A leading Department of Finance official has questioned Government plans to ban goods from illegal Israeli settlements, warning of potential fallout for Ireland’s economy.
The concerns expressed by John McCarthy, chief economist in the Department of Finance, come at a time when the Coalition is grappling with deepening uncertainty in the outlook for Irish trade as Donald Trump prepares to impose a 25 per cent tariff on imports into the US from Europe.
Mr McCarthy, a member of the department’s senior management, has responsibility for economic and budgetary analysis and forecasts and for developing a strategy for the Irish economy across all sectors.
Taoiseach Micheál Martin has called for a fundamental overhaul of the disputed Occupied Territories Bill because of legal issues, prompting Opposition critics to accuse him of stalling tactics.
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However, the proposal remains in the Programme for Government. In the policy document agreed only last month, Coalition leaders pledged to progress new laws to ban imports of goods from Palestinian territories illegally occupied by Israel.
Now there is disquiet among Department of Finance officials about the potential for such measures to undercut relations with global multinational companies that employ hundreds of thousands of Irish workers.
The question is all the more sensitive as the US president has cast himself as Israel’s unwavering ally, saying Palestinians should be forced from the Gaza Strip to make way for a US-run “riviera of the Middle East” in the territory.
In a recent meeting in the Department of the Taoiseach, Mr McCarthy said the Occupied Territories Bill raised the prospect of conflict between the State’s diplomatic policy and its economic policy.
That meeting was specifically called to discuss the Government’s response to Mr Trump’s abrupt policy U-turn on global trade, fraying relations between the US and its western allies, Russia’s war on Ukraine and the Israel-Hamas conflict in Gaza.
The view in the Department of Finance is that it is its job to advise the Government on economics and it is the job of others to advise on non-economic issues.
Mr McCarthy’s views were later amplified in a formal submission to Minister for Finance Paschal Donohoe from the economic policy division in the department.
Such documents – known as “eSubmissions” as they are transmitted electronically – are usually sent to Ministers via the secretary general in a department.
“It wouldn’t come as a surprise that the economic ministry would be talking about the economic impact of a measure,” one close observer of discussions within the Government said.
Another noted that Mr McCarthy was known for direct language: “He is not shy about voicing an opinion.”
The questions raised over the Occupied Territories Bill in the Department of Finance come after Department of Enterprise, Trade and Employment officials warned of potential for problems for international companies operating in the State.
“Implementing these measures might pose problems for some businesses based in Ireland, including multinationals, which do not usually operate different regimes between Ireland and other EU countries,” officials told Minister for Enterprise Peter Burke after the Coalition took office last month.
Mr Trump has said he would be going ahead with a 25 per cent tariff on American imports from the EU, presenting the risk of steep taxation on Ireland’s €72.6 billion export trade with the US. The US is the State’s single biggest export market for goods, with pharmaceutical products likely to face a big hit.
Any US tariff on EU imports would trigger European retaliation against US imports, leading to concern about the risk of higher prices for consumers on both sides of the Atlantic and pressure to raise interest rates because of rising inflation.
