Ireland: From shock therapy to resistance

Issue: 125

Kieran Allen

Ireland is undergoing a form of shock therapy and major political changes are in the offing. The government has embarked on pay cuts and reductions in the public sector as its principal strategy for getting out of a recession that will see its economy fall by 8 percent this year. With deflation running at 5 percent it wants to cut the pay of the 300,000 strong public sector workforce in order to unleash a new round of wage cuts throughout the economy. In February the Irish Business and Employers Confederation (IBEC) demanded a 10 percent reduction in pay but could not match its rhetoric with significant action. A recent survey indicated that only 30 percent of all workers experienced a wage cut, and this tended to take place in smaller non-unionised workplaces. By inflicting a major defeat on the public sector, where the vast bulk of unionised workers are concentrated, the state and the employers hope to launch a new and devastating pattern of deep wage cuts.

Simultaneously, the Fianna Fáil-Green coalition government is trying to reduce public spending by €4 billion in its current budget. Support for this strategy is repeated daily by the private media that is controlled by two tax fugitives, Denis O’Brien and Tony O’Reilly.1 A strident and vindictive rhetoric that scapegoats a “bloated” public sector workforce has become the main ideological weapon of the wealthy.

The reality is, of course, very different. As a proportion of GDP, Ireland has the third lowest spending on public services among OECD countries. Whereas state spending accounts for an average of 41 percent in these industrialised economies, it accounts for just 31 percent in Ireland. Even at the height of the so-called “Celtic Tiger” economy, before the crash of 2008, this extreme form of neoliberalism had led to run down health and childcare services. Inadequate creche facilities compelled Irish parents to pay the highest childcare costs in the EU, and an underfunded education system forced many of these same parents to collect Tesco tokens just to get an extra computer for their schools.

Now a brutal and incompetent ruling class are signalling even more cuts. They display not the slightest embarrassment when a contrast is drawn between these cuts in basic services and their bailout of the banks. In 2009 about €13 billion of state money was spent propping up Ireland’s banking system. This, it so happens, is equivalent to the total amount spent on the health service for a whole year. The major recipient of these funds is the now nationalised Anglo-Irish Bank, which effectively functioned as the financial wing of Fianna Fáil. Its board of directors, full of Fianna Fáil hacks, sanctioned the lending of billions to Fianna Fáil-supporting builders who hyped up the property bubble. A staggering €70 billion was lent out by this bank to Irish property developers who became the second largest purchasers of commercial property in Europe.

In order to rescue its banking and builder friends, the government has devised an extraordinary scheme to turn the Irish state into the largest property owner in the world. Known as the National Assets Management Agency, it transfers all the bad debts of the banks to the state for a staggering €54 billion. The state will gain control of the deflated property assets of those who cease paying for their debts. The theory is that the cleaned out banks will then start lending money and so restart the Irish economy. The state pretends that it will get its money back when the property market revives, which it predicts will happen in ten years time. Yet even this enormous bailout will not be sufficient to breathe life back into the zombie banks and it is predicted that they will need another €14 billion.

This incredible state of affairs has led to extreme anger which is now manifesting itself in two main ways. First, the frozen landscape of Irish politics has finally started to melt as Fianna Fáil loses its political dominance. Fianna Fáil has been in government for the past 18 years and before that enjoyed long periods in office. Each of the last ten major opinion polls has recorded a drop in its vote to a low to mid 20 percent range. Its current tentative hold on office is only possible because of the spineless behaviour of a Green Party which justifies every attack on working people’s living standards as a necessary compromise to allow it to be a “party of government” which can effect green policies.

The immediate beneficiary of Fianna Fáil’s decline is its right wing rival Fine Gael. This shift has led some on the left to adopt a pessimistic view. The Irish, according to these doom-laden commentators, are a hopelessly conservative bunch who can do no more than switch from Tweedledum to Tweedledee.

This is to misread what is happening: Fianna Fáil is Western Europe’s most successful populist right wing party and has long held the allegiance of many workers. It built on a republican tradition and translated this into the language of economic nationalism. Through mechanisms such as social partnership, it successfully submerged all forms of political class consciousness underneath a sea of Irish national progress. A break with this party is therefore highly significant. Moreover, Fine Gail’s ascent is highly fragile. It does not have the same roots among workers and is seen by many merely as the quickest way to rid themselves of Fianna Fáil.

At one stage the Labour Party appeared to be about to catch up on Fine Gael’s electoral ascent and in the Dublin area it emerged as the largest political party. It did this when it tacked left and challenged the bank bailouts. But the scale of the crisis facing Irish capitalism means that its leadership is terrified about raising expectations. It has therefore systematically discouraged mass protests and has rushed to its historic safe ground, preparing to settle in as a junior partner in a future government dominated by Fine Gail.

The second significant manifestation of anger has been a major public sector strike. Nearly 300,000 workers took action on 24 November 2009, reviving a tradition of militancy among many young workers. New activists began to come to the fore as strike committees organised rotas and in some cases campaigned against the media propaganda with their own leaflets. Even the police are about to vote on taking strike action.

The radical left intervened well around the strike by calling on workers to “take French lessons” by following the example of France’s brilliant 1995 strike which combined picket lines with mass demonstrations. Calls for a march on the Irish parliament, the Dáil, and an escalation of action met with huge popular approval.

At the time of writing, it is not possible to predict the outcome. The union bureaucracy, which has close ties to the Labour Party leadership, is terrified of the movement that is welling up beneath it. In the midst of the strike it repeatedly issued “instructions” to various groups to cross picket lines and began intensive negotiations with the government on alternative ways of cutting the public sector budget. Under the slogan that they could offer “more for less”, it indicated that it was willing to trade up to 15,000 redundancies and new forms of flexibility if pay cuts were withdrawn. The union bureaucracy even offered to give up overtime rates in hospitals by allowing its members to be rostered to work anytime from 8am to 8pm. But despite getting on their knees, the Fianna Fáil-Green government arrogantly brushed the union leaders offer aside, proclaiming “Not enough”.

This rebuff has signalled the death of social partnership and means that the union leaders are now under the spotlight as many ask: will they lead a fight? Up to now they are showing extreme reluctance to do so. They appear stunned by the collapse of a cosy 22 year relationship with the Irish state and are desperate to avoid a strategy of national stoppages to drive a deeply unpopular government out of office.

On the other hand, there is a growing anger and militancy emerging in new networks such as the 24/7 alliance which groups together nurses, firefighters, the police and the army. This alliance held open mass meetings which 5,000 workers attended. At one such meeting, a representative of the police told the gathering, “No government in the world has ever cut the pay of the police—they should realise that loyalty is a two way street.” An empty chair was kept for a representative of the soldiers, who the
government banned from attending.

A weak, unpopular government which has lost the support of its main agents of repression is therefore confronting an organised working class which has woken from the slumbers of social partnership. It may again find that its last line of defence is a union bureaucracy that is more terrified of its own members than it is of the neoliberal revivalists who dominate the state. Yet no matter what the outcome of the present conflict, a dark cloud looms over the Irish capitalism. In order to make an eventual return to the European Union’s Growth and Stability Pact, it has to embark on the same scale of cuts for the next three years. Watch out for even bigger confrontations on the edge of Europe.


1: The status of tax fugitive is Ireland’s unique contribution to neoliberalism. Rich people who are outside Ireland for more than 183 days a year-and few check when their private planes come and go-are allowed to escape all Irish tax simply by claiming residency in Bermuda or some other offshore tax haven