Ireland is rich but vulnerable, with the weakest military in Europe – outside of a few micronations. It now has the opportunity for that to change. With the second highest GDP per capita globally, Ireland acts as a gateway to Europe for countless American companies. Yet its defense capabilities remain alarmingly inadequate, in the past even relying on local fishermen to deter Russian warships. Now, as tech giant Apple faces a €13 billion payout tied to its operations in Ireland, the nation is presented with a unique opportunity: to use its new found money to transform its defense capabilities while safeguarding the economic foundations that make it such an attractive player on the global stage.
On 10 September 2024, the European Court of Justice’s (ECJ) backed the European Commission’s 2016 findings that Ireland had placed corporate tax rates as low as 0.005%, giving an unfair advantage to American tech giants like Apple and breaking EU state-aid laws. The ECJ decision forces Apple to pay €13 billion in back taxes, a pivotal moment that demonstrates the magnitude of growth in the special relationship between Ireland and the United States. It also gives Ireland extra capital at a time at in which its defense industry needs it.
Beyond one-time modernization efforts, Dublin should raise its annual defense spending to adequately protect Ireland’s transatlantic undersea cables, to both recruit and retrain members of its armed forces, and better secure its borders, as well as Europe’s northwestern flank, by increasing air, sea, and cyber capabilities. Starting this initiative now will enable Ireland to strengthen and safeguard its relations with the United States – especially crucial due to the incoming Trump administration, with its ‘America First’ policies and transactional view of foreign affairs – while also allowing it to flex its muscles within the EU during its 2026 presidency of the Council.
While the characterisation of ‘special relationship’ is often deployed with reference to the bond between the United Kingdom and the United States, one built upon a geostrategic and defense relationship underpinned by past cooperation to defeat Hitler and current cooperation to support Ukraine, defense isolationism is growing on both sides of the Atlantic, undermining the viability of future cooperation.
Economic prosperity and a bridge between continental markets might form the foundation of a new special transatlantic relationship, perhaps even a tripartite agreement akin to the Good Friday Agreement, to which Ireland, the UK, and the US are all signatories. This would have the effect of replacing current isolationist sentiments with realist, capitalist deliverables. Brexit also put the aforementioned Good Friday in jeopardy due to the impossibility of reestablishing a hard border between the Republic of Ireland and the United Kingdom in Northern Ireland.
Given Ireland’s potential to further American advocacy in the EU, just as Ireland did for the Obama administration over Apple back taxes in 2016[MC2] , a stronger Ireland-United States relationship is likely to emerge in the future – and perhaps even reach the status of a special relationship for the US.
While the US-Ireland relationship began in the early 19th century, peaking between 1845 and 1851 (during the Great Starvation, when two million Irish migrated to the United States, resulting in 31 million Irish-Americans today), it might be better understood today in terms of the 970 American companies that have European headquarters in Ireland. These companies include, to name just a few, tech giants like Google, Meta, Apple, Microsoft, LinkedIn, AirBnB, PayPal, Indeed, Twitter, and eBay.
These companies have chosen Ireland as their gateway to the European market given the favorable tax policies, highly educated English-speaking workforce, and role as the only EU country with English-speaking common trade law (the legal framework for governing trade and commerce). The Effective Tax Rate paid by multinationals in Ireland is also significantly less than the advertised corporate tax rate of 12.5% (the second lowest rate in Europe). This is the result of the ‘Double Irish’ and ‘Dutch Sandwich’, tax mechanisms that allow companies to shift profits to low or zero-tax jurisdictions through intellectual property licensing.
This economic relationship has proven highly beneficial for Ireland. US companies employ a total of 376,000 people directly or indirectly in Ireland. Ireland had a GDP per capita of $104,270 in 2023, second only to Luxembourg; it is one of the fastest-growing economies in the world, and ten American companies represent 60% of Ireland’s corporate tax revenue, according to the Irish Tax and Customs Department. Apple alone accounted for 25% of Ireland’s GDP growth in 2018.
Most notably for Ireland’s foreign policy, it has gone from a net receiver to a net contributor to the EU as a direct result of American investment. This has put it on a better footing during EU negotiations, allowing it to continue to uphold its more transactional approach to EU affairs – an approach demonstrated through its status as a corporate haven and negotiating an open border with Northern Ireland.
In 2023 alone, 167 American companies opened new offices in Ireland – but this geoeconomic relationship is still, in many ways, in its infancy. Given that it is likely to continue to grow, Google has built transatlantic undersea cables of which 75% will pass through Irish waters. This relationship should involve looking beyond simply capitalizing upon economic issues, but also by expanding on a defense infrastructure that might preserve and protect it.
In Europe, Ireland is known as a ‘defense freeloader,’ with Irish waters and airspace remaining Europe’s ‘open flank.’ While the Republic controls 16% of EU waters, it contributes close-to-nothing to Europe’s northwestern protection. Ireland has one of the lowest annual defense budgets in Europe, spending only €1.1 billion, or around 0.2% of GDP. The country faces an ‘existential’ recruitment and retention crisis operating at 41% of required personnel capacity until 2021, lacks a primary radar system to monitor its own airspace, has no combat or heavy airlift planes, and outsources its security to Britain’s Royal Air Force as part of a ‘secret deal’ between Dublin and London.
Ireland continues to freeload in a geopolitical age in which a revanchist Russia and more assertive China threaten both the physical and cyber security of European states. Not only does this harm Irish security, but it also impacts negatively upon European security and the special transatlantic geoeconomic relationship that Ireland has worked hard to build over the past forty years. Unlike elsewhere in Europe, Russia’s invasion of Ukraine in February 2022 has not resulted in a strategic shock that has changed Ireland’s approach toward its own security. The fact that a month before the invasion, Ireland had to rely on a courageous crew of fishermen, instead of its Naval Service to deter Russia’s navy warships from conducting military exercises in Ireland’s Exclusive Economic Zone (EEZ) likewise changed nothing.
This reluctance to change is in large part a result of the ingrained culture of neutrality and resistance to military cooperation involving the UK shared by much of Ireland’s political elite. Stemming from its history as a British colony, Article 29.4.9 in Ireland’s constitution prohibits it from from establishing common defense, reflecting its non-aligned nature.
Although Dublin has made progress by joining NATO’s Critical Undersea Infrastructure Coordination Cell, outlining its engagement with Nordic states that include defense and security, and their plans to purchase a primary radar system before 2028, as outlined in the February 2022 Commission on the Defence Forces report, its defense spending continued to decline in 2023. Seeing as Ireland may now be coming into a spare and unbudgeted €13 billion, which it fears will inflate the country’s currency, Ireland should look at investing this money in defense and in protecting its special relationship with the United States.
Ireland should further institutionalize military modernization by raising its annual spending on defense to better secure its borders and Europe’s northwestern flank from potential malignant actors. The US should support Dublin in addressing these strategic realities as part of a broader goal of boosting Ireland’s role and credibility in Europe and out of a necessity to protect its corporate and political gateway to the EU.
Finland, another EU country similar in population to Ireland, has an annual defense budget of €6.2 billion and has developed a formidable defense posture. While the defense culture differs greatly between the two countries, with Finland having mandatory male service which significantly cuts costs, Ireland investing a fraction of its newly found money in defense infrastructure – primarily in cyber, maritime, and air capabilities to protect its transatlantic trade – could surely achieve similar results.
Ireland has hit the economic jackpot in Europe. It should be doing everything it can to protect it.
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Dr. Sean O’ Dubhghaill is a graduate of KU Leuven (2015) and an Adjunct Professor at the Brussels School of Governance.
Zahar Hryniv is an MA student in Central and Eastern European, Russian, and Eurasian Studies at the University of Glasgow and the University of Tartu. He currently serves as a student intern at the U.S. Department of State, Consulate General Almaty. All views and opinions expressed are his own.
Samuel Dempsey is the editor at The Mainichi Newspapers Europe Bureau in Brussels. He is an incoming Presidential Management Fellow at the U.S. Department of State and currently serves as a research analyst at the ITSS Verona, an expert at Blue Europe, and as a security and defence officer at YPFP Brussels. All views reflected are his own.
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