Europe does not love us as much as we think

Our response to the Apple tax ruling has not gone down well in Spain and elsewhere

Some 8.2m people in Spain have bought something in Primark, more than even the Spanish home grown Zara, but you can detect a low level of anger. (Photo by Pablo Blazquez Dominguez/Getty Images)

Some 8.2m people in Spain have bought something in Primark, more than even the Spanish home grown Zara, but you can detect a low level of anger. (Photo by Pablo Blazquez Dominguez/Getty Images)

 

On the surface relations between the Irish and the Spanish have never been better. Last year over a million people from Ireland visited Spain, more than France, Italy and Portugal combined.

From a low base 20 years ago, Irish-managed companies are now doing very well here. Ryanair is the number one airline in Spain in terms of passenger traffic, and 8.2 million people in Spain have bought something in Primark, more than even the Spanish home-grown Zara.

Yet to those of us living here long enough to be well integrated we can detect a low level of anger towards Ireland both in government and amongst the Spanish public. I will give two examples.

A banker told me that Ireland was increasingly seen as place you could issue debt when the banks in Spain will not lend you any more money. “They should have had to sell assets, but you lot gave him more money.”

An executive from Sareb, Spain’s bad bank, complained about the highly-favourable terms offered to private equity firms by Nama. “No euro zone country should be falling over like that to help those guys,” he said.

In technology circles the anger is even greater, with start-ups losing their technical staff to the bright lights of Silicon Docks in Dublin and elsewhere. Any defence that Ireland just created the right investment climate is given short shrift.

“Those big tech companies are only there as you allow them to transfer most of the profits from around Europe”

If you are used to the words Irish and Ireland bringing nothing but a great big smile, such treatment can be quite a jolt.

There is no great Boston or Berlin debate in Spain. Rich and poor alike expect high-quality public services in health, education and transport. Many people who have private healthcare through their employer prefer to use the public system. Similarly, many parents I know send their children to public school, dismissing any notion that private is automatically better.

While centre-right politicians here express their admiration for (and even name streets after) Margaret Thatcher, they do not share her antipathy towards the role of the state. Over the last five years the government lead by prime minister Mariano Rajoy has cut education and health spending by €16 billion. At just over 1 per cent of GDP it is not an insignificant figure but he did not dare to cut it by more.

Reluctance

Apple

This week in the European Parliament, Spanish EPP MEP Pablo Zalba Bidegain said: “We must say loud and clear that the party is over. Although multinationals create jobs, they must pay taxes and we need a consolidated tax basis.”

Also members of the EPP are Fine Gael MEPs Brian Hayes and Sean Kelly, both of whom spoke in opposition to the ruling.

An old joke among the major oil companies is that in Spain it is not possible to know where the energy company Repsol ends and where the ministry for energy begins. The same could be said for the other large utilities on the IBEX35 such as Telefonica, Iberdrola and Endesa.

Although private companies, they are seen as having strategic national importance. In exchange for having their interests always taken into consideration, they are expected to pay their fair share of corporation tax.

They do, of course, take measures to reduce the burden, but never to minimise it to anything near the 0.005per cent Apple paid on its European profits in 2014.

The image of the Ireland has been dragged by association into the world of the Panama Papers, Lux Leaks and the Lagarde list.

It did not help that the Irish Government rushed so forcefully to Apple’s defence. Something more nuanced like “while we support Apple’s decision to appeal the ruling, we also support the amendment to Accounting Directive (Directive 2013/34/EU) to ensure that large groups publish annually a report disclosing the profit and the tax accrued and paid in each member state on a country-by-country basis” would have gone down better in Madrid and Brussels.

Tremendous benefit

Europe

Brexit means that the era of Ireland riding two horses as the acceptable face of the Anglo Saxon world is over.

The UK saying “cheerio” means we will have to get on board with an agenda of closer integration or continue to have more days as a lonely minority as Hayes and Kelly had this week.

This will not be easy. As a nation we like to be friends with everyone. We are not good at taking sides. However, as both my Latin American and African students remind me, some of the things people like most about the Irish are our ability to side with little guy against injustice.

The EU has its faults, but we should be in there fighting to ensure that corporations pay tax where they generate profits, that justice is done in public and not by secret investor courts, and that companies in breach of consumer regulation lose access to EU markets.

Many a political career in Ireland was derailed over doubts as to whether he or she was “sound on the national question”.

Maybe now it is time we should rephrase the question, and ask if he or she is “sound on the European question”? Joe Haslam is an associate professor at the IE Business School in Madrid

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