Ireland's changing position within the European Union is thrown into high relief by the Agenda 2000 negotiations entering their most intensive phase after yesterday's summit in Bonn.
The idea of positioning has both a spatial/geographical and a power/influence connotation. Net transfers from Brussels under the Common Agricultural Policy and the structural funds have encouraged Ireland to consider itself geographically peripheral, developing and dependent on Brussels for infrastructural spending. Total net transfers, according to the Department of Finance, amount to £21.5 billion in the period 1973-1997, an average 4.13 per cent of gross domestic product (GDP). They are still running at a substantial, if reducing, proportion of GDP despite fast economic growth.
The Taoiseach acknowledged this week that Ireland could become a net contributor to the EU budget by 2007.
From these figures alone it can be seen how big a transition is facing this State in coming years. The picture is compounded when account is taken of the important distinction between gross domestic product and gross national product in measuring Irish living standards. The gap between them is 102 per cent as against 87 per cent. A more truly accurate figure, gross disposable income, would include the EU transfers and put real incomes at perhaps 91 per cent of the EU average.
This is a uniquely Irish phenomenon, and a misleading one which has created a false picture of Irish prosperity. It arises from the scale of profit repatriations from foreign direct investment by multinational companies, largely US ones. They have, of course, been attracted here by the 10 per cent rate of corporation tax, which encourages them to maximise the profit declarations in Ireland and use transfer pricing to do so.
The Government's proposal to standardise such taxes at 12.5 per cent is legally inviolable from Brussels as a matter of domestic fiscal policy, but is coming under more and more attack, from social democratic Germany especially, as unfair competition. The decision, which has had cross-party support, constrains the Government's tax options just as it will need to become much more selfreliant for infrastructural spending.
In comparative terms Ireland is a low-tax, low-spend country. How much can this continue in these new circumstances, as the Government pleads an infrastructure deficit and urban congestion emerges as a potential disincentive to further foreign direct investment?
The scale of EU transfers is higher when measured as a proportion of GNP. It is reckoned that Ireland was the fourth-poorest member-state in 1997, according to this measure; and assuming continuing strong rates of growth, we would not catch up until 2006.
Such figures expose the duality of the Irish economy between an internationalised and technologically sophisticated high-growth foreign sector and a much less innovative domestic one far more dependent on trading with Britain. There are similar gulfs in agriculture. And, as the regionalisation debate reveals, average national figures, however calculated, give a misleading picture of geographical and social inequalities and disparities.
Such dualities help to explain the ambiguous attitude towards positioning Ireland within the EU, between the impulse to preserve existing transfers and increase the resources to sustain them, and the realisation that the current net contributors are not prepared to do so and that Ireland will soon be transferring to that camp.
The Government's policy in the Agenda 2000 negotiations sensibly combines elements of both approaches, summarised in the definition of this State as a transition country looking for a soft landing in the next budget period.
For the moment this puts Ireland firmly in the camp of southern net receiver states, with Spain, Greece, Portugal, Italy and France, rather than in the northern net contributing ones with countries such as Germany, Britain, Sweden, Austria and Finland. But alliance-building in these negotiations is made much more difficult than in 1992 because of the fragmentation of interests across such a diverse agenda.
Peripherality and dependence have receded as defining characteristics of Ireland's position within the EU as high growth combines with greater confidence and internationalisation of the economic and political systems. We are certainly not peripheral in Atlantic terms, for example, but rather something of a cultural bridge between the US and the EU. Reduced dependence on Britain has released similar energies.
It is useful to distinguish between the geographical centre of an enlarging EU - a point which is steadily moving north-east - and its core. Economic and monetary union, the Common Foreign and Security Policy (CFSP) and the rapidly emerging justice and home affairs regime (JHA) are all core areas in which there is provision for differentiated membership. Those states involved in all of them, which might be described as the omnipresent ones, are likely to have most influence in the system.
Along with the redefinition of Ireland's material interests in Agenda 2000 the CFSP debate is becoming more intense following the UK's defence initiative at St Malo with France; so is the JHA one, as the UK and Ireland are due shortly to announce opt-in arrangements; this week Mr Blair signalled a much more positive approach to joining EMU.
The Blair government is keen to dispose of the forthcoming negotiations on weighted voting, and Commission and European Parliament representation quickly, so that they would not coincide with their referendum on joining EMU.
Ireland's growth and success with foreign investment owes more to access to the EU market than to transfers and the CAP, however significant these have been. This will be all the more significant as the EU enlarges. Positioning this State at the political core of the system will be more and more important as the transition from semi-peripheral status is accomplished.