Colm McCarthy: little comfort in being outside NATO

Just over a month from now, on 7 October, the budget for 2026 will be revealed.

Obscured by the ongoing pressures for extra spending across the board as well as more tax breaks, there has been a less audible murmur of support for an expanded long-term commitment to greater defence costs. Ireland has been a militarily neutral state since its foundation a century ago, one of only a few non-members of the NATO alliance in today’s Europe.

A part of the economic legacy of the State’s early governments has been a small annual bill for expenditure on the Defence Forces. The largest possible uplift in the annual bill would come from accession to NATO where most members already spend around 3% of GDP on their armed forces.

Ireland’s military expenditure in the coming year will be about one-quarter of 1%, that is, one-twelfth of what is currently being spent by many NATO members, some of whom have specific plans to increase further to around 5%, 20 times the burden currently shouldered in Ireland.

Of the European Union’s 27 members, just four are not members of NATO. There is little public support for Ireland joining, according to opinion polls, and there appears to be no great pressure from continental EU countries either.

The most significant EU non-member is Austria, constrained by the 1955 Austrian State Treaty which facilitated the withdrawal of Soviet forces which had occupied Vienna and eastern parts of the country after the Second World War.

The others are two small islands in the Mediterranean, Cyprus and Malta, and their circumstances are different. Cyprus has Turkish (NATO) bases in the north of the island while the United Kingdom has retained sovereign territory, including air and naval capacity, in the south.

While the Cypriot government keeps defence spending low, the island is a NATO base for all practical purposes. At the other end of the Mediterranean, Gibraltar is British and there are Spanish bases nearby. Thus, the Mediterranean is secured for NATO at both ends and the neutrality of Malta in the middle may not be seen as a weakness.

Little comfort

Ireland should thus take little comfort in being one of four EU countries outside NATO. There could be pressure to join from the continental countries as their overall defence capability ramps up, in response to apparent US disengagement and the likely bill could rocket.

Even at 3% of GDP, the annual bill would be 12 times the current spending level, currently around €1.5bn per annum. The extra cost would be around €17bn per annum, comparable to the cost of building a MetroLink every year, indefinitely.

The Irish political left is in tune with the general public in its attachment to neutrality, but strangely reluctant to draw attention to the enormous fiscal burden which NATO membership would invite. Even without abandoning neutrality, all EU members could come under pressure to participate in a defence arrangement built around European Union standalone capability.

This has already been mooted as a possible formula for replacing the UNIFIL force in Lebanon, in recent times a substantial draw on the resources of the Irish army and due to terminate in 2027.

If there are grounds for concern about the sustainability of the public finances into the medium term, as articulated by the Irish Fiscal Advisory Council, the ESRI, the Central Bank and others, the budget due in October is only a first instalment. The Government has already committed to a big expansion of the capital programme, and this would be jeopardised should the corporation tax bonanza slow down or disappear.

Add in the risk of a huge expansion of military spending and the prospects for maintaining budget balance begin to fade. Choices will have to be made and the trade-offs acknowledged.

Had Ireland chosen NATO membership back in the 1980s, there would today be a bigger army, air force and navy, but no inter-urban motorway system. Or there would have been higher rates of VAT, income tax and PRSI contributions, plus water charges and higher property taxes.

To pretend otherwise is to assume that national resources are simply unlimited and that the existence of trade-offs can permanently be denied.

The case for prudence in the forthcoming budget has been made forcefully in recent months and we will know soon enough whether the message has been received. Longer term, the priority will turn to persuading our EU partners that no likely threat would be countered in any meaningful way by Ireland’s accession.

The only threat is Russia, and Ireland has the good fortune to be closer to Newfoundland than to Moscow. There could well be pressure to contribute financially to European defence even without a military build-up here, and this is the financial threat to which Government needs to respond.