Irish Government Reaps Reward for Exiting the EU/IMF/ECB ‘Bailout’

Calling it a bailout was never a good idea as it was anything but a bailout.

Loans to Ireland

The loans provided by the European Union, European Central Bank and the International Monetary Fund to the Irish Government had two main purposes: to keep the Euro currency alive and to allow Ireland to repay French and German banks and bond-holders who were owed billions by the bankrupt Irish banks. The fact that the Irish Government needed the cash to meet the wage-bill of the ridiculous numbers of public and civil servants employed by this tiny country was very much incidental. The EU/EBC/IMF had their own agenda.

But now they are gone.

Ireland has again taken control of raising its own finances and regained its ‘economic sovereignty’ amid much fanfare and self-congratulation. Ratings Agency Moody’s has added to the positive tone in Ireland by upgrading Irish 10-year debt bonds to ‘investment grade’ and as a result the cost of borrowing by the Irish Government has dropped dramatically from over 12% at the depth of the financial crisis to a much healthier 3.3% today. By comparison the US and UK borrow at about 2.8% while Germany borrows at 1.65%, Portugal at 5% and Greece at 8.5%.

Should the Irish economy recover and unemployment fall then this will be seen as a very significant turning point in recent Irish history. Fine Gael will claim the credit for steering the country through its darkest ever economic moments having implemented the Fianna Fail plan for recovery that they inherited, despite lambasting that same plan in the run up to the last General Election.

With the economy pointed in the right direction Fine Gael will expect to be rewarded by the Irish people with a second term in office. Despite being not quite half way through its five year term with the next General Election not due until 2016, the analysts in Fine Gael will surely be eyeing up the very best moment to ‘go to the people’, likely next year in 2015.

Of course a year is an eternity in politics and it is not out of the question that a fickle Irish electorate could yet punish Fine Gael for its failures, perceived or otherwise. Lack of political reform, controversial social policies and the never-ending implementation of the economics of austerity may yet come back to haunt the party.

For the time being Fine Gael are enjoying their time in office with the latest numbers from the opinion polls supporting their optimism:

Fine Gael: 30%
Fianna Fail: 26%
Sinn Fein: 16%
Labour: 12%
Others/Independents: 16%

This survey suggests a return by vast groups of voters to the more mainstream political parties and away from independents and fringe groups. Even the Labour Party managed to increase its support although it is still in a very poor position. Looking at the numbers above, surely a grand coalition of Fine Gael and Fianna Fail is only a matter of time?

by Michael Green
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Opinion Polls driving Fianna Fail and Fine Gael together – Doom for Labour Party

The prospect of Fianna Fail entering a coalition with Fine Gael after the next General Election is looking ever more possible. A recent Irish Times/Ipsos MRBI opinion poll certainly points toward such a possibility and also makes very, very bad reading for the Labour Party.

Sinn Fein leader Gerry Adams

Labour are currently in Government with Fine Gael whom they joined in coalition after the 2011 General Election. Fine Gael took the bulk of the Fianna Fail vote with Labour also soaring to new highs in the hope that the party would see off the money-men of the EU/IMF/ECB troika who were/are hated by large sections of the Irish population.

‘Burn the bondholders’
‘Let the banks fail’,
‘Gilmore for Taoiseach’ were the rallying cries.

The reality has been very different for the Labour Party. Nurses, Labourers, Teachers, Public and Civil Servants, lower-paid workers and even the unemployed all voted for Labour in their droves at the last election. Now they are looking elsewhere.

Irish Nurses proitest against Government policies

By continuing the policies of the previous Fianna Fail government both Labour and Fine Gael chose to play a long game. Fine Gael could make the case that they have no choice but to implement the policies they inherited while alternately blaming Fianna Fail and then claiming the credit for the economy stabilizing. Labour however, have no such luxury.

It was the Labour Party that was supposed to represent the working classes. Instead they implemented cuts to services and installed the hated Property Tax, threatening and bullying the Irish citizenry into submission.

Eamon Gilmore is the Labour Party leader

Just 6% of voters now say they would now vote for Labour (down from 19%) while 23% say they would vote for Sinn Fein and 22% for Fianna Fail. Sinn Fein and the Labour Party occupy much of the same left-wing space on the political spectrum yet it is Gerry Adam’s party that now seems to represent the working classes. Historically though Sinn Fein have always done better in opinion polls than at the ballot box. This is probably because their support comes largely from a younger population who are in fact less likely to actually vote.

With 26% support Fine Gael cannot afford to be too smug either. Both they and Fianna Fail have repeatedly said that they would not go into a coalition Government with Sinn Fein. Logically then, if an election were held tomorrow the obvious new Government would be a coalition of Fine Gael and Fianna Fail!

In the US this would be the equivalent of John Boehner cozying up with Barack Obama in a Democrat-Republican national government to run the country.

Could it happen in Ireland? This possibility has recently been floated by former members of both of these political parties. Fianna Fail and Fine Gael have their genesis in the 1922 Irish Civil War. Over the last two decades any lingering differences have rapidly dissipated. Socially Fine Gael is viewed as being more conservative than Fianna Fail but there seems to be little to choose between their economic approach.

Is a grand union possible?

In Ireland after the economic crash, anything is possible.

Labour Party Exile May Form New Political Party

Speculation is mounting that a new left-wing political Party may be formed in Ireland.

The Labour Party are currently in a Coalition Government with Fine Gael that has effectively continued the policies of the Fianna Fail Party that it ousted at the last election. It is this position that has seen support for the Labour Party plummet in recent opinion polls.

Labour is supposed to be the Party representative of the working classes and yet has supported the imposition of a property tax as well as the never-ending austerity measures. Against this backdrop the possibility of a new Party with a socialist backbone is very much alive.

Roisin Shortall was a Junior Minister in the Government but resigned her position after further cuts to the Irish Health Service were implemented. She is very much a thorn in the side of the Labour Party leadership at the moment and could align with similar left-of-centre independent T.D.’s to form a new Party that would directly challenge her former colleagues.

by Michael Green
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Calls For End To Austerity As Ireland Plunges Back Into Recession

Those commentators who have been critical of the overuse of austerity policies in Ireland are claiming that Ireland’s plunge back into recession is proof of their views.

A 'People Before Profit' March Protesting Irish Government Policies

Since 2008 the Irish economy has been battered by international forces beyond its control in addition to massive self-inflicted damage caused by a property market bubble and the near collapse of the Irish banking system.

The effects were far-reaching. Unemployment stands at 13.7%, public services have been slashed, bitter wrangling continues between the Government and its own employees in the Civil and Public services. Emigration has soared to Famine-era levels while those left behind have been burdened with extra taxes and levels of debt that will take decades to pay off.

Ireland re-entered recession in the final quarter of last year and with ‘negative growth’ prevailing it seems that the austerity and tax increases have dampened any possibility of a domestic recovery. The Property Tax did not help either. Demanded as a condition of loans granted to Ireland by the EU/IMF/ECB the Property Tax was almost gleefully imposed by the Fine Gael Government who clearly see it as an easy way to bring in finance. Political cover was provided by the European ‘troika’ who could be blamed for demanding its imposition – ‘it wasn’t us – its them!’ Job done.

Chart showing the financial effect on Ireland of the economic crash

The uncertainty caused by the Property Tax, the fear of its impact and the never-ending burden of yet more taxation certainly played a huge part in dragging the country down again.

Ireland is also more exposed to events outside its borders than most other countries. As an island nation the most basic raw materials must be imported, raising costs. Exports to Britain, Europe and beyond have to be expensively transported, raising costs. Any change in the value of the Sterling and US Dollar currencies can lay waste to the best laid of export plans in the space of a few hours, again raising costs.

Even bad weather can effect the Irish economy, especially domestic spending, further depressing a beaten-down population who retreat to their ‘mortgaged to the hilt’ apartments in semi-derelict half-built housing estates to ponder the future – ‘I wonder if Australia is still looking for electricians?’.

Maybe this is the bottom of the trough?

Domestic spending looks to be improving now that the Property Tax shock is pretty much out of the way. Anecdotal evidence of a recovery in both the construction market and the property market have been borne out by recent numbers. Major road projects are being undertaken for the first time since the economic crash in 2008, a sure sign that things are about to improve. The South County Dublin section of the Dublin property market has actually seen a 12% increase in prices in the first 6 months of 2013 according to Irish property website Daft.ie, with an overall rise of 5.3% in Dublin prices over the last year.

Hot stuff. And even the weather has improved!

So despite the economic woes there does appear to be grounds for optimism. This is year five of the greatest economic crash in the history of the country. Being well positioned to catch a ride on the global economic upturn that will inevitably come must surely be the current Government’s major priority, as well as its best bet for being re-elected.

by Michael Green
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Divisions In Irish Government Over Abortion Laws

The Fine Gael and Labour Coalition Government are committed to implementing legislation on foot of the X-Case. This 1992 Irish Supreme Court case confirmed that a woman was entitled to an abortion in Ireland if her health was threatened. This included the risk to her health of suicide and it is this provision that is causing so much trouble for the Government.



Fine Gael are perhaps the most conservative of the larger political parties in Ireland with many of their T.D.’s (members of the Irish Parliament) being from rural districts. Some of their Dublin T.D’s are now also very concerned about the new legislation and it is clear that they will vote against the proposals.

The proposed legislation does not actually change the law of the country relating to abortion. Rather, it clarifies and formalizes the procedures that should be implemented when the medical profession encounter such difficult scenarios.

The impetus for the legislation was brought about by the tragic death of Savita Halapanavar who was denied an abortion and died from complications relating to a miscarriage she had while in the care of the Irish health-care system. It is clear that her life could have been saved had the medical profession had clearer instructions on how to act. Currently Doctors are having to interpret the legal position on an individual case-by-case basis and at their own risk.



It is proposed that the abortion legislation will provide a procedure whereby a suicidal woman can be legally given an abortion. This circumstance may occur for example where a woman or teenager is raped and becomes pregnant. The rebel Fine Gael T.D’s are concerned that this provision may be abused and lead to a situation of ‘abortion on demand’.

Fine Gael leader Enda Kenny has so far ruled out a ‘free vote’ on the issue, whereby Party members would not be obliged to vote for the legislation with the possibility of being expelled from the Party if they did not. Fianna Fail may allow their own members to have a free vote which would certainly cause problems for Fine Gael if they did not follow suit. The Labour Party, Sinn Fein and most Independents will vote in favour of the measures so it seems that the new legislation is very likely to be passed and become law.

The difficulty for Fine Gael is just how much damage it will inflict on itself over this, perhaps the most divisive of all social issues.

by Michael Green
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Gay Marriage Referendum Recommended For Ireland

The ‘Convention on the Constitution’ Committee that is meeting to recommend changes to the Irish Constitution has voted in favour of legalizing Gay Marriage in Ireland.



The Committee is comprised of 66 members of the Irish public, who were chosen by random, with 33 politicians from the various political parties and a chairman making up the 100 strong group. The Committee voted by a margin of 79 to 19 in favour of recommending the Constitution be changed to allow Gay Marriage. The Government is now obliged to have a Parliamentary debate on the subject within four months and to then set out a timescale for a Referendum.

The timing of this decision will certainly cause problems for Fine Gael. The main Party in Government is regarded as being more conservative than their rivals Fianna Fail and certainly more conservative than the left-wing Labour Party who are in Government coalition with Fine Gael. They are now faced with being perceived as the Party that quickly brought both the abortion issue and the Gay Marriage issue to the Irish public, many of whom would prefer to just leave these issues alone.

The decision to legislate for the X-Case on foot of the tragic death of Savita Halapanavar has put the abortion issue front and centre. Not all Fine Gael T.D’s (members of parliament) are at all happy with the proposed abortion legislation with many set to oppose the provision allowing for abortion in Ireland where there is a risk of suicide by the person seeking the abortion. Many Fine Gael T.D’s are concerned that this will amount to ‘abortion on demand’ and are not assuaged by the assurances that any such provision would be strictly policed.

By also putting the question of Gay Marriage to the Irish people there is a fear within Fine Gael that the Party may be seen to be acting too radically or liberally, and too quickly. Of course asking the question about Gay Marriage of the Irish citizenry does not automatically mean the Referendum will be passed. The Irish public has in the past demonstrated itself to be liberal in the opinion polls and conservative at the ballot box.

An example of his occurred in the 1995 Referendum to allow Divorce in Ireland. The measure was enacted by a margin of 50.28% to 49.73%, and this despite the fact that it looked as if the measure would easily pass in the opinion polls prior to the actual vote. A previous Referendum on the same subject in 1986 was rejected by the Irish people by 63% to 37%, thus preventing the introduction of divorce in the country and again when opinion polls indicated that the Referendum would be easily passed. (note 1)

Consequently those who are in favour of Gay Marriage in Ireland will certainly not be taking the result of any future Referendum for granted.

The Local and European elections that are due to be held in 2014 also complicate the matter for Fine Gael. They will certainly not want these mid-term elections to become a de-facto vote on their decision to hold a Referendum on Gay Marriage. They have enough to be concerned about with Fianna Fail surging in the opinion polls and their austerity policies attracting ever-increasing criticism.



The battle-lines are being drawn up already with the Labour Party delighted to have a policy that they can promote as one of their own. Party Leader Eamon Gilmore:

I believe myself that same-sex couples have the right to marry, I’m glad the Constitutional Convention has recommended that

It is possible that Fine Gael may delay any actual Referendum until the next term of Government, making it a General Election issue or they could reject the recommendation altogether which, for a somewhat conservative Party would be quite a radical move.

note 1: http://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=1277&context=djcil

by Michael Green
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Rebellion in Labour Party Might Suit Fine Gael

The Irish Government Coalition of Fine Gael and the Labour Party looks very unlikely to run its full term despite the insistence of the two Party leaders.



Rarely has a Political Party leader looked in so much peril of removal as does Eamon Gilmore at this moment. To the despair of his Labour Party colleagues it is their Party who are taking the lions’s share of the blame for the never-ending austerity measures that the current Government is imposing.

Never mind the fact that the policies now being implemented were first started by the previous Fianna Fail administration. Never mind the fact that Fine Gael is the largest Party in Dail Eireann (Irish Parliament) and should shoulder most of the blame. The electorate has focused most of its ire on the Labour Party who seem to have abandoned just about every one of the core values for which it once stood.

It must seem amazing to Fianna Fail supporters and Fine Gael supporters alike that the Labour Party, that which is supposed to represent the interests of the working classes and unemployed, the poorest and the down-trodden, could be part of a Government that has introduced such savage and wide-ranging cuts in public services and incredible increases in taxation.

That the Labour Party supports the introduction of a Property Tax will probably be the final nail in its coffin. Of course both Fine Gael and Labour claim that they have no choice with the Property Tax and that they must introduce the tax as part of the EU/IMF/ECB loans to keep the country going. If that does not work then they will point to Fianna Fail and blame them for all of the austerity being foisted on the hapless Irish public.

This tactic worked for a while but has now worn very thin. Fianna Fail has bounced back in the polls while the Labour Party has plunged downwards. The Party has now lost 5 T.D.’s (members of the Irish parliament), all of whom have left in disgust at the direction the Party is heading. MEP (Member of the European Parliament) Nessa Childers is the latest member to resign from Labour’s Parliamentary Party. The Labour Party candidate in the recent Meath by-election did not get even enough votes to secure the return of his election deposit! There is a public perception that the Labour Party leadership has sold out and the Party seems set to implode with rebellious factions fighting each other.

But does this suit Fine Gael?



The Fine Gael leader Enda Kenny has repeated his assertion that there will be no renegotiation of the ‘Programme for Government’ and that there will be no substantial reshuffle of his Cabinet. He is basically giving Labour no wriggle room whatsoever at precisely the moment when they are taking the flak for the severe policies the Fine Gael Government are implementing. That is pretty useful political cover!

If Labour left Government, as they must surely do in advance of any General Election, then Fine Gael would still have enough support to carry on, and, even if it did not, it could cut the smaller Party loose while attacking the policies of Fianna Fail and then the policies of their previous coalition partners.

A Fine Gael unencumbered and untainted by a link to a faltering Labour Party would certainly look more attractive to the Irish electorate than the current coalition Government does. Fine Gael will find a way to ditch Labour unless, as seems likely, Labour does it to itself.

The Labour Party is heading towards utter decimation.

by Michael Green
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Further Fianna Fail Poll Surge Is The Low-Mark Of Irish Despondency

The ruling Fianna Fail Party was trounced in the 2011 election. At 17% of the vote they seemed to be on the very edge of oblivion. Fine Gael and Labour had brushed them aside, bolted into power on a wave of optimism about ‘real change’ and ‘burning the bond-holders’ (a reference to not paying back bank loans to unsecured bond-holders in Europe).

For a while it seemed that there might actually be some a change in direction. But alas it is now clear that the current Government has merely assimilated the trappings of power worn with such gusto by Fianna Fail, and in fact is implementing much of the previous Government’s policies.

It is difficult now to see any real difference between Fianna Fail and Fine Gael from a policy standing. The historical civil-war divide between the two parties is now all but irrelevant. Fine Gael have made very few changes to the deal struck with the EU/IMF/ECB troika who are lending Ireland huge sums of money in order to pay back German and French banks (and at a nice interest rate). Even the renegotiation of the Irish Promissory Note Deal is but a scratch on the surface of the mountain of debt facing the country. Heralded as a triumph it actually increases the amount of debt Ireland owes!

The Irish electorate is facing a scenario where there are two big Parties occupying the moderate central section of the Irish political landscape (Fine Gael, Fianna Fail) while the Labour Party vainly attempts to brand itself as the party of the left wing, a space now dominated by Sinn Fein and the Socialist Party. Rumours abound that the vacancy for a more right-of-centre Party may about to be filled with the establishment of a new ‘Progressive Democrats’ style of Party, but it has not happened yet.

The most recent opinion poll shows that Fianna Fail are now the best supported Party in the country at 27% compared to Fine Gael on 25%, 20% for Sinn Fein and Labour at 13%.

How could this happen?

How could the Party that was in Government while the Irish economy imploded be a mere two years later regarded as the best bet to lead Ireland to recovery?

Perhaps it is a sign that the current Government has failed or that the prospect of Sinn Fein in power is just too much for some people. Perhaps it is the disgust with the Labour Party being expressed so openly now by even some of its own membership. Perhaps it is the now five years of austerity and hardship that has been imposed on a relatively docile Irish citizenry by its masters in Government.

Perhaps it is a combination of all of the above – or is it that such are the depths of Irish despondency and cynicism with the Irish body politic that people will now vote for anyone just to get some real change.

Anyone.

Even Fianna Fail.

by Michael Green
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Irish Government Finally Issues Apology to Magdalene Survivors

The Irish Government response to the release of the Report into the extent of Irish State involvement in the now infamous ‘Magdalene Laundries was very poor indeed.

Taoiseach Enda Kenny botched the response and unwittingly inflicted more stress and hardship on the victims. The easy and honorable thing to do would have been to immediately apologise to the victims of what were essentially State-Sponsored Labour camps.

Instead of apologising Enda Kenny decided that his Government needed more time to examine and consider the findings of the Report. Now, in respect of putting together a proper financial compensation package for the estimated 1000 still surviving women who were interred in these prisons, a considered approach is certainly appropriate. But quite why an immediate apology did not follow is a source of bafflement to just about everyone outside of the Taoiseach’s close circle of handlers and advisors and prompted severe media criticism.

The backlash had an effect. Enda Kenny finally stood up in Dail Eireann (the Irish Parliament) and apologized to the women, some of whom were in attendance:

“Therefore, I, as Taoiseach, on behalf of the State, the Government and our citizens, apologise unreservedly to all those women for the hurt done to them, and any stigma they suffered, as a result of the time they spent in a Magdalene Laundry”

The Government has also established a fund to provide compensation for the victims of the 10 Magdalene Laundries. Labour leader Eamon Gilmore criticized the four religious orders who ran the Laundries and called on them to help provide compensation for the women.

The apology does not mark the end of the investigation into the running of the Laundries but it is a starting point and hopefully will provide some measure of, if not closure then at least acknowledgment, for the women who suffered so badly in these most terrible of places.

by Michael Green
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Debt Deal for Ireland: A Step in the Right Direction?

The Irish debt deal did not reduce the amount owed by the country. Ireland still owes in the region of 125BN Euro – a staggering figure that will take decades to pay off. The new debt deal merely allows part of the debt to be paid off over a longer term.

This is not necessarily a bad thing if you are able to ignore the immorality of it. By pushing the debt repayments down the road to the year 2053 the current Government has essentially lumbered today’s toddlers with the task of paying their parents debts. On the other hand, the breathing space that will be created by not having to pay as much as 2BN Euro annually over the next 10 years has given the current generation the opportunity to create jobs and growth to repair the damage sooner.

Under the deal the Central Bank of Ireland swapped high-yielding ‘Promissory Notes’ for longer-term Government Bonds. The original deal was to cost over 3BN Euro annually for the next 10 years. The new deal sees a reduction in the interest rate from 8% to 3% and stretches the loan out to 40 years. This reduces the borrowing requirement of the Government in the short term which it is hoped will free up funds for job creation.

The response in Ireland to the news of the deal has been broadly welcoming although those opposed to the whole concept of the Government bailing out the banks to begin with used the opportunity to demand that a write-down of Irish banking debt be sought immediately.

The Fine Gael and Labour Party coalition Government made the point that the European Central Bank has never agreed to debt write-down before so it would have been pointless to even negotiate on that basis. The more militant of those opposing the Government want to see an immediate default on the debt to force the issue with the ECB, EU and IMF.

This may yet happen.

The level of debt being carried by Irish citizens and small businesses is reaching catastrophic proportions. Although the economy of the country has stabilised it is still quite dreadful. Unemployment in Ireland is stuck at over 14%, Irish emigration is at pre-Famine levels and job creation is barely perceptible. The gamble by Fine Gael that they can soldier on in the hope that the economy recovers may backfire under an avalanche of personal debt and mortgage defaults. In such a scenario a massive default on the loans granted to us by our European ‘partners’ will become a question of ‘when’ and ‘how much’ rather than ‘if’.

Against this backdrop the much vaunted ‘Promissory Note’ deal may become just another footnote in this bizarre period of Irish history.

by Michael Green
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