The news this week in the national press that voters in the recent Brexit referendum were only influenced to change their Referendum vote largely by three key people was instructive: ignoring David Cameron and his Government colleagues (irrespective of whether they Remainers or Leavers); ignoring the Labour Opposition and its confused mixed messages campaign; and ignoring “real experts”, such as the economists profession, political affairs academics, and UK Industry representatives bodies - instead - the three people who caused people to change their vote in the Referendum were (the now former) UKIP leader Nigel Farage, Prime Minister “wannabee” Boris Johnson, and US Presidential candidate Donald Trump.
Trump’s inclusion on this “key Brexit influencers” list is interesting, because although the polls do not look good for him right now, nevertheless US voters have been listening and following him for months now in the US, liking his “Making America Great Again” motif, with its anti-immigrant undertones, which of course, has strong resonances with the Brexit campaign’s appeal to UK voters to leave the EU so that the “Great” in Great Britain can be restored again. Just as with Trump’s Making America Great Again campaign, the BREXIT campaign has barely disguised anti-immigrant undertones, and had a major influence on winning voters over to the BREXIT Leave EU side.
And so, here we are, its September, with the Donald vs Hilary show on the race to the White House. Who will get the contract to build that Great Wall along the Rio Grande? And who will pay for it? This week the President of Mexico made it very clear he won’t. And who will be awarded the Trump-inspired contract to organise the screening of foreign Muslims when they seek to enter America? Another big contract that will have to be paid for by presumably the US taxpayer - an open-ended cheque for some large computer software corporation to milk for years. All sounds depressing familiar: “Grande Projets” emanating from election campaigns, massive project budget overruns, fostering resentment and rarely achieving the desired objectives.
Now caught up in the post-Brexit hangover, Dublin, with its export sector being hit hard by post-Brexit Sterling depreciation, has a more than usually keen interest in the outcome of the White House race. The Republic has traditionally been favourable to the Democrats, so Hilary is clearly the preferred candidate. The Clintons have a strong association with Ireland: Bill had ancestors on both Catholic and Protestant sides, and he devoted large amounts of energy to nudging the disparate factions during the Northern Ireland peace process, so the Clintons are well regarded in the Republic and in the North. Blair in his diaries acknowledges Clinton’s key role in removing logjams between the once intractable Nationalist and Unionist sides, and Hilary herself was also part to those constructive interventions. A frequent visitor to Ireland, Hilary is held in high esteem on account of the peace process success, so Dublin is watching this election very closely for two key reasons. So what’s the connection with BREXIT and Trump?
There are two reasons: first, Brexit raises the prospect of the legal necessity under EU Law to impose a hard border along the dividing line between the Republic and Northern Ireland: notwithstanding both Prime Ministers May and Kenny’s mutually expressed wish for a “soft border”; the need to re-impose a “hard border” between the Republic, an EU member, and Northern Ireland, a non-EU member, becomes inevitable once BREXIT occurs.
This likely re-appearance of (now dismantled) border posts could rekindle old enmities between the opposing political factions in Northern Ireland, so this could be a key issue where “honest broker” President Hilary Clinton could play a constructive role to help both sides “cool it” and get along with this likely uncomfortable border revival, based of course on her past credible familiarity and successful engagement in the peace process during the 1990s at Bill’s side.
The second reason why Dublin is more than interested in the election of Hilary in preference to Donald, is even more immediate: the not insignificant matter of US corporations using Ireland as a vital conduit for the hoarding of their foreign earnings outside the US and keeping them out of the reach of the IRS. Now with the recent European Commission Apple State Aid decision going against Apple last week, Ireland assumes an even more significant role for corporate America.
Do not forget, 10 times more investment has gone in Ireland (gateway to the European Union being the motif) by US corporations since the 1950s than has gone into China to date.
So the Irish Government’s quick response that it will appeal against the Commission’s Apple decision is hardly surprising, and there is little doubt in the corridors of power in Dublin that a Wall Street-friendly and Ireland-friendly Hilary Clinton will do little to upset the status quo. While some Irish politicians and others key observers such as Nobel Prize winner Joseph Stiglitz are asking, why would a Government give 100 reasons not to take 13bn euros from Apple, they are in fact missing the point: appeal or no appeal, Ireland is going to get the lolly sooner or later. Ireland is in fact in a nice position, despite the bluster from the Irish political class: you see, Ireland occupies a “win-win” situation in the Apple controversy. Think about this: if Ireland takes a “successful” appeal before the European Court of Justice (Apple can keep its lolly), Ireland will have proven its colours as reliable partner location for channel multinational profits through, though of course this loyalty will of course have to come with a price tag attached for the multinationals: the “close-shave” will require US (and other) multinationals, desirous of continued use of Ireland as tax-minimiser location post-Apple, to return a more generous thank-you tribute to such a loyal country-partner. In other words, Ireland will, as a guarantee of future support for multinationals, “demand” an increase in the modest cut it currently takes off the multinationals’ Irish-based tax minimisation operations, thereby keeping the Irish taxpayer sweet, the optics will represent a “put-down” for those who complain about multinationals’ excessive influence on governments, and at the same time will puncture claims that Ireland has an unduly low corporate tax rate as it will be bringing increased tax payments into its treasury coffers.
So far, so good. But what if Ireland loses the Apple appeal? Should Ireland “lose” the appeal (Apple pays up the 13bn), then Ireland gets the money anyway, after “reluctantly” dividing some of it with the other countries who were deprived of an opportunity to tax it at its place of origination in the first place! Win-win all the way again for Ireland! Predictions of doom (that the multinationals would leave Ireland if the appeal to the European Court fails) are simply not credible: Ireland is simply too strategic a tax minimisation partner for the US multinationals to walk away from.
And how does Brexit and Hilary and Donald fit into all of this?
BREXIT only enhances Ireland’s strategic value to the US and other multinationals: if Brexit occurs, Ireland’s attractiveness as the remaining English-speaking country inside the EU, with close affinity to the US, enhances Ireland’s worth in the eyes of corporate America, as the ideal place in the EU not only to base operations in Europe, but as a prime trusted global tax minimisation partner.
While Donald, Hilary (and don’t forget Bernie too!) all spoke of bringing US corporates’ foreign profits back to America’s tax net, they won’t, because they can’t: America is run by these corporations. Many of its politicians are well funded by these multinationals; Wall Street investors take handsome dividends from their Irish-conduited low taxed profits, so this is one tree that won’t be easily shaken.
And the link with Donald and Hilary? Well, Hilary is no doubt welcome in the boardrooms of corporate America. She and Bill have been generously funded by the corporate sector. And Ireland is likely to bend over backwards to keep the US multinationals happy, so it will be business as usual, albeit with a few tweaks to Ireland’s tax laws here and there, to keep on the right side of the OECD, and so, while one can debate the merits or otherwise of facilitating multinationals to pay so little tax on foreign earnings, the “real politik” is that it will be largely business as usual. Hilary knows the multinationals needs Ireland, and Ireland needs them too. Why make two sets of enemies, with a common mutual interest, when Hilary can have two friends instead!
Donald’s offer of a tax reduction amnesty is not a serious threat to this: first he won’t have the support in Congress, and second he does not understand that the multinationals’ ultimate aspiration is to pay NO TAX, ANYWHERE! 15% would cause them to choke in horror, when we hear they are currently getting away with paying as little as 2% on global earnings by the time all the tax minimisation channelling of profits around the world’s tax havens has been completed. Donald can’t match that.
In a curious way of course, the UK also has a large role to play in facilitating all of this, because the many global tax havens around the world, frequently used by the US multinationals to channel their profits onto (after the Irish conduit has “worked its magic” to minimise their tax liabilities), often happens to be UK overseas dependencies or territories! Funny isn’t it, how the UK population, so taken with the ins and outs of the BREXIT campaign, so obsessed that immigrants are allegedly consuming the UK health and social services budgets, yet does not seem overly concerned that these UK-sponsored overseas territories allow many global corporations keep their global profits far, far, away from the reach of the UK taxman.
Ironic isn’t it, that while the EU, which they now seek to leave, is fighting the Apples of this world using EU State Aid rules, to force EU member countries to extract tax from these multinationals at point of income generation, and yet the UK wants to leave the EU! The very body that will quite possible cause more multinationals to pay tax on their UK generated income, is the very body the UK wishes to divorce from! The very body whose actions could result in an increase in the UK tax take and so allow better funding of the UK’s social and health services, is the body that BREXIT seeks to diverge from.
It’s a funny old world alright!