It's one year since Mairead McGuinness became the newest member of the European Commission, replacing her Fine Gael colleague Phil Hogan as Ireland's commissioner and taking up the brief of financial services.
Her Strasbourg office is largely bare. She assumed the role at a time when the EU's usual travelling carousel and face-to-face meetings were largely suspended due to the Covid-19 pandemic, confining her work, until recently, to a small circle in Brussels.
Two major policy areas have been her focus.
One is setting common standards for investments that can be classified as “green” – something she hopes will follow the trend of past EU regulations and ultimately shape global norms.
"Most of my work at the moment is about trying to fund this green transition," McGuinness says. "The whole transition towards a more sustainable future requires vast amounts of money. Private money, because the public purse isn't big enough. As I keep reminding people: all the talk in the world will change nothing – but money will."
The other is strengthening EU safeguards against money-laundering, including by extending regulation to cover the nascent world of cryptocurrencies.
The weaknesses and loopholes within the EU's current controls were sharply revealed by the massive Pandora Papers investigation by a consortium of international media organisations including The Irish Times, which revealed how rich and powerful figures were able to work within the European system to disguise their wealth and reduce their tax bills.
Pandora Papers
Among those named in the files were a former European commissioner, Malta's John Dalli, and the current Czech prime minister, Andrej Babiš, who used offshore companies to secretly buy a lavish French Riviera chateau.
“The fact that there was one commissioner and a prime minister [on the list] certainly doesn’t give people any reassurance that their leaders are doing what they should do, which is lead by example,” says McGuinness.
“It may be legal, but it certainly raises questions as to why people want to hide behind – or use the expertise of accountants and lawyers to distance themselves from – something that they are involved in. If it’s not illegal, why hide it?”
The details revealed – such as the fact that more than 800 limited partnerships are registered to a single empty office on Lower Fitzwilliam Street in Dublin – should be taken up by national regulators and will be addressed by the EU’s updated rules, she suggested.
“When I read the detail, the two pages in The Irish Times, it’s such a web of intrigue,” McGuinness says. “These are not real, physical entities on the ground but addresses of convenience.
“The extent of it revealed by those investigations is extreme to say the least,” she added.
In response to calls for action by the European Parliament this week, the economy commissioner Paolo Gentiloni announced that the commission would propose new measures to tackle tax avoidance and evasion, and on the publication of the effective tax rates paid by multinational companies.
Tax reform
The Covid-19 pandemic revealed the extent to which the economy relies on public services, and has driven a global push to reform taxation to allow states better fund them, according to the former MEP and European Parliament vice-president.
It's partly responsible for the momentum towards an OECD deal to reform how digital giants are taxed and to set a global minimum corporation tax of 15 per cent, ending Ireland's traditional 12.5 per cent rate.
“This is driven by a sense that very large entities have the know-how and the capacity to move money to where it is taxed least, and that adds to a sense of injustice,” McGuinness said.
“Big companies, whether they’re big tech, pharmaceuticals, all of these . . . that are important employers, but equally should be big contributors, if they make big profits.”
Over time, there has been an “evolution of Ireland’s position on tax”, McGuinness said, to a point where it sees it as a common EU and global interest as well as a national competence.
The commission has said it will translate any OECD agreement into EU law, and the Irish Government has been pushing for reassurance that this process wouldn't toughen the rules. It's no secret that member states like France wanted a far more ambitious deal. But McGuinness is reassuring.
“The Irish Government has been very effective in making its case,” she says. “Around the Irish concerns, I think there have been extremely well-articulated by the Taoiseach, and by the Minister of Finance. And, as I understand it, they have not just been listened to: they’ve been heard.”
Brexit bitterness
McGuinness recently made her first trip as commissioner outside the EU to London, where she met chancellor of the exchequer Rishi Sunak and City of London stakeholders.
The business people she met “want certainty and they want good relationships”. But what is missing post-Brexit is “the political will to move on, including addressing this unsolved problem of implementing the protocol”.
The commissioner described herself as “more than concerned . . . actually quite alarmed” at how relations with the British government have nosedived despite what she sees as EU efforts to improve the mood.
“Certainly some of the commentary at the Conservative Party conference would add to my concern,” she added.
Britain's Brexit minister David Frost has repeatedly threatened to use the sensitive article 16 clause to suspend Northern Ireland's special arrangements, unless the EU makes concessions fast. But McGuinness sees this as ultimately futile.
“Article 16 has a ring of dread to it, because it sounds like the ultimate weapon. But triggering it won’t solve anything. It will just have been triggered, and then we will still have to talk to each other,” she says.
Protocol difficulties
The EU is expected to unveil proposals this week on how to ease the implementation of the protocol, which was designed to maintain an open border with the Republic while protecting the EU’s Single Market, entailing some differentiation with Britain and checks in Northern Irish ports.
McGuinness blames at least some of the problems of implementing the terms on a British lack of preparation.
“It’s very clear that there are implementation problems in Northern Ireland. And on that I would say this is hardly a surprise. The UK government made no effort to communicate what it agreed, what it signed and to help business understand some of the changes that were coming,” McGuinness said.
Her interpretation is that the government of prime minister Boris Johnson signed up for something it didn't really want.
“I think it was in a rush to ‘get Brexit done’, and any Brexit will do, as long as it’s done. And I have a sense – I hope I’m wrong – that the UK government agreed it, signed it, ratified it and then said: ‘Well, we didn’t really want it, so we’ll try and make Europe, if you like, capitulate.’”
The perceived attempt by London to backtrack on the agreement has damaged trust in Brussels. “What has been very difficult for us to understand at the European level is how a country like Great Britain would resile from an international agreement, and do it without any blushes,” she said.
It has been politically difficult for the British government to acknowledge that Brexit may have had a role in its current wide-ranging shortages and empty supermarket shelves, she suggests.
“I think it’s really interesting that Northern Ireland, while people were saying it had problems, in fact it doesn’t have shortages and certainly didn’t have the queues for petrol,” McGuinness says.
‘Strategic autonomy’
"I would ask Lord Frost and others to look at this in a less emotional way and see how beneficial for business and families in Northern Ireland it is to have free access, of course to the UK market as part of the UK, but also to the European Union. "
Part of the lesson of Brexit, McGuinness says, is that the EU has to be “less naive”. Too often in international affairs, the EU is “taken for granted in the room”.
“Over the last year, my experience in the college is that we’re beginning to talk about ‘strategic autonomy’. That we shouldn’t be naive about our neighbours and our friends. We should make sure that we are not vulnerable, whether it’s in pharmaceutical supply chains, or protective equipment, or microchips, or energy.”
This applies to the relationship with the United States as well, which was deeply bruised by the hostility of the Trump administration. Hopes for a recovery under President Joe Biden were dampened by perceived lack of communication and dismissal of European interests during the chaotic withdrawal from Afghanistan, and announcement of a security partnership with Australia and the United Kingdom that snubbed France.
Recent events have shown the need for “a stronger Europe globally, so that we are taken very seriously. That allies don’t, you know, do things without chatting to us at least,” McGuinness said. The “language and atmosphere” on trade has improved, but not enough to yet resolve a tariff war that ended up hitting Irish companies like Kerrygold.
Energy prices
As we speak, EU countries are piling pressure on the commission to intervene to address high gas prices. The surge has raised fears of a consumer backlash as winter sets in that could sink the bloc’s ambitions to slash emissions to rein in climate change.
There have been calls for the EU to negotiate gas contracts centrally in a similar way to how it bought vaccines, to stop member states bidding against each other, and for tweaks to its energy market regulations.
The commission insists that the rising price of carbon – under an EU emissions trading system that forces polluters to pay for carbon credits – is responsible for only a fifth of the price rise, and that the crisis only strengthens the case for speeding up the switch to renewables, as they will be more secure.
As a bonus, the higher-than-expected carbon revenues mean there is more cash to help those affected, McGuinness argued.
“Now is not the time to blink,” she said. “The solution is to keep on this path. If we deviate, or slow down, or divert, we will simply make the problem worse. And we will not be forgiven for making the problem worse, particularly by the younger generation.”
