Mr. Tony Connelly:

The Irish Government and the then Taoiseach managed to have language inserted that essentially stated Northern Ireland would automatically be part of the European Union in the event of Irish unity. That took quite a battle. I am sure the Deputy has recollections of this. My understanding at the time was that the French were a little worried about what this language might mean. Would it put Europe on the hook for recommending or promoting Irish unity? Of course, capitals do not want to be involved in that. They do not want to know. I think there were also concerns raised by Cyprus over the EU's commitment to resolving the Irish border question and about whether this might set a precedent for Türkiye. Irish unity is never seen in isolation and in general ,the EU would not want to get involved until there is a settlement between the London and Dublin Governments, and the parties in Northern Ireland. That said, they were very keen to get involved in the Brexit negotiations because of the legacy of the Good Friday Agreement and the EU's contribution, not so much to the agreement itself, but afterwards to the funding and so on. They saw the Irish peace process as one of the few success stories with EU money stamped on it. I think EU officials went to Colombia some time afterwards to talk to Fuerzas Armadas Revolucionarias de Colombia, FARC, guerrillas about spending money to break down barriers within communities, using EU structural funding, peace funds and so on. They were using Northern Ireland as an example.

I will turn to the question on austerity. I covered the Greek and the Irish bailouts. I was in Athens quite a few times over that period and it was a tremendously violent and awful period. There is certainly a consensus that the European Commission and the IMF recipe at the time was too strict for the cycle that the Greek economy was in. I remember talking to an Irish official who was part of the European Commission's delegation in Greece. He said that ultimately Greece could not borrow money anywhere so the EU and IMF were the only people who would lend money, and it would be European taxpayers footing the bill if there was a default. He said there were Slovak taxpayers who would be on the hook for this and their standard of living was lower than the Greek standard of living. There was a lot of politics around this. There was a lot of politics at the time. A lot of different constituencies were having to be balanced and, as Mr. Montgomery said, the EU simply did not have the tools to respond to this. I remember at the time there was a real existential threat to the euro, and possibly to the EU. The stakes were extremely high and mistakes were certainly made because of that. However, in retrospect it is generally correct to state that the EU would probably say it was too hard, certainly on Greece, at a time when the Greek economy simply could not cope with the level of austerity being applied.

There is a vibrant debate at the moment on the question of state aid. The state aid rules have been relaxed since Covid hit because countries are having to spend a lot more and they have used an exceptional clause in the Stability and Growth Pact to allow countries to spend more on essential issues. That will feed into a wider debate on the future of economic and monetary union. That debate will be kicking off in the next year or so. Along comes the Inflation Reduction Act in the United States, which is unfortunately referred to as the IRA in all of the correspondence and commentary at the moment. It usually causes me to jump whenever I hear it. I have still not internalised that. The Inflation Reduction Act has caused a lot of nervousness in Europe about the size of the state aid subsidies and spending the Biden Administration envisages for the green tech sector in the US, and how that will suck investment out of Europe. There is an ongoing debate on how much state aid we should have, and if countries should be allowed spend both to cope with the legacy of the pandemic and to try to counter the effect of the Inflation Reduction Act in the US. My indication so far from the Irish Government is that the Taoiseach, Deputy Varadkar, is a bit squeamish about simply loosening state aid strings too much. He says that ultimately taxpayers are on the hook for that money and often these projects may not be value for money. We will hear more about that in the coming weeks.