ROTTEN TO THE CORE 1610 XCIV

ROTTEN TO THE CORE

In recent weeks the ordinary Irish punter has received a crash course in corporate taxation courtesy of the European Commission and the Apple Corporation.

This lesson has underlined the reality that taxes, like death, may be inevitable, but who pays them and how much varies greatly.  In Ireland, as in every country, a complicated structure of rates, allowances and exemptions provides lucrative careers for armies of accountants, tax specialists and lawyers employed expressly to minimise the amount of tax paid. And the general conclusion, here as elsewhere, is that the wealthier the client, the better help can be hired and the smaller the resultant tax bill.

There’s nothing fair or equitable about the Irish tax system, notwithstanding official claims that it is among the most “progressive” tax regimes in Europe. Possibly it is, in the narrow sense that once an individual’s income for tax purposes has been determined, taxation at a rapidly increasing rate is applied, so the more you “earn” the more you pay. The devil however is very much in the detail of determining just what you “earn” for tax purposes, with the legislation a mishmash covering personal and company tax law as it has evolved over the last century.  The lines between tax avoidance – permissible – and tax evasion – illegal – can be blurred, and tax defaulters rarely if ever face jail, which hardly encourages compliance.

The elements parcelled together in Irish tax law reflect a mixture of government policy and the fruits of special interest lobbying over decades. Inter alia there are provisions governing non residence, policies of disregarding certain income entirely and others favouring certain groups of taxpayers. Much of the legislation and provisions (or exemptions!) were drafted initially in tandem with and with an eye on other government laws and policy objectives.

The result, on the personal tax side, has been something to annoy everybody. Why should certain people receive a $50,000 plus exemption on income received for writing a book or selling a painting? Why should people receiving one payment from the state pay tax on it while people receiving a different payment do not? Why should some people charge the cost for travelling to work while others cannot? Why should those caught in the PAYE net alone have tax deducted right away?  And why should persons – invariably wealthy – pay no tax in Ireland if they are deemed “non-resident for tax purposes” which is liberally interpreted to apply to anyone not proven to reside here for 184 days in any one year?

One question rarely asked is about Ireland’s low rate of corporation tax. At 12.5% – much lower than that on individuals – the CPT rate has become one of Ireland’s sacred cows, to be defended as fiercely as the level of the Old Age Pension. The reason is simple. That low rate has been identified as one of the major factors in successfully attracting and keeping foreign industrial investment here. And, while other factors making Ireland attractive can be cited, few doubt the importance of the low tax rate. It had its origins half a century ago when Ireland was struggling to establish a manufacturing export oriented industrial base and was attempting to attract inward industrial investment.

We have come a long way since then but the tax rate continues to matter. Any doubts on that score can be dispelled quickly by viewing the various attempts and pressures put on Ireland by the Commission and individual EU states to force a change. Under sustained pressure from the Commission the Government increased the rate to 12.5% some decades ago amid allegations from several EU states that Ireland was poaching jobs and investment.  When we were on our uppers several years ago, requiring a bail out from Europe, concerted and determined pressure to change was again exerted by the Commission and several member States, including France. We held firm on the grounds that national taxation was a matter for member states and not within Commission competency.

We were supported back then by several smaller member states which themselves were applying low rates, again to encourage inward investment. I recall in 2002 Estonian Prime Minister Kallas discussing Estonia’s low tax rate and asking me, rhetorically, what else a small country on Europe’s periphery had to offer. Indeed. The peripherality argument is one that has never been teased out fully within the EU, where there are massive cost savings and advantages to companies (and countries) close to the EU’s centre. And, very importantly, one of the EU’s heavy hitters, Britain, was firmly and resolutely opposed to any encroachment by the Commission into the area of national taxation.

Cue August 30, Apple, and the European Commission, which found under the EU’s “state aid” rules, that Apple, one of the world’s major corporations, had paid little or no tax on billions of earnings through channelling huge sums in complicated fashion through Ireland. There is no doubt that this took place and the Commission called the Irish government complicit in facilitating Apple’s arrangements, instructing it to claw back €13 billion plus interest in taxes dodged by Apple since 2003. The government is appealing the ruling and the matter is likely to drag on for several years.

There are a number of dogs in this particular complicated fight. There is the multi- layered issue of EU – US trade relations, affecting both sides, and involving the relationships between both tax systems and multinational companies, with agreement for once between the USA and Europe that the multinationals need to have their wings clipped – and their profits taxed. There is, internally in Europe, the complicated issue of what constitutes state aids. There is the separate issue of whether the Commission is trying by subterfuge to extend its competence into national tax policy.  Despite Commission denials, given the history on this one, there cannot but be suspicions that this ruling, if left unchallenged, could prove to be the thin end of a long term wedge.

Then there is the domestic Irish dimension. For decades the long suffering Irish taxpayer has put up with a Faustian –type pact under which it was accepted that multinationals paid less tax in exchange for bringing the jobs, and certainly they have. But this episode has revealed that Apple – and probably other multinationals – has been paying substantially less than the accepted 12.5% rate; indeed creative accounting on a worldwide basis has involved Apple “paying” at less than 1%. The Irish left has been shouting for years that something like this was the case and has constructed marvellous economic plans factoring in missing billions which they allege should be due.

For a cash-strapped economy and taxpayers punch drunk after years of austerity, the prospect of a windfall infusion of up to €19 billion with interest, was, briefly, tempting. But enthusiasm faded quickly as it became clear that other countries could well demand a share. And who, after all, would want to rock the boat of Ireland’s relationship with the multinational sector?  Factor in that this could well have been a glowing and gilded Trojan Horse planted by the Commission and surely the government was right to reject the money and appeal. “Timeo Daneos” indeed.

19/09/16

THE FORTY FIFTH U.S. PRESIDENT

THE FORTY FIFTH U.S. PRESIDENT

I was asked,at short notice, to write a piece for the PSEU Review magazine on the prospects for the forthcoming U.S. Presidential Election and any likely implications for Ireland from the outcome.

“Like most people this side of the Atlantic, I’ve watched with fascination the developing race for the U.S. Presidency.

The emergence of Donald Trump as Republican candidate has been astonishing. The only person now standing between him and the White House is Hilary Clinton, who if elected will make history as the USA’s first female President. Trump’s candidacy seemed initially bizarre and unlikely, but, as I write, with less than seven weeks to polling day, the outcome is currently too close to call, with Trump having reeled in Hilary’s lead in dramatic fashion in recent weeks.

There is still a long way to go, and, with the caveat that a major terrorist attack could prove a game changer, much may hinge on the outcome of the televised debates, or the emergence of some currently unknown unknown – two weeks ago who could have forecast Hilary’s pneumonia? Or again, one candidate (which most pundits assume will be Clinton) may start to pull ahead in the final few weeks as the undecided make up their minds. But right now in terms of secured states Clinton has a far from decisive lead, with Trump ahead or level in a number of crucial states including Ohio, Iowa, Florida and North Carolina, while the Clinton lead in Pennsylvania is diminishing. Either way one of them will be the next President. What can we forecast about the new administration’s policies and does who wins matter for Ireland?

Taking the easy one, Hilary Clinton, first. She is a Democrat, succeeding another Democrat, for whom she worked as Secretary of State. She is widely experienced in what can and cannot be achieved in terms of getting things done domestically and internationally. Expect therefore more of the same as we have seen from Obama. The main domestic issues are likely to be consolidating the improving economy as well as the healthcare system and attempting again to sort out some form of immigration reform, perhaps helped by a stronger Democratic presence on Capitol Hill.

In the foreign policy area she will push on with closing Guantanamo, and continuing the thawing of relations with Cuba. Outside the hemisphere she will continue with current US policy in the Middle East, attempting to sort out the mess that is Iraq and Syria and further pressing on ISIS. Her options are limited. Much will depend on the relationship with Putin. Ireland is unlikely to figure largely unless there is action to curb “corporate inversion”, where US companies have their headquarters overseas to avoid US taxes, something both Clinton and Trump have called for. She could be involved were there to be an impasse on negotiations over the open Border issue in the context of Brexit; a role here for Bill, perhaps? We could well be in for a Presidential visit.

Trump is another story, and at this stage very difficult to predict. He captured the Republican nomination by being outrageous and stoking passions which appealed to an inchoate coalition of right wingers, Tea Party members and disillusioned blue collar elements. In so doing he alienated many traditional moderate Republicans and his chances of winning rest on how many of them will trickle back. He has recently changed his campaign team, hiring Steve Bannon to intensify attacks on Clinton, but also giving some hints of toning down his rhetoric, perhaps in an attempt to broaden his appeal.The run-in to the actual vote will be interesting.

Should he win, bear in mind that everyone loves a winner! An early indication of how he will proceed will be in Cabinet formation, particularly who he nominates for Secretaries of State, Defence and Homeland Security. But several things can be predicted with some confidence. There will be no deportation of millions to Mexico or anywhere else. Quite simply the US administration does not have the resources to undertake the process. Tens of thousands of additional staff would have to be recruited, vetted and trained, from border patrol officers to judges and clerks to run the new courts required, to detention centre staff to hold the throngs awaiting deportation. Former head of Homeland Security Michael Chertoff commented that without suspending the Constitution and the police acting like North Koreans “it ain’t happening.” Even targeting only criminals would require an exponential ramping up of resources.

Similarly impractical are suggestions to ban Muslims from entering the USA, while the physical problems and costs associated with the Wall idea, including managing the water flows, rule this out except as a long term aspirational project. In Foreign Policy, Trump, for all the rhetoric, will be tied largely by where the USA is “at” currently in the Middle East. A close examination of recent remarks suggests that, stripped of rhetoric, he will adhere to current policy in broadest terms; there are few options to do more. Trump’s unpredictability is legend but whether, faced by reality, his loud mouth threats will come to anything is questionable.

On internal and economic affairs Trump is standard right wing Republican. His “magical thinking” tax plans will reward the rich by cuts, without spending cuts to balance. As well as corporate inversion, of interest to Ireland is his proposal to cut US corporate tax from 35% to 15%. Whether any of this, or renegotiation of NAFTA , will pass Congress is doubtful, while “getting tough with China” and backing out of the TPP could backfire and will probably just amount to empty rhetoric.

One point to interest over-taxed Irish readers. Trump proposes a top tax rate of 33% for those earning over $154,000 pa. Clinton’s sliding scale reaches 33% at $190,150, remains at that up to $ 413,350 and includes a 39% band from $415,050 to $5 million pa!

S.F.
22/9

ISIS 1609 XCIII

ISIS

There IS a militant Islamic presence in Ireland. On July 6 a Jordanian living in Ireland since 2000 was deported. What made this gentleman special (300 odd have been deported this year ) is  that his deportation came after a lengthy legal battle, held in camera, in which the judge was finally convinced by the State that he was the main recruiter for ISIS in Ireland and  “ the foremost organiser and facilitator of travel “ for would-be ISIS fighters. His claim to reside in Ireland was on the basis of an Irish born son. While here he had been living on Irish Social Welfare. Justice Minister  Frances Fitzgerald made clear afterwards that the Government would deport as necessary where matters of national security were involved.

The deportation came a week before the mass murder in Nice of eighty five by an ISIS sympathiser. The spate of recent lone wolf terror attacks, including the horrendous Bastille Day massacre, has left much of Europe on edge wondering whether anywhere is safe. The simple answer is “Nowhere” but clearly there are degrees of threat. As elsewhere, threat assessment is being conducted here.

Irish people have had several brushes with Middle Eastern terrorism. Three Irish holiday makers were among those murdered in Tunisia last year and Irish people were among those wounded in the Paris Bataclan massacre last November. The roll call of murders and beheadings in Iraq included a couple of Irish citizens. And, going back a generation, in 1986, a young, totally innocent, Irish woman in London was duped by her Jordanian fiancée into attempting to carry a bomb disguised in a suitcase onto an EL AL 747.

It would be surprising if there weren’t some elements of radical Islam here, given the proximity of Britain, Ireland’s relatively easy going and open society and the number of immigrants to arrive since the Millenium. The official line is that threat of a direct terror attack here is moderate. This despite a bragging ISIS video last November which identified Ireland as part of the “kuffars” ( the n-word favoured by ISIS to describe Christians and others)forming the global “Coalition of Devils” opposed to the Islamic State. This may just mean that we are, like all infidels, fair game and clearly the possibility of a lone wolf attack can never be discounted totally. However, with this caveat, the official threat assessment looks reasonable for several reasons.

Realistically there are easier and more obvious targets. Ireland is not a NATO member; we are a militarily neutral country and not part of the coalition fighting ISIS ( a reason cited by ISIS when claiming different terrorist atrocities). It is true that Ireland permits US troops to stopover at Shannon Airport, but, against that, geographically Ireland is remote, an offshore island behind an offshore island, rendering logistics for any attack that more difficult. Moreover, for what it’s worth, Ireland has been seen as pro-Palestinian and Irish troops on UN Peacekeeping operations in the region have a high reputation.

The nature and position of the Muslim community in Ireland are also factors. Mao’s aphorism that a “guerrilla must move among the people as a fish swims in the sea” is relevant here. While there are a small numbers of ISIS activists known or suspected to be living here – the deportee was reported to be one of a group of about thirteen –   the overwhelming majority of the Muslim community in Ireland, as elsewhere,  are law abiding and have no truck with ISIS or militant Islam. The community is numerically small, roughly 50,000 or 1% of the population in the 2011 census, and, therefore hardly constituting a critical mass within which ISIS – or Al Qaida – could move with impunity. Indeed in Western Europe only Finland, Portugal and the Baltics have less Muslims, numerically and proportionately.

Moreover, Islam in Ireland, which is mainly of recent origin, has developed in a different pattern to those other European countries with large Muslim communities.  In Germany most are Turks, in France and Belgium most are from North Africa, in Britain most are from the Indian sub-Continent.  Muslims here appear more diverse in terms of race and ethnic origin and most came with established skill sets and for specific purposes rather than as refugees or economic migrants. An important consequence is that Ireland has no predominantly Muslim or immigrant ghettoes akin to Molenbeek  in Brussels or  one of the Parisian banlieues , where extremism flourishes among sections of the alienated young ( or indeed to Leeds, where three of the London Tube bombers grew up) . There is no sense or feeling that a separate community within the community is evolving here.

Yet a problem, however small, clearly exists and with alarm bells ringing in the aftermath of the July terror attacks,  the facts such as they are are being picked over by the media here . Security briefings suggest that up to fifty young Irish Muslims have gone to fight for ISIS. While this could be partly written off as rebellious and impressionable youth, there have also been calls in recent months from some of the Imams here  for closer engagement by the authorities with their communities as well as claims by them that extremists are active, lecturing and proselytising.  One factor is that  the common travel area with Britain makes it easy for radical preachers and recruiters  to travel here and hold private sessions. And, as experience elsewhere has shown, grooming over the Internet is virtually impossible to monitor.

The adequacy of our surveillance measures to combat any threat, particularly for a police force shredded by cuts since 2008, has been questioned. More resources have been promised to the Gardai to beef up the existing structures but these have yet to come on stream and there has been criticism from some Garda representatives that the force is ill prepared to deal with an atrocity.

There have been complaints also about the  lack of information and transparency on Ireland’s anti-terrorist security structures and operations  generally, in contrast to Britain. This, and the sharing of information with other security services, is clearly a delicate issue. Surveillance of terrorists here has traditionally been directed at republican terrorism , where for various reasons very little was divulged publicly and old habits die hard. Moreover, the threat from dissident republicans remains a real one, with men, weapons and explosives very much here on the island and constituting a real quantifiable threat.

Indeed the proximity of Britain adds another worrying dimension. Up to now attention and resources in the North have concentrated on dissident republicans, who constitute a clear and present danger,  both locally and in terms of possible infiltration, into Britain. There is now the additional possibility of Ireland being used as a base by Islamic extremists from which to plan or even mount an attack against Britain. However remote this may appear the British have been worried enough to brief at (anonymous)Ministerial level pointing out that Northern Ireland is not part of the U.K.’s “Prevent” strategy to combat violent extremism. Thrillers have been written around the subject. With increased vigilance let’s hope that nightmare scenario remains in the realm of fiction.

16/8

 

 

BRITAIN PUTS THE CLOCK BACK 1608 XCII

BRITAIN PUTS THE CLOCK BACK

BREXIT. Occasionally an event of major significance occurs. After it things are never the same.  In Ireland we’ve just finished celebrating the centenary of one such event – the Easter Rising. Hiroshima was another, the fall of the Berlin Wall a third, Nine Eleven a fourth.  On June 23 arguably another such event happened when Britain, the world’s fifth economic power, voted – narrowly – to quit the European Union. As I write the shock waves internationally, not least in Ireland, show no sign of diminishing. A new, ostensibly gung-ho government is in power in London, determined to push through with exiting, a process likely to take several years.

The inquests and recriminations are well under way. Europe’s establishments and chattering classes, including in Britain itself, are baffled and dismayed. Britain was seen as a sometimes petulant but important partner, not only as one of the Big Four but also as providing an important counterweight in internal policy discussions, usually to be found on the side resisting further or speedier European integration. Its EU credentials were never in doubt even though it maintained a semi-detached position on key EU areas like the Euro and the Schengen common travel zone, stances it could more easily take given the financial clout of the City of London and Britain’s position as an island.

Britain’s increasingly vocal Eurosceptic wing, represented by UKIP and a sizeable minority within the Conservative Party, was ignored or discounted. Britain was regarded as too deeply embedded within Europe for trade, investment and social reasons, seriously to contemplate the leap in the dark that leaving constituted. The warning signs were ascribed to the same mixture of discontent, disillusionment, dissatisfaction with the status quo and vague xenophobia evident in a number of other member States, where right wing parties were starting to garner significant electoral support. All true, no doubt. What made the British situation unique was that, staggeringly, a country with little or no tradition of deciding important matters by referendum,  was asked to vote a simple yes or no on a proposal to undo involvement in almost half a century of  political and social construction and cooperation within Europe. The resulting Mother of all Protest Votes was then compounded by the (narrow) victors proclaiming there could be no going back on the result.

The “Why” has been parsed and analysed since. The philosopher Roger Scruton, in a brilliant article in Prospect Magazine, has traced the alienation of the English working class in recent years, and their feeling that, above all, their sense of identity was being eroded. In a striking phrase he has identified a vital flaw in the EU as it is: “the European people have not been merely SUBJECT  to a treaty, but GOVERNED  by it.” Add the hubris of a wealthy faction in Britain, convinced that the country would do better “going it alone.” As far back as 1994 a junior British Tory Minister explained this attitude in detail to me; depressing but prophetic. Taken together, and in a campaign notable for its chauvinism and churlishness as well as its deceitfulness, the mix proved a potent one.

The referendum outcome has shattered the comfortable Establishment near-consensus of a Europe moving steadily if slowly towards an “ever closer union” a vision which has sustained Europhiles for over half a century. This cosy vision has it that the then EC, when Britain joined  in January 1973, was  little more than a post-war free trade area between six members, with one or two transnational dimensions, in coal, steel and a limited number of agricultural products. It had aspirations to be a lot more, and wording in its treaties to allow for organic growth. And, over the decades, it HAS grown, dramatically, sometimes lopsidedly, changed its name and now comprises a shaky and incomplete union of five hundred million spread over twenty eight countries. It has established a zone of unprecedented economic and prosperity across Europe with landmark standards in human and related social rights. A queue of countries waits to join.

With up to twenty eight countries, each with its own national priorities and particular requirements, for the EU getting to where it is has not been easy. Progress has been slow and tortuous. There IS a common currency – the EURO, but not all twenty eight are members. There IS a Common Travel Area – Schengen – but again some countries -Britain and Ireland – are outside. There are serious differences evident over national attitudes to the Refugee problem. There is serious economic imbalance between the wealthier North and the poorer South, something exacerbated by the 2008 Financial Crisis. Yet overall the consensus has it that Europe has muddled through and worked hard at solutions. The various landmark Enlargements, culminating in the 2004 admission of the Central Europeans, are testimony to the vibrant European idea. And significant progress has been made in making the EU more democratically accountable, a process that is ongoing. Throughout, Britain has been an important and valued component in the evolution of the Union.

That vision now lies in tatters. What happens next is unclear. We are now in a kind of phoney war situation. The process for exiting the EU, stuck in as an afterthought as Article 50 of the Lisbon Treaty, must first be initiated by the UK, with afterwards a two year “sunset period” to complete the separating process. How quickly the new British government acts to invoke Article 50 remains to be seen. Teresa May has appointed Brexiteers to lead the exit charge, which could be a Machiavellian tactic, though others see it as filling the posts with what remained after the purge of the pro-Europeans.

Thus far these have made predictable noises about negotiating bilateral trade deals with third countries. Yet eight of Britain’s top ten markets, including Ireland, are EU or EEA members, accounting for the bulk of her exports. Britain already has thriving trade with all major third countries, on foot of existing trade deals negotiated by the EU Commission; whether any new deals will prove more fruitful or beneficial for Britain must be moot. There’s no pot of gold out there that the evil EU has been withholding. A lot of similar hard economic realities are likely to be aired in the coming months as the small print of Britain’s economic and social entanglement with the EU is picked over. And politically there’s Scotland, which voted 62% to remain, with every prospect of a constitutional crisis before long.

For Ireland the issues are profound. We have major concerns, quite apart from the economic ones which are potentially more serious for us than for the other EU members.  The Common Travel Area – a vital element in our bilateral relationship with Britain – is under serious threat. The EU’s one land frontier with Britain is within Ireland. Given the posturing of the Brexiteers over curbing immigration from the EU, that Border – and with it that special relationship – is now an issue. Arguably the Common Travel Area has sugared the bitter pill of Partition over the years and is part of the fabric underpinning the Peace Process. Is it possible that the casual passing whim of English voters will “do” for Ireland yet again? Perfidious Albion?

20/7

QUO VADIS BRITANNIAE? 1607 (2) XCI

QUO VADIS BRITANNIAE?

I’m still trying to come to terms with the BREXIT outcome. The bald truth is that Britain, the fifth economic power in the world, the second in Europe, has signalled its intent to walk out of the EU. Can it be fixed? Can it be reversed? At this point in time this does not appear likely, but as the dust settles something may emerge. Some personal reflections follow.

I felt a waft of déjà vu last Friday morning as Britain woke up to the result. The whole establishment, the chattering classes, bankers, businessmen, even the Archbishop of Canterbury, came out solidly for a vote to remain in the EU. Sound familiar? Ring a bell? It was Ireland the day after Nice One and later after Lisbon One. To the dismay of the elite, the referendum result was not what had been confidently expected.

There the resemblance ends. In Ireland’s case the treaties as originally framed had been rejected but our membership of the EU was not at stake and there proved to be enough wiggle room, not to mention good will and anxiety to reach a deal on our specific concerns from our EU partners, to resolve matters. Cameron and the British government, however, have metaphorically bet the house , precipitating a crisis not just for Britain but for Europe itself. It remains to be seen whether there is any scope to undo the damage. An important element in Ireland’s case was the willingness of both sides to accommodate to reach a solution. Britain is currently leaderless, so one side is unable to engage, even should this prove feasible. The early indications are not encouraging.

It’s now Wednesday and , déjà vu again, the spectrum of reactions resembles that here – and in Europe – in the wake of our “No votes,” writ much larger of course but not dissimilar. On the BREXIT side, triumphant hubris, a chorus of anti EU sentiment and flat assertions that the vote was final, there can be no going back and no second vote. On the domestic losing side, numbness, dismay, disbelief, and a feeling of helplessness not helped by Cameron immediately choosing to fall on his sword. In Europe at the political level similar reactions of dismay and disbelief, with an obvious fear that the contagion may spread and encourage others to contemplate leaving. European leaders seemed asleep to the danger in advance, as the extent of panic among them as June 23 approached demonstrated. It was yet another example of the disconnect between Europe’s elite and the people. Some of the first public statements from Europe have not helped.

Several days before the Vote I wrote in my IAN column that the result was at that stage too close to call, noting that the latest polls were showing the Leave camp slightly ahead. I pondered whether the momentum – clearly with the Leave faction – would be halted by the hiatus following the murder of Jo Cox, and observed that the “Stay” campaign were mounting an Operation Stable Door. My gut feeling subsequently – wrong – was that the Stay side would win, based in part on the expectation that the undecided would plump in the end for the devil they knew. I also took heart from the poll analyses of experts and the bland assumption that an electorate would vote, even with misgivings, in their own best interest and take any promises from the Leave camp with handfuls of salt.

There was a particularly devastating assessment of Cameron by Max Hastings (who voted Remain) in the Daily Mail several days ago which painted up his limitations and tactical ineptness. Certainly a lot of blame must attach to David Cameron, in calling the referendum, in choosing to hold it when he did, in framing it as a simple In-Out choice only and then for running an inept campaign. It’s not as if a referendum was necessary, and indeed the result is only – theoretically – “advisory” rather than “obligatory.” But having decided on one, its terms and wording should have been set with care. Even with those particular dies cast, a more astute politician would surely have thought long and hard about the date, which was only announced in mid-February, without any pressure to hold the poll so early.

And Cameron should surely have reflected at the very least at how the political scene elsewhere in Europe was evolving. I wrote last week as follows: “ Little-England nationalism aside, the Brexit movement should perhaps be seen in the context of the sizeable and almost universal Europe-wide popular disenchantment with the way society is perceived to be evolving, with the existing establishment and party political dominance under threat from populists on both the left and right.” Cameron could hardly have been unaware, from his frequent meetings with fellow HOGs, and from those briefing him, including reports from British Embassies sur place, of the extent of this disenchantment, often inchoate but also often organised, and expressed in elections when opportunity presented itself, whether in Spain, Greece, Ireland, Austria and in state elections in Germany, and otherwise reflected in opinion polls throughout the EU. Did he think the British voter was immune?

So why do it now? Was it overconfidence? Cameron had a comfortable Parliamentary majority following his unexpected General Election victory last year. He had also the experience of the Scottish referendum in 2014 and perhaps thought, that having headed off the threat from the Scottish nationalists he could head off UKIP and the Tory malcontents by a short swift campaign, particularly having extracted, as he saw it, fresh concessions from Brussels. The concessions – cosmetic – fooled no one, while his reading of Scottish nationalism was myopic – symptomatic of his whole approach. Even the framing of the question – an “X” in the Remain or Leave box – was less nuanced than that in the 1976 vote (“ Do you think the UK should stay in the EC?).

Yet having decided to plough ahead with a vote, he and his government seemed content to run the campaign on autopilot, only waking up to the danger recently as the Leave campaign gained momentum. Again there are interesting parallels with the approach of the Irish governments to the first Nice and Lisbon referendums. Satisfied that the majority of the Irish electorate knew where there bread was buttered, Irish governments twice campaigned “softly” and paid the price, while their opponents hammered away on a few basic themes. On Nice it was a brutally effective poster campaign – “ You will lose Money, Power, Influence.” On Lisbon the opposition focussed on the partial loss of an Irish EU Commissioner and fears of involvement in a European army as well as playing on public unfamiliarity with the contents of what was primarily a technical tidying-up treaty. Again, ceteris paribus, sound familiar?

For Farage and Co. it was Immigration, over-regulation from Brussels and slogans about sovereignty and “getting our country back.” They also played on the basic unfamiliarity of the man-in-the-street with the EU and how its institutions worked. Moreover they could and did point to the Europe –wide disenchantment with governing elites and to the Brussels bureaucracy. The deliberate distortions and misinformation from the Leave side were deplorable. It was win at all costs. The EU was demonised, Britain’s net contribution overstated and the complexities of unpicking complex legislation and benefit structures minimised. A major platform plank, that the cash-starved NHS would benefit by billions annually after leaving has since been disavowed. Apart from that the Leave leaders post –referendum have confined themselves to bombast or to minimising the likely difficulties of any forthcoming negotiations. There appears to be no Plan B.

Cameron apart, the chattering classes have no shortage of villains or scapegoats, whether Farage or Johnson or Gove or the tabloid press which pandered to the deceitful and misleading campaign the Leave side ran. All true, but hardly sufficient to explain the results as with the assertion that Jeremy Corbyn and Labour campaigned less than enthusiastically for the Remain side. Which leaves those who voted Out. We are told that the old, the less prosperous, the less well educated and the racists all voted to leave.( In a particularly nasty aside the old are being accused of having ruined things for the young.) All apparently true, but again, why?

Immigration was clearly portrayed by the BREXIT side as a major issue and immigration from other member states (shorthand for the 2004 Accession countries) has been identified by Cameron as a reason for much of the leave vote. Yet I don’t see the 52% of the British electorate who voted Out as being racists or necessarily anti-immigrant. I have little doubt that, had the vote been 52%-48% to remain, those same chattering classes would now be preening themselves about the “ maturity” of the British electorate in rejecting Farage and co. and racism. Millions of immigrants have entered Britain since Powell’s 1968 “Rivers of Blood” speech and have been successfully, and on the whole seamlessly, integrated into British society. There have been incidents, certainly, but in terms of the massive multicultural influx into Britain, particularly after 1980, such incidents have been inconsequential. And indeed some of the more humorous T.V. interviews aired have been with immigrants or the children of immigrants who last week voted to leave the EU.

It seems to me that Immigration – or rather the perception that Britain was unable to control its own borders – became the lightning rod for a variety of grievances in Britain, rather as Irish Water did in elections here in 2014 and 2016. The last thirty years have seen the significant erosion of the great achievement of post war Britain – the Welfare State. This has been accompanied by the collapse of many of Britain’s traditional rust-bucket industries. Pressure on resources in health and education, limited employment opportunities and an obvious growing gulf between the rich and the rest have generated a sense of alienation and discontent, particularly in the lower socio- economic groups. The recent economic recession, increased taxation and reduced benefits fed into this.

With the 2004 EU Enlargement came the arrival in Britain of a million plus migrants from Eastern Europe (far less, incidentally, than the numbers who arrived in the twenty five years before from the sub-Continent, the Caribbean and Africa) , perceived to be willing to work harder and for less and also to be receiving state benefits. This could have been avoided, or at least postponed, had Britain chosen to follow the example of twelve of the other Fifteen, including Germany and France, in restricting workers from Eastern Europe for seven years. It’s worth pointing out here that of the EU three who allowed unrestricted access, while relatively few workers emigrated to Sweden, proportionately far more came to Ireland than to Britain. Even today the percentages of Poles Latvians, Lithuanians, Slovaks, Hungarians and Czechs living and working in Ireland are far greater than in the UK., though you’d never think it from reading the British tabloids. There’s an interesting “Compare and Contrast “ study to be done on this.

The new arrivals, highly visible, on the one hand, and the catalogue of what appeared an ever-growing number of EU regulations affecting everyday life on the other, melded with the other senses of grievance and alienation, with EU membership becoming an obvious blanket scapegoat for all these perceived ills. Cue Farage, Johnson and the others playing on these fears and on misapprehension and misunderstanding of how membership of the EU had benefitted and was still benefitting Britain. The vote last week was a protest one. It has proved to be the Mother of all Protest Votes!.

As to what to do now, no ready solution seems on offer. If indeed the Referendum result is considered to be irrevocable and not to be revisited, which at this point in time appears to be the case, lengthy and complex negotiations lie ahead. Whether these can be concluded within the two years specified by Article 50 once invoked remains to be seen, but this is technical and can surely be tweaked .Yes, an IGC could easily amend the time limit if in everybody’s interest. Alternatively surely the EC old device of stopping the clock could be used. The significance of Article 50 is that invoking it is the starting gun.

Any such negotiations will be of major importance for Ireland. From our national point of view the consequences of BREXIT are enormous, not only economically – Britain is our largest trading partner – but because of the Northern Ireland dimension, involving as it does the whole Peace Process, the land border ( the only one the UK has with the rest of the EU) and the vital Common Travel Area between the two countries. Will that survive? And how will it be regulated? What if Ireland were to become a back door for entry into Britain? And what of the Peace Process? A landmark success but arguably still bedding down. Noel Dorr has an interesting piece on the importance of this for Ireland in today’s Irish Times One Scottish columnist lamented what he referred to as the “casual vindictiveness” with which the English had voted. Most in Ireland would concur. And indeed, what will befall Scotland?

The formulae for getting around the Irish vetoes hardly offers a way forward, though if there could be agreement on the end to be achieved that would be a start. (In Ireland’s case there was a willingness on both sides to achieve the necessary compromise and none of the fundamental foundations of the EU were in dispute.) Here the first and perhaps fundamental red line, if and whenever any negotiations actually begin, appears to be for both sides the issue of free movement of labour. Could this be tweaked? A lengthy derogation perhaps? And what about EU citizens already in Britain?

If this issue could be sorted, by both sides showing willingness, it might be feasible to contemplate a new British government, with or without an election, taking the plunge on a second referendum. There are already signs of the “Oh Jesus” factor emerging – i.e. “ Oh Jesus! Did we really vote for that?” with the subtext that we might vote again. Wishful thinking? Perhaps. But Britain already has a major opt-out of arguably another of the EU’s cornerstones – Schengen. Right now there is a huge hole threatening in the fabric of the European economy, with possible worldwide consequences. The nature of the EC/EU has been to stagger on and advance crabwise; not ideal but practicable. We should be considering all options and agreeing on what is least-bad for all.

29/6/16

BANANA SKINS 1607 XC

BANANA SKINS

First hearty congratulations to my old friend the new Irish Senator, Billy Lawless,  well known to Chicago’s  Irish community. I know you’ll do Ireland and the Irish Community overseas, including the Undocumented, proud.

How long Billy will serve will depend on how long the current government lasts. The jury is very much out on this as the new administration feels its way in its first weeks. What is clear is that there will be frequent “crises” with Dail defeats for the government  on banal populist motions with no legislative or practical effects beyond stoking  unrealistic sentiments of entitlement on  various issues. And, of course, taking up a lot of Dail time and energy as well as generating publicity for the usually leftist advocates.

Whatever about letting off steam ,  none of these  constitute “confidence issues” which could bring the government down. Banana Skins apart, any crunch is most likely to come on issues involving actual allocations of money  especially where there is choice involved or some need either to increase tax or reduce benefits. On this the current outlook is “so far so good.” The economic indicators are all positive  and  tax revenues buoyant, permitting – already – some allocations from the “fiscal space” wiggle room on which the last government , ironically, fought the election.  As long as the money keeps rolling in cuts can be restored and even modest improvements made, though nothing sufficient to meet even a fraction of the official wish list. October’s Budget should prove manageable  and perhaps indicative of the government’s life expectancy.

Yet Banana Skins internal and external remain a constant threat. Indeed by the time you read this one major external banana skin could have arisen, with certainly long term and possibly short term  effects on politics here. This is the June 23 British referendum  on leaving the European Union. As I write it is certainly too close to call, with the polls actually showing a majority in favour of leaving (Brexit). A surge in support for Brexit in recent weeks has caught the Establishment, in Britain, in Brussels and throughout the Union by surprise. What appeared until recently unthinkable could well become reality.

Should Britain  vote to stay in the result is likely to be close but settled for several years at least. Should Britain vote to LEAVE there would  obviously be particular important implications for Ireland. To name but a few: we are the only country sharing a land frontier, hence the resurrection of cross –border issues thought long buried, with possible implications for the Peace Process; Britain is our major trading partner and business connections are many; both countries are home to sizeable numbers of expats from the other and we enjoy a common travel area. There could be immediate currency fluctuations ( Sterling falling) which could sabotage our recovery.

For Britain the process of exiting would  take time (several years ), be complex and complicated and  involve inter alia negotiations  of  sectoral agreements across the spectrum of the EU  internal market, probably resulting in arrangements along the lines of agreements with Switzerland and Norway. There is universal acceptance here, and in Europe, that  Brexit and its aftermath  are likely to be disadvantageous for Ireland, possibly considerably so.

The appeal of Brexit to a sizeable proportion of the British electorate has dumbfounded the chattering classes across Europe. As I write an “Operation Stable Door” is being mounted by the “Stay” campaign even involving Taoiseach Enda Kenny  urging the Irish in Britain to vote to remain. The final week could be decisive.  Momentum has been with the Brexit side; whether the hiatus after the murder of British M.P. Jo Cox could change this remains to be seen.

Little-England nationalism aside, the Brexit movement should perhaps be seen in the context of the sizeable and almost universal Europe-wide popular disenchantment with  the way society is perceived to be evolving, with the existing establishment and party political dominance under threat from populists on both the left and right.

Potential domestic banana skins are beginning to emerge. The government has a date with destiny next year over the  Irish Water issue when the expert commission reports. In the interim there could be further trouble over  pursuing those who haven’t paid for existing water bills –  possibly  half of all households – with the responsible Minister  (Coveney) and the Taoiseach insisting on payment and threatening action on this. And nobody has yet posed the question what happens politically if the commission early next year recommends charging consumers for water.

The last government missed the warning signs over water and political antennae should have been  up. Yet incredibly until very recently the July 1introduction of a new system of charging for garbage removal seemed likely to slip by unnoticed. Anti- garbage- charge protests have a history with over twenty  people jailed in 2003. The protests then petered out,  and most garbage collection services were subsequently privatised, with charges inching up. The new system , based on weight, backed up by an EU directive and dressed up as preferable environmentally, was presented as being no more expensive. Fears that the garbage companies would gouge consumers with  doubling charges or worse have panicked the government. Action is pending to suspend the new regime. Watch this space.  Caving in to populist howls on any issue does not augur well for the government’s long term survival.

An undoubted looming banana skin relates to the head of steam building up  to repeal  the Eighth Amendment which in 1983 copper-fastened  the legal ban on abortion. Subsequent referenda modified  the total ban – by a very narrow margin in 2002 – by providing for abortion where there was a threat of suicide by the mother. The pro-choice lobby  are calling for the whole amendment to be revisited.  It was an electoral issue, albeit a minor one, and considerable interest has focussed recently on distressing cases involving  carrying non-viable foetuses to term (fatal foetal abnormalities). The Taoiseach’s position is that a “citizen’s assembly” is to examine all aspects of the issue and report to the Dail, for a promised “free vote”, presumably not until well into 2017. As always on this highly emotive issue, the devil will be in the detail of anything  put to the vote, with  differences among politicians already demonstrable, many  too coy to commit and the threat to the government’s survival evident.

There are other known knowns threatening. Following  settlement in a lengthy  dispute involving drivers for LUAS, Dublin’s light rail system, the message to unions is that persistence with unreasonable  wage demands is likely to be rewarded with an eventual  cave in by the official side. Sectoral relativities are prompting a rash of similar claims as well as demands for the restoration of wage cuts in the public sector ( a huge headache for the public finances) and action over  minimum wage levels. While these are unlikely to bring down the government, the political fallout, in terms of a steady drip of accompanying defeats on Dail motions cannot but be demoralising.

Then there are the true Banana Skins – the Unknown Unknowns. What else is out there in the long grass? Irish politics is never boring!

18/06

 

ENDA’S GOVERNMENT 1606 LXXXIX

ENDA’S GOVERNMENT

Enda Kenny is assured of his place in history. Despite a disastrous election, which saw his party slump to 25% of the popular vote and win less than one third of the seats, he has become the first Fine Gael Taoiseach to secure re-election. He was elected Taoiseach with just over a third of the House supporting him (59 to 49) courtesy of an abstention agreement with Fianna Fail. Should his government, a fragile minority coalition including several independents, last a year Enda Kenny will become Fine Gael’s longest serving Taoiseach.

The agreement and the accompanying legislative parameters have been hailed as a signal victory for Fianna Fail and its leader Micheal Martin, since theoretically the plug on the Kenny government could be pulled at any time . However, without good cause this could backfire. There is, after all, a country to be governed and not wrecked. How long the new government will actually survive remains to be seen – the bookies and the early opinion polls favour one or two years. But with little appetite for a fresh election right now, in or out of the Dail, and barring a major banana skin like Irish Water or some unexpected economic upheaval, it could last until the end of the three –budget gentleman’s agreement with Fianna Fail.

The negotiations between the two main parties were hard and heavy, with most of the time and effort over what to do about Irish Water. This was hardly surprising. Without a solution, any future minority or coalition government would be hamstrung on the issue – toxic to legislators and a significant proportion of the electorate. Yet positions were entrenched, chiefly over the principle of consumers paying something, with a wide gap between what was regarded as reasonable. One commentator quipped that the Fianna Fail position appeared to be that only someone who had an elephant to wash daily in the back garden would be liable to pay.

The eventual fudge – to kick the can down the road by setting up an expert commission to ponder all aspects of water in Ireland and report back in about nine months to another committee, this time in the Dail, and then the Dail to vote after solemn deliberation – could have been sorted months ago instead of becoming a self-inflicted wound for the last government. Indeed the solution begs the question of why this detailed examination of what has been billed as the second greatest infrastructural project in Ireland’s history was not carried out in the first place.

While the disaster quango is effectively dead and buried with a stake through its heart, legacy and related issues remain. There is the ticklish issue of how to reward the 60% sheep who paid some or all of their water bills and also deal effectively with the 40% goats who didn’t ( one new government Minister has belatedly paid up). Watch the politicians tie themselves in knots over this one. There’s also the “me too” chorus being heard from the 120,000 rural dwellers who have paid for water for decades through local water schemes. There are the implications for the existing organisation and staff of any root and branch overhaul. And finally what everyone accepts to be the case – the need for major infrastructural investment to bring Ireland’s nineteenth century water supply system into the twenty first century and how the several billions required are to be raised in the absence of charging consumers.

Which brings us neatly to the issue of the new Programme for Government and how its aspirations and hostages to fortune are to be financed. It’s a weighty document – 156 pages, 16 chapters and an executive summary – but is conspicuously lacking in how its lengthy wish list could be financed. The document was drawn up having regard in the first instance to the prior Fine Gael /Fianna Fail agreement and then after negotiations with and attempts to bring on board various groups of independents, only some of whom seem to have bitten. The result is academically interesting as a lengthy check list of first world issues which we would all like to see addressed on the assumption of virtually unlimited resources and an ability to “freeze” certain issues while action is taken on others.

There are vague commitments to soak the high earners (who else?) – in order to “ensure the tax system remains fair and progressive” – an aim somewhat undermined by “not indexing personal tax credits and bands”. It promises further crackdowns and sanctions on cigarette smuggling and fuel laundering, and a commitment to improve “tax compliance.” There are also measures, parcelled up as altruistic “key public health interventions,” to increase duty on alcohol and cigarettes ( we are to be “tobacco free” by 2025, surely a fiscal oxymoron) and to tax “sugar sweetened drinks.”

All this is hardly the stuff to bring in the extra €6.75 billion promised for public services by 2021, let alone suffice to phase out the detested USC. And this is before investment in water and the many small print undertakings in the programme are factored in. Some hope is attached to an extra €4 billion available for capital investment apparently following a “redefinition” by the European Commission of Ireland’s “structural balance” which may help on the investment side. With fiscal limits now set by Brussels, it’s going to take particularly favourable economic developments over the coming years to generate the fiscal space just to tread water.

There’s a reality here that requires addressing. While health, housing, homelessness, crime and the curate’s egg nature of the extent of economic recovery were the main issues in the election, Irish Water was indicative, indirectly, of what is becoming a chronic issue in politics here – the unwillingness of the public to pay for the services they demand. The Left (5.5% of the vote) and Sinn Fein (13.8%) have cleverly stoked resentment about austerity while demanding more and better welfare payments and services to be financed from some limitless pot of gold accessed by punitive income and wealth taxes on those defined as wealthy as well as hiking corporation taxes. While this is manifestly unrealistic, the Programme has bought into some of this at least in its wish list.

Quite how the first Hundred Days of the government – in which much has been promised – will pan out is unclear and it’s as well to remember how the original Hundred Days ended. The housing and homeless morass will require years to sort out and a banana skin may be in the offing here as the number of house repossessions seems set to rise dramatically. Ditto the structural problems in the health service.

Overall, given budgetary constraints the scope for any initiative is limited and the government would seem fated for however long it lasts to continue the general approach of its predecessor, with effectively the independents who have bought in replacing Labour. Its duration will depend on its ability to negotiate some minor matters to keep the Dail happy and on having enough political nous and antennae to avoid calamities like Irish Water. Yet Enda Kenny remains as Taoiseach and may well prove as difficult to dislodge as Haughey. Remarkable.

17/05

QUO VADIS HIBERNIA ? 1604 LXXXVII

QOU VADIS HIBERNIA ?

It WAS the Economy, Stupid – but the Micro and not the Macro. Ireland Inc. may be doing very nicely, thank you, our putative growth rate may be the highest in Europe and our circumstances dramatically better than five years ago, but very little of this cut ice with the Irish voters on February 27. Like its predecessor the Government was unceremoniously dumped, though this time without any obvious successor.

In fact its goose was cooked two years ago. The Local Election results in May 2014 mirrored almost exactly what happened last February, suggesting that three years was all the electorate needed to pass judgement. This after seeing off the Troika and and receiving concessions on interest rates payable on our debts and on the promissory notes early on. The perception in official circles may have been that the worst was over, but for the ordinary punter austerity was biting and the cuts causing outrage. I wrote at the time (“Mugged by Reality”) that the hiding the Government parties suffered rendered their chances of recovery slight – regardless of any new policy initiatives.

So it proved. We now have a stalemate with very few options. With the magic number eighty, the only viable majority government would be between Fine Gael (50) and Fianna Fail (44). There is historical baggage certainly, but, failing such a coalition, were all other attempts and permutations unsuccessful, including minority administrations by either, another election would beckon. Whether either party has the stomach for one so soon is unclear, but as I write there is little indication of the big two entering negotiations on a “Grand Coalition.”

Right now Fine Gael is seeking to negotiate some type of rainbow- style arrangement involving the minor parties (5 seats) and the 19 assorted independents. Sinn Fein (23) and the ten Leftists have painted themselves out of any coalition while Labour (down to 7 seats) is still shell-shocked. While there are Cabinet seats and Junior Ministries on offer the prospect of a stable administration emerging seems fanciful. Whatever about Independents being loath to precipitate another election, any divisive vote could bring the government down. The cautionary tale of the fall of the first Fitzgerald administration in 1982 when an independent withdrew vital support over a budget proposal to tax children’s shoes has not been forgotten . April promises to be particularly interesting .

The election post mortems have taken place. Much has been made – particularly on the Left ( 5.5% of the vote) and from Sinn Fein ( 13.8%) – of the fact that the two major parties for the first time saw their combined vote fall below 50% . Yet with less than one fifth of the votes cast going to these self-described parties of the Left – about what Labour polled in 2011 – and with many of the Independents rooted in the gene pools of the major Parties, rumours of their demise seem premature.

Fine Gael and Labour have both polled lower and Fianna Fail – long the dominant force in Irish politics – have bounced back appreciably since 2011. There is clearly considerable disenchantment currently with the traditional parties, but the big two have traditionally been coalitions across class and social divide and have also had the ability to absorb whatever small splinter groups to have emerged, while Labour has its own particular niche.

Cue the recent election. Fine Gael’s failings included political naivete, hubris, the wrong priorities, failure to empathize with public sensitivities, perceived indifference to issues such as homelessness and crime. There was general dissatisfaction with the health service, other legacy issues from the crash including the hangover from years of austerity and the palpable reality that most people – particularly the squeezed middle – are worse off now than eight years ago. To cap it all Fine Gael ran a woefully inept campaign – virtually the worst I can remember in half a century and equalled only by Fianna Fail’s 2011 fiasco.

For Labour, some or all of the above, plus guilt by association with Fine Gael. Its strongest card, that it preserved much of the core welfare payments intact, was undermined by clever, focussed and continued sniping from the left over broken election “promises.” Labour was never able to shrug off this charge even though the sniping was obviously politically motivated and so disingenuous in view of the country’s dire economic situation that only die hards on the anti –Labour left could parrot the “broken promises” line with a straight face. It had moreover oversold itself during the 2011 campaign with Gilmore’s fatuous “ Labour’s way or Frankfurt’s way “ remark and was on the back foot virtually from the off on that account.

In many ways it was the Crash Election Part Two , and, as in 2011, the incumbents paid the price. It was never going to be easy governing after 2011, but the Coalition did have several factors going for it. It had been gifted office. It enjoyed an extended honeymoon period in which all the blame could be lumped conveniently on Fianna Fail and/or the Troika. Most of the heavy lifting in terms of savage budgets had been done by Fianna Fail. Even the Troika budgetary targets could be passed off as force majeure.

That left the small print. Adherence to the Troika programme and targets promised a rapid economic recovery, which is now well under way at the macro level. But it involved increased and new taxation and cuts in spending. The taxes weren’t popular – the Universal Social Charge and the property tax in particular – against a background of public disgruntlement over bailing out the banks and not burning-the- bondholders. But they were accepted, given the general public recognition of the need to bridge the gap between government income and expenditure. The spending cuts were more controversial and proved critical.

In effect the Troika suggested the figures but not the details, which were left to the government . It was an opportunity. Sensitivity and political acumen – “cop on” – were needed. Neither were forthcoming. The cuts, particularly in Health, were ham-fisted, indicating a government woefully out of touch. Many discretionary medical cards were challenged or discontinued while vital home help and carers programmes were among those cut back. The mantra that cuts should be universal (why?) rang hollow against the simultaneous protection of sacred cows like Old Age Pensions, and Child Benefit (pruned slightly, but not taxed or means tested). And elsewhere the government showed itself no better than its predecessor.

There was still a chance had the lessons of 2014 been absorbed. But the sole strategy adopted was to plough on, lecturing on the need for stability to sustain the recovery which not all felt, while tinkering with taxation and benefits, Meanwhile issues of public concern (homelessness, crime and sick people on hospital trolleys) were ignored. Irish Water capped it all, becoming a lightning rod for public discontent. Water charges were an austerity too far, the institution itself perceived as an overpriced, overmanned new quango. The charges issue could have been solved – and buried – with some tactical thinking and minor adjustments in revenue elsewhere. Instead it became one of the issues which buried the government. Bon Chance!

20/3/16

A PEOPLE VOTES 1603 LXXXVI

A PEOPLE VOTES

Some very preliminary and personal thoughts on the Election (rather than on the prospects for the next Government).

The Election has certainly shaken up things though the evidence was all there in the polls, particularly the maverick one late on which caused panic in Fine Gael. There WAS no late surge, as many, me included, had thought likely. Both Sean Donnelly, with a proven track record of forecasting, and Ivan Yates, who was after all in a previous life a bookie, got it almost right on the day before the vote:

Donnelly ( accurate in previous elections) gave FG 49 FF 41 LABOUR 8 SF 22 ALL OTHERS 37. Yates gave FG 51 FF 39 LAB 7 SF 29 AAA/PBP 6 SD 3 RENUA 1 ALL OTHERS 22.

I doubt if the results are quite as earth –shattering as some of the more excited commentators are claiming. There has certainly been fragmentation of the old system, with support for the two major parties less than 50% this time around. Arguably, as, inter alia Gene Kerrigan has written, this election was the Second Crash Election with the legacy issues post 2008 casting a comprehensive shadow across the government’s record. Just as Fianna Fail were punished in 2011 for being deemed responsible for the mess,  this time around the Coalition got it in the neck for the residual austerities required by the rescue. Yet Fianna Fail did manage a significant bounce back so whether the two main parties will continue to languish at below 50% in future elections remains to be seen.

Sinn Fein continues its march, consolidating its working class support , including – according to analysts – significant numbers of blue collar unemployed males. Its share of the vote increased from 9.9% to 13.8%, its seats from 14 to 23 (and in a smaller house) . Interestingly, however, its 13.8% was roughly similar to its candidate’s share in the 2011 Presidential election and actually less than the 15.2% the party got in the 2014 local elections. It is no longer making inroads into Fianna Fail’s support.  The next election (whenever) will show whether its rise will continue or whether it has peaked at a certain level. As election day approached, successive opinion polls gave it less and less support.  What is indisputable  is that it has “arrived” as a major force in politics.

Renua bombed – which was fairly predictable –  while the Social Democrats received 64,000 votes and got all their three highly impressive candidates elected , together with several good shows elsewhere. They could be a force in future or alternatively go the way of a number of small parties. All three of their T.D.s are cabinet material. The Independents are either favourite –son style people  out for their constituents alone, or some with the potential to offer something nationally. It will be interesting to see how they – and the Social Democrats –  feature in the negotiating process over the next government.

The hard left – AAA/PBP – got an identifiable six seats with just under 4% of the vote – the same number as Labour ( excluding Penrose) though with far less votes -84,000 as against 140,898. The not-so-hard left got four seats with 31,365 votes, 1.5% of the total. Collectively hardly  the new dawn of a socialist Ireland. Targeted seats, high profile candidates and extremely good vote management and organisation brought its rewards. The water charge issue galvanised a particular segment of the urban working class. Whether this can be sustained and built upon in the long term only time will tell.

None of the commentators appear to have focussed on Voter turnout which, last week, at 65% nationally, was down by 5% compared to 2011. The low poll (the total voting was 85,000 less than 2011)  could have affected support for the Government, particularly Fine Gael.  Note that  Fine Gael’s last disastrous showing , in 2002, when they actually slumped to 24.5% of the first preferences – less than last week – coincided with the lowest national poll – 62.7% – at least since the War and probably since the 1920s. In 1987, also after a period in an austerity driven government, Fine Gael’s support fell from 37.3% to 27.1%. Significantly, in that election,  the new party – the PDs – garnered 12% of the vote while support for Fianna Fail was largely unchanged.

Labour lost out by small margins in a number of constituencies and could regain some of them next time around. Its core vote has hovered around 10-11% since the mid- 70s (1992 and 2011 were aberrations), and actually its performance in 1987, significantly coming out of the same government of austerity, was worse than last week, with only 6.4% of the vote. Plus ca change? Back in the Sixties, when Labour had somewhat higher support ( remember Brendan Corish in 1969, when Labour was on a socialist kick, and got 17% – “ Let’s build the New Republic”) it had a monopoly of support on the left. It has now significant opposition there. The issue of Trade Union support for Labour looks like becoming a live one –flagged already by Ogle, Coppinger and others.

It is often overlooked that , since the 60’s, and the Lemass era, when the country started to grow and experience modest prosperity, the electorate has almost always voted to “throw the bums out” by voting out the incumbent government next time around. The exceptions were Bertie’s three-in-a-row. Haughey “lost” in 1989 and clung on by going into coalition, and Albert was propped up by Labour in 1992 – for which Labour paid a price five years later. After five years of at best rather lack-lustre austerity government, however necessary, and having been gifted  the 2011 election , there was bound to be a voter reaction. Woe betide a government that frustrates the public’s expectations.

Apart from the “Recovery? – What Recovery?” sentiment, what undoubtedly helped undermine Fine Gael was that it lost the Emperor’s suit of clothes image of being more upright and upstanding than Fianna Fail. The “minor” matter of the McNulty appointment to the board of IMMA did incalculable damage to that image amid charges of cronyism. Albert’s remark that it was the small hurdles that brought you down comes to mind. Similarly Enda’s remark that the weekly cost of paying the water charges was about half a pint of beer was insensitive; it factors into 26 pints in a year which, to someone on  a low income, is significant. The whole Irish Water fiasco, plus the Medical Cards and health cuts also smacked of insensitivity.

Furthermore, having preached stability continuity and recovery, Fine Gael were seen, half way through the campaign, as panicking and shifting on taxation policy over its plan to abolish the USC. Coming on top of the “fiscal space” confusion this fatally undermined its claim to be the best party to manage the economy. However it was dressed up  the plan rang hollow, given the central importance of the charge in the Government’s finances. That Sinn Fein  should have pointed this out served to rub salt into the wound.

As I write, Irish Water is still the disaster that continues to give. The inelegant pavane we are hearing today around the issue of charges  and paying for them doesn’t inspire much confidence all round.  The arguments for a single authority appear to me unanswerable. There is one – though I don’t agree with the quango form with which we have been saddled. Let’s see what we can do with it, reforming or restructuring as necessary. But on the issue of charges it would appear that, one way or another, the people have spoken.

2/3

 

 

 

ISSUES FOR IRELAND 2012 (I) NEUTRALITY

ISSUES FOR IRELAND 2012  (I) NEUTRALITY

Even if there is no referendum in 2012 on or about the Euro, there will be a passionate public debate on the totality of Ireland’s relationship with Europe. If the previous debates are anything to go by, there is likely to be more heat than light. And, while European defence and Irish neutrality should be peripheral to any debate on what are primarily economic and financial issues, the old chestnut of the threat to Irish neutrality of any further European integration is likely to crop up – the more so in the context of a tighter union outside (even if overlapping with) the existing EU treaty framework .

I published the following piece, on Irish Neutrality, in the United States in November 2009, just after the vote on Lisbon 2. I could have written a lot more but the column was confined to 1200 words. I post it now, unamended, as we enter 2012:

“IRISH NEUTRALITY

Ireland is not a member of NATO, nor is membership likely. Yet few things can be calculated to raise blood pressure (and voices) more at the dinner table or over some drinks than the subject of Irish neutrality. In the campaign on the Lisbon referendum just ending the issue has again loomed large. No one can seriously get worked up over the proposed changes in qualified majority voting, or the alleged threat of legalised abortion, or even over the prospect of a future ukase from Brussels on our company taxation rate. But mention European Defence and the spectres conjured up include conscription into a European army, involvement in foreign wars and the loss of our international “nice guy” image. In vain have the “Yes” side pointed out that Lisbon threatens none of this. Debates on neutrality generate much heat without corresponding light!

The intellectual justification for Irish neutrality can be summarised briefly. Our history of centuries-long subjugation to English rule involved us, involuntarily, in British military and colonial ventures worldwide. Independence finally gave us an opportunity to gain distance and determine our own policy. Most famously we asserted our neutrality during World War Two (described in Ireland as “The Emergency”). We were fortunate in that we were not attacked or invaded, like the Netherlands or the Baltic States. Ireland’s geographical location and island status were vital factors in maintaining our neutrality, as was the fact that we were not in the way of the major belligerents or their war plans.

Whatever moral doubts we had about not fighting the Nazis could be assuaged by the presence, on the allied side, of the equally monstrous tyranny of Stalin’s regime. The response of De Valera to Churchill’s intemperate outburst over Irish neutrality in 1945 is recalled with pride (his signing the book of condolences for Hitler’s death generates embarrassed silence). Post 1945, staying out of NATO was justified, at first semantically, by the issue of Partition, and later, after Stalin’s death, by an expressed wish to stay outside the military alliances of the Cold War. With the collapse of the Soviet Union the case for joining a military alliance further diminished.

To avoid charges of isolationism, Ireland could point instead to a long standing support for collective security; starting with her involvement with the League of Nations and proceeding through to the United Nations. Ireland’s high-profile involvement in UN Peacekeeping operations – a source of national pride – could be cited. Irish soldiers have died in such operations from the Congo in 1960 onwards – the first Irish troops to die overseas for Ireland and in the cause of the UN. Ireland was seen as one of a small number of reliable UN members which could always be counted upon to step up to the plate when troops were needed. And being militarily neutral was felt to increase Ireland’s acceptability for involvement in sensitive UN peacekeeping operations.

Military neutrality enjoys wide popular support, at least according to opinion polls. This is perfectly understandable. No one likes or wants war. Avoiding the horrors of World War Two was a plus. Our UN peacekeeping record another plus. Not having a colonial past or the moral ambiguities of involvement in questionable military ventures are other positives, qualifying Ireland for a potential “honest broker” role. All in all, neutrality sits well with public self-perception of Ireland as non-aggressive, anti-colonialist, progressive and supportive of assisting the Third World. Brownie points are awarded (subjectively) for the moral superiority associated with being neutral.

Neutrality has again become a live issue as the world has proved to be less secure in the post Cold War era. There have been moves within the European Union (which contains three other non-NATO countries) to develop a common defence and security policy. These moves were given impetus and some degree of urgency by the wars in Croatia and Bosnia, where meddling by the EC as it then was, was accompanied by total impotence militarily when faced with the forces unleashed, and where peace was achieved eventually only through US intervention. The high watermark of these moves, as set out in the Lisbon Treaty, proposes mutual assistance (of whatever form) where a member state is attacked, and a vague commitment to improve national military capability.

These moves have galvanised Ireland’s neutrality lobby, which sees them, despite Government denials, as the first steps on a slippery slope. This against a background of daily television reports from Iraq and Afghanistan. Indeed the Iraq fiasco has focussed attention also on the use of Shannon Airport by the US military as a troop stopover. The government has held firm against demands that this use be ended as it contravenes “Irish neutrality”.

Any attempt at debate on neutrality rapidly turns into a dialogue of the deaf. The suggestion that Ireland should do its bit to cooperate, in the context of membership of a Union which has served Ireland well, has had a mixed reception. Ditto with the argument that, if we are seriously neutral we should develop our defence capabilities like other neutrals (Sweden, Finland, Switzerland) so that we could give our neutrality a practical status. Indeed this argument is neatly sidestepped by a variant of the “nice guy” theme – who would want to attack Ireland, so why spend money on defence?

Ireland’s get out of jail card, action by and through the UN, has lost much of its lustre in the face of the manifest failures of the UN in Bosnia and Rwanda in the 1990‘s. Whether sufficient force could have been marshalled by the UN in time to prevent the genocide in Rwanda is debateable. What is a fact is that the Srebrenica massacre took place within a so-called “UN Safe Haven” which proved anything but. While the UN “is all we have”, as a leading Irish left wing politician put it to me, its shortcomings have become more apparent with the end of the Cold War paralysis.

The fact that a veto-wielding Permanent Member of the Security Council can thwart international action when its interests or those of a client state are at risk has become more evident in recent years. So also the difficulty of organising effective action against a regime practicing internal repression. “Collective action” and sanctions are difficult to enforce and often the regime remains untouched while the ordinary populace suffers (consider the sanctions against Iraq after the first Gulf War). We have become sadder, if not wiser, at world events this decade.

The nature of the debate within the EU on defence, and the mixed enthusiasm for involvement in NATO’s mission in Afghanistan among those EU states involved, means that it is likely to be some time before EU policy in this area has developed. Ireland’s military neutrality, in all practical senses, is not under threat. Only an attack could change this. One is reminded of the story that in 1940 Queen Juliana telephoned Churchill to tell him that Holland (neutral during the First World War) was under attack from Germany and asked what he was going to do about it. What indeed!”