For decades the European Commission and the establishment political parties of the member-states of the European Union praised the Irish model, called the “Celtic Tiger.” What were the most important characteristics of this model?
The most important aspect was that the EU Commission, with the help of the Irish establishment, attributed the success of the Irish economy to the fact that it was one of the most open economies in the world. It was based upon (a) low corporation tax, (b) low personal tax, (c) very little or what they called “light” regulation, (d) a trade union movement heavily compromised by “social partnership,” (e) a well-educated and skilled young work force, and (f) a significant platform for trading into the European Union by transnational capital, particularly from the United States.
Ireland knew a period of considerable economic growth above the average in Europe. Could you give some figures? For whom were the benefits of the economic growth?
Without a doubt, the standard of living of most people rose during the period called the “Celtic Tiger.” The average yearly growth was somewhere in the region of 6–8 per cent per annum. Much of this growth was centred on the construction industry. This resulted in an enormous growth in speculative investment in the construction industry, reaching a peak of 100,000 housing units being constructed in one year alone. The housing market and the construction industry have now collapsed, from a peak of employing 255,000 people in 2008 to now employing a little over 150,000. Yet 44,400 people are now on the housing list, awaiting housing, while more than 60,000 housing units are still empty.
This led to a huge growth in house prices and the speculative price of development land. Young couples and individuals where taking out 100–120 per cent mortgages over forty years at a time of low interests rates. Low interest rates suited the German economy, as the Germans were trying to stimulate economic growth. The value of the euro is determined by the needs of the German economy, not necessarily by the requirements of the smaller member-states of the European Union.
When interests rates began to rise, in the main because of the needs once again of the German government to damp down inflation, this caused a crisis, as people stopped buying houses. People in Ireland are second after the United States for the level of personal debt. The plastic card made up the difference between real wages or their disposable income and the false desires or needs created by the brightly coloured magazines and shop windows promoting the unsustainable life-style of capitalism.
How badly were the banks in Ireland hit with the financial crisis and how did the government respond? How much money went into the financial sector (in absolute figures and in relation with Ireland’s GDP)? What do you think of the government’s response?
In early October 2008 the management of Anglo-Irish Bank, which was heavily exposed to the speculative property market, had an emergency meeting with the Government about its imminent collapse. This bank had financed a lot of the speculative building and investment by many of the major property speculators, who have investments around the world. These same investors are the financial backbone of the major party in Government; so effectually the ruling class was and is in deep financial crisis.
Following from these, which at first were secret meetings, the Government proposed an across-the-board guarantee of all banks’ and financial institutions’ debts. Six Irish banks and financial institutions have agreed to avail of this protection afforded to them by the state. It is now estimated that bank debt exposure taken on by the Irish state is in the region of 260 per cent of GDP. Subsequently the Government has raided the national pension fund and has put €3½ billion into both Allied Irish Bank and Bank of Ireland, having nationalised Anglo-Irish Bank.
How high were the profits for some Irish banks the last years? Did Ireland also know bankers and CEOs with huge wages that were thanked with golden handshakes, in Belgium also called golden parachutes? Over the last decade the Irish bank system has been highly profitable, with year-on-year growth in profits. Allied Irish Bank made €885 million in profit in 2008. In relation to the salaries of bankers, Irish bankers are paid well above what many bankers in Europe would receive. For example, the CEO of the Central Bank of Ireland is paid more than his equivalent in the British or European Central Bank.
The CEO of Irish Life and Permanent resigned with a pension of €400,000 per year. It has been discovered that the CEO of Anglo-Irish Bank had secret loans coming to €110 million from the bank that the Revenue Commissioners (state tax-collectors) and the Bank Regulator where “unaware” of. At the end of each financial year another financial institution, Irish Life and Permanent, would secretly transfer money from its account to Anglo-Irish Bank in order to cover up this massive gaping hole in the finance of Anglo-Irish Bank. This is massive potential fraud, yet no-one has been questioned by the police and no-one has been charged, and it is most likely that no-one will every go to prison. If a father or mother stole food to feed their children they would get six months in prison.
For months now, the financial crisis went into a deepening general economic crisis. Could you give some facts and figures from company closures and unemployment? Other examples? Ireland is experiencing not only a financial crisis but also the general crisis of capitalism. Since the mid-1960s the Government’s main economic development strategy has been to encourage investment by transnational corporations, to set up bases here in the Republic; a similar strategy was carried on in the North of Ireland by the old Unionist government and the British government under direct rule from London. They were and are relying upon transnational corporations to create an industrial base.
This strategy is now falling apart at a rapid rate—this year alone Dell, SR Technics, Google, Seagate, F. G. Wilson, Nortel, and KPMG. Unemployment has risen by more than 8 per cent in two years and is growing, with nearly a thousand jobs being lost every day. It is estimated that unemployment could reach 600,000 by the end of the year. The Government estimates that the general Government deficit this year will worsen from the forecast 9½ per cent of GDP that it was predicting when it produced an emergency budget in late 2008.
Ireland is severely hit by the economic crisis. Has the nature of the “*Celtic Tiger” model something to do with that? Yes. The Irish economy was one of the most open and deregulated in the capitalist world, very similar to that of the United States. It is also one of the most unequal societies, next to the United States, and also has the highest personal debt ratio after the United States.
Exchequer figures show a deficit of €2 billion for the first two months of this year. Tax receipts for the first two months were €5.76 billion, compared with €7.56 billion in the same period in 2007—a drop of 24 per cent.
VAT receipts were 17 per cent lower, at just under €2¼ billion, while income tax was more than 7 per cent down, at just over €2 billion.
The amount collected in VAT and excise duties was down by €755 million, compared with the first two months of last year, a decline of 21 per cent.
The fall in income tax results from a fall in employment, while stamp duty and capital taxes were off a total of €613 million, relating to the contraction in house sales—an investment activity.
Public spending rose by €131 million, as social welfare spending was up €188 million in the first two months as a result of higher unemployment.
In what consists the crisis policy of the Irish government? What are the consequences for workers’ income, working conditions and jobs? Briefly tell us also the composition of the Government. What do you think of it? The current Government in the Republic began as a three-party coalition with the support of a number of independent members of the Dáil (parliament). Since then the Progressive Democrats, who styled themselves on the Thatcher model, have collapsed, though their one minister remains on in government as Minister for Health. The major party in the coalition is Fianna Fail, which grew out of the national independence forces of the 1930s; and the final partner is the Green Party.
Especially, the levy on workers’ pension was highly controversial. Could you explain the measure?
In the last budget, in 2008, the government imposed a 1 per cent levy on all workers’ earnings. Hospital charges increased to €100. The drug repayment scheme was limited to €100 per month, hospital bed charges increased to €75, third-level education fees increased to €1,500.
The Communist Party of Ireland say that the budget which the government introduced in November showed that government wants the working people, the poor, the sick and pensioners to pay for the crisis? You even speak of a “criminal conspiracy” among the ruling elite “to make working people pay for the deepening crisis”? What do you mean? You can gather from my answers to previous questions the close nature of the ruling class to this Government and how it influences its decisions. What is clear is that since 1987 most of the important economic decision have been taken or shaped by the European Union. Over the last decade of the “Celtic Tiger” Irish bankers have had a huge input into Government economic and social policies.
When the economy was running with massive budget surpluses it was easy to throw money around the place, funding projects, paying grossly inflated prices for infrastructural projects, to fatten the wallets of financial backers. The Taoiseach, Brian Cowen, speaking in the Dáil in early March, stated that the Government was not aware of the extent of the fiscal and economic crisis facing the country up until the exchequer figurers for February 2009 had been announced. This is the same leader who informed the nation that he had not read the Lisbon Treaty but that people should take his word for it and vote yes last June, that it was a good deal for the Irish people.
As the crisis has deepened it is clear that the establishment has few if any answers to it except to attack public spending on education and health, to impose levies on workers to bring in additional revenue. The most recent was the imposition of a 10 per cent levy on public-service workers to contribute an increasing amount to their pension.
What concrete policies does the CP Ireland propose?
We are working on an alternative economic strategy, which should be completed shortly. But we have proposed—and this has been taken up by a number of unions—the establishing of a State Development Bank, in which the National Pension Fund should be invested, along with other pension funds, removing them from the global speculative markets. Also, the general public could move their savings, and also families could move their family-home mortgage.
We have not called for the nationalisation of the banks, as we believe that that is a case of the socialisation of the debts of the ruling class. The nationalisations that have taken place around the capitalist world are for strengthening capital, not for controlling or weakening it.
A planned use and development of our natural resources, such as marine resources and farming, should be developed. These valuable resources should be brought under democratic control and accountability. As an example, the Republic has nearly 30 per cent of the fishing stock of the European Union yet is allowed to catch less than 8 per cent of the EU catch. Meanwhile all mineral resources, such as natural gas, are owned by transnational corporations.
In addition, we have called for the establishment of a state development body that should set up advanced-technology industries, creating jobs using the creative abilities of our scientific community, along the lines of those developed in Cuba, thereby creating jobs that can’t be shipped to eastern Europe or China.
We recognise that there are no real short-term solutions within the existing economic and political structures and that there is a need for radical national democratic transformation. We do not believe that we are at the stage to be calling for socialism. The material and ideological basis for such advanced demands does not yet exist.
In Dublin 120,000 persons were on the streets to protest against government. Who organised and participated? What were the demands and the slogans at the manifestation? Other facts about the manifestation?
The major demonstration was organised by the Irish Congress of Trade Unions. The Irish trade union movement is united under one union federation. Their slogan was “There is a better, fairer way.” They also issued a bland ten-point recovery plan, a reheated version of a plan produced by a Swedish economist that was implemented during the economic crisis in Sweden in 1993.
There have also been a number of other demonstrations by public-sector workers, Gardaí (police), taxi-drivers, and bus workers—all individual protests not yet reaching the position of looking at their situation in relation to the general crisis.
We need to gain control of capital. That is within our grasp, as is the case in relation to the many changes that are now under way in Latin America. The solutions proposed or advocated within the European Union we feel are narrowed by the economic and ideological straitjacket that so much of the left have taken on board in the false belief (from our viewpoint) that the European Union can be transformed from being an instrument deliberately constructed by and for monopoly capitalism.
Another remarkable workers’ action was the occupation of the Waterford Glass factory. Could you tell us something about that?
480 workers continue to occupy their factory, Waterford Crystal, part of the Waterford Wedgwood Group. Waterford is a city in the south-east, and high-quality crystal glass has been produced there for many decades. The workers are attempting to secure the future of the company and prevent its take-over by venture capitalists. The CPI has called for its nationalisation, not in some knee-jerk ultra-leftist reaction but in recognition of the very real fact that the Waterford Crystal name is one of the top 5 per cent world brand names; the crystal is made from local raw materials; and there is a highly skilled work force. We believe that this business could be developed and grown, creating additional jobs.
Also teachers’ unions demonstrated all around the country? Why? When?
Teachers and other education workers, pupils and parents organised a protest late in 2008 at the cuts in the education budget. Tens of thousands participated in all the cities and major towns.
Pensioners forced a retreat of a policy of the government concerning medical cards. That’s a success. How did they resist the policy measure?
They held meetings throughout the country. They refused to allow any representative from the Government parties to either attend or speak at their rallies. One of the features was the central role played by retired trade union members.
The Government has announced that it is planning to have an emergency budget in April, as the public finances continue to nosedive further and it is clear that state pensions, along with other state benefits, such as unemployment benefit, will come under renewed attack.
What are the perspectives of the movement after the manifestation? Are other manifestations, strikes planned?
The ICTU has planned another national day of action for 31 March against Government policies. It is also clear that leading elements within the labour movement would like to find some accommodation with the Government in the context of some new “social partnership” arrangement. After decades of social partnership agreements with Government and employers, significant elements of the unions are unable or unwilling to resist. Despite offices full of researchers and economic advisers, trade unions have not come forward with one concrete alternative. They continue to think inside the ideological box of contemporary bourgeois society. It is a case now that they must become either radical or redundant.
Some union leaderships, particularly representing public-sector workers, are very keen to get into bed with the Government in some renewed or reheated “social partnership” deal. If this happens, then trade unions would, in the minds of many workers, become identified with current and future Government policies, in other words overseeing and being associated with a massive assault on the social gains that Irish workers and their unions have struggled long and hard for over many generations.
“Towards 2016” is the current social partnership agreement and was ratified by the trade unions on 5 September 2006. Unlike its predecessors, it is a ten-year agreement, with an initial 27-month pay phase.
In relation to pay, a deal worth 10 per cent over the initial twenty-seven months was agreed. This was be structured as follows:
• 3 per cent over 6 months;
• 2 per cent over 9 months;
• 2½ per cent over 6 months;
• 2½ per cent over 6 months.
For low-paid workers (those on €10.25 per hour or below) there was an additional 0.5 per cent payable in phase 2.
Employers are now reneging wholesale on this agreement, and those employers who have paid it because they are profitable have come under attack from the employers’ organisations for paying what they had agreed in the first place. What is happening is that many employers are seizing the opportunity of the crisis to launch sustained attacks on workers’ terms and conditions, with up to 30 per cent cuts in wages now being demanded.
In these conditions it would be complete suicide for the trade union movement to move closer and be identified with Government policy.
What’s your opinion on the political parties participating in the workers’ movement?
None of the major political parties represented in the Dáil have come forward with any radical proposals to advance the workers’ movement. All operate within the same framework, all seeking to take electoral advantage in the forthcoming EU and local government elections in June. All see solutions within the narrow restraints that current EU treaties impose on member-states in relation to economic and social policies.
Clearly they are all attempting to steer dissent into purely parliamentary channels. The contradictions both of the Irish ruling class at the national level and the crisis at the global level are growing and deepening. While the material conditions or the objective conditions appear to be pregnant with the possibility of change, the subjective factor—that is, the understanding of working people in relation to the nature of the crisis and the forces responsible—has not yet reached the point where the ideology of the ruling class becomes less of an influence over the thinking and understanding of the masses.
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