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9 December 2010

From free state to failed state

The popular consensus is that Ireland’s debts are unpayable and the “rescue package” simply adds to

By Rob Brown

As the economic storm gathered in Ireland, the country’s premier, Brian Cowen, exhorted his compatriots to turn their sights to 2016 and imagine the centenary of the Easter Rising.

By that point, national prosperity would be restored, the Taoiseach confidently forecast, and the proud citizens of this little republic would be able to gather around the GPO in O’Connell Street, still pockmarked with British bullet holes, knowing that they, too, had made worthwhile sacrifices. That was back in February.

It is a measure of how much everything has changed over the past few weeks that even complete scoundrels in the self-styled Republican Party, Fianna Fáil, are no longer seeking refuge in patriotism.

Peeling billboards advertising Roddy Doyle’s latest historical novel, The Dead Republic, now seem a sombre verdict on the state of the nation. For many here, the history of independent Ireland can be summed up in a few short words: free state to failed state. The need to borrow €85bn from the EU and the IMF, in a deal hammered out at emergency negotiations in Brussels in late November, has abruptly ended almost a century of national economic sovereignty. Today, the spirit of 1916 is being invoked by the Irish Times, which ridiculed the uprising when it was the house journal of the Anglo-Irish ascendancy. “This is not a rescue plan,” argued Fintan O’Toole, a prominent commentator on the paper. “It is the longest ransom note in history: do what we tell you and you may, in time, get your country back.” O’Toole took to the microphone at a huge demonstration in Dublin on 27 November, declaring: “Working people in Ireland have always made sacrifices . . . They just don’t want to be the sacrifice.”

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Whatever they laid down their lives for, the martyrs of 1916 did not die for Eire to be at the mercy of faceless men at the European Central Bank in Frankfurt – even if the Proclamation of the Republic referred to Ireland’s “gallant allies in Europe” and they were German. Turning to Brussels for a bailout means that Ireland is a province once again, this time on the westernmost fringe of a punitive monetary union.

Even though Cowen claims that the average interest being charged on the rescue package (5.8 per cent) is less punishing than would be charged by the international bond markets, it is more onerous than what the Greeks were forced to accept (5.2 per cent) for their bailout. The deal saddles Dublin with a debt burden of 102 per cent of GNP, putting it back to where it was before the Celtic Tiger boom. The state had to put every cent of its remaining cash reserves (including its pension fund) on the table to get this.

The Irish have always had a strong sense of victimhood, which O’Toole used to mock as the Mope (“most oppressed people ever”) syndrome. Suspicion is growing that the blanket bank guarantee given by the Irish government at the beginning of the crash in September 2008 – arguably the source of current woes – was motivated not so much by the usual desire to keep local capitalist cronies happy but by pressure from the ECB, anxious to ensure that no major financial institution on its watch spread contagion to the entire eurozone.

The international media that have descended on the Irish capital have predictably lapped up every manifestation of Hibernian humour amid the humiliation. Petit Café, situated a croissant’s throw from the building containing the lower house of the national parliament, Dáil Éireann, got global coverage for its Bailout Brews and ECB Stews. Dubliners joke about whether they’re dealing with the Provisional IMF or the Real IMF. But behind the craic, some are starting to crack up: depression, anxiety and suicide are on the rise. Even successful shrinks are traumatised by the shrinkage of Ireland’s national (and their own individual) wealth. A friend who established a large, thriving counselling and psychotherapy practice during the boom now frets about his financial future. Like many of his generation, he bought a couple of modern, city-centre flats through a series of buy-to-let mortgages. But as he approaches 60, his alternative pension plan has gone as the value of his mini property portfolio has halved and he has had to slash the monthly rents to keep the apartments occupied.

Another middle-aged female friend tells me she is almost afraid to visit her 78-year-old mother. Every time she calls round at the family home in the leafy suburbs of Dublin, she is prevailed upon to pop down to the local bank and withdraw €300 – the maximum amount allowed from her cashpoint. “My mother pores over the papers and is petrified that Ireland will become another Argentina,” she says. Born in 1932 – the year Fianna Fáil first came to government under its founder, Eamon de Valera – this lady lived through hard times and, according to her daughter, “doesn’t want her life savings snatched away by a bankrupt state”.

Sinn Fein’s gain

“Default!” is the fresh rebel slogan gaining ground among the plain people of Ireland, who have been hit by double whammy after double whammy of spending cuts and tax rises. A newspaper poll published on 28 November found 57 per cent in favour of the state writing off or restructuring its debts to bondholders in the country’s stricken banks. The popular consensus is that the debts are unpayable and the so-called rescue package has simply increased the burden.

Ireland is “not an irresponsible country”, insists its premier, but more than 90,000 households are already defaulting on their mortgages and hundreds of thousands more will join them in January when the Christmas credit-card bills land on doormats. “It’s very simple. We are insolvent,” is the view of Constantin Gurdgiev, a Russian-born economist who has become a media don in Dublin.

It is forecast that the average household could be €4,600 (£3,800) worse off if the government’s national recovery plan is implemented. Social welfare benefits are due to be slashed and a euro will be lopped off the national minimum wage rate. “USELESS GOBSHITES” read the banner headline on the front page of the Irish Daily Star denouncing the government on 23 November. Ireland’s leading red top has also taken regularly to lambasting “wanker bankers”.

The date Cowen is telling his countrymen to fix their sights on is no longer 2016 but 2014 – the slightly extended EU deadline for Ireland to bring the state’s budget deficit back down to 3 per cent of GDP (it is running at 32 per cent). On 24 November, his fragile coalition government unveiled a further set of proposals, hailed as a four-year plan aimed at achieving this target. But at times it has seemed as though Fianna Fáil does not have even a four-day plan: its Green Party allies are calling for a general election in January. The main protest vessel looks to be Sinn Fein, which won a landslide victory in a Donegal by-election on 25 November. The Shinners will now endeavour to build on this triumph by seeking to more than double their contingent in the Dáil. If the party were to capture just two more seats (it has five), that would raise Sinn Fein’s status in the chamber and give it considerable speaking rights.

In the final instalment of his historical trilogy, Roddy Doyle accorded a mysterious cameo role to a bearded Sinn Fein leader with
a tweed jacket and large white teeth. “I’d never seen teeth that white in a Catholic mouth before,” exclaims the protagonist, Henry Smart. A man fitting that description now seems destined to be flashing his tusks in the Dáil. The Sinn Fein benches are almost certain to be graced soon by the party’s president, Gerry Adams, who recently announced his plans to seek a seat in the border county of Louth after resigning his West Belfast seat in Stormont, the Northern Ireland Assembly.

Next year marks the 25th anniversary of Sinn Fein’s watershed conference at Mansion House in Dublin, where it voted to end its policy of abstention from the Dáil. Those celebrations would be capped if Adams – still revered within the republican movement despite the incest scandal surrounding his brother – were to walk through the ornate wrought-iron gates of Leinster House, the elegant Georgian pile that serves as the seat of the republic’s legislature. The thought of Adams and his acolytes holding the balance of power must be a grim one for any future finance minister. Sinn Fein has opposed every drastic fiscal adjustment policy devised by the mainstream parties. The party has lived up to its name (it means “we ourselves”) by arguing that the Irish should rebuff both the IMF and the EU. The defiant message is proving especially popular among young voters, who were most sceptical about the Lisbon II Treaty.

Fianna Fáil was well beaten at the Donegal by-election, its share of first preferences collapsing from 50 per cent to 21 per cent in what had previously been one of its strongest outposts. If this pattern is repeated at the general election, the party that styles itself as a band of “Soldiers of Destiny” is destined for a slaughtering at the polls.

Cowen is already a walking political corpse and is expected to be put out of his misery immediately after the latest slash-and-burn budget, due on 8 December. Whoever replaces him – the minister of culture and sport, Mary Hanafin, appears to be the favourite – Fianna Fáil will be punished by the voters for pushing through an open-ended bank bailout that has so far benefited only the big property developers and builders who backed them. With the number on the dole nearing half a million, fear and loathing are rampant. Declan Kiberd, professor of Anglo-Irish literature at University College Dublin, caught the prevailing mood. “Nobody knows what will happen next – not even our leaders,” he wrote in the Irish Times. “We walk as a community in darkness down a strangely unfamiliar road, into a new landscape for which there are no maps.”

Dublin troublin’

The government claims it is providing a road map with the four-year plan, and the main opposition party, Fine Gael, accepts that the €15bn adjustment is unavoidable. Yet both may have underestimated dangerously the deflationary effect. Euroframe, a major research network, has forecast that the cumulative negative impact of the harsh austerity measures over the next four years could be a 4 per cent reduction in Ireland’s GDP. If so, the road map is a recipe for further shrinkage, not growth.

Kevin O’Rourke, professor of economics at Trinity College Dublin, has suggested that, “by worrying less about what the country’s elite want, and embracing the basic republican values of fairness and justice, the state may yet salvage something from the wreckage”. And a growing tribe of highbrow commentators is calling for an end to the culture of cronyism that has prevailed in Irish business and politics. It is even becoming fashionable in Dublin these days to advocate the creation of a second republic.

The potential for radical change may be doubted by those who persevered with Doyle’s trilogy. By its end, Henry Smart, a foot soldier in the struggle for Irish freedom, has lost his idealism and lapses into dreary cynicism. He expects no miraculous resurrection of the dead republic. Poets, priests and politicians, he concludes, will deploy any words or weapons to preserve their power and privileges. As someone shrewdly observed once, the Irish have proved themselves to be the world’s finest rebels and its worst revolutionaries. It might even have been that fella with the tweed jacket and the flashy teeth who said it.

Rob Brown is senior lecturer in journalism at Independent Colleges Dublin.

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