Stephen Collins: Summit outcome gives credence to Ireland being 'tiny diplomatic superpower'

A striking feature of the marathon European Council summit was the way Ireland managed to reposition itself away from the “Frugal Four” northern states led by the Netherlands and strongly support a recovery plan providing the maximum possible grant aid to the southern states worst hit by the Covid-19 pandemic.

In the wake of Brexit the Irish government moved quickly to build new alliances with neighbouring European Union countries that have a similar approach to the market economy and international trade. The so-called Hanseatic League emerged involving Ireland, the Netherlands, Denmark, Sweden and Finland.

In December 2017 Dutch prime minister Mark Rutte visited Dublin for a meeting with Leo Varadkar. Afterwards the taoiseach noted the common interests and values of the two countries, pointing to the fact that they were both small trading nations committed to free trade, liberal values and multilateralism. Rutte emphasised that they were like-minded on many issues including the single market and Brexit.

The strategic importance of this development from an Irish point of view was that with the departure of the UK there was a real threat that some of the big EU states, particularly France, would step up the long-running campaign to curtail this country’s ability to set its own tax rates and attract foreign direct investment.

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Another reason for closer co-operation with the small northern states was that Ireland, after decades of benefiting from massive transfers from Brussels, has now become a net contributor to the EU budget so it made sense to move into the camp of other net contributors.

New links

The drive to develop closer relations with our northern neighbours was symbolised by the State visits of the Swedish king and queen in May 2019 followed closely by the Dutch king and queen a month later. It was hardly an accident that the two royal visits coincided with the new political and diplomatic links being forged between the three countries.

The Irish perspective suddenly changed when Covid-19 ravaged Italy and Spain. The EU initially struggled to come up with an appropriate aid package, with the Italians seeking massive grant aid and the Dutch strongly objecting, insisting that loans and not grants were the solution.

Ireland's prosperity is dependent on a dynamic EU and a united response to the pandemic was vital for Europe's future

President Emmanuel Macron of France took a decisive lead in support of a massive recovery fund and when German chancellor Angela Merkel was persuaded that this was the right way to proceed there was a serious reassessment in Dublin about where Ireland should stand. At meetings of EU finance ministers Paschal Donohoe detached himself from the Dutch position and backed the emerging Franco/German commitment to an unprecedented package of measures to deal with the crisis.

Ireland pivoted away from the Frugal Four and became a firm supporter of the need for a collective approach focused on solidarity with the worst-hit member states during the intense and sometimes fraught negotiations that took place before and during the summit.

“Early on we took the decision to shift our position and we did it for the right reasons but just think about what might have happened if we had stuck with the Frugal Four. Politically we would have been banjaxed,” said one government source. Political embarrassment at home would have been compounded by loss of prestige in the EU, which could have had damaging long-term consequences. In any case Ireland’s prosperity is dependent on a dynamic EU and showing a united response to the pandemic was vital for Europe’s future.

Recovery fund

The changed Irish emphasis was also congenial for new Taoiseach Micheál Martin, who at the summit argued strongly for a recovery fund of sufficient scale to enable the most badly affected member states to respond to Covid-19 and help their economies recover. He firmly backed the line that the package had to include a large element of grants.

Remarkably, the shift in the Irish position appears to have been managed without seriously alienating our new northern allies with whom we continue to share a range of fundamental interests. This was illustrated in the run-up to the summit when Donohoe was elected chair of the euro-zone finance ministers with the support of the frugals as well as the Benelux countries and a number from central and eastern Europe.

Donohoe’s victory was achieved despite the big three states, Germany, France and Italy, throwing their weight behind the Spanish candidate, Nadia Calvino. She was furious at her defeat and accused an unnamed country of reneging on a commitment to her. Rumour has it that she led in the first round of voting with nine votes to seven for Donohoe and three for the Luxembourg candidate. On the second round Donohoe won by 10 votes to nine.

Ireland managed to pull together an alliance of the smaller countries against the big four to win the contest but at this week’s summit we backed the approach of the big countries to the recovery fund against a core of smaller wealthy ones. The nimble footwork involved maybe does give some credence to the claim by the Economist magazine that Ireland is now a “tiny diplomatic superpower” with “immense” influence in Brussels. The years to come will tell how much truth there is in that flattering assessment.