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Irish Shillelagh Austerity

Irish Shillelagh Austerity *

Dispatches From The Edge

Conn Hallinan

Mar. 1, 2016

 

If there is one thing clear after Ireland’s recent election, it is that people no longer buy the myth that austerity is the path to economic salvation. It is the same message that Greeks, Portuguese and Spaniards delivered to their elites over the past year: the prophets of tough love, regressive taxes, and massive social services cutbacks should update their resumes and consider a different profession than politics.

 

Ireland is a small country but the Feb. 26 election drove a big spike into the policies of the “troika”—the European Central Bank, the European Commission and the International Monetary Fund—that have blitzed economies across the continent and made chronic unemployment and growing economic inequality a continuing source of malaise.

 

The governing center-right Fine Gael lost 16 seats, and its partner, the center-left Labour Party, was virtually wiped out, dropping from 37 seats it controlled after the 2011 election only to six. The two parties had overseen an economic program that almost doubled child poverty rates, drove some 500,000 young people to emigrate, reduced wages by 15 percent, and sharply raised the jobless rate.

 

Ireland’s economic difficulties had nothing to do with public spending, but were the fallout from private speculators and banks caught in the great 2008 financial meltdown. Rather than making the speculators pay, the then government of Fianna Fail shifted the bank debts to taxpayers. The troika agreed to a $67 billion bailout of the banks, but only if major bondholders were exempted and the government would institute a draconian austerity program. Most Irish voters were unaware of this “trade off” until just before the election.

 

The Fine Gael/Labour government has long claimed that it had no choice but to apply the austerity formulas and that, in any case, the policies worked, because the economy was recovering. Voters didn’t buy it. The “recovery” has largely been restricted to Dublin—where homelessness in January reached a record high—and the growth was largely a product of falling oil prices and a decline in the value of the euro, rather than the result of austerity.

 

As Fintan O’Toole of the Irish Times put it, “What voters said on Friday is in some ways highly complex, but in relation to the dominant narrative” that austerity is the path to recovery, the Irish said, ‘We don’t believe you.’” The Fine Gael-Labour campaign slogans of “stability” and “all is well” fell flat. The government, O’Toole said, “imagined that it would ride back to power on a feel-good factor, as if people who had been repeatedly beaten should feel good that the beating has stopped.”

 

At first glance, the Irish election looked like a shootout between the two center-right parties—Fine Gael and Fianna Fail—that have taken turns governing Ireland for more than eight decades. But this time around Fianna Fail ran from the left—mild left, as it were—promising greater fairness and more public services. Fianna Fail, which was crushed in the 2011 election, bounced back from 21 seats to 44 and is now the second largest party in the Dail after Fine Gael.

 

The Dail has 158 seats.

 

Another winner was the unabashedly leftist Sinn Fein Party, which picked up nine seats for a total of 23 and is now the third largest force in the Dail. The People Before Profits/Anti-Austerity Party gained two seats, and the independent bloc picked up a seat. In contrast, the rightwing Renua Party lost its three seats.

 

Irish elections are complex affairs, employing a proportional representation system that provides a path for small parties to gain a foothold in the Dail, but makes campaigning complicated.

 

What emerged from the Feb. 26 vote was a hung parliament: Fine Gael/Labour did not win enough seats for a majority, but neither did anyone else. There is talk of a “grand coalition” between Fine Gael and Fianna Fail, but both parties would have to renege on pre-election promises that they wouldn’t consider such a move, and it would automatically make Sinn Fein the leader of the opposition. The latter possibility scares both center-right parties.

 

Fine Gael, Fianna Fail, and Labour refuse to consider a coalition with Sinn Fein because of the Party’s links to the Irish Republican Army and violence. It is an odd rationale, considering that all three parties have roots in the sometimes quite violent struggle for Irish independence and the bloody 1922-23 civil war over the Anglo-Irish Treaty that freed the Republic from Great Britain.

 

In any case, Sinn Fein leader Gerry Adams made it clear that his party has no interest in being a minority member of any combination that Fine Gael or Fianna Fail put together. And there is no way that Sinn Fein can construct a majority coalition. At most, the left and center-left parties could muster 60 votes, and that would include the Labour Party, a dubious possibility. Indeed, one Labour Party leader, Alan Kelly, has already called for a Fine Gael-Fianna Fail unity government.

 

It is possible that Fine Gael will try to rule as a minority government, but that would require Fianna Fail to abstain when it comes time to elect a Prime Minister, or Taoiseach. And it would also mean that Fianna Fail might have to choose between swallowing some of Fine Gael’s austerity policies that it ran against in the election, or bringing down the government. Since any minority government will be extremely fragile, another round of elections is a real possibility. During the campaign, Fianna Fail leader Michael Martin said he would not go into a coalition with Fine Gael, and Irish voters in a re-match might punish any party that broke its promises.

 

Irish voters essentially gave two messages in the last election, one directed at Europe and the other at its own political structure.

 

About Europe, the voters firmly rejected the increasingly discredited policies of the troika, joining Greek, Spanish and Portuguese voters in saying “enough.” Austerity as a cure for economic crisis, as O’Toole points out, “was not just an Irish story—it was a European narrative.” That narrative is under siege.

 

About Ireland, voters turned their own political structure upside down. The two parties that have dominated Ireland since the end of the 1922-23 civil war can now claim the allegiance of slightly less than 50 percent of the electorate. This election, as Sinn Fein’s Adams argues, represents “a fundamental realignment of Irish politics.”

 

*A shillelagh is a blackthorn walking stick that the Irish use for whacking things they don’t like.

 

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Irish Elections and Austerity

Irish Voters to Grade Austerity

Dispatches From The Edge

Conn Hallinan

Feb. 17, 2016

 

What looked like a smooth path to electoral victory for the Irish government has suddenly turned rocky, and the Fine Gael-Labour coalition is scrambling to keep its majority in the 166-seat Dail. A series of missteps by Fine Gael’s Taoiseach [prime minister] Enda Kenney, and a sharply critical report of the 2008 Irish “bailout,” has introduced an element of volatility into the Feb. 26 vote that may end in a victory by an interesting, if fragile, coalition of leftists and independents.

 

The center-right Fine Gael and center-left Labour Party currently hold 99 seats, but few observers see them maintaining their majority. Fine Gael has dropped from 30 percent several months ago to 26 percent today, and Labour is only polling at 9 percent. That will not translate into enough seats to control the Dail, and putting together a ruling coalition will be tricky, particularly when polls indicate that the independent bloc that has picked up 3 percent and is now the number one vote getter. In general, the independents are left or left-leaning.

 

The country is in the middle of an economic “boom,” but that is a relative term. Ireland is still reeling from years of European Central Bank (ECB) and International Monetary Fund (IMF) imposed austerity that doubled the rate of childhood poverty and saddled working people with onerous taxes, painful rate hikes and high unemployment. Wages have fallen 15 percent. Since 2008, almost 500,000 Irish—the majority of them young and educated—have emigrated from the country in search of jobs.

 

The government’s trouble began in December, when torrential rains swamped parts of the country and Kenny slow response to the disaster angered rural voters. Flood victims blamed the government for failing to invest in flood control, an infrastructure improvement that fell victim to the austerity regime.

 

Then the Fine Gael-Labour coalition was hit with a double whammy: a report by in-house auditors for the European Union and an Irish parliamentary study of the collapse of Irish banks from 2008 to 2010. The EU study found that the European Central Bank (ECB) had pressured the Irish government not to impose losses on “senior bondholders” and, instead, put the burden on taxpayers. According to the parliamentary study, the ECB threatened to withdraw emergency support for Irish banks—thus crashing the economy—if wealthy bondholders were forced to take losses. All of this came as news to most of the Irish.

 

The center-right Fianna Fail Party was in power when the great crash came in 2008, a crash that had nothing to do with government spending or debt, but was instead, the result of real estate speculation by banks and financial institutions. Irish land values jumped 800 percent, which should have warned the banks that a bubble was inflating. But the bondholders, speculators and banks did nothing because they were making enormous amounts of money. When the bubble popped, Irish taxpayers were forced to pick up the $67 billion tab.

 

Fianna Fail was crushed in the 2011 election, losing two-thirds of their deputies, and Fine Gael-Labour took over.

 

Part of the government’s problem is that for the past five years it has been saying that it had no choice but to enforce the savage austerity regime of the ECB, but it is now trying to take credit for the recent improvement of the economy.

 

The coalition’s mantra has been “stay the course”, good times are ahead. The term the government is using is “fiscal space,” or the estimated amount of money that will be available for investment if Ireland continued its economic recovery. According to Fine Gael that figure would be $12 billion between 2017 and 2021.

 

First, no one understood “fiscal space,” a term used by the IMF. Even Deputy Prime Minister Joan Burton, a Labour Party leader, called it “a new kind of ‘F’ word” and said voters hadn’t a clue what it meant. Asked to define it, Kenny said the Irish voters wouldn’t understand it, a statement that managed to insult everyone. The government subsequently knocked the figure down to $10 billion, and the opposition said it was more like $8 billion.

 

And while Fine Gael is taking credit for the economy, critics are pointing out that it wasn’t austerity, but a fall in world oil prices and a decline in the value of the euro that favors Ireland’s export industry, that got the economy going.

 

Finally Kenny muffed a question about whether Fine Gael might consider a coalition with Fianna Fail because the Labour Party was dropping in the polls and might not hold its 33 seats. This enraged Labour, and Kenny had to mend fences and pledge that Fine Gael would never go into a government with Fianna Fail.

 

In short, the government is looking inept, and it is taking fire for its shift from “we had no choice in applying the austerity” to “we take all the credit for the current situation.” Fintan O’Toole, the sharp-tongued columnist for the Irish Times and author of “Ship Of Fools,” chronicling the financial greed that led to the 2008 meltdown, wrote of the government, “If you had no power, you can claim no credit; if you did have power, you have to account for how unjustly you used it.”

 

Behind the cover of “It’s not our fault,” the government cut funds for caregivers, threw people off of National Health, cut support for the disabled, support for education, and did nothing about rising homelessness. As O’Toole points out, the improvements in the economy were because of oil prices, low interest rates and the falling euro, all “entirely outside the control of the Irish government.”

 

In any case, the country is still deeply in debt and, while the jobless rate is no longer 15 percent, it is still just below 10 percent.

 

The Dail is a motley affair, with a host of small parties and a bloc of independents. Currently Fine Gael has 66 seats and Labour 33. The center-right Fianna Fail (that inched up slightly in recent polls) has 21, and the leftist Sinn Fein has 14. The latter dropped three points in the poll from 20 percent to 17 percent. Other left parties include the Social Democrats, the Anti-Austerity Party, and there is a mix of mainly leftists in the independent bloc. The centrist Greens are showing some growth, as is the small rightist Renva Party.

 

Right now various stripes of the left hold 41 seats, a figure that is likely to go up in the coming elections. To control the Dail requires 80 seats, but if the independents do well, Sinn Fein holds its own, and Labour jumps ship, an anti-austerity coalition is possible.

 

In the end it may be a hung parliament, with no bloc of parties able to cobble together an effective government. Kenny may double cross Labour and join with Fianna Fail. But whoever takes over, the policies of austerity have been deeply discredited during this election and anyone who tries to “stay the course” is in for stormy weather.

 

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Europe’s Elections: A Coming Storm?

Europe’s Elections: A Coming Storm?

Dispatches From The Edge

Aug. 26, 2015

 

 

Between now and next April, four members of the European Union (EU) will hold national elections that will go a long ways toward determining whether the 28-member organization will continue to follow an economic model that has generated vast wealth for a few, widespread misery for many, and growing income inequality. The choice is between an almost religious focus on the “sin” of debt and the “redemption” of austerity, as opposed to a re-calibration toward economic stimulus and social welfare.

 

The backdrop for elections in Greece, Portugal, Spain and Ireland is one of deep economic crisis originally ignited by the American financial collapse of 2007-08. That meltdown burst real estate bubbles all over Europe—particularly in Spain and Ireland—and economies from the Baltic to the Mediterranean went off the rails. Countries like Ireland, Greece, Spain and Portugal saw their GDPs plummet, their banks implode and their unemployment rates reach levels not seen since the Great Depression of the 1930s. Debt levels went through the ceiling.

 

The response of the EU to the crisis was a carbon copy of the so-called “Washington consensus” that the International Monetary Fund (IMF) applied to indebted Latin American countries during the 1990s: massive cutbacks in government spending, widespread layoffs and double digit tax raises on consumers.

 

Instead of lower debt levels and jumpstarting economies, however, the IMF strictures for Latin America did exactly the opposite. Cutbacks, layoffs, and high taxes impoverished the majority, which in turn tanked economies and raised debt levels. The formula was a catastrophe that Latin America is still digging itself out from.

 

But the strategy was very good for a narrow stratum, led by banks, speculators, and multinational corporations. U.S, British, German, Dutch and French banks helped inflate real estate bubbles by pouring low interest money into building binges. The banks certainly knew they were feeding a bubble—land prices in Spain and Ireland jumped 500 percent.

 

However, as economist Joseph Stiglitz points out, the banks had a trick: their private debts would be paid for by the public. Taxpayers did pick up the tab, but only by borrowing money from the Troika—the IMF, the European Central Bank, and the European Commission—and accepting the same conditions that tanked Latin American in the 1990s. Needless to say, history was replicated on another continent.

 

The upcoming elections will pit the policies of the Troika against anti-austerity movements in Portugal, Greece, Spain and Ireland. If these movements are to succeed, they will first have to confront the mythology that the current economic crisis springs from avaricious pensioners, entitled trade unionists, and free spending bureaucracies, rather than irresponsible speculation by banks and financiers. And they will have to do so in a political arena in which their opponents control virtually all of the mass media.

 

Never have so few controlled so much that informs so many.

 

The election terrain is enormously complex, and, while resistance to austerity gives these movements a common goal, the political geography is different in each country. Plus the Left essentially has to fight on two fronts: one, against the policies of the Troika, and two, against a rising tide of racist, xenophobic and increasingly violent right-wing movements that have opportunistically adopted anti-austerity rhetoric. The openly Nazi Golden Dawn in Greece and the fascist National Front in France may attack the policies of the EU, but their programs have nothing in common with organizations like Greece’s Syriza, Ireland’s Sinn Fein, Spain’s Podemos, or Portugal’s Left Bloc.

 

Size counts in this coming battle. Because Greece makes up only 1.3 percent of the EU’s GDP, the Troika could force Greece to make a choice between, in the words of former Syriza economic minister Yanis Varoufakis, “suicide or execution”—suicide if Syriza accepted another round of austerity, execution of the country’s banks and financial structure if it did not. Because it is small, Greece’s death would scarcely cause a ripple in the EU. A similar situation exists for Ireland and Portugal.

 

But not for Spain. Spain is the 14th largest economy in the world and the fifth largest economy in the EU. Bankrupting it or driving it out of the Eurozone—the 19 countries that use the euro instead of a national currency—would cause more than a ripple, it could sink the entire enterprise. That is why the austerity measures the Troika impressed on Spain were severe, but not as onerous as those inflicted on Ireland, Portugal and Greece.

 

Besides trying to ameliorate the worst aspects of the Troika program, the anti-austerity Left faces an existential question: should their indebted countries remain in the Eurozone, or should they call for withdrawal and a return to national currencies?

 

The Eurozone has been a disaster for most its members, except Germany, and, to a certain extent, Austria and the Netherlands. While the currency is common, there is no shared responsibility for the results of economic unevenness. In the U.S., big economies like California help pay the way for Mississippi, under the assumption that a common interstate market is a good thing and why shouldn’t the wealthier states help the less fortunate? In the Eurozone, it is every man for himself, and if you’re in trouble, talk to the Troika loan sharks.

 

Since the euro is controlled by the European Central Bank—read Germany—countries can’t manipulate their currencies to help get themselves out of trouble the way the U.S., China, Russia, India, Brazil, Great Britain, and others do. A currency union doesn’t work without a political union, and such a union is a bad idea when it puts countries like Germany and Greece on the same playing field. In the end, the big dogs dominate.

 

While the issues throughout the Eurozone may be similar, each country is different. A short scorecard:

 

Greece-Sept. 20

 

Syriza, the leftwing party that won the last election, has split with 25 former Syriza deputies who formed the Popular Union Party and called for full resistance to the Troika’s demands. Despite retreating from his previous opposition to any new austerity, polls show Syriza’s former prime minister, Alexis Tsipras, is popular. The parties that formerly dominated Greece—the right-wing New Democracy and center-left PSAOK—have been badly discredited, and the centrist Potami Party doesn’t have a clear program, except none of the above. The Left should do well, but it will be divided. Division in the face of the Troika is perilous, but this battle is a long way from over, and there are creative ways to resist the Troika without taking it head on. A civil war within the Left, however, could be disastrous.

 

Portugal-Oct. 4

 

The country is currently dominated by the conservative Popular Party/Social Democratic Party coalition that holds 132 seats in the 230-seat assembly. But polls show the opposition is running neck and neck with the Socialists (74 seats), The Socialists put in the austerity program, but have since turned against it. The leftwing United Democratic Coalition (16 seats), an alliance of the Communist Party and the Greens, and the Left Bloc (8 seats), looks like they will pick up deputies. There is a strong possibility that the conservatives will fall, and that the center-left and left opposition will form a coalition government. The Left already controls 98 seats. It will need 116 to form a government.

 

Spain, December, 2015

 

The political situation in Spain is fluid. The rightwing ruling Popular Party is in trouble because of several major corruption scandals and its enthusiastic support for austerity. The Socialist Party has recently increased its popularity but it was the Socialists that instituted the austerity policies. Support for the leftwing anti-austerity Podemos Party appears to have stalled, but it has elected, or helped to elect, the mayors of Madrid, Barcelona, Cadiz and Zaragoza. Unlike Syriza, which is a coalition of left parties, Podemos is a grassroots organization that knows how to get the voters out.

 

There is also the center-right Ciudadanos Party that did well in spring elections, but is anti-immigrant and anti-abortion, and whose economic program is at best opaque.   Those things are not likely to translate into major electoral gains. Whatever happens, Spain is no longer a two party country, and the Left will play a key role in any coalition building to form a government.

 

There is a wildcard in this election: the newly minted Citizens Security Law, which the Popular Party rammed through Parliament and is aimed at suppressing demonstrations, criticism of the government, and free speech. It is clearly aimed at shutting down Podemos.

 

 

Ireland, April 2016

 

“Volatile” is the only way one can describe the Irish Republic, where the polls shift from month to month. The economy is growing, but the Troika’s austerity regime is still raw. Over 100,000 mortgages are under water and since 2008, some 400,00—mostly young professionals—have fled to Britain, Canada, Australia, New Zealand and the U.S., inflicting a crippling brain drain on the island.

 

The centrist coalition of Fine Gael and Labor currently rules, but that is likely to change after the election. Polls show Fine Gael at 28 percent, and Labor at 7 percent. At 21 percent, the leftwing, anti-austerity Sinn Fein Party is in the number two post, although its support has fallen off slightly since last year. However, the popularity of its leader, Gerry Adams, has been climbing. Lastly, there is a mix of independent parties, ranging from Greens to socialists, supported by 24 percent of the voters. Most are anti-austerity and potential coalition partners if the ruling parties fall. The conservative Fianna Fail Party is polling about 20 percent.

 

In these upcoming elections, the Left will have to confront the enormous power of the Troika on the one hand, and on the other, deliver services and jobs. It will also have to clearly differentiate itself from the racism of the right on the immigration crisis and challenge the unwillingness of their own governments to find a humane solution to the problem. Since of the bulk of the refugees are generated by the irresponsible policies of countries like France, Britain, Italy and Germany in Afghanistan, Libya, and Syria, the Left must clearly link the foreign adventurism of their elites to the flood of people now seeking safety from the storms those elites help generate.

 

None of this will be easy and disunity will make it harder. The Left elsewhere in the world cannot expect small countries like Greece, Portugal and Ireland to take on the power of international capital by themselves. Not since the rise of Nazism has there been such a pressing need for international solidarity. In a very real way, we are all Greeks, Spanish, Portuguese and Irish. These elections are as much about the U.S. as they are about the parties and movements that have decided to resist a species of capitalism that is particularly red of tooth and claw.

 

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