TWO CHEERS FOR DEMOCRACY IAN 0911 IX

TWO CHEERS FOR DEMOCRACY
Some good news at last. The second Lisbon referendum was won decisively by the “Yes” side. A hurdle on the road to national recovery has been successfully cleared. Taoiseach Brian Cowan, mugged last year by the earlier No vote, can now focus on the Economy. The final vote was two to one in favour, 1,214,268 to 594,606. The yes vote rose by 360,000, the no fell by 268,000. The total vote was up by 195,000, and the turnout, at 58% was higher than in any of the previous votes on Europe (six) since 1972.

A vigorous campaign was mounted by the Yes side. Of particular note also was the role of the Chairman of the (neutral) Referendum Commission, Judge Frank Clarke, whose clear and concise contributions on radio did much to dispel fears and misapprehensions among the public. However, a reality check. It should not be overlooked that a third or so of the electorate remains stubbornly opposed to strengthened links with Europe and that, in numerical terms, this group continues to grow.  The figure opposing Lisbon Two was 60,000 more than that opposing Nice Two.  Winning them over seems a forlorn hope. “Getting out the vote” will remain, therefore, of major importance to the pro-Europeans.

The experience also shows that Ireland needs another, major, reality check where relations with the European Union are concerned. Ireland is not at the heart of Europe, as is constantly claimed; if we were, our history would have been far different. The EU was founded on a Franco-German axis and the economic and political weight of the EU remains roughly situated around this core. Ireland is a small country on the periphery, with less than 1% of the EU’S population, which has enjoyed very substantial cash and capital transfers from Brussels (i.e. from other member states) over three decades. This money has in the main been put to good use and has been largely instrumental in hauling our living standards up to European levels. This era is now over, with the arrival of newer, poorer states from Central Europe.

Europe nevertheless remains of the utmost importance to Ireland, in terms of market access, the toleration of our business-friendly tax regime and the social fabric and progressive legislation which has flowed from Europe. More than that, Ireland is embedded in the European project, which is an inclusive rather than a “them and us” relationship. Fundamental to this is a collegiate approach to issues, so that vital national interests are not trodden upon (in our case neutrality and investment incentives), and the “national veto” is never invoked. Ireland has benefitted enormously from this European inclusivity which has given us both a voice and an audience. The picture is completed by the succour that our economy has received over the last year, which has seen the European Central Bank keep us afloat financially, as a member of the European family.

This almost unique relationship was jeopardised by the initial no vote on Lisbon and would have suffered seriously by a repeat. Up to then Ireland was seen as an EU success story and was the recipient of much good will from our European partners. These partners, particularly the ones who picked up the tab, regarded the first vote with incredulity, given the benefits Europe has brought Ireland. Their indulgence and patience would have been sorely tried by another no.  What would have been seen as wilful disregard of the nation’s self interest would lead to a cooling of affection by our partners. Nothing precipitate would happen right away. The EU would muddle through. But Ireland would have slipped from her “most favoured nation” status to one regarded as an awkward marginalised partner.  The yes vote has prevented this, but we will still have to re-establish our credentials and bona fides with a Europe which has greater issues and problems to confront.

Another reality check is required with regard to the economy, where denial persists regarding the extent of Ireland’s fiscal crisis. For many this is still somewhat of a phoney war despite the sharp tax hikes and the promise of more to come. The reaction to suggested welfare, health and education cuts has been disbelief, anger and a demand that scapegoats (i.e. someone else) be found to pay. The suggestion of wage cuts in the public sector (where jobs are guaranteed) has provoked fury and threats of strikes. Each special interest group has been vocal in defending its patch. Meanwhile the Government continues to borrow over $500 million per week.  Revelations of lavish expenses claimed by politicians, leading to one high profile resignation, have fuelled public anger and distracted from the reality of the economic crisis.

For some the phoney war is set to hot up. A large and increasing number of house owners are now in negative equity as property prices continue to fall. Negative equity does not matter in the short run as long as the mortgage is paid, but where jobs are lost repossession looms. This year has seen a trickle; 2010 promises a stream if not a flood as the banks cease to be “nice guys”. By then a scheme to bail out the banks – by diverting bad developer-loans – will be up and running. Nothing has been mooted regarding a bail out for home owners in trouble and this issue may well move to political centre stage next year. But first there is the December Budget which will certainly concentrate minds.

There are signs that the economy is indeed bottoming out, with unemployment flattening, some categories of exports booming, and the decline in government tax revenue almost halted .One central bank official recently described the economy as “bubbling along at the bottom”.  In the property sector this appears to be happening, at reductions of up to 50% from the peak. There are cautious official forecasts of a return to economic growth in 2011. However, even if this happens, recovery is likely to be lengthy and arduous.  It will be many years before the jobs lost are regained. Barring inflation, property prices are unlikely ever to reach the dizzy heights of 2006. Emigration has officially restarted, despite continuing immigration, but the economic situation elsewhere offers no solution to Ireland’s jobless.

One solution, though not in the short term, may emerge as a result of an event which took place in Dublin in mid-September. The Global Irish Economic Forum saw a gathering of almost 200 prominent international business and cultural figures of Irish birth or heritage. The Forum was at the invitation of the Irish Government, taking up an idea put forward by the economist David McWilliams, who has argued for some time for more interaction between Ireland and the Irish Diaspora. The idea behind the weekend meeting was to explore how the energies and expertise of those worldwide with an Irish connection might be harnessed fruitfully on Ireland’s behalf.  A report with follow up recommendations will be made to the Government. There is tremendous affection and good will for Ireland out there among the Diaspora. God knows Ireland need it!

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