Engagement with Dr. Anthony Coughlan

Thank you for coming back for this afternoon's session. I am delighted to welcome Dr. Anthony Coughlan, a professor emeritus from Trinity College, Dublin, to give us a second line on the future of Europe, which is an element of today's discussion.

As you might be aware, Dr. Coughlan, we had Noelle O'Connell from European Movement Ireland before the committee this morning. We look forward to hearing your insight and opinion as well as some of the items you believe might be relevant in looking at Ireland's future or otherwise in Europe in the post-Brexit era. Before I invite you to make your remarks, Dr. Coughlan, I will read out the standard note on privilege, so please bear with me.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if you are directed by the committee to cease giving evidence on a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

With all that out of the way, Dr. Coughlan, I invite you to make your opening remarks.

Dr. Anthony Coughlan

Táim an-bhuíoch den Chathaoirleach agus den choiste onórach seo as an chuireadh a thug siad dom teacht anseo tráthnóna. I appreciate the privilege of having an opportunity to make some points to the committee and I hope they help the committee in its deliberations. Before making my basic statement I wish to make some short remarks by way of background. As some committee members may know, I have been a long-term critic of European integration on democratic and internationalist grounds. That has been the case throughout most of my adult life. One reason is that a long time ago I used to read the speeches of the late Jean Monnet and I read his memoirs as well. He was one of the founding fathers of the European Community or Union. It was clear from this material that he saw the European Economic Community as developing towards a type of federal political union in Europe. I thought that to be fundamentally undemocratic.

The Schuman Declaration is commemorated on 9 May every year by the European Union. The declaration was presented at the inauguration of the European Coal and Steel Community, the first super-national community, and includes the line that the declaration was the first step in the federation of Europe.

Of course, a federation is a state and it is quite clear that the aims of those who have been pushing the integration project include essentially trying to turn the various nation states of western and central Europe into elements in a super-national federation. The Treaty of Lisbon gave us a super-national constitution. It is a normal federal-type constitution with sovereignty divided between federal level in Brussels and national level in member states. It gave us two citizenships, our Irish citizenship and our European citizenship, in a real sense. We have a constitutional federation or a federal-type constitution but we do not have a fiscal union with common tax on services, which would shift resources from the richer to the poorer areas - that is what happens within each national state. That is the fundamental problem of the integration process.

Often one discovers the importance of health when one gets sick. Similarly, one understands the importance of democracy often only when one has lost it. There is no doubt, in my submission, that the European Union has greatly deprived national member states of national democracy without establishing democracy at the super-national level. That is impossible in principal because there is no European demos or people whose support or votes would give legitimacy and valid authority to the super-national project. That is the fundamental problem and that is why, I suggest, in the context of the diminution of democracy at national level, there is a revolt against integration throughout western Europe at present.

My basic submission is that the Irish State should take advantage of the citizens of the United Kingdom voting to leave the European Union to do likewise because this is an opportunity for us also to get back our democracy, sovereignty, law-making power, etc. I have read most of the submissions made to this honourable committee on the Internet. It seems most of the problems related to Brexit that the select committee has been considering in previous hearings would be avoided if the State left the European Union at or around the same time as the United Kingdom, for five main reasons, which I shall set out.

First, leaving the European Union would save the State money as we are now net contributors to the EU budget rather than net recipients from it. Most people are not aware of this fact but it is quite an important one. For so long, the European Union was seen as a kind of cash cow for people in Ireland but it is no longer that. We must now be a net contributor if we stay in the Union. The United Kingdom has been contributing for quite some time. The second basic reason is that leaving the European Union would give us back control of our valuable sea fisheries, the annual value of catches by foreign boats in these being a multiple, by several times, of the money we have got from the European Union over the years. This would be extremely valuable. We, of course, do not have normal national state control over our fisheries.

The third reason is that it would give us back control of our law-making, free us from the rulings and sanctions of the European Court of Justice and thereby restore our State sovereignty and national democracy.

The fourth basic reason we should leave the European Union at or around the same time as the United Kingdom is that it would give us back a national currency, which is one of the two pillars of any independent state, and with it the capacity to run an independent exchange rate policy that is important, if not vital, for our economic competitiveness, especially in the context of Brexit. Another reason is that we do most of our trade outside the eurozone and the EU 26, namely, the EU members minus the British. Approximately three-fifths of our exports go outside the EU 26 and two-thirds of our imports come from outside the EU 26. The most important single country market for our foreign firms is the United States of America. The most important single country market for our domestic firms is the United Kingdom. That is a very important point. In Annex 1 of my document, there are trade figures for exports and imports as regards goods and services for the year 2015. These are the most recent figures available from the Central Statistics Office. Fifth, the most important reason of all we should consider leaving the European Union along with the United Kingdom is that it is the only way to save the Irish Government and the parties that support such a policy from the guilt and responsibility, before future generations, in respect of implementing in our time a new partition of Ireland, or adding significantly to the existing partition.

These reasons are expanded on in the documents accompanying my submission. Annex 1 is "Taking Back Control: the logic of accompanying the United Kingdom out of the European Union", and Annex 2, which I believe has been circulated, is "Why Brexit should be accompanied by Irexit (Ireland Exit)". The latter is the report of a private study group of Irish economists and lawyers that I was responsible for convening during the past year. I drafted the report.

It is hard to point to any significant advantage for the Republic remaining in the European Union when the United Kingdom leaves. Owing to this, I believe it is probable that Brexit will ultimately be accompanied by Irexit, as the adverse consequences of our seeking to stay in the European Union become evident to the Irish public and to major Irish interest groups over the coming two years. Perhaps that will happen quite late in the day. Presumably our Government and society will need to see the lineaments and key elements of the British deal with the European Union before deciding on their own final policy. Even if we do remain members of the European Union without the United Kingdom for a period after Brexit, however, it seems it is likely to be an experience so painful that it will induce us to leave, except that to wait until then would mean that we would be leaving from a position of considerable weakness. If we try to leave now, along with the United Kingdom, we can, of course, co-ordinate our movements with it. That is why we should start preparing for leaving now, and especially prepare for leaving the eurozone, which is the real, big problem associated with leaving the European Union. It is the negative reason for considering leaving because the pain of getting out would possibly be quite significant, even though this would also be the case with the pain of staying in. The latter would be even greater. Consequently, the course of action of the Government that is most in the Irish people's interest is to use the east-west and North-South strands of the Good Friday Agreement to concert a joint approach with the UK Government aimed at both states leaving the European Union simultaneously, or around the same time, and to work towards a UK-Ireland agreement and an Ireland-EU agreement embodying that policy. The contrary course, which is for the Irish Government to seek to stay in the European Union and eurozone as part of so-called Team EU 26, would be one of folly and, if persisted in, will undoubtedly come to be seen as such in time.

I wish to add some points on the North-South aspects of the matter, on which I want to concentrate in my statements. The United Kingdom leaving the European Union and the Republic remaining in it would greatly strengthen partition and make eventual Irish reunification more difficult, for three obvious reasons. For us to support such a course would be to contribute to a second partition of the country, which is a very grave responsibility for legislators who are considering it, yet it is the obvious corollary of our staying in the European Union if Britain and Northern Ireland leave it. The first and most obvious reason is that our staying in the European Union and Britain and Northern Ireland leaving it would add several new dimensions to the existing Border: food and EU veterinary checks on milk and animals moved from the North to the South, for example; customs posts; possible passport controls; and growing divergence between EU-harmonised law and justice provisions in the South and British ones in the North. The second reason, to which I have not seen any allusion in public or in any document I have read, and which might be of particular interest to this committee, is that the British Government's statement that it has “no strategic interest” in staying in Ireland if the majority in the North should wish otherwise underpins the 1993 Downing Street Declaration and the 1998 Good Friday Agreement. If, however, the South remains in the European Union when the United Kingdom leaves it, any future Irish reunification would mean that the whole of Ireland would become part of an EU security or military bloc under German hegemony. As one knows, the EU authorities have made clear they are anxious to push towards closer security co-operation in the context of a European Union minus the United Kingdom. That can never be in Britain's, or even England's, security interests. It would give London a new strategic security interest for holding on to the North and give future UK Governments good reason from their point of view to discourage, rather than welcome, future moves towards a united Ireland. That is an important consideration for those of us and all those Irish political parties that would, in principle, like to bring about Irish reunification. Our staying in the Union without the United Kingdom would add a new dimension to partition.

The third reason is that our State staying in the European Union when the United Kingdom leaves would give Northern unionists a whole series of new and objectively valid reasons for opposing a united Ireland if we want to bring that about some time, however remote and distant. It is obviously a consideration that should influence us. For Northern unionists, reunification at some future date would mean that they would have to join the European Union, with its 123,000 or so supranational rules, legal acts and international agreements, which is hardly real freedom. They would have to adopt the dysfunctional euro currency instead of the pound sterling, which they have at present. They would have to take on the burden of helping to pay for the private bank debt that the troika imposed on the Republic when it decided in 2010 that no Irish bank should be let go bust. They would have to agree to be bound by all the new EU laws and regulations that will be passed between now and whenever partition might end at some time in the future. It is hard to envisage significant unionist consent to Irish reunification occurring in these circumstances. As the Good Friday Agreement recognises, partition can never be ended, or the country reunified, without the consent of at least a significant number of the present unionist population. We need, of course, a majority in the North for reunification.

The Irish Government and all the Irish political parties ought therefore to support and work towards a policy agreement with the UK Government and the European Union that would bring about Irexit alongside Brexit on the following desirable lines. I shall suggest some of the key elements that sensible Irish Government policy should seek to implement.

First, the relevant UK governmental powers that will be repatriated to London from Brussels, including control of Northern Ireland sea fisheries and other underwater resources, should be devolved to the Northern Ireland Executive in Belfast. Second, a rate of corporation profits tax comparable to that in the South might be introduced for the North to encourage foreign investment on an all-Ireland basis. Third, it is desirable for generous direct payments to be provided by the UK Exchequer for Northern Ireland farmers to compensate them for the loss of current Common Agricultural Policy payments and the impact of cheap food imports to the British market following Brexit. As Senators are aware, the British Government has agreed in principle to continue these payments for a certain period. The length of time in question is of considerable interest. I presume Northern unionists would support these measures which could well form part of agreements between Ireland and the United Kingdom and Ireland and the European Union.

The United Kingdom should co-operate with the Irish Government to secure a mutually advantageous post-Brexit agreement between the United Kingdom, Ireland and the European Union that would ensure free trade, including in agricultural produce, between these three parties. It is in the interests of all three parties that free trade should continue as it is. Sensible negotiation should bring this about. It is possible that in these circumstances the United Kingdom would maintain for a period of time direct payments for the Republic’s farmers comparable to those paid in Northern Ireland as recompense for the removal of EU Common Agricultural Policy payments. This might be done in the interests of Anglo-Irish and North-South co-operation. Obviously, such a circumstance would be desirable from the perspective of the Republic. If the British Government was willing to pay some money to facilitate a joint departure by the two states from the European Union, this might, in part, take the form of support payments for farmers here, along the lines of what is planned for farmers in the North of Ireland. Of course, this would be done through the Irish Government.

If the Irish Government were to seek to leave the European Union, it would be quite important for this state to get back its national currency. One of the main problems in this situation is the utterly foolish decision to join the eurozone in the first place. We do just one third of our trade in the eurozone. We do two thirds outside it. By no means has this experience been happy for us, any more than it has been for many other countries in the European Union, particularly in southern Europe. If we were to seek to leave the European Union, we would have to align our policy with that of the United Kingdom and co-operate with the British Government in joint or parallel negotiations with the European Union. As a key element of this, there would be a requirement for the UK Government to co-operate with the Irish Government, the European Central Bank and the governments of the 19 eurozone countries, particularly Germany, in facilitating Ireland's departure from the eurozone and the re-establishment of an Irish currency. This should happen in a constructive manner to disturb the eurozone as a whole as little as possible.

This country's highly competitive exchange rate which was made possible by an independent Irish currency gave the Republic an annual average economic growth rate of 8% during the Celtic tiger years of 1993 to 2000. That was the only period since its foundation in 1922 in which the State followed an effectively floating exchange rate policy. The highly competitive exchange rate that was maintained for a period of seven or eight years contributed substantially to the extraordinarily high economic growth rate in those years. Dublin is stuck with an overvalued euro currency which is affecting exports and encouraging competing imports. The Republic needs to get back its own currency to uphold, expand or restore its economic competitiveness and prevent Southern customers from streaming into the North to do their shopping in the face of a regularly falling British pound which is likely to continue to fall during the Brexit negotiations and possibly for a considerable period after an EU-UK deal is concluded. A restored Irish pound would need to be devalued to restore or maintain the State's competitiveness in the new situation and maximise its rate of economic growth. The support of the Bank of England would be helpful to prevent any such devaluation from going too far in the initial days and weeks. That is why the provision of such support should be an important element of any Ireland-UK agreement.

Any understanding reached between Ireland and the United Kingdom on foot of joint or parallel negotiations should seek to ensure the UK Government would co-operate closely with the Irish Government in negotiating joint trade agreements and foreign investment deals with third countries after Brexit and Irexit happened. The aim of such agreements and deals should be to benefit both parts of the island of Ireland in co-operation with the Northern Executive in Belfast. I submit that these provisions, or variants of them, would bring major benefits to both parts of Ireland and the United Kingdom. They would avoid adding new dimensions to the existing North-South Border. I do not think the Irish people in the future would welcome or praise the politicians responsible for changing the current Border arrangements.

I invite the Chairman and members of the committee to consider these points and raise them with their Oireachtas colleagues. I suggest they be impressed on the Government as being in the best interests of the Irish people in both parts of the country as we face the challenges presented by Brexit. I thank the committee for allowing me to make my statement.

I thank Dr. Coughlan. I will open up the debate to Senators before asking a few questions of my own. We will take all of the questions in one go before coming back to Dr. Coughlan for answers, rebuttals or comments.

I thank Dr. Coughlan for coming and giving us his views and some information. It is important for us to hear the views of those who articulate the case for Irexit, regardless of whether we agree with them. The arguments in favour of Ireland leaving the European Union should be heard. One wonders whether we should see how Britain gets on before considering whether to ride on its coat-tails. Dr. Coughlan has suggested we draw up a joint agreement. It feels like we have to choose between the devil and the deep blue sea. What is the least bad option - the status quo of staying in the European Union or joining the United Kingdom in leaving it? That brings us back in a roundabout way to the possibility of rejoining the United Kingdom in everything but name. If we were to leave the European Union, we would have to return to a currency that was tied to sterling once upon a time.

This is a hugely complex issue. During last year's referendum campaign the Brexiteers suggested that because Britain was a net contributor to the European Union, it would be able to use the money it no longer needed to pay to the European Union to support the National Health Service, but all of that disappeared as soon as the "Leave" vote was confirmed. It suddenly transpired that the National Health Service would not receive an additional €300 million a week. The main consequence of the outcome of the referendum was uncertainty. I know from talking to people who work in the financial services sector in London that many of them have been told to prepare to leave London and move to Frankfurt or Paris. We heard about the uncertainty in the airline industry when a representative of the industry appeared before the committee a number of weeks ago. Uncertainty - the biggest issue Britain is facing - would transfer immediately to Ireland if we were to move in the same direction as the United Kingdom. Would Google or Intel open new facilities or tell employees to come here if we were facing the uncertainty that lies ahead for Britain?

Dr. Coughlan has made some valid points about the eurozone and militarisation. My colleagues and I have expressed concern about the creeping militarisation of the European Union. The federalist mentality of people in Brussels is contrary to the will of the peoples of Europe, as was seen when they voted on the proposed EU constitution. While I have many concerns about the European Union, we should focus on whether, on balance, it has been better for Ireland in the past 40 years. When we had an Anglo-Irish trade agreement, Ireland was the poorer for it because Britain dictated its terms. Dr. Coughlan has suggested Ireland and Britain could negotiate their own trade agreements if Ireland were to leave the European Union too. If we were to try to negotiate 55 trade agreements with the countries with which Ireland and Britain currently have trade agreements by virtue of their membership of the European Union, it would be a huge process. This country would not have the capacity to do so on its own. It would take decades to negotiate 55 trade agreements and we are assuming that these countries would be interested in negotiating trade deals with us. They would be interested in negotiating trade deals with the United Kingdom, but it would take them decades to do so. It is important, however, for the issue to be debated and the point of view to be put across.

In the worst-case scenario and if things go badly for Britain, the wait-and-see attitude is all we have at this moment in time. If it was quite clear that Britain would benefit, then everyone would be leaving the EU and Ireland would be leaving too. We are now the country most likely to be the worst affected by Brexit and whether we join them is a question to which, at this stage, nobody knows the answer. It is made all the more complex for Ireland because we are in the eurozone. This would double the complexity of trying to leave a trading bloc and a currency union at the same time. I am not sure that any country has ever managed to do that. Are there any examples of a country leaving a currency union in this context? Even when Ireland left the United Kingdom in 1922 we had our own currency but it effectively was tied to sterling. Where are the modern examples in such a complex and global world where such an issue could happen? I believe it is a valuable contribution.

I wish to apologise because I must attend the Joint Committee on the Implementation of the Good Friday Agreement, where we are also talking about Brexit. I will read the transcripts of Dr. Coughlan's reply because it is important. While people in this House would share many of his views on militarisation and the growing bureaucracy of Brussels, Ireland's only status at the moment is to wait and see and try to negotiate the best deal for ourselves as part of Brexit. If that does not work out there is always the option of which Dr. Coughlan speaks. The option is there but at this stage, when we consider the information we have heard about what is facing Britain as a result of Brexit and Theresa May's continuous statement that she wants to make Brexit a success and when we consider what has been clearly stated by EU politicians, then Brexit cannot be a success from an EU point of view. If it is a success, it is the end of the European Union. It is a huge challenge for the country. Are there examples in modern times of countries having successfully left a trading bloc and a currency union simultaneously? We want to hear about examples or precedents and if there is an example of that. All my colleagues will be asking questions and I do not believe the Chairman will allow the witness to answer it now, but I will read the responses.

I thank Dr. Coughlan for his attendance. I represent the diaspora abroad so he will understand that this issue will be of major interest for me in the United States of America, particularly in respect of what happens to Ireland. While I disagree with many of the statements in his presentation, I defend his right to put forward these views. It is extremely important that this committee receives input from all views, particularly those that are sincerely held, as in Dr. Coughlan's case.

I had guests into the House yesterday from Chicago, one of whom is a mother. She told me that she works for The Northern Trust Company in Chicago. This bank has a branch in Dublin and one of its top offices is in London. The UK office is moving because of Brexit and, of course, it wants to go to an English-speaking country within Europe. We were aware that it looked at Ireland but were shocked when it decided to go to Luxembourg. I asked why, as the bank already has an office here in Dublin. The reason was the shortage and expense of housing in Dublin. This is a situation where someone is actually affected by it and it is a major issue here.

I come from a farming background, many years ago. What does Dr. Coughlan propose will replace the roughly €1.5 billion Ireland receives from the EU? Of that funding some €1.2 billion comprises payments for farmers. These are my two basic questions for Dr. Coughlan.

I would also like Dr. Coughlan to elaborate a little more on his point that by Ireland staying in the EU - and the United Kingdom deciding to leave - it is actually enhancing partition. I genuinely do not get that argument. In the UK's Brexit referendum, the majority of people in Northern Ireland were on the remain side and voted to stay. We all know that democracy is democracy and that a regional majority must bow to the overall outcome. In essence, however, there was a strong majority in Northern Ireland for remaining. Dr. Coughlan's theory would have Ireland jumping ship and bringing Ireland closer to that, when in fact Northern Ireland's message was to stay. I cannot get the logic in his argument that by Ireland staying and by not joining Brexit with an Irexit, we are driving a wedge back into partition and, therefore, we are not enhancing the future possible unification of the island.

Like Senator Lawless, I also point out that while Ireland may be a net contributor now, it sounds very much like if one were to visit a friend, a relative or a neighbour's house, eat the cake and then get up and go. For 40 years the EU has been a mass contributor to the infrastructure, culture and social development within the island. That Ireland is now a net contributor is not a great argument. We must take into consideration where Ireland would be now if it had not joined 40 years ago and had not the benefits it has received. I agree with Dr. Coughlan that in some circumstances, there were disadvantages. Ireland had to accept controls or regulations about which we may not have been over the moon but with the good there is always some bad. In my opinion, the majority was on the side of positives. I ask Dr. Coughlan to elaborate a little more on it. It is easy to say, as in the two points I have raised, but I would like a little bit more flesh on the bones of the argument. We are formulating a report and it is very good that we get both sides of the argument. As both of the previous speakers have said, I may not be on the same side of the fence as Dr. Coughlan but I welcome his contributions and I take everything he said very seriously. It will be given due consideration when we compile our final report.

I welcome Dr. Coughlan here today. I believe it is good that he challenges the mainstream thinking on these issues. I am sure it is not just for the sake of that he is doing it but it is always good to be challenged to think about things that we may take for granted or as the norm. My initial reaction to his proposition is that having followed the issue and seeing how it is being dealt with by the UK, it appears that Dr. Coughlan is proposing that Ireland aligns itself with people who do not really have a clue as to what direction they are going. Theresa May made many statements, including on removing the UK from the customs union and the Single Market, but they are all qualified with platitudes around giving an impression of a soft Border, whatever that might be. There are so many contradictions within those positions. We also see in the UK that some of the rhetoric is unravelling when one considers the polls during the current general election hustings. If Jeremy Corbyn were to announce another referendum tomorrow we might see a more substantial shift. That is just my own view. Mr. Corbyn is obviously making a lot of inroads that were unanticipated by some of the pundits.

Part of our economic recovery after the troika has left and what we have built or carved out for ourselves is as a small, open economy that has shown and proven its success in attracting foreign direct investment and is capable of trading and dealing on the international stage. I wonder about Ireland aligning itself with the UK.

Ireland and the UK together is a much smaller market than the European Union. If we were in direct competition with the EU, which is what Dr. Coughlan's proposal would bring about, how would the EU not have more leverage than Ireland and the UK?

Of course, there is the historical situation between Ireland and Britain, which I know to a great extent we have put in the past, but it is my view that the British politicians and Brexiteers who were to the fore in this did not give a damn about Northern Ireland, pardon my language. Theresa May mentioned it, but Britain would have been a disgrace if it had not given some nod towards and made some acknowledgement of the importance of trying to maintain the very hard won peace in Northern Ireland. I do not think the people to the fore have any social conscience about our economic or social condition or about anybody else. This is a concern. Will we not go against where we have positioned ourselves and where we have shown we are able to grow by circling the wagons with the UK? It is a debate on globalisation and what it means for individual countries. It seems it would go against the very areas where we have made strides and where we have been successful in the economic recovery.

Dr. Coughlan's paper contends that if the South remains in the EU but the UK leaves, any future Irish unification would mean the whole of Ireland could become part of an EU security military bloc under German leadership or control. I do not understand this. We all know our neutrality is a qualified position, notwithstanding people beating their chests about how neutral we are. At the end of the day, our interests are aligned with western powers and countries. When we look at world security, the people campaigning against western democracy do not distinguish us from any of these western powers. We are all the same as far as they are concerned. The reality is that even in a tacit way we support many of the activities. I am minded of what happened in Libya. Even though we are a neutral country, everybody in this country supported that Gaddafi should be taken out. I did not support it, but anyhow there was general consensus it was in the interest of the citizens. To my mind it was a civil war. The issue of neutrality is not very honestly spoken about in my view. How is our current fluffy position going to be interfered with by virtue of the UK leaving and us remaining in the EU? I do not understand what Dr. Coughlan means.

I sincerely thank Dr. Coughlan for his contribution today. He has challenged us in a way most of our speakers so far have not. This has been reflected by the very earnest questions put by my colleagues. The contribution he has made to our committee is very valuable. Before I ask him to respond to some of the comments and questions, I have one of my own. Does Dr. Coughlan see any positives to Ireland remaining in the European Union, in light of a recent opinion poll we heard about during our 11 a.m. session, that this is the will of 88% of the population? I appreciate it is an opinion poll and not a referendum. With this in mind, I ask Dr Coughlan to address the comments made by my colleagues.

Dr. Anthony Coughlan

Many issues were raised. I do not know whether I will be able to deal with all of them or remember them all. It is very important to realise we are faced with a drastic new situation and the committee does not need me to tell it this. The Conservative Party manifesto was published only two weeks ago. It repeated Mrs. Theresa May's statement last January that the United Kingdom of Great Britain and Northern Ireland will leave the Single Market and the customs union. It is a repetition of that commitment. It will be very hard for any British Government leader, whoever it is. Prime Minister May will probably be re-elected. Even if Mr. Corbyn were elected, he has committed to implementing Brexit as well, although possibly a softer variety.

The reality in political terms is the United Kingdom will leave, which means part of our country will leave. If we stay in the European Union it seems to be fairly obvious that new dimensions will be added to partition. We will have to accept more and more EU laws, while in the North of Ireland the laws will continue to be made by the United Kingdom. Almost certainly if the United Kingdom leaves the customs union we will have some form of custom controls on the Border. This will add to partition compared to the position we have today.

I made the point that the statement by the British, that they have no security interest in staying in the North of Ireland, will change once we stay in the European Union. It will become closer together in security terms, and they are speaking about this. We are, to some extent, going along with this, whatever about what happens to neutrality. The British will not look kindly on the southern State going with the European Union. It would give it a new reason to hold onto the North of Ireland. Otherwise, if it allowed or encouraged or, down the road, it came about the North and South came together and there was some possibility of reunification, the whole of Ireland would then be in the European Union with much closer security co-operation under German hegemony, which is fairly obvious. This is hardly likely to be in Britain's security interests, or even in England's security interests assuming the United Kingdom did not hold together, but I believe it will for the foreseeable future. That is not the current situation. In that sense, we do add a new dimension. We will give the British a new reason for holding onto the North.

Then, of course, we will give the unionists a whole lot of other new reasons for staying in the union, because for them to leave the union they would have to join the EU, take on board more than 120,000 legal acts, which result from the EU, and adopt the euro currency. This is a major obstacle in the way of any unionist perception, or the perception of some unionists, that they might look favourably on a united Ireland. These are new dimensions to partition. Surely they make eventual Irish unification more difficult. It seems to me these are irrefutable statements, which are very hard to question.

It is not a question of us rejoining the United Kingdom. If we leave the European Union, we would be the second state to leave from the 28 members, and I believe other states will almost certainly leave down the road, or certainly leave the eurozone. The euro is a dysfunctional currency which will not hold together, certainly not for its current 19 members. That it is a dysfunctional currency is admitted by those running it. It will have new problems. Leaving it is not a painless operation I accept, but staying in it is also likely to be replete with pain and problems. There have been many examples of currency unions that have broken up. The USSR broke up into the 15 states that inherited the USSR. One state became 15 and one currency in the USSR, the ruble, was replaced by 15 currencies in the 15 successor states. Senator Mark Daly raised this point. Czechoslovakia broke into two, and we had the Czech crown and the Slovak crown. Yugoslavia broke into seven or eight states, which each has its own currency. States leaving currency unions and adopting currencies of their own are relatively common. I understand that if we take into account the former colonial powers, something like 60 currency unions broke up during the 20th century, including those I have just mentioned.

If we left the European Union we would need to co-ordinate and we would have to have our own negotiations with the European Union and the United Kingdom.

Two agreements would be needed, one with the United Kingdom and one with the European Union, which we would be leaving in parallel with the UK. That does not mean that we would become part of the British state or do whatever the British want.

We should keep our own currency; to give it up would be lunacy. The value of having our own currency was evident during the Celtic tiger period of 1993 to 2000 when we had, for the first time in the history of the Irish State, an effectively floating exchange rate which gave us a highly competitive exchange rate and an 8% economic growth rate each year. In 1993 and 1994, the Irish pound was one tenth more valuable than sterling. It was then devalued and decreased in value to 90 pence sterling in the next eight years. That measure, more than anything else, led to the Celtic tiger. If the UK leaves the EU, as it will, it is likely to devalue sterling, which will hugely hit our exports to the UK if we stick with the euro. Commentary on this matter usually exaggerates the importance of the EU 26 market. The basic statistics are compiled by the CSO and reproduced on page 3 of appendix 1 to the handout given to the committee. They show that three-fifths of our exports go to, and two-thirds of our imports come from, outside the EU 26. If one adds together our exports to the United States, Canada and the United Kingdom, it is as much as our exports to the EU 26. Our exports to English-speaking countries are more valuable than those to the EU 26. It is not as if one has to choose between one market and another. If we leave the EU along with Britain and our fellow countrymen in Northern Ireland, as we should, a sensible agreement between the United Kingdom, the European Union and Ireland would ensure free trade, which we already have. There is no reason that should not continue if sense rules in the negotiations that will develop over the coming two years.

It is true that we have received a significant amount of money from the European Union over the past 40 years. The general official and unofficial view in Ireland was that the EU was a cash cow, particularly for Irish farmers because the Common Agricultural Policy gave substantial sums of money to Irish food producers. Over the past two years, we have become net payers into the EU. The second annexed paper gives the figures in that regard. In 2014, we became a net payer for the first time, paying €1.69 billion into the EU budget and receiving €1.52 billion. That has continued since and is likely to continue for the foreseeable future.

Senator Lawless asked what will replace CAP payments if we leave the EU. The Exchequer can replace the CAP payments because all the money that we get from the EU in the future, whether it be CAP payments, regional funds, Erasmus programmes or research supports, will, in effect, be Irish taxpayers' money coming back. It is currently a net payment of a few hundred million but that is likely to grow, depending on our economic growth rate or otherwise. That has been the case with the United Kingdom. It makes contributions to the EU of in the region of €10 billion per year. During the Brexit referendum, there was talk of spending the savings on the National Health Service, but it will eventually be able to spend the €10 billion when it leaves the European Union. It will probably have to continue to contribute for some period as there will be some kind of interim settlement, but they will eventually get that money back. There is no longer any money for us from the EU. One might say that we got many benefits in the past and farmers certainly got many benefits. Is it a situation of eaten bread soon being forgotten? It is a new situation. We must be realistic and consider what are our interests. One could argue that even though we got a significant amount of money from the EU, or farmers and various other interests groups who received regional funds and INTERREG funds and so on did, we gave the EU extremely valuable fishing rights. The value of catches by foreign boats in Irish fishing waters is greater than the net monetary benefit we have received from the EU since joining. We would get these rights back if we left the EU. The United Kingdom will recover the rights to its waters. If Northern Ireland leaves with the United Kingdom, as it will, will it have control of sea fishing rights there and what will happen in regard to the South of Ireland? The EU has not just been benevolent to us. We gave them our fisheries. We must be realistic that in future Ireland will be paying in more than it gets out. What is our interest in doing that? What benefits will we receive from the EU if we stay in? It is very hard to say. I cannot see what they are. We are not going to get more money. There will be new dimensions to the Border between North and South. We would have the advantage, were we to leave at around the same time as the British, of getting our fishing rights back and the possibility of getting our currency back.

In terms of the single currency, it was huge folly for us to join the EU. We are in deeper than the British because we have the euro while Britain was sensible enough to avoid it. We are now caught in the eurozone trap. Getting out would require the co-operation of the EU authorities, the eurozone authorities, Germany, the principal country in the eurozone, and the Bank of England in regard to sustaining a devaluation in that context. There are very good advantages in getting back a national currency. Without it, we are stuck with the euro, which is likely to get more valuable in regard to sterling and that will hit our exports and encourage competing imports during the coming period. It was utterly foolish for us to join. We experienced the delights of the eurozone when Mr. Trichet, then president of the European Central Bank, said that no Irish bank must be allowed to go bust and forbade the bondholders being burned in regard to Anglo Irish Bank or the Bank of Ireland and so on. That was the result of European Central Bank policy and we have suffered very much from it in recent years. To restore the national currency is fundamental. The two pillars of the nation state are the sword and the currency, as Romano Prodi, former president of the European Commission, said. The sword is a monopoly of legal force in an army and a police force, while the currency can enable a state to have control over either its rate of interest or exchange rate. We gave up that fundamental pillar of the nation state by joining the euro on the assumption the British were going to do so in a year or two and we have suffered the consequences. One of the big advantages of leaving the EU would be that we would get our own currency back. There would be costs and problems if we were to do so but there will be problems if we stay.

One problem that has not been mentioned is that by staying in the EU without the United Kingdom we will find it much less easy to sustain things like our corporation tax rate or our national interest in regard to fishing rights and other areas where British and Irish positions have been rather similar. Members are aware of the pressure exerted by the EU in terms of subverting or eroding our corporation tax rate which is so important for attracting foreign industry. In this regard, the United Kingdom has been on the same side as this State. Trying to resist those pressures without the United Kingdom alongside us will be much more difficult and cause us many problems. That is another relevant factor.

The Chairman asked a question regarding positive aspects of the EU.

Is there any positive aspect to Ireland remaining in the EU?

Dr. Anthony Coughlan

There is no significant advantage. Leaving the eurozone would be painful but staying in the eurozone would also be painful. It is very hard to discern any advantages to remaining. There is likely to be no net income from the EU. If Ireland left, there would be the advantage of getting back control over fishing rights. If the UK alone leaves the EU, Ireland will be more divided because there will be new dimensions to the Border.

We give the British a new reason for holding onto the North of Ireland, namely, security considerations, if we stay in the EU and the United Kingdom leaves. We give the unionists many extra reasons for staying in the United Kingdom because for them, at some distant time in the future, when perhaps some of them might say they would like to have a united Ireland, they have to join the EU if we stay in it. They would have to adopt the euro, and take on board all the new laws and regulations of the European Union that will be passed between when the United Kingdom leaves in the next two years and some hypothetical date in the future, when there might be a move towards Irish unification. These are major obstacles to winning over unionist consent or an element of unionist consent to Irish unification. One cannot have a united Ireland unless there is a move by a significant section of the unionist population in that direction. That is not there at the moment - I am not naive enough to think so - but those of us who would like to see Ireland reunited at some time in the future should take that point on board. Otherwise, one adds to the difficulties of reuniting Ireland and, in effect, conniving at and helping to implement a second partition. That is undeniable.

Neutrality is a tattered thing but if we stay and are on our own in the European Union without the United Kingdom when Britain and Northern Ireland leave, we will come under pressure to take part in closer EU security co-operation. This has already been signalled. There was a meeting recently, one of the last summit meetings, which talked about the possibility of a military treaty. That could be done on an intergovernmental basis, which is perhaps why the Germans and others want to push towards closer security co-operation because they can do that without it being an EU treaty. It would be an intergovernmental treaty. They will put us under heavy pressure to go along with at least elements of that and with EU foreign policy or EU foreign policy positions. If we are in the EU without the United Kingdom, we are likely to be under greater pressure to go along with the foreign policy positions of France and Germany when they agree common foreign policy positions. One only has a common EU foreign policy when France and Germany agree. When they disagree, there is no common EU foreign policy. We are likely to be under pressure in that regard and to take part in EU military operations, the purchasing of arms and weapons and so on.

Senator Mark Daly made points about new trade agreements. Sensible negotiation between the United Kingdom and the European Union will lead to free trade, certainly in goods, although services may be somewhat more difficult. No one can be entirely sure what the detailed elements of that agreement will be. That is why the penny will only begin to drop with the important business and farming interests in the Republic of Ireland in the next two years as the British negotiations continue and it becomes clearer what Brexit really entails. It would be foolish to take refuge in suggestions that the British do not know what they are doing. It was widely thought that the British did not know what they were doing until last December and then in January Mrs. May said they were leaving the Single Market and the customs union. That commitment was repeated two weeks ago in the Conservative Party manifesto. There would have to be a revolution in the Conservative Party for that manifesto commitment to be broken. It will happen and public opinion will bring it about.

At the same time, over the next two years, democratic opposition to further European integration, particularly to the austerity regime that is widely prevalent in the eurozone, is likely to raise opposition throughout the European Union to further integration and will encourage other states to consider leaving, as well as the United Kingdom. At present, everyone is keeping up a common front but I have little doubt that behind the scenes, approaches are being made to Brussels by different foreign ministries as well as to the United Kingdom. There will be states within the European Union who will say that the EU 26 must all present a common front but there will be approaches being made sub rosa that we do not hear about or that are not publicised, whereby foreign ministries in various EU member countries will be sounding out the British about various possibilities. We should do the same.

It is in our interest to come to an agreement with the United Kingdom because the North of Ireland is leaving the European Union, and us with it, and there is no obvious advantage of our staying in the EU that any of the distinguished speakers this afternoon have pointed out. We got a lot of benefit in the past, particularly on the agricultural side, but that is water under the bridge. It is no reason for staying in the European Union which is a supernational federal structure, with a federal-type constitution committed to further integration under the hegemony of Germany and France.

I may not have been able to cover all the points but I have done my best to cover the most important ones mentioned.

Dr. Coughlan has certainly done that and we appreciate him taking the time to go into such detail with such a range of questions from so many areas. I thank him for attending, for his remarks, and for the detailed appendix which he also provided to us.

The committee went into private session at 3.35 p.m. and adjourned at 3.45 p.m. until 10 a.m. on Wednesday, 7 June 2017.