Rising East Essays

S.O.S: the Celtic Tiger has tanked

When we think of a small European nation in the midst of a severe economic crisis, one island comes to mind: Iceland. But there is another severely underpopulated European island whose financial industry has ground to a halt, grinding much of the rest of the economy into dust with it: my own home country of Ireland.

Things are not quite as bad here as they are in the land of fire and ice, but the four green fields are certainly turning brown around the edges. The symptoms so far are a severe banking crisis, rapidly rising unemployment, a €17bn gap in public finances, the attendant social welfare cutbacks, a declining credit rating on the international markets, public protests, strikes, tumbling share prices and a sharp spike in house repossessions.

Once a charming, inward-focussed rural backwater languishing on the fringes of Europe – just how the native political class and foreign tourists liked it – in the 1990s Ireland transformed itself into one of the continent's fastest-growing economies. With Ireland swiftly achieving the fifth highest GDP per capita in the world, the comely maidens dancing at crossroads were mowed-down by commuters driving in to Dublin to work in the financial sector.

And then capitalism borked. Today, Ireland appears poised to fall back into the economic abyss of the 1980s.

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Capitalists Queuing For Handouts

Of course, it's not the end of the world, or even of capitalism, but things are looking grim. In the year from January 2008 to January 2009, unemployment soared, rocketed (and other journalistic clichés) from 181,449 to 327,861 – an increase of 80.7% in just 12 months. The country has a total population of just under 4.2 million, and is staring at the possibility 15 per cent unemployment.

The banking system is in turmoil. First the government promised to guarantee deposits; but confidence did not return. Then Anglo Irish Bank fell off a cliff. Chairman Sean FitzPatrick is known to be a generous man, but to give people a bank to own? Now that's largesse!

Anglo Irish, a principal driver of Ireland's house-building boom, was a doyen of the Celtic Tiger years. Its nationalisation occurred amid an €87m loans scandal. Today, Anglo Irish is as despised by the public as the Anglo Irish class of the past.

When one capitalist comes cap-in-hand it's a sure thing that his competitors will instinctively form a bread-line, and so, with tedious inevitability, next came the banking recapitalisation programme: €7bn was poured into the country’s two main financial institutions, Bank of Ireland and Allied Irish Banks.

Helpfully, the Mail on Sunday started a campaign to get British savers to withdraw their cash from Irish banks. Strangely, this exhortation was missing from the 'Celtified' edition known in Ireland as 'Little England on Sunday'.

What does the future hold for the Emerald Isle? Austerity. A report published by Goodbody Stockbrokers predicts the Irish economy will shrink by a further six percent in 2009 – 1.8% more than the firm had previously predicted.

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Commentary Without Vision

The entire country is talking about the economy, at least when there's not a rugby match on; but what appears to be missing from the discussion is any kind of political vision. Neither the government nor the suddenly popular opposition parties have anything much to say about how we can get out of this mess, instead preferring to talk about exactly how much money should be poured into the banks to keep them afloat or whether tax rates should be adjusted slightly upwards or downwards: tax the bastards (slightly) or tax the bastards (slightly less). You pays your money, you takes your (little) choice. Only Sinn Féin, desperate to grab a few working class votes in the inner cities, has come out with a plan to soak the fat boys.

The government’s latest wheeze is to repair the economy by subsidising insulation in the home. Sure, all those unemployed architects, accountants and computer programmers can get back to work on the oul' buildin' sites.

Actually, upgrading Ireland's dire housing stock is a good idea, but even if it were done properly it still would not amount to a serious investment in a genuinely productive economy.

Next on the agenda is the orange, the white and the green: patriotism, the stuff that kept us alive during the last recession – the one that lasted from 1921 until 1994 or thereabouts. The brave boys in the government are now telling citizens that belt-tightening is a national duty and that crossing the border into the North to avail of lower prices is some kind of affront to Irishness.

Meanwhile, actual work is grinding to a halt; even government-sponsored work. In February, Taoiseach Brian Cowen announced that the National Development Plan, Ireland’s multi-year infrastructure improvement project, was to be scaled-back. Presumably we will not need all those fancy new motorways in the brave, green future.

Perennial opposition party Fine Gael, polls in its eyes, has not missed an opportunity to take the governing Fianna Fáil and Green parties to task; but when it comes to planning for the future the party once known as the Blueshirts prefer to waffle on about technical measures than identify how the country might be revolutionised. Fine Gael's prescription for the future is essentially the same as that of the government: more austerity, as if Ireland has not had its fill of penury over the decades.

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Still Fighting The War Before

The lack of serious political engagement with the crisis is unsurprising. The two main parties in Ireland, Fianna Fáil and Fine Gael, are both products of splits in the IRA dating back to the 1920s: they are still defined by their historical positions on the partition of Ireland into two states, not by ideas and policies for the twenty-first century.

The absence of any significant battle of ideas has resulted in indentikit policies and a general lack of dynamism in Irish politics. This is compounded by over-representation in the Dáil, Ireland's parliament. A country with a population of 4.2 million elects 166 deputies under a system of proportional representation that was devised by the British in 1919, largely to marginalise Sinn Féin. Today, the result is a kind of clientelism where local deputies act not as lawmakers, but in the narrow interest of their local constituencies.

Now, after a decade and a half of easy times, the political mainstream is struggling to develop a coherent narrative about the current economic crisis. As a result, allegiances are begging to shift – within boundaries. Sinn Féin is ramping-up its socialist rhetoric while Labour, a minority party in Irish political life, is polling better than ever before. Neither party actually has a way out of the crisis, however. Instead they are benefiting simply by not being Fianna Fáil and/or Fine Gael.

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Morality Makes Poor Politics

The mood on the streets is alarmingly similar to the 1980s. Young people talk openly about emigrating, and the hollowed-out unions are engaging in half-hearted ‘days of action’. Austerity is the (g)looming reality, while the traditional Irish dream of escape to sunnier climes, is making a comeback.

Perhaps there is an alternative, but there has been virtually no discussion of how Ireland can develop a genuinely productive economy. Instead, most of whatever debate there is, hinges on the moral question of greed, particularly in the financial industry. As few of us actually understand the workings of finance, the discussion can be more readily framed as a simple morality play rather than in terms of meaningful politics.

It’s official: even in a recession, the Irish economy is a politics-free zone.

Jason Walsh is a freelance journalist based in Dublin

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