 years.
My big issue, and one of the matters with which we must deal from a European point of view, is jobs growth. One of the key areas in growing jobs is research and development. I raised this issue already in the Seanad this morning with the Minister of State with responsibility for European Affairs, Deputy Creighton, because there is a considerable problem from a European point of view that many who are involved in research are moving outside of Europe, and going to the United States, in particular. Then there is the problem that approximately 70% of those from non-European Union countries who are involved in research and development will go to the United States to continue their work on research and development rather than come to Europe. I raised this aspect morning with the Minister of State, in particular, because Ireland will hold the Presidency in 2013. How can we as a country make a contribution to that debate and ensure that in the European Union there is more joined-up thinking on the area of research and development? I accept there is an overall ten-year policy on it but we do not appear to be making significant progress and we need to do much more. We will have a significant opportunity in 2013.
The second issue relates to our education system. Like Mr. Halligan, who served in the European Parliament, I served in it for a very short period. I was struck by the shortage of information about the importance of Europe to Ireland and to the Irish economy, and about how we need as a nation to do much more in getting across from where Europe has come. If one looks at it, one notes that in the first 50 years of the last century the vast majority of those killed in the two world wars were Europeans and in the past 60 years there has been so much progress made where now one can travel from the Dingle peninsula to the Russian border without conflict. We have not highlighted that, nor the achievements that have been made in such a short period of time. Drawing from his own experience, how would Mr. Halligan approach this aspect? We have much work to do here. Those are only two issues at which we need to look.
I thank Mr. Halligan for his contribution. Unfortunately, I missed most of it because there was a vote in the Seanad and I was delayed in the debate there.
I was happy with how Mr. Halligan finished, stating that the euro would survive and that we would end up with a strong currency. We need that for stability and it is critical for the entire euro area. What I did not get, and wondered, was whether he predicted how Europe will emerge over the next 20 years. Does Mr. Halligan see the emergence of a federal Europe similar to the United States? Right now it is hard to imagine what life will be like 20 years from now in 2032 given the steps that we know we need to take in the next few years, even over the next few months.
Nations - Irish people are sensitive about this - have a concern about losing identity if Europe becomes a stronger entity in their lives. How does Mr. Halligan see that panning out? Having German masters is a big concern. Can he see a way that Germany can become a more friendly place and not be seen as a threat or master? Yesterday I spoke to someone about this and it was clearly pointed out to me that Germans can greatly contribute to growth by spending more, living a little and increasing their wages. They are one third of the entire population of the Euro area but we have not seen that side of the coin. What are Mr. Halligan's views on it?
My concern at the moment is youth unemployment across Europe. It is at perilous levels in some countries, here it is 30% and in Spain it is 50%. We know what youth unemployment did in the past in bringing forward the far right. Ireland's Presidency of the European Union next year is a unique opportunity. As Senator Burke said this morning, we had a Seanad debate with the Minister of State, Deputy Creighton. One of the requests that I made was for Ireland to host a high-level event and meeting on youth unemployment and to find solutions together for the entire euro area. Good examples of how to deal with youth unemployment do exist such as in Denmark, Canada and New Zealand. Will Mr. Halligan comment on this?
Last summer I attended a good event organised by the Western Economic Association International, WEAI, on China-Europe relations. Ireland is getting a lot of positive soundings from China at present. I missed Mr. Halligan's comments on the subject earlier. Does he see a healthy future relationship with China? Is it more than just soundings?
I will give my own tuppenceworth before Mr. Halligan replies. He gave an interesting tour de force and had the courage to stick his neck out and make predictions. That is what Monnet, Schuman, Adenauer and all such people did years ago. If they had not done so we would not be where we are and Mr. Halligan acknowledged their role in his comments.
Like Mr. Halligan it is a long time since I first visited the institutions in Brussels where people like the former mayor of Strasbourg, Pierre Pflimlin, Simone Veil and Egon Klepsch worked. They all had a deep conviction or commitment to a European vision that persisted and was consistent through good times and bad. Unfortunately, it appears that when all external threats disappeared their conviction seemed to fade. It appears to me that the re-nationalisation and rediscovery of nationhood seems to have emerged once again. It is not a good sign for Europeans because whenever that happened in the past 1,000 years it led to tragedy.
As we all know and as Mr. Halligan rightly stated at the start, to know something of the future one must take a quick look at the past. I hope that we have all learned from our past mistakes. I hope that people will emerge, and my next comment is fundamental to Mr. Halligan's predictions, who will be committed to the ideal of a European vision and give leadership in Europe. People should not always be so willing to respond to immediate pressures and should look to the future. The great achievement of the founding fathers of modern Europe was that from the ashes of the Second World War they were able to think positively. They did that when Europe had suffered the deaths of 60 million people, Europeans had fought each other to a draw and committed the most horrendous acts of violence against each other. They were people of vision and commitment because they made positive predictions and stood by them in such a scenario. That is fundamental to Mr. Halligan's comments and I totally agree with him.
Britain will have to become part of the Union at some stage and Mr. Halligan and I have had this conversation before. British membership and commitment to the European Union will lend tremendously to the strength of the Union. I accept his point that Britain may not. I also accept that it may find its way there. It would be far better to play a leading and positive role than to stand on the outside and criticise or lack a total commitment. That is a failure.
Norway will find its ways back into the European Union because places like Switzerland are effectively members of the European Union. The difference between them and us is that they are in the centre of a land mass but Ireland is on the periphery as said by other speakers. This all makes for an interesting picture.
I wonder whether in 20 years time people looking back to where we are now will look back in anger. Will they say we stood our ground and continued along the path charted for us by people who had learned the harsh lesson and realities of divisiveness, division and people wishing to go their own way? Will they think that the might sought to overcome the right to live and exist?
Mr. Halligan made an important reference to the emergence of the hard right. We know from the past that the hard right exists alongside the hard left. Whenever they emerged and came together in a common cause it led to particularly disastrous for the wider community. What Mr. Halligan and other speakers have emphasised the importance of level-headed people being prepared to give leadership and show their courage and commitment to lead even when there are discordant voices, sometimes to the extent of hysteria, leadership must continue. I compliment Mr. Halligan on his assessment and the courage of his convictions. There is no better man than him. I am sure he will have some interesting closing remarks for us. I hope that he is proved right when history is recorded.
Mr. Brendan Halligan
I thank the Acting Chairman. Writing history before it happens is a difficult thing to do but it does not prevent us from speculating. I have always thought that futurology was an interesting topic.
First, I shall respond to individual comments. Deputy O'Reilly fastened immediately onto the point that I made about the process of integration continuing. It is part of the inevitability. Those who put big questions marks over the continuation of the process simply do not understand the impulses that are at work and the historical momentum that has been created. For example, there has been a lot of comment in the past 48 hours about the future of the Franco-German lines. People have completely misunderstood the nature of that alliance, its strength, the historical basis upon which it was formed and the commitment of the leaders of both France and Germany to it, irrespective of their political allegiance. It is a building block for the future of Europe. The Deputy said that it would be bizarre for us to cut ourselves adrift from this process which, from my perspective, is inevitable and I completely agree with him.
The Deputy asked for my suggestions on green energy. Wearing a different hat - I am still chairman, although in my final year, of the Sustainable Energy Authority of Ireland - I know sustainable energy offers enormous possibilities which we have not yet fully grasped, internalised or understood. This is frustrating. We could completely revitalise and regenerate our economy on the basis of the green agenda, which presents us with export possibilities that far exceed what we can expect from agribusiness generally. Members may know that area is expected to grow by 20% in terms of output and exports between now and 2020. That is a separate agenda and should be looked at in time. That is why I raised the question on the emergence of the single electricity market and the creation and building of the supergrids.
Like Deputy O'Reilly, the Acting Chairman, Deputy Durkan, fastened on the question of the right and the emergence of the neo-Nazis, which is an inevitable consequence of economic distress in a society. He pointed to the symmetry between the hard left and the hard right. Again to confirm this, Monnet makes this very point in his memoirs, where he writes about the defeat by the National Assembly of the European Defence Community Treaty, where both the extreme right and the extreme left caused its defeat. It is very worthwhile to read his account, even today.
Members may recall a former Leader of the Labour Party, Mr. Brendan Corish, under whom I severed as general secretary, who said that politics is not a spectrum but a circle, and extreme left and extreme right meet here. They are basically one and the same people. What is interesting about France, in particular, is the collapse of the Communist Party resulted in much of its vote going immediately to the right, especially in working class areas. We must be very careful. The emergence of the right, which we see in Greece where the leader has taken the traditional posture and people must stand to attention and salute when he comes into the room, is scary. We can see a similar trend emerging in Holland, and especially in Belgium as well as Scandinavia. Unfortunately, it is also emerging, although it is suppressed in particular ways, in Germany. We should be very careful about this phenomenon. I had a friend, Paavo Lipponen who was the leader of the Finnish Social Democratic Party and also Prime Minister and later the President of the Parliament, the Eduskunta. He described himself as extreme centre. It is a very good philosophy. We in the centre are not tough enough. An extreme centre is not a bad idea.
As regards Scotland, which Deputy O'Reilly, who is from a Border county, raised in the context of Irish unity, we have been studying this for 20 years and we have two publications which I would like to think are important, the most recent of which was Blair’s Britain, England’s Europe which posits that the tension in the United Kingdom is between the three component countries, of Scotland, England and Wales and also with the European vocation of the totality. When we started to write this book 15 years ago, one could see what was happening in Scotland. I heard about it from my contacts inside the British Labour Party, with whom I was very close. Fifteen years ago the Scottish National Party was beginning to make strong waves locally. It is now led very spectacularly and very successfully by Alex Salmond. I think it will go in a particular direction, the only question at issue being whether and to what extent Wales follows suit.
Deputy O'Reilly drew a comparison between Scotland and Northern Ireland. We also had a look at that. There is no question that Scotland has a very big influence on the Unionist mind. In a sense the Scottish element of the United kingdom is a vindication and justification for them being part of the United Kingdom itself. Were the Scots to leave the United Kingdom, it would certainly cause enormous cultural and ideological difficulties for the Unionist community. I do not have an answer to that question. Irish unity is not something I have taken into consideration inside the next 30 years.
Deputy Kyne raised very interesting questions as to how we will get there over the next 20 years, particularly in respect of the euro. I think he asked the right questions. I believe the work on institution building during the past two years is probably the most productive in the past five decades since the creation of the European Union, starting with the European Coal and Steel Community. There has been an astonishing burst of creativity and new institution building. The processes which have been set up as a result of the so-called six-pack and the two-pack, the enhanced Stability and Growth Pact, the European Stability Mechanism, ESM, and the stability treaty will all in turn lead us forward. The pathway forward is very simple. It is a simple formula: fiscal discipline at national level ensures stability at European level. That is the simple equation that underpins the stability treaty. We have also learned that fiscal profligacy leads to nothing but trouble.
I heard an academic work being advanced very recently by Professor Seán Ó Riain from NUI Maynooth, in which he looked at ideological differences in European countries and categorised them into five different groupings. The countries with the highest rate of growth, the lowest rate of youth unemployment and the highest rate of research and development are the countries with the strongest commitment to fiscal discipline, which happens to be the social democratic model in Scandinavia. We do not find Finns tossing money around as if it were going out of fashion; in fact, quite the opposite. The answer, which I referred to in my presentation, is the new paradigm where one marries fiscal responsibility with economic innovation. That is the trick. If one is to create an environment in which there is the greatest possible certainty for long-term investment in particular, one will get the pay-off.
Deputy Dominic Hannigan took the Chair.
Mr. Brendan Halligan
I think we have set up the pathways to go forward. Deputy Kyne mentioned Russia and her allies. As the Deputy rightly detected, I did not mention Russia. The future of Russia in the next 20 years may be on the darker side. This is a society that has never really modernised and still has the cultural overhang of the Tsarist philosophy. The incoming president is not necessarily cast in a different mode from his predecessors, even liberal tsars like Alexander II. It is a society with a different soul and culture from standard European culture. That is not to say that Russia is not part of Europe. Europe is from the Atlantic to the Urals as General de Gaulle famously remarked. Russia is facing significant economic difficulties with major under-investment in its infrastructure. I am not so sure the model they have chosen will lead to continuous peaceful sustainable development, as we have seen with the demonstrations in the past week. There is certainly a question mark over it. Russia has an influence over Belarus, the Ukraine, which will always remain a problem for us, and far down into the Caucasus. I do not have a positive view on the future of Russia, but a sense of foreboding. However, it will not be a problem for Europe as it is no longer an item on the agenda.
The Senator referred to China. In some senses, the growth of China is the counterpart to the re-emergence of Russia. What we have not yet got into our heads is the scale of the development that is taking place in China and the development that will take place during the lifetime of those present. In the case of China one must multiply everything by its population of 1.4 billion as against our population of 4 million. When the average income in China reaches the level the party leadership seeks, let us say 40% of global GDP 25 years from now, the country's economy will be enormous. The paradox, about which the Chinese are also aware, is that we will, for the first time, have a poor superpower. While it will be poor at the level of the individual, it will not be poor in the aggregate.
The Senator asked how we relate to China and what question marks hang over Chinese culture and the country's evolution, particularly in the areas of civil and human rights. What the Chinese expect of the rest of the world and what they found in this country is respect. The dialogue taking place between Ireland and China is most peculiar and different from China's dialogue with other countries. The Chinese ask for the respect they have not been given by western society for the past two centuries. What happened to China was as bad, if not worse, than what happened to Africa. The Chinese were subjected to as virulent and violent a colonialism as were the Irish. The extent of that imperialist domination, which the Chinese want western society to understand, is not understood.
China is on a long-term growth path which will last for at least another half a century. There is a dichotomy at play in China between individual liberty or freedom, on the one hand, and social sustainability, on the other. If we were to raise human rights with a senior Chinese official, his reaction would almost inevitably be to point out that his country is removing 8 million, 10 million or 20 million from abject poverty every year and to ask what is the impact of this on human rights. This is the line given to our Ministers and senior officials and it is a tough question to answer.
We must learn much more about the culture of China than we currently understand. Monnet, in his memoirs, recalls that he lived with his new wife in Shanghai for nearly two years in the early 1930s, during which time he created a bank for development purposes. He concludes that he never understood the Chinese or their culture and other than keeping his word, which was respected, he did not know how to deal with Chinese culture because he never really saw inside it. It should be noted that Monnet knew people at the top of Chinese society, including Chaing Kai-shek and Mao Tse-tung.
I could not agree more with Senator Colm Burke's comments on research and development, an area in which Ireland has a poor record. My first essay on public affairs, which I wrote 60 years ago, was on expenditure on research and development. At that time, we were at the bottom of the league, behind Iceland, and we are still not far from the bottom. The Senator's comments about research workers moving to the United States are apposite. He will be aware of work being done in University College Dublin which has been presented to the Minister for Jobs, Enterprise and Innovation, Deputy Richard Bruton, about developing Ireland as a research and development base. Such a base could also be used to attract Chinese researchers. UCD has been leading the way in this area and it is one from which we could profitably benefit. However, it requires the belief and imagination to which Irish people are not often given. A Whitaker-type approach to the issue is needed. It is one of the areas on which we could base the future economy. Ireland could be one of Europe's research and development leaders in the smart and green economies. I fully concur with Senator Burke in this regard.
Reference was made to the journey from Dingle to the Russian border and the lack of information about Europe as a whole. I passionately believe European affairs should form part of the second level curriculum. I have spoken about this for too long to be in any way polite about repeating it again. This must be matched by the teaching of history. The downgrading of history in the curriculum is an astonishingly perverse act. When one has economists who are writing from the perspective of the previous five years as if it were history, one winds up in the position in which we just found ourselves.
I found it astonishing when studying economics in UCD a long time ago that we did not study economic history to any great extent. My youngest daughter, who followed me into exactly the same degree course, did even less history. The most interesting book on the current crisis is that by Reinhart and Rogoff entitled This Time is Different. The two scholars in question, one a man, the other a woman, make the point that having studied 1,000 years of economic history, everything remains the same. Despite this, we continue to make the same mistakes or, as Marx said about history, if one does not know it, one is condemned to repeat it.
Senator Colm Burke's point about research and development is an important one. As I noted, the introduction of European affairs to the second level curriculum and the teaching of history are critical. On a positive note, I was delighted with the announcement by the Minister for Education and Skills, Deputy Quinn, that Mandarin is to be part of the curriculum.
I believe the euro will survive because it is condemned to success. What we have done will not be undone very easily. We are glued together not only by history but by common political will. The issue of loss of identity can be handled by teaching history properly. It will not arise.
On the Germans being our economic masters, Germany is paying many prices for what it did in the Second World War, one of which is the cost of reunification. The absorption of the former East Germany into the Federal Republic of Germany is costing Germany as much as the country expends on the rest of the European Union by way of transfers to people like us. This will continue for at least another 15 years. In the meantime, German standards of living have not risen for 15 years. For this reason, asking German workers to spend more in order that we can become richer is difficult to do.
Growth is good for the Germans too.
Mr. Brendan Halligan
The first time I visited Germany as a young man was in 1955 or 1956, only ten years after the end of the war. I travelled the length of the country and saw where the Germans were at the time. If the Deutschmark were still the German currency, its value would have appreciated by a factor of between eight and ten since its introduction. When I first visited Germany I received 12 Deutschmarks for £1 or one and eight pence for one Deutschmark. The difference between then and now is the hard work and discipline German people have shown and the social control German trade unions have exerted in collaborating and co-operating with the rest of society. I find it hard to stomach this business about German masters. At the end of the day, it is their money they are lending to us and it is entirely reasonable that they should expect to get it back. It is also entirely reasonable that they would spell out what we should do to convince them we will pay it back. Germany is a society for which I have a great deal of admiration, notwithstanding certain parts of its history.
The Presidency was mentioned. It will be a major challenge for us. We have had enormously successful Presidencies in the past. One could argue that Ireland created the role of the Presidency in 1974 and that it was done in Dublin under the then Taoiseach, Liam Cosgrave, and the late Garret FitzGerald as Minister for Foreign Affairs. We created a concept of the Presidency with a continuing programme that would last throughout the six months. Of course, we can provide leadership if we have done the right thing in the meantime but if we have turned ourselves into outsiders we cannot expect to be treated by the rest as an insider. In areas such as youth unemployment, which was mentioned, of course we can provide leadership if the rest of the EU is prepared to listen to us. If we put ourselves outside the frame, quite reasonably, nobody will listen.
I thank the Chairman for inviting me to appear before the committee and allowing me to express my views.
It has been a most stimulating debate. On behalf of all the committee members I thank Mr. Halligan for appearing before the committee and speaking to us. We have all enjoyed the experience. I wish him all the best with his work with the IIEA in the future.