On this week’s episode of What’s at Stake, former Irish Prime Minister Leo Varadkar, now a member of Penta's Global Advisory Board, shared his perspective on the evolution of political leadership and business strategy amid rising global uncertainty.
His candid and wide-ranging conversation with hosts Bryan DeAngelis and Ylan Mui covered:
You can learn more about the former Taoiseach’s background and new role within Penta Group here.
Welcome to this week's episode of what's at Stake. I'm your host, Bryan DeAngelis, partner and head of the Washington office here at Penta, and I'm Ylan Mui, managing director at Penta.
Bryan DeAngelis: 0:17We're thrilled to be joined today by Leo Varadkar, former Taoiseach of Ireland and a member of Penta's Global Advisory Board. As a two-term prime minister and one of Europe's most influential voices in navigating global challenges, from Brexit to the pandemic response to global taxation, Leo brings deep, firsthand insight into how political leadership and the business community can evolve together, and that's exactly what we want to unpack today. It's impossible to predict every twist and turn in a increasingly fast-moving and interconnected environment, but leaders who understand how to operate within it can gain a real advantage. So we have a lot to get into, but first, Leo, welcome to Washington and welcome to what's at Stake, thank you.
Leo V.: 1:02Great to be back in DC.
Bryan DeAngelis: 1:04Yeah, it's great to have you and it's great to have you on the team here at Penta. I want to start with probably the most interesting question. But you've actually worked with Donald Trump and we'll call it negotiated with Donald Trump, but in your role you had that opportunity and I think a lot of folks are interested in as we're trying to figure out where Trump's going with a lot of his agenda and how to best deal with him. You've had such a unique vantage point, so tell us how did you approach your meetings with President Trump and what can we learn from that?
Leo V.: 1:38Yes, so I worked with President Trump during his first term, would have had three meetings in the Oval and welcomed into Ireland when he came to visit. Yes, it was different in the first term. Quite frankly, he didn't have the popular mandate that he has now in terms of winning the popular vote. There definitely were more constraints from the courts and from Congress. The checks and balances were stronger and working better at the time and I don't think they were as prepared for office or the agenda was as clear back then as it is now. So really, my main objective at the time, particularly during Brexit, was to avoid him acting against Ireland, because even then, president Trump and his people were hostile to the European Union, were more favourable to the UK, wanted to make sure that he didn't do anything negative to disrupt those negotiations and, in fairness, he didn't and then also really tried to stay out of his crosshairs in terms of tax and trade, and even back then, he had an interest in the fact that there were so many US companies booking so many profits in Ireland. But, as I said to him at the time and it's something he even says now Ireland was very smart in how it attracted investments to the US, and it's often anomalies and loopholes in American laws that allow companies to avoid some of their taxation, rather than in Irish and European laws.
Leo V.: 2:57But I think this administration is different. It's definitely more aggressive. They came into office with a very, very clear purpose. I think they're going to try and get as much done as quickly as possible, certainly in advance of the midterm elections, and I think the pace of change and the level, I think I suppose, of muscularity and aggression has taken people by surprise. Not what's been done, because that was all very well flagged in the campaign there aren't any huge surprises there but just that so much has happened so fast and that has been so muscular and at times aggressive and at times quite unsettling for a lot of traditional allies.
Bryan DeAngelis: 3:38Yeah, that's true and it has been. It was well advertised during the campaign, but I think the business community and it's interesting to hear you say it as a world leader has been so shocked. Base took him seriously, but not literally, and this time it feels like people are taking him both literally and seriously at the same time.
Ylan Mui: 4:10So how are you thinking about how the approach that maybe you took during your time as the leader of Ireland would that still work in this administration with this level of aggressive posture?
Leo V.: 4:26Yeah, I actually don't think so. You know, I think companies, I think governments are going to have to be very clear as to what their objectives are, very clear as to what their strategy is. It should remain true to their values, because all administrations come to pass at some stage and politicians are never around forever, whereas institutions are or can be around for generations and hundreds of years. So I think it's really important that people don't do things that they then might regret in the longer term. But in terms of watching the strategy, you know, certainly when it's come to issues like trade and some other things too, you know there's the initial period, which is kind of shock and awe. You know a big announcement, very extensive demands that surprise people or shock people. There's then often a little bit of bullying and intimidation of opponents and competitors. Then there's the effort to make a deal, and make a deal quite quickly, and no matter what the deal is, it is then always sold as a great deal or the best deal ever, even though it isn't much of a deal sometimes.
Leo V.: 5:25And what we've seen in terms of trade agreements and trade deals so far are not what we would have traditionally described as being free trade agreements or anything of that sort. They're very much ad hoc agreements and a toning down of what was previously announced or promised. I think, when it comes to the European Union, we will come to an agreement, probably something similar to what's been done with the UK, with a reduced tariff based on what was there, what's there now, and different agreements in different sectors. I think the real difficulty for us, though, and other trading partners and for companies, is just a degree of uncertainty. There's no assurance that an agreement made in July couldn't be changed then in December or January, and that makes it very difficult for governments to plan, very difficult for businesses to plan, and I think for a lot of companies operating internationally. They will be looking at other markets where there's just greater stability and greater predictability around tax, around tariffs, around regulations.
Bryan DeAngelis: 6:24And I'm curious do you see Europe presenting itself to the business community as the solution there, that this is a place of maybe more stability, or is that going to be competitive between Europe, Asia?
Leo V.: 6:38I think for a lot of people in Europe it's felt a shock and an opportunity, a wake-up call for us to really make strategic autonomy a policy, not just an aspiration, so being more responsible for our own defence and that's one of the criticisms that Trump has been correct about, quite frankly that the EU has been willing to shelter under the umbrella of American defence but in return for that, Europe has been willing to follow the US on international policy and foreign policy matters and that's going to be much less so the case as we take responsibility for our own defense.
Leo V.: 7:11So I think it in the medium term leads to diminished influence of the US and the world, not greater influence. That will take time, I think, to become apparent. I think European Union will double down on free trade. Has really good free trade agreements with Japan, south Korea, Canada, Mexico, strengthening the one we have with the UK, one ready to be ratified with the Mercosur countries in South America. So I think there will be a doubling down on free trade and there will be an effort by the European Union to become more competitive, because we've sort of allowed the US and China to outpace us economically for too long. We've sort of allowed the US and China to outpace us economically for too long. Europe's good at saying that, it's not necessarily brilliant at doing it, but I think there'll be a greater willingness to do so. No-transcript.
Bryan DeAngelis: 7:59One of the things that is talked about a lot here recently is you might have seen some headlines on it we operate and stand up on our own, without overly relying on the US, but at the same time, it seems like companies, industries and maybe even governments are figuring out. This is Trump's kind of playbook, and if you work with him long enough, you're going to get to a spot where it looks like a lot of wins for him.
Leo V.: 8:43But it's really right back to where we were, you know in some of the trade-offs I think you know our best guess is that the policy is to have some level of permanent tariff, that there will be, you know, a price to enter and take part in the US market and there will be a new permanent tariff, and then there will be other agreements then on the side in different industries. So I don't see a return to the way it was before, where we had very low tariffs and effective free trade with America, and that of course, has consequences as to where people invest and the markets people target. I'm kind of curious now, though, from you, because you would deal with businesses here in the US more than I would what's their approach or what are their fears? Are they thinking of greater investments in the US, or are they thinking of strengthening their bases in other parts of the world, particularly in Europe, where there's more reliability around what the rules of trade are?
Bryan DeAngelis: 9:41A little bit of all of the above. It's been interesting to watch a number of industries first, immediately after the election, almost a sigh of relief, where they felt Biden went probably too far on regulations. They expected almost like a Trump 1.0 presidency. This will be a more pro-business kind of administration. The populist side of Trump is way different in Trump 2.0. And, to your earlier points, he understands the power of government. He feels like he has a mandate. So he's not operating with this old Republican Party that he's negotiating with. He's operating with his MAGA party now and so has still gone after industries and that sigh of relief quickly went away as they felt like they were now a target.
Bryan DeAngelis: 10:33There was a lot of confusion of do we engage? Do we sort of keep our heads down? And I think as we've moved into this year, you've seen a lot more. Okay, we have to get out there and tell our story. We have to think about, yes, our supply chains, and it's less about pulling out of this place or that place because Trump doesn't like it, but more how do we have that stability over the next 5, 10, 20 years and how do we keep working with partners in Europe and Asia without alienating this administration. So it's a lot of, I think, great comms work, where you know they are wrapping it in different ways to keep Trump happy, while at the same time they've got a plan for their future.
Ylan Mui: 11:16Yeah, and I feel that a lot of companies you know back in 2017, when Trump first took office.
Leo V.: 11:46no-transcript social is going to come have the contingency plan.
Ylan Mui: 11:53But also there's now a recognition that you can make it through that news cycle If you react. Sometimes the cover up is worse than the lie right. Sometimes the reaction can extend the length of the news cycle and extend or amplify what was perhaps a damaging piece of information or a damaging comment to begin with. And so I think that we're starting to see companies understand that if you have that sort of steady engagement and steady response, you stay true to your values, you stay true to your operating principles, then you can make it through the news cycle, because the media is moving so fast and they're constantly being pulled in a new direction. There's constantly a new headline, and so the spotlight is going to move on.
Leo V.: 12:37Is there any evidence that he's actually been able to do harm to companies that have been called out?
Ylan Mui: 12:45You know, we looked at this a little bit and tried to map the stock price of one company that he called out against the tweets and against the news cycle, so trying to triangulate, if you will, and what we found, that I mean there's many variables, but in our sort of back of the napkin analysis we found that the stock price recovered over time as the news cycle died down. So did the stock price. Again, there's many macro factors, but I think that goes to the idea that you can weather through it, and what we saw in the beginning, I think, of the Trump administration was a lot of companies making some very rapid decisions based on what they were seeing happening on Twitter or on true social, and now I think you're starting to see companies engage more behind the scenes and do that direct outreach to the administration rather than a full sale change of policy.
Leo V.: 13:34And I suppose that the attention of the White House can move on to something else.
Bryan DeAngelis: 13:38Absolutely. I mean, he's a master at media manipulation in that sense where he is, to Alon's point, constantly flooding the zone, where he's trying to do it for himself too. You've interesting to watch over the last few months is, to Alon's point, that companies who are well invested in Washington, have that crisis plan, have been thinking about these issues, are actually pretty well prepared. Where you're seeing the most damage, I would say, is an industry like higher education, where they usually are not in these fights. They don't have that kind of muscle memory of how to work with him or deal in these media environments. And really being caught by surprise and just now starting to figure out some ways to counter that and build allies within Congress and others.
Bryan DeAngelis: 14:39That's a lot of change. I want to jump back to Europe, though, for a second, because, in as much as there's all this change and tension around Trump's policies that's happening at a time when there's a couple of years out of Brexit and what that's doing in terms of the UK and EU relationship, how is that being impacted by Trump? Is that pushing folks closer together? Is that creating more tension? How are you seeing that from your side?
Leo V.: 15:15Yeah, well, I think at the moment we see the United Kingdom and Europe being pushed closer together.
Leo V.: 15:21That's in part because of the invasion of Ukraine, which was the big shock to the East, if you like.
Leo V.: 15:26You know Russia invading a European country, a candidate country for the European Union, and then the shock to the West, which was President Trump casting doubt on his commitment to NATO and his commitment to European security, and that really has pushed the European Union closer together and has pushed the UK closer back to the EU.
Leo V.: 15:44So we have now a defence and security agreement. We have some agreements that have been put in place on rules around food standards and veterinary standards, which will ease trade between the EU and the UK, and also the outline of some changes around energy reintegrating the UK into the European energy market, of some changes around energy reintegrating the UK into the European energy market, and then also around passport controls and possibly youth mobility, allowing a certain degree of limited free movement among young people again. So that's definitely the UK moving closer to the EU and what I could see over the next number of years is more and more agreements like that in other areas being layered on top of what's been done. So it's a little bit like Switzerland, which is not in the European Union but has maybe a hundred different agreements with the European Union in different areas. So at the moment it's a closer relationship, but again because of the volatility in British politics, and it isn't just America where there's volatility and fragmentation and polarization in politics.
Leo V.: 16:43That's happening all over the democratic world. It's very unclear which way the UK will go in four years' time when they have elections again. So in opinion polls, British people want to rejoin Europe. They believe that Brexit was a mistake. But the party leading in the polls, albeit only on around 30%, is the party of Nigel Farage, which instigated Brexit really. So you know, it's very hard to know where things will go in the UK in the medium term. For the first time in a long time again, there's majority polling in Scotland for independence, and then there's the question of where Northern Ireland ends up in terms of unification with the Republic. So there's a lot of uncertainties there, and I think that does create a big worry for business. If you're making one-year decisions or two-year decisions, that's fine. It's pretty clear that the relationship between the UK and the EU is going to be pretty good for the next couple of years. But come the next UK elections, who knows? And that's something that I think has to be factored in as a risk.
Bryan DeAngelis: 17:59Talking about elections, we have seen what's playing out in America, playing out throughout the globe. As you mentioned, there were a retreat, but certainly a much lower volume of companies engaging on those issues, still doing the work, I think, behind the scenes, but not being as vocal about it.
Ylan Mui: 18:20Maybe a recalibration.
Bryan DeAngelis: 18:21Yes, and it seems that way. We're seeing a lot of that in Europe and elsewhere, elsewhere too. But tell us, what are you seeing on that front?
Leo V.: 18:31I think there are policy trends and there are policy fashions and a few years ago everyone wants to talk about corporate social responsibility and DI and ESG and because of the changes that happened in America and perhaps elsewhere, they're less in vogue. I think there are examples maybe of some excesses as well that annoyed people, you know, particularly where there were very strict numerical targets and so on that companies had to meet, and that made other people often people in the majority feel that they were being discriminated against and that's when things can backfire were being discriminated against and that's when things can backfire. Certainly in the European Union, what happens in America is always the background music and it does have an influence to what happens in the UK and in Europe. But I don't see companies pulling back hugely on their inclusion and equality programs. I think maybe they're just being rebranded, they're not being advertised as much, but most companies still conclude that having decent gender balance around the boardroom in senior positions is good for the company and its performance better represents their customer base. And the same thing goes for wider and other forms of diversity, whether it's racial diversity or inclusion of people with disabilities or LGBT people, particularly when it's hard to get staff and hard to get talent. I think most companies see that that's their advantage. They just mightn't make as big a deal of it, perhaps as they did, because they don't want to attract the ire of opponents or, you know, right wing politicians.
Leo V.: 20:11On the environment, I'm probably a little bit less optimistic.
Leo V.: 20:12Governments and companies set very ambitious targets in terms of what could be achieved in terms of net zero and climate action.
Leo V.: 20:19That we probably all knew were unrealistic, but went for a stretched target because if you make the target hard enough, you'll probably get closer to it and I think there's definitely a pullback on that, but I hope it's a pullback towards realistic targets and that will still take action and not the climate action gets paused because you know it is very real and while there's, I think, still high levels of climate skepticism, climate denial in the US, that's not really the case in the rest of the world, certainly not in Europe, in Australia, in China. People can see that the world is getting warmer, that it was warmer than it was when they were kids. They can see the increase in extreme weather events and they can also see that there are huge potential economic opportunities in things like renewable energy and nuclear and not being dependent on fossil fuels, and I hope those investments will continue, even if the very ambitious targets that were there a few years ago are not being adhered to.
Ylan Mui: 21:16One of the things that we talk about with clients is this concept of political durability, especially when it comes to reputation, in other words, making sure that your public posture and your public statements can withstand a Republican or a Democratic administration or whatever else might come in between that. What does that political durability look like to you? You mentioned the importance of authenticity and of staying true to your values and principles earlier in our conversation. How do you recommend that companies approach that?
Leo V.: 21:49Yeah, look, that's difficult. It depends on the company, depends on what they're doing, depends on their objectives and depends on where they operate. You know, one thing that I think is very evident now is that elections really do matter. When elections happen, it can result in very big shifts in policy. That was sort of less so the case maybe 10 or 20 years ago, when there was more consensus and political parties and political leaders were aggregating around the center, and now they much more want to be able to say that if you vote for me, big things and big changes will happen. So that makes them more difficult for companies.
Leo V.: 22:22So, you know, I think you need to have contingency plans. You need to look around the corner, get the information about what might happen. You know, have plan A, have plan B, have plan C, dfg, dfg and I do think taking the longer term view does matter. You know, governments can change. They can also change back again. We see in Poland, where there's, you know, a more liberal centrist government again after nine years of a populist one. We've had in the Netherlands a government for about a year that was led by a populist right-wing party that has now pulled out and looks like they might have a left-green liberal government again, so you definitely have to prepare for that kind of volatility. It's not that the pendulum can't swing back again it can, and I think that's a difficult environment, I think, in which for companies to operate. So it is important to know your objectives, have your strategy, stay through to long-term values and have lots of different contingency plans, much more so than might've been the case in the past.
Bryan DeAngelis: 23:22Yeah, it's amazing. It feels like just a few years ago we were talking about Democrats winning the presidency forever, republicans holding the House forever. Now we're switching every two years and it's going to be whiplash.
Leo V.: 23:37I'm sorry. I'm kind of fascinated by American politics though, you know, and people talk about how the map has changed. But you know, if you look at it in 25-year cycles, like the map has changed. Yeah, you know, if you look at, if you look at it in 25 year cycles, like the map always changes, it always changes.
Bryan DeAngelis: 23:49We were talking about this a little bit at dinner. Yeah, you look at that. Bill Clinton 1992 electoral map and it would not, it would be very foreign California once, once solidly Republican and right in the era of Nixon Reagan, which isn isn't ancient history you know. Yeah, well, let's wrap up. I want to wrap up, maybe with a fun one, but you've moved on to a new chapter of your life. Post your time as prime minister. What's been the biggest change since you've come out of public life?
Leo V.: 24:19It is very different because you know, I think as a politician or a political leader, the more control and influence you have over other people's lives, the less you have over your own. So it's great to be in control of my own time again. I'm not missing going to functions six nights a week. A few nights a month is actually enjoyable. Six nights a week really wasn't certainly not after 13 years in government.
Leo V.: 24:42But the other thing as well is being able to speak more freely and being able to speak my mind.
Leo V.: 24:45But the other thing as well is being able to speak more freely and being able to speak my mind because you know when you lead a government, when you lead a party, you know you always have to bear in mind how your words are going to be heard by your coalition, by your party, by your constituents, how they might be interpreted by the media and how they land with the public. And I think President Trump has a great freedom not to be bothered by those things. But they really bothered me and I used to kind of be careful. I became increasingly careful about what I would say and how I would say it, and it's nice again to be able to be a bit frank again and to be much more clear in my analysis and what I want to say and also to be you know, to be able to take the chance of being wrong and not having to caveat everything you say take the chance of being wrong and not having to caveat everything you say.
Ylan Mui: 25:31Leo, we're certainly glad to have you with us here at Penta. I hope that you get some time to yourself while you're here in Washington as well.
Leo V.: 25:34Thanks, so much for joining us. Thank you, it's been a real pleasure. Thank you.
Ylan Mui: 25:37To our listeners please remember to like and subscribe wherever you listen to your podcast and to follow us on Twitter, at PentaGRP, and on LinkedIn at PentaGroup. I'm your co-host, elon, and, as always, thanks for listening to what's at Stake.