Author: paleoutlaw

BLESSED ARE THE PEACEMAKERS.

2014 marks the twentieth anniversary of the Northern Ireland Ceasefires. It’s a measure of how far we’ve come that the failure at the end of 2013 of special envoy Richard Haass to secure agreement among the North’s political parties on some outstanding issues has generated little reaction. Despite evidence of a growing sense of anger frustration and alienation among some younger working class loyalists, there is certainly no threat of a resumption of the grim cycle of violence that scarred the North for a generation before 1994.

But first things first. On 22 November last Fr Alec Reid died. A Redemptorist priest, Fr Reid will forever be remembered in one of the iconic photographs of the “Troubles,” as he administered the last rites to two British army corporals, murdered by the Provisionals in 1988 after blundering into a republican funeral. It was a grim time, only months after the Remembrance Day bombing in Enniskillen, with the two communities seemingly totally polarised and no apparent prospect of political initiative to end the violence.

However, only a short time later Fr Reid was the major facilitator in setting up what became known as the Hume-Adams dialogue, meetings between Gerry Adams and John Hume, which played a vital part in launching the Northern Ireland Peace Process. Over the years he remained actively involved in the peace process, facilitating dialogue and contacts. It was Fr Reid who, together with Methodist Minister the Rev. Harold Good, announced in September 2005 that the IRA had decommissioned its weapons. He also became involved in attempts to resolve the conflict in the Basque country. His singular contribution to the achievement of peace in the North cannot be overstated.

Serendipity. The release of the British and Irish state papers from thirty years ago at the end of 2013 provides a certain analogy with Fr Reid and “the darkest hour.” The documents just released, which merit detailed and careful analysis, cover the years in the wake of the Falklands’ War, and portray fairly frosty relations between the Irish and British governments.

From the papers, the prospects for political progress seemed bleak. Taoiseach Garret Fitzgerald’s attempts to find a political way forward with the initiative of the New Ireland Forum met with the firm rebuff of Thatcher’s famous “ Out, Out, Out” press conference in November 1984. Speaking less than six weeks after the IRA attempt to assassinate her in the Brighton Bombing, she dismissed the three suggestions of the Forum: a unitary state, a federal/confederal state or joint British/Irish authority. The British seemed also to have considered at the time repartition of Northern Ireland, though how seriously this was taken other than as a doomsday option for dealing with Nationalist alienation is a matter for conjecture.

Yet within a year, on 15 November 1985, the Hillsborough Agreement was signed. Clearly, thinking people – a small number of officials on both sides and a totally committed Garret Fitzgerald – set to work to pick up the pieces and seek to find a way forward. The Agreement was historic in that it aligned for the first time British government policy with the majority rather than the minority on the island of Ireland, inter alia by establishing a consultative role for the Dublin government in certain aspects of the governance of Northern Ireland.

There were unintended as well as intended consequences, with violence continuing for nearly a decade, but the Agreement was a catalyst and laid the basis for breaking eventually the political stalemate. The strands began coming together in the early nineties with some attempts at talks featuring the two governments and the main political parties in Northern Ireland but excluding Sinn Fein. This exclusion, and the continuing background of political violence, doomed the negotiations at first but, in the words of one seasoned transatlantic observer, the pieces for a settlement were on the table.

The logjam was finally broken with the historic Downing Street Declaration of 15 December 1993. In the Declaration the British government declared inter alia it had no selfish strategic or economic interest in Northern Ireland and that it was for the people of Ireland alone to determine their future. This proved sufficient to nudge the IRA and then the loyalist paramilitaries into declaring ceasefires in the autumn of 1994.

Much of the credit for the Declaration must belong to the then Taoiseach, Albert Reynolds, who worked tirelessly, with the aid of, again, a small team of officials, to achieve a path to peace from the moment he became Taoiseach. It was certainly, as Newton observed, a case of standing on giants’ shoulders, in terms of the foundations already laid by Garret Fitzgerald, John Hume and Alec Reid among others, but Reynolds’ unique approach was to seek peace first and sort out the constitutional modalities later.

There can be no doubt that this approach, which is also Reynolds’ political legacy, worked. It is, therefore, particularly sad to record that Albert Reynolds, now stricken by the final stages of Alzheimer’s, was too ill to attend the Declaration’s twentieth anniversary celebrations in Dublin last December. Mrs Reynolds attended on his behalf, together with the former British Prime Minister of the time John Major.

Political developments within Northern Ireland since 1994 have resembled a roller coaster ride with advances, setbacks, swoops and ascents. But the peace has held, Sinn Fein is now in government with the DUP and, gradually, differences have been ironed out, starting with the easiest. But a significant rump remains and it should be kept in mind that political consensus exists only to the extent that all sides feel it is better to be inside the tent than out in the cold and that “jaw jaw is better than war war.” There are still two tribes in Northern Ireland with different concepts of national identity.

Hence the Haass involvement, this time also without any direct input from the two governments. Two of the issues that divide – parades and flags – are of totemic significance to many on the loyalist side who regard them as zero sum ones where any concession would signify defeat. 2013 saw some serious and nasty rioting over both issues, particularly over the flying of the Union flag over Belfast City Hall. The flag is now a badge of identity, just as the schools attended and the games played were and still are. There is much talking and teasing out on these issues still to be done. A change in mind-set is perhaps too much to hope for.

The third issue – coming to terms with the past – is even more tricky and has an ominous external dimension. A lot of blood was shed, a lot of innocents murdered on both sides, a lot of hurt is still to be got over. Recent revelations confirming not only collusion between the security forces and loyalist paramilitaries but even involvement by some of those forces in numerous killings over a generation have complicated matters further. This is one that will run. The glib call for a Truth and Reconciliation Commission as in post-Apartheid South Africa is simply not applicable. In South Africa one side was victorious, one side lost. In Northern Ireland there have been no losers.

January 12 2014

FREE AT LAST! – WELL, ALMOST

With considerable fanfare Ireland has exited the Troika bailout programme after three years. The programme, which provided cheap credit to run the country when no other institution would loan us money, has had a bad press. It became identified with assertions that Ireland had “lost” her economic sovereignty. At best an oversimplification.

Following years of economic and fiscal mismanagement and a banking collapse, a crisis developed in the country’s finances, with a yawning gap between tax revenues and the cost of running the country, including a bloated and expensive public sector and an over generous welfare state. The alternative to savage politically and socially unacceptable cuts to balance the books was the Troika arrangement. Under it – thanks to it – public finances have been stabilised, the tax base has been sensibly extended and our economic and social structures have survived. All this with negligible public discontent and unrest.

Opinion among commentators is divided on whether Ireland’s exit has been a trifle premature and whether we should seek a line of credit “just in case.” The instinct of the government is “No.” The reasoning is that the political plaudits to be claimed for “restoring our sovereignty” – assuming it was ever lost – far outweigh the risk of needing a further bailout. If the need arises, not only can it be blamed on external factors, but does anyone doubt that we would not be accommodated – and with the real economy in far better shape than in 2010? The government is on a winner on this one.

So where does Ireland stand now? The picture is somewhat murky. Very few have been left untouched by the crisis since 2008. Even for those with jobs or still in business disposable income is down substantially. Domestic demand has suffered grievously and serious structural problems remain. The mortgage crisis remains to be tacked in any definitive way and its effects extend far beyond those directly affected. The banks – what remain of them – carry the albatrosses of distressed mortgages and overvalued property portfolios, inhibiting any genuine recovery of the banking system and restricting severely the availability of credit to the domestic economy.

Unemployment remains stubbornly high, with the annual natural increase from school leavers and immigrants a constant to be factored in. Reducing the minimum wage to a more realistic level , which would facilitate hiring additional workers, appears a lost cause with Labour in government. Certainly wage costs have come down considerably, improving the country’s competitiveness, but little action has been taken to reduce upward only rents. The retail sector remains in distress with long established businesses continuing to go to the wall. Shortage of credit from the banks is now chronic. And, when recovery comes, the debt legacy will remain for years to come.

But suddenly there are Green Shoots everywhere – in the media and among politicians at least. And optimism is catching. A good summer; a mild autumn. The public mood is definitely more positive amid hopes that the worst of the recession may have passed. Several economic indicators are showing improvement. Not only is unemployment down, something that could of itself perhaps be explained by emigration, but employment is up, very definitely, with new, permanent, job announcements weekly. There is a mini boom in house property prices around Dublin and hopes that it will spread. Small, and new, businesses are opening.

Whether this is a temporary blip or whether recovery is actually on the way remains to be seen. Partly it may be the seasonal factor with pubs and restaurants in the cities full again. However, for most people things have stabilised and even the prospect of increased property taxes and water charges to come are being contemplated with equanimity . There is a growing feeling that, to quote Churchill, while this may not be the beginning of the end, it is certainly the end of the beginning.

Not surprisingly politicians on the government side are talking things up for all they’re worth. There is cautious optimism that, politically as well as economically, the corner may have been turned. The latest opinion polls show Fine Gael continuing to perform relatively strongly, while for Labour, post –budget, the slide seems to have been halted.

The fig-leaf Labour has clung to, that it helped keep the economy from collapsing while simultaneously maintaining core welfare payments, suddenly seems to be acquiring substance. While Labour has a long way to go to regain the ground lost, its leadership received an added unexpected bonus in early December when one of its most trenchant internal critics left to join Fianna Fail.

Taoiseach Enda Kenny appears to have that quality Napoleon regarded as essential in generals – luck. He was in opposition when the economy collapsed. He – and the government – were presented with the Troika as a convenient fait accompli. Moreover, and often overlooked, much of the heavy lifting to get the finances straight was actually set in train by Fianna Fail, with the present government now beginning to reap the benefits of the knock – on effect of emergency measures taken in 2009 and 2010 – before the Troika arrived.

Then strict adherence to the Troika’s terms, the harshness of which could conveniently be lumped at the previous government’s door, began to pay off. The result was some wiggle room come last October’s budget, which proved less severe than feared, with the relatively harsh cuts of $3 billion passed off as some sort of easing of austerity. Fianna Fail were – and are – hamstrung since the Troika deal was theirs, while the Left, including Sinn Fein, has, despite everything, been unable to make serious inroads. The population as a whole, while increasingly leery of politicians, has shown stoical acceptance of what needed to be done to get the economy straight.

There is still some way to go. 2014 will provide some answers. On paper another harsh budget is required to bring borrowing down to the 3% mark. But politicians are politicians. There remains the danger that, with European elections scheduled for next summer, the politicians will cut and run by offering, or promising, sweeteners for the electorate. As I write the prospect of tax cuts is already being floated by some government ministers , though the Taoiseach has emphasised that there can be no return to the profligacy of the past . This is something to be watched. Short of an amendment to the 2014 Finance Act – unlikely – any changes in taxes will not take place until 2015 but the very fact that the notion is being peddled now is worrying.

For 2014 potential banana skins remain, none more so than in the black hole of Health. The 2014 budget target of cuts of $3 billion was achieved by introducing a balancing figure for cuts in health spending amounting to €666 million ($1 billion). Some commentators have suggested that, factoring in elements left out – including the overrun for 2013 – the “true” figure for cuts in 2014 could be close to €1 billion. If implemented this would mean a double digit cut in the health budget – both unsustainable and unacceptable, and probably also unachievable given the HSE’s track record to date. Any cuts at all in health are politically sensitive. Watch this space.

December 16 2013

FIFTY YEARS ON

To anyone of a certain age Dallas means one thing only. Where were you when you heard? What did it mean to you? Fifty years on, even though the later revelations have tarnished the reputation somewhat, the sense of loss remains.

JFK was philosophical, remarking that all it took was one man with a rifle on a rooftop. Staggeringly, in 1963 the Secret Service did not check the upper floors of buildings unless they had received a specific threat.

And who has led the Free World since? Johnson, Nixon, Ford, Carter, Reagan, Bush One, Clinton, Bush Two and Obama. No Camelots there for sure. Though the acid test must be how they would have handled the Cuba Crisis. Reflect for a moment on that, and ponder whether, without JFK’s surefooted course of action, there would have been a world for them to lead.

I’ve reviewed three books on JFK in the six months, one on the promise unfulfilled after the Cuba Crisis, one on his last Hundred Days, and the most recent, Philip Shenon’s fine book on the Warren Commission – “ A Cruel and Shocking Act.” My review follows:

There is no doubt that Lee Harvey Oswald shot President Kennedy in Dallas on 22 November 1963. The doubts since are whether Oswald acted alone or was front man for a conspiracy, whether there was another gunman, and whether the Warren Commission, set up by President Johnson to investigate the assassination, discovered the whole truth of what happened. Additionally, could the assassination have been prevented?

In 2008 Philip Shenon, a veteran investigative journalist, published an expose critical of the report of the Commission set up to investigate Nine Eleven. Soon after he was approached by a former staff investigator on the Warren Commission, now an eminent lawyer, who urged Shenon to tell the story of the Warren Commission investigation “ to explain what really happened.” Five years of dogged and painstaking research followed.

What was to have been an inside history of the Warren Commission evolved into an account of how much had not been told about the assassination and how much of the evidence failed to reach the Commission, some covered up, some destroyed. What emerges overall is a picture of various agencies and individuals acting in their own self-interest, shifting blame and suppressing information. The Warren Commission was flawed from the beginning, hurried, understaffed, under resourced, politically manipulated, deceived and misled by the CIA and the FBI, both of which conducted extensive cover-ups.

The approach taken by Commission Chairman Chief Justice Earl Warren compounded matters. Warren, convinced from the outset that Oswald had acted alone, was keen to wrap up the report as quickly as possible, certainly before the 1964 Presidential campaign started, and aimed to minimise any further distress to the Kennedy family. He originally envisaged the Commission holding few hearings, having no power to compel witnesses to testify, conducting no independent investigations and doing no more than reviewing the evidence already gathered by the FBI, the CIA and other agencies.

The other Commission members baulked at this and the mandate was broadened, but the auspices were not good. The junior staffers, who did the work, including some brilliant lawyers, dubbed Warren as “Grumpy” or “Dopey” among the “Seven Dwarfs” of the Commissioners (Marina Oswald was Snow White!). Warren took shortcuts which left the field open for later conspiracy theories. To achieve consensus he insisted on language in the report which left open the possibility, contradicting the physical evidence, that a separate additional bullet had wounded Governor Connolly. When the Commission was wrapped up he even favoured destroying its internal files.

From the outset there were rumours of a cover up. The naval surgeon who presided at JFK’s autopsy destroyed his original notes – stained with the President’s blood – lest they became grisly souvenirs. He had already bowed to pressure from the Kennedys to suppress evidence that JFK suffered from Addison’s Disease. Later, Warren refused to allow anyone else view the autopsy photos and X-rays, provoking a near rebellion among the Commission staff.

The FBI, with J. Edgar Hoover bent on damage limitation, suppressed or destroyed vital evidence, while leaking material in attempts to steer the investigation. The night Oswald was shot, the FBI Dallas office, which had been monitoring him for months, destroyed a threatening note which Oswald had hand delivered several weeks earlier. They also failed to place Oswald’s name on the Internal Security Index provided to the Secret Service prior to the President’s visit. Hoover, while publicly denying FBI failures, sometimes under oath, secretly authorised disciplinary action against several dozen agents for dereliction of duty.

The CIA tried to bury the full story of Oswald’s five day visit to Mexico City from 27 September – of critical importance to investigating any possible conspiracy or Cuban connection to the assassination. While there he visited both the Cuban and Soviet Embassies, ostensibly to apply for visas. Attempts to investigate claims that Oswald was seen receiving $6500 from a Cuban agent during his visit were frustrated or glossed over by the CIA, as was another story that Oswald had a brief affair with an embassy employee who introduced him to Cuban agents.

Kennedy after all was dead. The CIA seems to have been at pains to keep secret the widespread and comprehensive surveillance operations it was conducting on the Soviet and Cuban embassies and staff in Mexico City. The damage limitation, orchestrated by the CIA’s eminence grise, James Jesus Angleton, worked. The Commission was heavily dependent on the CIA for information and its final report was far less critical of the CIA than the other agencies involved.

Bizarrely, the FBI learned later from Fidel Castro, indirectly through a double agent that, while in the Cuban Embassy, Oswald made threats to several agents to kill Kennedy . A top secret memo from Hoover to the Commission on the incident ,written in June 1964, never arrive, though decades later a copy was found at the CIA. Another cover – up?

More bizarrely, Castro, clearly anxious to distance Cuba from Oswald, met secretly with a representative of the Warren Commission , denying strenuously any Cuban involvement in the assassination, remarking that he actually admired JFK!

What motivated Oswald? The Commission sat on some of its own records regarding suspicions about Oswald’s sexuality. Later, Commission member Gerry Ford thought him emotionally immature and desperately craving for attention. He suggested a possible sexual explanation, with Marina’s mocking of his impotence eventually pushing him over the edge.

Fifty years on, there are still no definitive answers. The “what ifs” remain. What if the driver of the Presidential car had accelerated immediately after the first bullet hit, which was not fatal, making JFK less of an easy target? Crucially, what if Oswald had been picked up, as he should have been, prior to the visit? For the sad postscript is the conclusion of Hoover’s successor, Clarence Kelley, that if the FBI office in Dallas had been aware of what was known elsewhere in the FBI and CIA about Oswald, “ without doubt JFK would not have died in Dallas” and “history would have taken a different turn.”

November 11 2013

THE FIRST ELECTION BUDGET ?

“With one bound our hero was free.” Not quite. Nevertheless the 2014 Budget, introduced in mid-October, was noteworthy. Hard on the heels of an embarrassing defeat for the Government on the Referendum to abolish the Senate, it was billed as “ the last of the tough budgets.” Maybe. Certainly with breath-taking panache – some would say cynicism – the paper targets were achieved without increasing direct taxation or disturbing most of the major pressure groups in receipt of government hand-outs.

The budget was gift wrapped for Labour, necessary given its poor poll ratings. Not only could the Government announce, triumphantly, that Ireland should be able to leave the Troika’s embrace ahead of schedule at the end of the year – the one fig leaf Labour in power had clung to – but crucially, from Labour’s perspective, old age pensions, child benefit and unemployment payments weren’t touched.
Whether this will be sufficient to reverse Labour’s slide remains to be seen, but it now has a foundation on which to build. If the omens remain good, next year’s budget could be at worst neutral, at best able to offer some sweeteners. The Coalition is in for the long haul and if its luck holds it could achieve a Fine Gael – Labour first by being re-elected, though there is still a long way to go.

The mortgage crisis elephant remains but the Government has bought time with the new insolvency regime and can plead that the public give it a chance to work. Recent deals on debt restructuring, combined with a carryover effect of measures in the last two budgets provided some wiggle room. Increased emigration and unexpectedly high levels of job creation added to this with the double effect of reduced unemployment pay-outs and increased tax revenues.

The net result was that the Budget cut spending by $ three billion instead of four. This was achieved on paper through enhanced cheese paring at the margins of the sort seen in the past two years, further tax increases on alcohol and cigarettes, more stealth taxes in areas such as private health insurance (something which may yet rebound) and maternity benefits, plus the factoring – in of anticipated enhanced yields from the property tax and public sector pay cuts. The remaining shortfall was made up by a balancing figure heaped on the Department of Health, to be achieved inter alia through an overhaul of the medical card system – another potential banana skin.

The few sweeteners include maintenance of child benefit without means testing, plus the introduction of free GP care for all under – fives. These will do Fine Gael no harm either, though neither is defensible in other than political terms. Obviously a plateau has been reached and elements dear to special interest groups are not going to be touched this side of an election.

Fine Gael clearly took a tactical decision to give a helping hand to its junior partner. Yet it needs to tread warily in the health area. The measures proposed will impact most heavily on its traditional middle class support, already hard hit in recent years. The questionable under- fives measure is a zero sum one, paid for in effect by substantial reductions in the income threshold for medical cards for the over -70s. It is justified as a first step in the provision of universal free G.P. care – an election promise – but hardly makes sense in terms of any holistic approach to health care. The generally healthy young will be subsidised at the expense of the group most likely to require medical attention and expensive medicines– the elderly.

Another problematic health element in the budget, the capping of income tax relief for private health insurance, also affects almost exclusively the middle class. Here too it would appear to be game set and match to Labour. As I write, there is considerable uncertainty as to the precise financial implications of the changes but what IS apparent is that Michael Noonan’s dismissive comment that only “ gold –plated” health insurance policies would be affected was wide of the mark. Many, perhaps most, ordinary families with quite modest health insurance are going to be further affected on top of already spiralling annual premium increases.

Those with private health insurance comprise for the most part people with no hope of qualifying for medical cards – which provide for free medical care – on income grounds, though the threshold is modest. There are certainly advantages in terms of fast tracking for some medical procedures but private insurance still leaves considerable costs to be met from taxed income for medicines, consultations and tests. Premiums have risen steeply in recent years with the old VHI now facing competition from rival companies cherry picking the young and the healthy. Throw in a 50% surcharge for over 65’s and top it off with further restrictions on medical cards for the over 70s and the seeds of discontent are there.

Health is a sensitive issue all round. Ireland, for better or worse, has a two tier health system. Political correctness dictates that all parties state publicly that this is undesirable, inequitable and socially divisive with the left shouting that it is unacceptable that those with money should be able to buy better health care and, indeed, to queue jump for routine operations.

The problem is that Ireland, unlike most advanced Western European countries, never had a single universal health system and the health sector was until recently chronically underfunded. Historically the gap between health care for those on low incomes, for whom the state provided rudimentary care based on social insurance, and the bulk of the population, was bridged by a state sponsored voluntary health insurance system (VHI), which provided reasonable cover at modest rates.

However the last two decades has seen a dramatic expansion of free medical care for those on lower incomes, in the form of medical cards, for the most part, but not exclusively, means tested. The current situation is that almost half the population, including all those on social welfare, hold medical cards, possession of which also provides free access to a variety of other welfare and educational programmes and benefits. There are, moreover, considerable variations in the percentages holding cards in different counties, for whatever reason.

The other half of the population, including many on very modest incomes, enjoy none of this. One result has been poverty traps with possession of a card and its benefits proving a disincentive to seeking work. The system, in short, is a mess, hence the announced root and branch overhaul. Media focus since the budget has been on recent hard cases where, on review, cards have been denied or withdrawn . The mess will take some sorting. The political fallout may be considerable

The Government now looks more secure and united than for some time. The challenge it poses to the lukewarm electorate is what, in practical terms, is the alternative? In theory, correct. But in practice matters can evolve differently. Albert Reynolds remarked that it was the small hurdles which tripped politicians up. The Government, Fine Gael especially, should beware lest medical cards and remarks about gold plate do for it also.

October 20 2013

DEATH OF A POET

By the time you read this we’ll know whether Mayo have finally overcome the hoodoo that has seen them lose their last six All Ireland Finals. One pundit commented wryly that another way of looking at it was that Mayo had a very good record in semi-finals! Whatever; after one of the most exciting and entertaining championships ever, Mayo and Dublin emerged after two enthralling semi-finals. The Hurling Championship also has been the best and most open for years, with, as I write, a replay scheduled between Clare and Cork.

The summer – better than usual, or at any rate a welcome, and warm , relief after an unusually cold spring – has also helped people forget the dismal prospect of another harsh budget and more tax hikes next year. As I observed last time, on the macroeconomic front matters are evolving reasonably well. There are now also some signs of minor economic growth (green shoots, an increase in employment), if only because the economy appears to have bottomed out. There are even signs that the housing market is beginning to pick up, at any rate in the Dublin area.

On the down side, the mortgage crisis and the problem of personal debt continues. It will be some time before the effects of the insolvency legislation and accompanying measures to assist those in debt can be assessed but even at this stage the omens do not look good. One of the experts tasked with helping debtors has already pointed out that the legislation will be of no benefit to many if not most of those in need, whatever way politicians have talked the legislation up. Some revisiting of the issue seems likely – but when?

Certainly not before the two events due this month, the Senate Referendum and the 2014 Budget. The Senate Referendum is the brainchild of the Taoiseach, an idea he launched several years ago. The Senate (Seanad) is not like the U.S. Senate in that it has no real power and its members are not directly elected, with almost one fifth in the political patronage of the Taoiseach. In practice it has become a testing ground for rising politicians (Garret Fitzgerald and Mary Robinson both started off there) or a pensioning-off ground for defeated and retired politicians.

It is hard to justify continuing the Seanad in its present form. It is expensive to run, adds sixty politicians to the public payroll at considerable expense and has contributed little since it was established. Its abolition now, however, is hardly a political priority, given the other issues begging for attention and would not be on the agenda had the Taoiseach not invested considerable political capital in the issue. The result is a poll few want after a short campaign that will see issues aired but not discussed in sufficient depth.

As I write the result looks too close to call. A debate on possible reform rather than abolition has begun with some of the various reform proposals made over the years being dusted off and recycled , begging the question of why no actual moves to reform have been made in seventy five years up to now. Predictably, Fianna Fail, which was in power for most of those years, and did nothing, has come out against abolition.

The whole issue of second chambers, their role, powers, relations with the electorate and their place in the democratic structure is one meriting careful and detailed consideration. This may well prove a potent factor in persuading the electorate, conservative on constitutional change, to reject or postpone abolition. We could well, therefore, see an outcome in which the best becomes the enemy of the good. The abolition proposal offers the Irish people a rare gift- wrapped opportunity to remove some of the political and constitutional deadwood at a stroke. It would be a pity to see this central fact obscured and the opportunity thrown away.

The Budget comes hard on the heels of the Referendum. Suffice it to say here that, politicians being politicians, the government parties are manoeuvring in a damage- limitation exercise to seek to make the spending cuts still required as palatable as possible. The Budget may contain also some populist gesture towards the doubly unfortunate apartment owners of Priory Hall, saddled with mortgages and negative equity on properties too defective to live in. The tragic recent suicide of one of their number has highlighted their plight.

Occasionally an event occurs that puts everyday concerns into a different perspective. For a brief period last month normal service was suspended for one such event as Ireland took time out to mourn the death of Seamus Heaney.

It was only fitting. In any poll of who best embodied those elements of the Irish identity in which people took most pride, Seamus Heaney would have been there or thereabouts. The expressions of loss at his passing were almost universal, akin to the mourning for the death of a favourite relative or close friend. It is doubtful if any other contemporary Irish person has been held in as much affection by the Irish people. He gave the lie to Dr Johnson’s dictum that “ the Irish are a fair people – they never speak well of one another.”

His appeal is easy to understand. He wasn’t a politician. He wasn’t a churchman. He was a poet; and Ireland likes poets. Within Ireland, in a time of dramatic change, political social and economic, his was a presence that endured in a writing career spanning over four decades. Poems of his learned at school remained fresh in the mind of successive generations. His modesty and accessibility, combined with his perceived personal and professional integrity in a period when others on pedestals proved to have feet of clay, cemented his reputation.

He enjoyed worldwide acclaim and popularity, as the many awards he received, culminating in the 1995 Nobel Prize, attest. Indeed, at his death his poems made up two thirds of the sales of living poets in Britain. Of his Irishness he was proud. An attempt to include him in an anthology of “ British poets” in 1981 met with the gentle but firm rebuff in “ Open Letter” to the effect that “My passport’s green,/ No glass of ours was ever raised,/To toast the Queen.”

He wrote of the years of violence in the North with quiet passion, yet with an equally resolute determination not to be used as a propaganda tool, responding, famously, in “ The Flight Path” that, if he did write something, “Whatever it is, I’ll be writing for myself.” There are similarities of approach here to the lines of the other great Irish poet Nobel Laureate, Yeats, who in 1915, responding to demands for a war poem wrote ” I think it better that in times like these/A poet’s mouth be silent.”

One commentator, noting the oft – used observation that Heaney was the greatest Irish poet since Yeats, observed that perhaps now it could be said that Yeats was the greatest Irish poet till Heaney. He will be missed. His last words, texted to his wife, were in Latin “ Noli Timere” – Don’t Be Afraid. Ave atque Vale.

September 15 2013

ON THE CLIFF EDGE ?

My local village pub has just closed its restaurant “until further notice” after two years of losses. It offered good value, unpretentious, food. It closed because of lack of custom, its fate in some ways a metaphor for what’s been happening in the real Irish economy. Elsewhere one of my favourite Dublin bookshops now closes every Monday and has reduced hours during the rest of the week.

Ordinary punters, assailed by a flood tide of direct, indirect and stealth taxes, have hunkered down. In a society where government taxes on a standard bottle of wine are $5, 20 cigarettes cost over $12, and gas and electricity prices are among the highest in Europe, dining out has become a luxury. The anecdotal evidence for this has now been backed up by the just released latest Quarterly National Household Survey – for the third quarter of 2012. Things have certainly not improved since.

The Survey paints a stark picture. 82% of those surveyed have cut back on some spending, 25% have cut in multiple categories. 66% have cut back on outings to pubs and restaurants, 65% on clothing and footwear and 51% on groceries. 60% have cut back on foreign holidays and over a third their spending on automobiles. A quarter of those surveyed have dipped into savings to pay everyday bills.

2014 promises little solace. The property tax will apply for twelve months instead of six, already overpriced public utilities are pitching for price increases from later this year, while health insurance premiums – for those who can afford them – are set for another substantial rise. The full impact of the solid fuel carbon tax, introduced last May, will be felt as soon as the home heating season begins. Public sector workers are now beginning to experience salary cuts imposed from July 1st. Hikes in many other basics and services like public transport will further squeeze what’s left of disposable incomes.

So much for the micro level.

On the macro level things seem to be panning out well with most of the heavy lifting on the economy done. The Troika targets have largely been met and the end of their stewardship seems in sight, leaving Ireland free reassert to its sovereignty by borrowing afresh on world financial markets, probably towards the end of next year.

Reducing borrowing to the recommended 5.1 % of GDP next year looks easily achievable despite the projected need of the government to continue to borrow well in excess of $ 1 billion monthly just to keep going. Some pundits are already arguing that we are so far ahead of schedule that some easing of austerity should be attempted in October’s budget, where the tug-of-war is already under way.
“Normal” politics has begun to re-emerge. The usual opposition voices calling for a reversal of policy are now being joined by significant sections of the Labour Party. With the government’s term well past half way and European and local elections due next year this is hardly surprising.

Labour has taken a hammering and is desperate for anything to restore its fortunes . While the party leader continues to speak bravely about its role in saving the economy, on current polls at least half of its deputies will lose their seats. The forthcoming budget represents perhaps a final chance for the junior government party to salvage something.

Support for Fine Gael, by contrast, is holding up well. This despite the decision to legislate on the thorny issue of abortion. The resulting law, while very limited in scope, criticised from all sides, and subject to a possible constitutional challenge, has been a watershed. Not just socially, but politically. It has established Taoiseach Enda Kenny, as a formidable political leader and Fine Gael, finally, as a tough professional political party. On his hind legs Enda is not a man to be trifled with; nor, increasingly his party.

This year’s budget is yet to be decided. As I write we are stuck at the skirmishing stage, with the actual amount of the savings required –roughly $4 billion – still in dispute. Labour wants less – given the perceived wiggle room now appearing; Fine Gael wants to keep to the pre-set target. The wrangling over cuts versus taxes has yet to hot up.

What IS clear is the message coming from the real economy that consumers have little if anything more to give. Domestic demand is in crisis; people have had to adapt, but at a price – considerable collateral damage to the retail economy. The argument advanced in favour of not slashing welfare payments because they tended to be spent, thus supporting economic activity, has now acquired relevance also for the spending power of the slightly-more-affluent.

Up to now there has been widespread stoical acceptance of what needed to be done to repair the economy, and, in the main, this has been achieved without wholesale dismantling of the welfare state and social safety net. Few would dispute that some of the spending cuts imposed at the margins, especially those affecting disparate small groups at particular disadvantage, have been ham fisted at best, incomprehensible at worst, and require redress as a priority, but by and large the system remains intact. Hence the absence of the type of public and street protest seen in Greece.

However, with different signals now coming from Europe about the efficacy of austerity policy as a panacea for the Eurozone’s economic woes, opinion is shifting here. The argument is that if some of those in Frankfurt are now having a rethink on austerity why the hell is the government here persisting with it. This argument is, of course, too simplistic. Relevant is Keynes’ comment that “When the facts change, I change my mind.” The economic situation, in Europe and worldwide, is evolving, and, with policy input feeding into and affecting economic developments, it behoves those in the ECB to take stock and amend their thinking accordingly.

There are additional flies in the Irish ointment. The target of bridging the budget deficit, so that eventually at least we can pay for our services and welfare without borrowing, continues to restrict the government’s freedom of manoeuvre and means that in practice there will be little relief for the populace next year no matter what.

Additionally our economy is heavily dependent on exports and our recovery hopes ( and plans, and strategies) are pinned on expanding those exports. There has been a double hitch. Firstly the world economy is showing at best only sluggish growth, retarding our export drive. This partly contributed to a fall of $4 billion or 6.4% in manufacturing exports this year to end June.

Pharmaceutical exports, however, which represent over half of total manufacturing exports, fell by around 10%. Much of this was the consequence of the so-called “ patent cliff “ when some extremely lucrative drugs – like Viagra(!) and Lipitor – came off patent. New drugs are being developed, so the fall has not been as precipitous as feared. Nevertheless the combined effect is to depress GDP this year, with negative implications for the budget arithmetic.

When will the hard-pressed taxpayer get some relief?

Echoes of another Keynes bon mot: “ In the long run we’re all dead.”

THE GOOD THE BANKS AND THE UGLY

Contestants on a recent RTE Radio competition were required to mimic a well-known Clint Eastwood quote: “ In this world there’s two kinds of people, my friend: those with loaded guns…. And those who dig…..You dig!” A pithy summation of the state of the nation.

Equally apposite, if less dramatic, would be the observation that there are the banks and their (few) supporters – and there are the mugs. Public anger with the banks has flared again with the recent publication of transcripts of phone conversations at Anglo Irish Bank in the run up to the fateful “ bank guarantee” night of 29 September 2008. The brazen hubris of the Anglo executives, their contempt for the outside world at the time, has shocked even the most stoical and apathetic.

But will it matter? The hand wringing will go on, politicians will point to the thorough – if glacial -pace of the criminal investigations ( perhaps a trial or two in 2014) and to the new and improved regime at the Central Bank and the Financial Regulator. And there’s the rub. The banks will not be reformed, or purged, or transformed into socially responsible institutions. They will be dusted down, and pushed and prodded to get going again – to act like…. banks.

One of the mantras of current official thinking is that a major key to kick-starting the economy is to “get the banks working again.” (This phrase was actually said to me by one of the key official players soon after the bank bailout.) That pious statement is surely open to question – and, indeed, critical analysis. Do we really want the banks resuscitated to function as they did in 2006 or 2007, or should we seek something better ? However a government trying to cope simultaneously with a bust economy and a chronic fiscal crisis does not seem inclined to take initiatives. The minimum possible has been done, coated in rhetoric.

The result has seen the banks get most of what they want, particularly in the detail. An example is in the small but significant area of state savings and investment schemes. These have traditionally offered reasonable and guaranteed returns to small savers. However the interest and prizes on offer have now been drastically reduced, apparently in response to whining from the banks about unfair competition. This has gone hand in hand with the banks ratcheting up their everyday charges to ordinary customers and reducing interest paid on deposits to derisory levels.

The current glib phrase is that banks are acting “to repair their balance sheets” with the hint that, when this is done, it will be back to “normal” and the banks will start lending again. But how much and to whom and under what conditions? Meanwhile the mortgage crisis remains unresolved, though we are now in a period akin to a phoney war. The rules against bullying those in mortgage difficulties have been relaxed, under what has been euphemistically entitled a revised code of conduct – revised, yes, but with nothing in it for the punter in difficulties. The effects of the new regime will take several months to trickle down.

This at a time when the numbers in arrears have reached 12% of residential mortgages and 20% of buys to let. The latest proclamation from the Central Bank has been a wholly unachievable timetable for the banks to “sort out” the mortgage issue, including reaching “sustainable solutions” for 50% by the end of the year. The first target, to end June, was considerably undershot. The long threatened sharp increase in repossessions and/or evictions is now much closer, with Ulster, the major bank not shored up by the taxpayer, first to up the ante. The process is just beginning; the
next six months should see all the banks begin to circle their prey. The elaborate structures enacted in recent months have yet to be tested, but one thing is certain: the individual, rather than the bank, will be left with the short straw.

The basic underlying reality is that the banks’ balance sheets are askew by billions in terms of overvalued private mortgages and that until this reality is faced up to there will be no solution. The balance sheets will continue to paint a false picture. Palliatives will not work. The government has no more cash to inject into the banks ( on this at least there is unanimous agreement) and therefore are loath to sanction or endorse individual mortgage write downs, which would contract the banks’ assets further with a knock on effect on credit. The net effect seems to be to allow the banks to wring every last cent out of debtors, an approach overwhelmingly borne out by the available anecdotal evidence.

“Moral hazard” is quoted at the debtors, with no sanction for the institutions which blithely financed them. The straw figure in this is the “can pay, won’t pay” bête noire for whom there are no figures, but who, Orwellian-style, has been caricatured in the abstract as some evil Emmanuel Goldstein, brazenly refusing to pay his lawful debts. There is no NAMA in prospect for the distressed mortgage holder.

However, the solutions on offer, including the laughably inadequate personal insolvency legislation, as well as the hair shirt suggestions for family lifestyles for up to five years to qualify for even partial debt relief, are so patently inadequate that it is inevitable that this issue will have to be revisited. In this regard, what happens on the macro (I.e. Troika and ECB) level over the next year or so could offer the Government – and the distressed – a lifeline.

The ECB is lurching towards a system under which bond holders and large depositors rather than the taxpayer will be burned if a bank goes under. Currently under consideration is a proposal for retroactive recapitalisation of already bailed out banks by the European Stability Mechanism , one of the new instruments under establishment by the ECB. In layman’s terms Ireland may get back some of the money the Irish taxpayer ploughed into the banks.

It is likely to be at least a year before any of this comes to fruition , and there are issues still to be resolved, including some opposition from more fiscally conservative member states. Nevertheless Ireland has earned considerable brownie points for sticking to the Troika bailout programme and outperforming the other PIGS in this and other regards, so some political quid pro quo may well be forthcoming as a reward. Michael Noonan, broadly supportive, is officially maintaining a poker face.
Any refund will not, of course be anything like the amounts the taxpayer put in, but some commentators have speculated that it could be up to € 8 billion – a sizeable sum for the government to play around with. Much will depend on whatever strings may be attached, but there could be scope for earmarking some of any monies received to help with the mortgage mess. Expect, however, a feeding frenzy around that particular trough, which, should it come to pass, will represent the first and only bonanza for this government.

All this, of course, is speculative.

In the meantime: “ You dig!”