Ireland’s “Celtic Tiger” – a housing-boom and minimal corporate-tax driven era of neoliberal economic expansion – has not delivered a new era of progress and plenty as was often promised by Ireland’s political class. Two years after Ireland’s economic crash, the promise that rich capitalists getting even more grotesquely richer would somehow benefit the working class has turned into dust and ashes.

Housing complexes built with cheap credit haunt the landscapes of Ireland’s cities, the banks that advanced the money are now mostly bust. Three hundred thousand empty apartments and flats lie in these complexes. Outside, their former residents hunker for warmth and support in hostels, and in some cases charity-donated sleeping bags on the streets.
"I believe over the next three weeks there are three things we have to do. There is a budget, the four-year plan and to bring stability to our own fiscal situation and try and pray that this is the end of it."
– Irish Minister for Social Protection Éamon Ó Cuív, offering sound advice for the tens of thousands of Irish workers who are set to lose their livelihoods in Ireland’s economic crash.Now, the future only promises to grow bleaker. After two years of recession and austerity budgets implemented by the governing Fianna Fail/Greens coalition, Ireland’s misery has been compounded with a €85 billion bailout package from the European Union and IMF. This comes alongside further cuts to wages, jobs and public spending.

The Celtic Tiger

Ireland’s last recession – in the 1980s – spurred a raft of economic policies aimed at making the country a haven for the world’s corporate elite. One of the lowest corporate tax rates in the developed world, coupled with low paid but educated labour force, led to an annual growth rate of 6.5 per cent from 1989 until 2006.
By the early 2000s new wealth and cheap credit had led to a mass increase in property speculation, and an increasingly construction-centric economy. In a process similar to America’s subprime crisis, when the bubble created by speculation and cheap credit burst three years ago, the consequences for the Irish working class are dire.
In October 2008 the Irish government bailed out the big Irish banks, going further than most other developed economies by guaranteeing the transactions of the banks. The Fianna-Fail/Greens coalition government predicted that it would spend $US60 billion to bail out the banks in a country with an economy that has an annual GDP of $US228 billion.
This necessitated a series of austerity budgets as the whirlpool of bad debt surrounding Ireland’s banks increasingly threatened to send the Irish state down the path of bankruptcy. The true nature of the toxic debts held by the Irish banks is revealed by the fact that the largest financial institution in Ireland today is not one of the country’s banks or investment houses, but Paddy Power, a betting agency.

Bailout

In response to this dire economic situation comes the bailout. This is a plan to ensure that social spending and wages are cut. It is a response to the fear that capitalists Europe-wide share that the crisis of Ireland’s banks and state may spread and infect the Eurozone.
Last weekend Fianna Fail, the European Union and the IMF agreed to the terms of a €85 billion bailout. Of this, €10 billion will be used immediately to shore up the Irish banks and €25 billion will be contributed to a contingency fund. The remaining amount will be spent to ensure that the Irish state can continue to fund its everyday operations. The last thing Ireland evidently would need is a cut to the police budget, or a reduction in parliamentary salaries.
Of course capitalists never simply hand over a blank cheque, even to other capitalists, which is why there has been such outrage in Ireland about the bailout. Not only will the working class endure cuts, but they can fully expect to be paying the cost of the bailout themselves.
Alongside the bailout the Irish Taoiseach (equivalent to Prime Minister) Brian Cowen has unveiled “The National Recovery Plan”, one of the most severe austerity measures seen in Europe since the Second World War.
The EU ministers insisted that to receive the bailout the government would have to raid its national pension fund as well as its cash reserves for €17.5 billion as a condition of the deal. It remains an open question whether Ireland will even be able to afford to pay the interest on the loans which will average 5.8 per cent, leading the repayments totalling approximately 20 per cent of annual tax revenue.
Under the plan social welfare will be cut by €2.8 billion; health, education and agriculture will see a combined slashing of €3 billion. Six thousand jobs will be lost on account of these cuts in the health sector alone. Fees for university will rise massively, alongside a 5 per cent reduction in schools funding.
Not only are social services being slashed, but the government is also preparing for an all-out offensive against the working conditions of Irish labour. The minimum wage is set to be reduced by 12 per cent. And 13,200 jobs will be cut in the public sector by 2014, compounding the loss that has already occurred since 2008 of 12,000 jobs.
These examples do not even scratch the surface of the breadth and depth of these cuts. But perhaps most starkly offensive of all is the fact that income tax will be raised for low-income earners. However the corporate tax rate will remain at an outrageously low 12.5 per cent.
The government plan to implement austerity stated that: “A low rate of corporation tax on export-oriented activity has been a cornerstone of our industrial policy since the 1950s, and the 12.5 per cent rate is now part of our international ‘brand’.” The document affirmed that corporation tax would “not be increased under any circumstances.”

Backlash

Unsurprisingly, there has been a backlash against Fianna Fail and the EU amongst the Irish public. Even if the bailout is successful in staving off collapse, the vast bulk of the Irish population face serious social disintegration as a result of the capitalist offensive.
The austerity measures come at a time when the official unemployment rate is already standing at 13 per cent, and by some predictions 100,000 people are likely to emigrate from Ireland over the next two years, most of them graduate students and skilled labour.
Seething resentment has already been seen at a parliamentary level. The Green party have tried to distance themselves from the Cowen administration that they enabled, and a recent by-election means that Fianna Fail maintains government only with the support of two tempestuous independents.
Public attitudes towards the government are best summarised by a recent headline in the mass-selling newspaper the Irish Daily Star, which stated above a picture of the Fianna Fail ministry: “Useless Gobshites”.
A recent by-election in Donegal South-West was illustrative of the anti-government feeling, with Sinn Fein candidate Pearse Doherty drubbing Fianna Fail in a seat they had held since the party’s formation. Running on an anti-bailout platform, Doherty himself claimed that his victory was primarily a statement to Cowen to “get out of office”.
However, the limits of parliamentary politics in resisting austerity are already making themselves clear. Elections are expected to be held early next year, but every indication is that this will not occur until after the austerity budget is passed. The Green party, while formally distancing themselves from Fianna Fail, have stated that they are willing to pass the austerity budget before an election is held.
The high pressure of the Irish ruling elite is being brought to bear upon the other major political parties as well, who hide a similar pro-austerity agenda behind their patriotic anti-EU and anti-Cowen rhetoric.
The main opposition party, Fine Gael, a right-wing party, has made statements implying opposition to the bailout. Party leader Endy Kenny stated that under his watch there would be a renegotiating of the deal. However, Fine Gael has agreed that there is a need for a program of cuts measuring €15 billion by 2014. Finance spokesperson Michael Noonan is on record saying the party is committed to the austerity plan. The Irish Labour party, a traditional coalition ally of Fine Gael, has made similar guarantees.
Most striking of all is the hypocrisy of Sinn Fein, which has pretensions to increase their presence within the Irish Republic. Happy to trade off anti-government feeling, Sinn Fein do so while obscuring the fact that they support the need to reduce spending. They have already done so in the North as part of the power-sharing agreement, differing only over the amount of time the cuts should be spread over.
A recent demonstration in Dublin shows the kind of response that will be needed if the Irish working class are not to suffer from the crisis of their capitalists. At least 100,000 people protested last weekend in one of the largest demonstrations that has ever occurred in the Irish Republic.
The mass mobilisation marched to the GPO, the site of the 1916 uprising against British colonial domination over Ireland. Explicit links were drawn between the struggle then and now, with many union and opposition figures drawing on a nationalist tradition of rebellion against foreign subjugation.
But the reality is that it is not primarily the European Union or foreign banks that have caused this crisis. It was the self-conscious actions of the Irish ruling class themselves who set Ireland on the economic road to disaster.
The future of the struggle lies not with hypocritical politicians trading off discontent and misery for their own advantage. Nor does it lie in narrow-minded nationalism. It lies with the legacy of working class militants such as James Connolly, who argued that the only freedom Ireland would experience would come as a result of overthrowing the shackles of exploitation by the Irish capitalists.

Liam B

(Socialist Alternative)