Mr. Tony Connelly:

I have reported from Europe on the European Union since 2001, the year that Ireland rejected the Nice treaty. I have covered various referenda and events since then up to the fiscal compact treaty, exiting the bailout, plus the second Irish Presidency of the EU that I have covered which has just finished. I shall outline to the committee the perception of Ireland at the end of all of those events and what political capital that may give the Government in shaping its strategic vision for its interaction with Europe and the wider world. There is no doubt, having spoken to people both from member states and the institutions, that Ireland's reputation has been restored. We are experiencing some kind of after-glow following a very effective Presidency and the exiting of the bailout. That has been crystalised in the discussions and speculation about the future role of the Taoiseach, Deputy Enda Kenny, as a potential presidential candidate for the European Commission. Whether he wants to participate is another question.
Ireland's political capital has largely been restored following the awful events of the banking collapse and bailout. Also, there was an overhang of some discontent and criticism about the way various referenda were handled in Ireland. Whatever about the democratic vote of the people at the time, broadly speaking, Ireland is now seen as a mainstream player in the European Union. It is becoming more mainstream the more the UK drifts to the right and towards a more eurosceptic trajectory.
The Taoiseach, Deputy Kenny, is a member of the European People's Party, the largest group in the parliament. The Tánaiste, Deputy Gilmore, is a member of the socialist group and Deputy Micheál Martin is a member of the Alliance of Liberals and Democrats for Europe, ALDE. All of these factors, and the fact that we are also in the euro is viewed as evidence that we are seen increasingly as a constructive, stable and forward looking European partner.
Having said that, the Europe that we have merged into, after the bailout and the Presidency, is much different and much changed from 2001, and even 2008 to 2009. The challenges that Europe face will be a major difficulty for Ireland and for the European Union.
Looking ahead, we have the UK referendum, an "in-out" referendum, that could be poisonous and very difficult for the Irish Government to deal with. The European Parliament elections are coming up and significant inroads could be made by far right eurosceptic candidates and far left groups in the European Parliament. The trade deal with the US has also run into difficulty. Migration is also a very difficult political hot potato that member states are not prepared to take risks with. Perhaps it will fall to Europe and the European Commission to frame some kind of far-reaching migration-emigration policy. Africa will be a major foreign policy challenge to the European Union. All of the upheaval that has emerged from the Libyan crisis seems to have opened up a vacuum in the Sahel that is being filled by radical Islamists. Therein lies the seeds of potential terrorist attacks in Europe in five to ten years' time. These are some of the challenges that Ireland must confront over the next few years.
The question is as follows. Does the experience of the bailout and the very painful reform programme that Ireland has gone through give the Government a particular advantage or political capital? There may be an expectation, and there is certainly a desire, among some of the institutions that Ireland will use its bailout experience to put itself forward as a possible model for growth and reform. Our ability to attract foreign direct investment is unrivalled in the European Union per capita. There will be an expectation for the Government to punch above its weight and be a more assertive player. Even though the Presidency is over the opportunity to do so still exists.
Ireland is largely seen as a pragmatic country and we are not constrained in one particular group. Of course Ireland is very close to the UK in a lot of areas such as taxation and justice and home affairs yet we are not virulently anti-regulation. We are close to the Baltic countries on taxation yet we are close to France and Spain on agriculture. We are trying to position ourselves as being closer to the northern European creditor rules-based community that we heard so much about during the crisis. Certainly we have decoupled ourselves, in terms of reputation, from Greece and perhaps Cyprus.
I shall outline another expectation. Ireland is viewed as being close to America. The Irish Government made quite a play and was quite triumphant about the fact that it was able to commence trans-Atlantic trade negotiations with the United States during its Presidency. However, the talks have ran into trouble with the Congressional mid-term elections approaching. Two questions are being asked in Brussels. Will the Irish Government take up the cudgel again on behalf of the trade agreement? Or will it sit back, like many other countries seem happy to do, and let the trade agreement talks drift?
We have heard about taxation many times. People always ask me the following questions when I return to Ireland. Is the Irish corporate tax rate safe? Are they out to get us?

We can always go back to the reality that taxation remains a national competence. There is a veto and many other countries have similar taxation aspirations. There will be major developments at OECD level over the next few months leading up to the G20 summit in September. The double Irish tax arrangements, the Dutch sandwich and various other loopholes that exist will come under a great deal of pressure at G20 level and they are not sustainable.

With regard to how the permanent representative and the Irish presence in Brussels operates, there was universal praise for the Irish Presidency. People have spoken repeatedly about the professionalism of the Civil Service and the fact that Ministers were prepared to make the journey not just to Brussels but to Strasbourg and Luxembourg. It was felt that the Ministers put many hard yards in and did a great deal of hard work with the European Parliament which is much more important, given the Lisbon treaty. However, the Irish Presidency was in a cluster of first-time Presidencies, including Cyprus and Lithuania, and, therefore, it was not that difficult for Ireland to make a big impact. We were seen as having done our homework on all the dossiers and civil servants were professional. There was a sense that Ireland's honour was at stake following the EU-IMF bailout programme and the Presidency was the opportunity to address that. One perspective I got on the way the Irish permanent representative worked is the ambassador, Rory Montgomery, seemed to have much more discretion and room for manoeuvre in making decisions on behalf of the Presidency rather than having to constantly run a particular policy or line back to Dublin through various levels. I have heard the word "envy" being used in that context. Ireland was much more pragmatic and had much more discretion and room for manoeuvre.

We are back to where we were before the Celtic tiger happened. There was definitely a perception in Brussels that the Celtic tiger was accompanied by a certain level of hubris, a certain cavalier attitude to Europe that we did not need the EU and that we had largely become rich on our own initiative. There were reservations about some of the policy decisions and logistical decisions Charlie McCreevy made as Commissioner. That did not go down well in Brussels and that sense lingered for some time. That was compounded by the events surrounding the bank guarantee scheme, the lack of regulation of banks and perhaps a fiscal policy which poured fuel on the fires that were raging at the time. However, people were aware that Ireland was not alone and other countries had caused problems for the rest of Europe in terms of regulation and banking policy. The UK, Spain and Cyprus have all come in for criticism. Now Ireland is back and its reputation is largely restored. The question for the Government will be what it will do with that reputation.

I refer to the EU and the world. We are again in a changed set of circumstances with the creation of the EU External Action Service, EEAS, which is often referred to as the 29th member of the Union. It is a strong bureaucratic body that is supposed to project European foreign policy with a strong voice. There are criticisms that this has diluted and diminished the impact Ireland could have. The Government sometimes struggles to get purchase on its policies at foreign affairs level but there are examples such as Zimbabwe where the Government along with other smaller member states was able to push the question of relaxing sanctions against the country in order that civil society and development organisations could benefit from a dialogue with the Union. Eventually that became EU policy. The opportunity, therefore, is there, although it is a greater struggle for countries such as Ireland when the EEAS is trying to develop its muscle and project its particular force on the world stage.

With regard to Ireland's traditional policy of neutrality, there is a perception that it is an irrelevance and there is puzzlement that Ireland is guided and bound by the triple lock given we do not have a voice at Security Council level but we have a voice at EU level and, therefore, why should we not go down that path. There is also a feeling that while Ireland has been positive in the context of development aid and in projecting its aspirations through organisations such as Concern and GOAL, this may not be enough in the 21st century. The security challenges Europe faces will require a blend of force, diplomacy and development aid. As Kofi Annan said, there is no security without development and there is no development without security.

A major issue that will confront the Government in the next few years is the UK and its relationship with the EU. It will be a major challenge given the apparent trajectory of the UK out of the Union. There is concern that an unstoppable momentum has been created and Ireland will have to assess its posture regarding the UK. The first challenge will come later this year with the European Arrest Warrant, EAW. Under the Lisbon treaty, the UK can opt out of as many elements of justice and home affairs as it wants and the big expectation is that it could opt out of the EAW and that will automatically call into legal question what will happen in extradition cases between Ireland and the UK. How the Government handles the debate as it takes place in Europe and as it filters through into the media-tabloid sector in Ireland will be important. Ireland is seen as a constructive, pro-European member of the Union, yet it is close to the UK on tax, security and justice and home affairs issues. However, it is not perceived as a troublemaker. For example, I heard anecdotally that Viviane Reding, the Justice Commissioner did not realise Ireland had an opt-out on criminal justice matters because we do not shout that from sidelines and we keep it to ourselves. We are seen as diverging from the UK on some key issues.

The perception is Ireland's reputation is largely restored in Brussels. It is up to the Government to see what it does with that political capital.