Fight or flight: a British soldier stands guard near a republican mural in Belfast, 1982. (Photo: Hulton Archive/Getty)
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The lady was for turning: Margaret Thatcher’s Battle With the IRA by Thomas Hennessy

The extraordinary sequence of events now seems too far-fetched even for a British version of Homeland.

Hunger Strike: Margaret Thatcher’s Battle With the IRA (1980-1981)
Thomas Hennessy
Irish Academic Press, 488pp, £19.99


A senior member of the royal family is blown up on his yacht together with his 14-year-old grandson, another teenager and an elderly lady. Hours later, 18 soldiers are killed by two roadside bombs in an ambush on British soil. The following year, prisoners belonging to the terrorist organisation responsible begin the first of two hunger strikes, in which ten of them will die.

Riding on a wave of religion-infused nationalism, one of the strikers is elected as an MP as he starves himself to death. When his organs finally fail, an estimated 100,000 people attend his funeral and he is portrayed as a Christlike martyr. Meanwhile, a rookie UK prime minister maintains a defiant public stance – not giving in to the hunger strikers’ demands – but, under growing pressure from the United States and the Vatican, authorises secret communications with the leadership of the group.

This extraordinary combination of events may seem too far-fetched, even for a British version of Homeland. Yet they occurred in only a small window in the Northern Ireland conflict – from the killing of Lord Mountbatten and ambush of the army at Warrenpoint on 27 August 1979 to the ending of the hunger strike on 3 October 1981. The IRA gave Margaret Thatcher her first serious test as prime minister, before the Falklands war and the miners’ strike. And she was not without admiration for the resolve of her opponents. “You have to hand it to some of these IRA boys . . . poor devils . . . What a terrible waste of human life!” she recorded in personal notes uncovered by Charles Moore while writing his recent Thatcher biography. She added (archly?): “I don’t even remember their names.”

In the middle of the dramatic confrontation between these long-haired, young, male Irish ideologues and England’s austere “Iron Lady” – a conflict depicted in Steve McQueen’s 2008 film Hunger – it is sometimes easy to forget just how squalid and unromantic “the Troubles” were. Thankfully, Thomas Hennessey’s richly researched book about Prime Minister Thatcher’s battle with the IRA goes light on maudlin sentimentality and heavy on the evidence. Forgotten victims of the story, such as the 21 staff working in Northern Ireland prisons who were killed between 1976 and 1980, also have their place here.

Thatcher conforms neither to the IRA stereotype of the wicked colonial tyrant nor, indeed, to her self-image as an unflinching opponent of negotiations with terrorists. In July 1981, after four of the ten hunger strikers had died, she authorised a communication with the IRA leadership through an intermediary, the businessman Brendan Duddy (known to intelligence officers as “Soon” or “the Mountain Climber”).

What happened next is still an issue of great sensitivity to the leadership of Sinn Fein and the IRA. The former public relations officer for the republican prisoners, Richard O’Rawe, has accused the leadership (specifically Gerry Adams) of prolonging the strike unnecessarily in order to extract maximum political benefit – in effect, of putting “the struggle” before the lives of comrades. His central claim has been that the IRA Army Council rejected a deal from the British government which was acceptable to those on hunger strike.

The documents prove that O’Rawe is at least half right, and do nothing to prove he is wrong. The British proposal was for a statement, in which the government would offer more flexibility on prison conditions (without directly giving in to specific demands). Thatcher’s own edits were all over the draft, which was to be shown to the IRA and released only if it agreed that the terms were sufficient to end the strike.

At this critical point, when a viable deal was on the table, the IRA leadership outside the prison rejected the offer, apparently because of its “tone” rather than its substance. Thatcher and her then secretary of state for Northern Ireland, Humphrey Atkins, regarded this as the end of the matter. Those negotiating on behalf of the prisoners had calculated that it might be the start of a dialogue in which they could gain more concessions. In other words, they tried to play a game of brinkmanship, only for their channel to the government to be shut down. Six more prisoners died.

The next explosive claim that Hennessey deals with is that members of the family of one of the hunger strikers, Raymond McCreesh, urged him to continue his fast when he was considering ending it. Although the McCreesh family has repeatedly denied this claim, Hennessey reproduces accounts of prison officials who claimed that they stood listening at the door as the prisoner’s relatives surrounded his bed. They claim to have overheard members of the family, including one of his brothers, a Catholic priest, telling him that he was in a “concentration camp” and reminding him that he had made a commitment and that his comrades were staying strong.

The claims and counterclaims made about this tragic episode will go on and there is not enough in the state archives alone to put them to bed. It must be said, however, that the self-righteousness and egotism of the IRA in this period really was something to behold – a group invoking the Christian spirit of non-violent resistance and at the same time doing the lion’s share of the killing in a sectarian blood war. Ian Paisley’s attention-grabbing bellowing from the sidelines throughout, and the continued activities of loyalist paramilitaries, provide further reminder that the British state (or Thatcher), though far from perfect, was not the problem in Northern Ireland.

Having examined the state papers for the preceding and subsequent years, I do not quite agree with Hennessey’s claim that the Mountbatten murder and the Warrenpoint incident led to a “revolution” in the security approach of the British government, as many of the changes were already in place. He also slightly overstates the importance of the “supreme spook”, Sir Maurice Oldfield, who was appointed as the overall security co-ordinator for Northern Ireland in 1979. Oldfield (reputedly the model for John le Carré’s character George Smiley) was at the end of his career and mainly rubber-stamped previous decisions to give the police primary responsibility for counterterrorism operations and reduce the role of the army. Indeed, the position of security co-ordinator was deemed surplus to requirements within a couple of years.

But Hennessey is right on the funda­mental point that intelligence was to be, as Oldfield predicted, the “ultimate match-winner” in Northern Ireland. Sinn Fein used the hunger strike as the platform to establish itself as an electoral force. By that stage, however, the British intelligence services had their tentacles on, and in, the organisation. This meant Sinn Fein’s entry into electoral politics could be encouraged, but that the ideals the hunger strikers died for were never realised. It is this realisation that motivates the self-appointed inheritors of the hunger strikers’ cause, who, under the banner of the New IRA, sent seven parcel bombs to army recruitment offices across England last month.

John Bew is an award-winning historian and a contributing writer for the New Statesman

John Bew is a New Statesman contributing writer. His most recent book, Realpolitik: A History, is published by Oxford University Press.

This article first appeared in the 12 March 2014 issue of the New Statesman, 4 years of austerity

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Artemis Monthly Distribution Fund: opportunities in volatile markets...

The Artemis Monthly Distribution Fund is a straightforward portfolio that combines bonds and global equities with the aim to deliver a regular income. It is run by James Foster and Jacob de Tusch-Lec. James also manages the Artemis Strategic Bond Fund whilst Jacob also manages the Artemis Global Income Fund. Whilst past performance is not a guide to the future, the Monthly Distribution Fund has returned 76.7%* since launch in 2012. Its current yield is 3.9%. It is also the top performing fund in its sector.*

Political uncertainty and the actions of central banks continue to create market volatility. In this article, James Foster talks about the opportunities this has provided and which areas of the market he considers most attractive.


The approach of the European Central Bank (ECB) has been both broad and radical. The increase to its quantitative easing (QE) programme has helped to push the yields on an even wider range of government bonds into negative territory. The cheap financing it offered to banks was less expected. To date, however, it has done little to ease fears that European banks are in trouble. The performance of bank shares across Europe (including the UK) has been abominable. Returns from their bonds, however, have been more mixed.

Bonds issued by banks and insurers are an important part of the portfolio. We increased our positions here in February but reduced them subsequently, particularly after the UK’s referendum on the EU in June. Our insurance positions have increased in importance. New Europe-wide solvency rules were introduced at the beginning of the year. They make comparisons easier and give us more comfort about the creditworthiness of these companies.

As part of its QE programme, the ECB announced that it would start buying corporate bonds with the aim of reducing borrowing costs for investment-grade companies. After months of preparation, the purchases began in June. The mere prospect of the ECB buying corporate bonds proved as significant as the reality. The implications, however, could be even more profound than they initially appear. Bonds of any investment-grade issuer with a European subsidiary are eligible.

Moreover, the ECB has changed the entire investment background for bonds. Companies are more likely to do their utmost to retain their investment-grade ratings. The financial benefits are so great that they will cut their dividends, issue equity and sell assets to reduce their borrowings. We have already seen RWE in Germany and Centrica in the UK undertaking precisely these policies.

High-yield companies, meanwhile, will do their utmost to obtain investment-grade ratings and could also lower their dividends or raise equity to do so. This creates a very supportive backdrop to the fund’s bonds in the BBB to BB range, which comprise around 28% of the portfolio.

The backdrop for higher-yielding bonds – those with a credit rating of BB and below – has also been volatile. Sentiment in the first quarter of 2016 was weak and deteriorated as the risk of recession in Europe increased. These types of bonds react very poorly to any threat of rising default rates. With sentiment weak in February and March, they struggled. However, the generosity of the ECB and stronger economic growth readings helped to improve sentiment. Default rates are higher than they were, but only in the energy sector and areas related to it.

We felt the doom was overdone and used the opportunity to increase our energy related bonds. Admittedly, our focus was on better quality companies such as Total, the French oil company. But we also increased positions in electricity producers such as EDF, RWE and Centrica. In a related move, we further increased the fund’s exposure to commodity companies. All of these moves proved beneficial.

One important area for the fund is the hybrid market. These bonds are perpetual but come with call options, dates at which the issuer has the option to repay at par. They have technical quirks so they do not become a default instrument. In other words, if they don’t pay a coupon it rolls over to the following year without triggering a default. In practice, if the situation is that dire, we have made a serious mistake in buying them. These hybrids have been good investments for us. Their technical idiosyncrasies mean some investors remain wary of these bonds. We believe this concern is misplaced. For as long as the underlying company is generating solid cashflows then its bonds will perform and, most importantly, provide a healthy income, which is our priority.


In equities, our response to the volatility – and to the political and economic uncertainties facing the markets– has been measured. We have been appraising our holdings and the wider market as rationally as possible. And in some cases, the sell off prompted by the Brexit vote appeared to be more about sentiment than fundamentals. We will not run away from assets that are too cheap and whose prospects remain good. We retain, for example, our Italian TV and telecoms ‘tower’ companies – EI Towers and Rai Way. Their revenues are predictable and their dividends attractive. And we have been adding to some of our European holdings, albeit selectively. We have, for example, been adding to infrastructure group Ferrovial. Its shares have been treated harshly; investors seem to be ignoring the significant proportion of its revenues derived from toll roads in Canada. It also owns a stake in Heathrow Airport, which will remain a premium asset whose revenues will be derived from fees set by the regulator whether the UK is part of the EU or not.

In equities, some European financials may now be almost un-investable and we have lowered our risk profile in this area. Yet there are a handful of exceptions. Moneta Money Bank, for example, which we bought at the initial public offering (IPO). This used to be GE’s Czech consumer lending business. The Czech Republic is a beneficiary of the ongoing economic success of Germany, its neighbour, and unemployment is low. The yield is likely to be around 8%. And beyond financials, prospects for many other European stocks look fine. Interest rates that are ‘lower for longer’ should be seen as an opportunity for many of our holdings – notably real estate companies such as TLG Immobilien  and infrastructure stocks such as Ferrovial – rather than a threat.


For high-yield bonds the outlook is positive. For as long as the ECB continues to print money under the guise of QE it will compel investors to buy high-yield bonds in search for income. The US economy is also performing reasonably well, keeping defaults low. Despite the uncertainty created by Brexit, that oil prices have risen means we can expect default rates to fall.

At the same time, there are a number of legitimate concerns. The greatest, perhaps, is in the Italian banking system. A solution to the problem of non-performing loans needs to be found without wiping out the savings of Italian households (many of whom are direct holders of Italian bank bonds). Finding a solution to this problem that is acceptable both to the EU and to Italian voters will be hard. Other risks are familiar: levels of debt across Europe are too high and growth is still too slow.

* Data from 21 May 2012. Source: Lipper Limited, class I distribution units, bid to bid in sterling to 30 September 2016. All figures show total returns with dividends reinvested. Sector is IA Mixed Investment 20-60% Shares NR, universe of funds is those reporting net of UK taxes.

† Source: Artemis. Yield quoted is the historic class I distribution yield as at 30 September 2016.



Source: Lipper Limited, class I distribution units, bid to bid in sterling. All figures show total returns with net interest reinvested. As the fund was launched on 21 May 2012, complete five year performance data is not yet available.


To ensure you understand whether this fund is suitable for you, please read the Key Investor Information Document, which is available, along with the fund’s Prospectus, from

The value of any investment, and any income from it, can rise and fall with movements in stockmarkets, currencies and interest rates. These can move irrationally and can be affected unpredictably by diverse factors, including political and economic events. This could mean that you won’t get back the amount you originally invested.

The fund’s past performance should not be considered a guide to future returns.

The payment of income is not guaranteed.

Because one of the key objectives of the fund is to provide income, the annual management charge is taken from capital rather than income. This can reduce the potential for capital growth.

The fund may use derivatives (financial instruments whose value is linked to the expected price movements of an underlying asset) for investment purposes, including taking long and short positions, and may use borrowing from time to time. It may also invest in derivatives to protect the value of the fund, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, if the price of the underlying asset rises in value, the fund will lose money.

The fund may invest in emerging markets, which can involve greater risk than investing in developed markets. In particular, more volatility (sharper rises and falls in unit prices) can be expected.

The fund may invest in fixed-interest securities. These are issued by governments, companies and other entities and pay a fixed level of income or interest. These payments (including repayment of capital) are subject to credit risks. Meanwhile, the market value of these assets will be particularly influenced by movements in interest rates and by changes in interest-rate expectations.

The fund may invest in higher yielding bonds, which may increase the risk to your capital. Investing in these types of assets (which are also known as sub-investment grade bonds) can produce a higher yield but also brings an increased risk of default, which would affect the capital value of your investment.

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