Category: TIME CAPSULE

GREEK TRAGEDY – OR FARCE?

It’s been a bruising few months for the Eurozone, and for one Member State in particular. It’s been also, depending on your point of view, an object lesson in Economics, in Realpolitik, in how the Strong can bully the Weak, on the impracticalities of instant solutions to complex problems, and above all on the inadequacies of the Eurozone.

The Greek saga still has some way to run. As I write negotiations on a third bailout are to begin, the Greek Parliament having passed legislation agreeing austerity measures harsher than those rejected in a referendum less than two weeks before. The measures were very much the stick part of the offer/ultimatum from the other Eurozone countries. The carrot the prospect of securing that third bailout of an estimated $90 billion.

Where that money if agreed will come from remains to be seen. Will all Eurozone countries pay, including the four poorer than Greece (the Baltics and Slovakia) and the three with roughly the same income? And what guarantees will be sought to ensure that Greece implements the measures passed – a problem with earlier austerity packages?

Moreover the issue of existing debt write down is still not resolved, lending an air of unreality to the sticking plaster solution currently proposed. Quite simply Greece cannot – ever –repay what it owes – roughly $350 billion. It may hope to repay, or make some gesture by having portion of any third bailout loan earmarked for “debt repayment” – as is being proposed – but that is only to deny the political and economic reality. Adding an extra $90 billion to the amount owing, bringing it to more than twice annual GDP, merely compounds the issue.

One solution would be to write off permanently a large proportion of the debt. This would involve Greece’s partners writing off monies already lent ( in Ireland’s case around $400 million). Whether that will prove palatable remains to be seen. A write-off has been tried once before, in 2012 . There is talk of finessing somehow the terms of “repayment” by lengthening the period allowed or giving extended holidays from interest – “Extend and pretend.”. ( Ireland got some finessing of its bailout terms but our case was simple compared to that of Greece.) This has also been tried before. And the sum owing would remain. A malign scenario would be a Greek exit from the Eurozone, possibly temporarily, with a devalued Drachma and more short term grief for the Greek people. That would presumably also involve some debt restructuring and write off. Some choice!

The fundamental flaw in the Eurozone from the start was its political nature – a monetary union not underpinned by a fiscal union and with insufficient fiscal controls and sanctions. Eurozone members were theoretically limited to annual national budget deficits of 3% of GDP. When Germany and France became first to break this limit in 2005 and were not punished it became clear that political considerations were paramount and that a softly softly approach would apply.

All was fine as long as economies were expanding. The lower interest rates which Germany enjoyed were suddenly available to other countries. Cheap credit led to a surge in government and private borrowing and spending in countries like Ireland and Greece. Germany benefitted from the Euro’s exchange rate, more favourable than the old Deutschmark. Then came the international financial crisis and recession , which began in the USA and spread rapidly to the EU in 2008.

The peripheral PIGS, which had benefitted greatly from cheap money, were hit hardest (and with them the Baltics, particularly Latvia). All four eventually required bailouts, though for different reasons. In Ireland a property bubble collapsed in 2008, ending a boom period during which the revenues the bubble generated had paid for tax cuts and generous increases in welfare benefits. The banks which had financed the boom collapsed and required state recapitalisation. The consequential yawning budget deficit precipitated a downward fiscal and economic spiral which ended when Ireland could no longer borrow money internationally. In November 2010 Ireland secured an €85 billion rescue package from the EU, the ECB and the IMF (the Troika).

The package required spending cuts and tax increases to restore the tax base, but, once adhered to, the harsh medicine worked and Ireland exited the Troika programme after three years. While a legacy of austerity remains, and the recovery is far from complete, the Irish economy has picked up dramatically over the past eighteen months, with all indicators positive. Another PIG, Portugal, has also exited its Troika programme.

Greece was different. Its economy, which grew strongly before 2007, was heavily dependent on tourism and shipping – industries sensitive to economic downturn. Economic growth and the cheap credit available from Europe saw government expenditure grow sharply during the decade, outstripping tax revenue, the money financing public sector jobs, welfare benefits, pensions and military expenditure,. Tax evasion, traditionally a scourge – put simply the well-off didn’t pay tax, and much of the economy was cash based – remained chronic. The National Debt, historically high, mounted, pushing, then exceeding 100% of GDP. Official statistics, always doubtful, were massaged to cover. Government revenue actually fell by 15% in 2009. Borrowing costs rose.

Revelations that the previous government had falsified the figures, disguising the true extent of annual borrowing, proved the final straw for international lenders. The vital factor of investor confidence was lost. The Greek government , like Ireland’s later, proved unable to borrow internationally and, in April 2010, was forced to seek EU and IMF assistance. A loan of €110 billion was agreed, contingent on the introduction of severe austerity measures. These were greeted with widespread street protests throughout Greece, including several fatalities, with banners and slogans proclaiming the Greeks were not like the Irish.

A year later delays in implementing reforms, together with a worsening recession, saw the Troika agree to an easing of the bailout terms. Nothing worked and in March 2012, a second bailout, this time of €130 billion, was agreed, contingent on further austerity measures. The bailout was accompanied by the largest sovereign debt restructuring in history with Greece’s debts reduced by €100 billion. Private bondholders were “burned” – losing over 50% of their holdings. More street protests followed.

Since then there has been political and social turmoil over the further austerity measures needed to ensure tranches of the second bailout were paid. This culminated in the government’s overthrow last January and its replacement by the far left Syriza government with a mandate to reject austerity and the second bailout. Ironically, Syriza’s success came just as the Greek economy seemed to be turning the corner. Since January Syriza has postured and refused to engage in serious negotiations even as Greece’s economy worsened. Its intransigence has exasperated and alienated its Eurozone partners. Trust and sympathy has been lost. Eventually as the money ran out, Syriza ran out of wiggle room and, at the last moment, folded when its bluff was called.

Some may feel schadenfreude at Syriza’s come-uppance. A cynic might observe that only a party as left wing as Syriza can now deliver Greece. But without sorting out or side-lining somehow the debt mess there will be no definitive solution. Hard pounding, Gentlemen.

19/07

AMENDING THE CONSTITUTION: TWO REFERENDA; TWO CLEAR RESULTS

Ireland voted in late May on two proposed constitutional amendments.

One was decisively carried, one even more decisively rejected. The turnout for both referenda was 60.5%.The successful referendum was on same sex marriage, where 62% of those voting approved adding to the constitution the words “ marriage may be contracted in accordance with law by two persons without distinction as to their sex.” The rejected proposal (73% voting against) was to lower the minimum age at which a citizen could become President from 35 to 21.

Much has been made of the “youth vote” in pushing through the same sex proposal, with reports of many thousands of young people forced to emigrate by the recession returning to vote. Whether this was critical is doubtful given the margin of victory; moreover this “youth vote” wasn’t prompted to back similarly the other proposal – one which appeared pitched at the young!

A more prosaic interpretation is that the results show on the one hand how Ireland has changed in a generation, on the other that the electorate remains hard headed and realistic enough to identify an attempt to con it. Central to the success of the same sex issue were the twin factors that, for most people, what was involved was the logical extension of equal treatment to a minority group and that voting for this did not affect negatively the rights of the majority.
Central to the defeat of the presidential age proposal was the perception that it was unnecessary, illogical (why not 18, the voting age, rather than 21?) irrelevant and was being presented as significant and fulfilling a commitment to Constitutional reform in the Government’s 2011 programme.

The 1937 Constitution is very much a child of Ireland of the 1930s, reflecting predominantly Catholic ideology, values and social thinking of the time, with a revanchist territorial claim thrown in for good measure. Amending it has in the main aimed at modernising or eliminating some of the provisions ( including that territorial claim!) to reflect social and political change since the 1930’s. Two thirds of the thirty five amendments have been passed (or rejected) in the last twenty five years, covering social issues such as divorce, abortion and now same sex marriage as well as the evolving nature of our relationship with the European Union.

Before 1972 there were only three attempts at change, all proposed by Fianna Fail and all rejected by an electorate which saw them as politically motivated and designed to shore up Fianna Fail’s political fortunes. Two, in 1959 and 1968, were attempts to change the voting system by abolishing proportional representation, something which, in the short term at least, was perceived as favouring the largest party, Fianna Fail. The third, also in 1968, was an attempt to give greater representation to rural constituencies where traditionally Fianna Fail was strongest.

The 1970’s saw five amendments, all carried decisively, including crucially, the decision, very much in Ireland’s national interest, to join Europe in 1972. 83% voted Yes in what was a massive turnout of 70.9%, the highest ever percentage vote since the Constitution was adopted. Another huge majority in 1973 saw the voting age reduced to 18.

The four referenda in the 1980’s were all significant and marked a changing Ireland. In 1982, the “Eighth Amendment” entrenched the statutory prohibition on abortion into the Constitution by acknowledging “ the right to life of the unborn, with due regard to the equal right to life of the mother.” As the Irish Supreme Court had been following some decisions of the US Supreme Court on human rights issues, the referendum was an attempt by the right to head off any possible future Irish Supreme Court decision along the lines of Roe v. Wade in the US, which had opened the door to abortion . The issue has remained contentious here, inter alia over what constitutes the equal right to life of the mother, and a further four referenda have been held since. The most recent, in 2002, was a second attempt to prevent the risk of suicide by the mother being invoked as grounds for an abortion, and was defeated by only 10,000 votes. Given the proximity of Britain, where thousands of Irish women travel annually for legal abortions, there is a certain unreality about the debate.

1986 saw a heavy defeat of a proposal to permit divorce. Those opposed proved adept at whipping up fears of destitute first wives and pointed to the lack of support legislation, including financial provision, in the event of marital breakdown. It was 1995 before a divorce proposal – the Fifteenth Amendment – squeaked through by a mere 9,000 votes. Significantly the safeguard support mechanisms had been enacted in the meantime.

Amendments since have involved tidying up, improving governance and dealing with unintended consequences of legislation. Other amendments have included extending the vote to UK citizens (1984), restricting the right to bail (1996) and cementing abolition of the Death Penalty (2002). There was even one in 2011 providing for the reduction in the salaries of judges . An amendment in 2001 permitted Ireland to ratify the Statute of the International Criminal Court.

Abortion and divorce aside, the landmark referenda of recent decades have been regarding Northern Ireland and a succession of plebiscites on the changing nature of Ireland’s relationship with the European Union . The Nineteenth Amendment in May 1998 ratified overwhelmingly (94% Yes) the Peace Treaty on Northern Ireland, known as the Good Friday Agreement. With it Ireland dropped the territorial claim to Northern Ireland.

More problematic have been the eight referenda on Europe held since 1987. As the original European Community has grown and evolved, inter alia making incremental inroads on Irish sovereignty, hard core opposition here has grown. While a solid majority remains supportive of EU membership, recognising there is no realistic alternative, “getting out the vote” has become a factor, particularly with little largesse coming from Brussels compared to a generation ago.

The numbers voting No have risen steadily, from 325,000 in 1987 to some 630,000 in 2012, a percentage increase among those voting from 30% to almost 40% . Mismanagement and complacency by the government during the Nice and Lisbon campaigns actually led to referenda defeats in 2002 and 2008, causing considerable embarrassment and necessitating re-runs, loudly and hotly criticised as undemocratic. The alternatives were unthinkable.

An attempt to abolish the Senate, an initiative of the Taoiseach, which would really have rocked the political system, was narrowly defeated in 2013. This followed an earlier rejection of a proposal to increase the powers of Parliamentary Committees of Enquiry. The lessons here, and over the Europe results, is that the Irish electorate are sceptical of the motives of politicians and should never be taken for granted . Reasonable proposals properly presented will always get a fair hearing.

An additional interesting and perhaps significant pointer to how the Irish see themselves in the world and how they see others was the 2004 vote on Irish Nationality where, in a 60% poll, 79% voted to remove the automatic right to Irish citizenship to anyone born in Ireland. Henceforth one parent must be, or be entitled to be, an Irish citizen.

19/06/15

EUROPE’S RIO GRANDE

In 1990 BBC TV broadcast a film entitled “ The March”. It recounted a fictional march on Western Europe by thousands of poor African migrants led by a charismatic figure from Sudan, El Mahdi. The tone was set from the outset when a senior European politician asked him what Europe could do to help: “You could come and live here; I could go and live in your house.” The slogan of the marchers was simple “ We are poor because you are rich.” In the film, which can be viewed on You Tube, what starts out as a trickle becomes a flood of humanity heading for Europe, with, at the end, quarter of a million gathering opposite Gibraltar preparing to cross.

Fiction? Fanciful? A generation later, there are currently estimated to be half a million people waiting in Libya, poised to embark for Italy, Malta and the EU. The Mediterranean – the northern shores at least – is one of Europe’s favourite playgrounds, from the haunts of the rich around Monte Carlo and the French Riviera, to the mass tourist destinations of Spain and Greece. Yet the Mediterranean is also the border between First World Europe and Third World Africa, and like the Rio Grande, it has become the route of entry for illegal migrants. It has also, increasingly, become a graveyard for those who don’t make it.

With per capita income in Southern Europe six times that in Morocco or Tunisia, and up to fifteen times higher than in Sub-Saharan Africa, the attraction of Europe is obvious ( the corresponding ratio for the USA and Mexico is four to one). The poverty, the misery these people are seeking to leave behind hasn’t changed since. Population pressure has compounded matters while new sources of conflict have made some situations worse and added more reasons for more people from more countries to try to get to Europe. There are several million alone displaced from Syria and Iraq on Europe’s threshold.

Some things HAVE changed. A crackdown by Spain has seen the numbers attempting to enter drop dramatically from the peak of 17,000 in 2000, though considerable numbers continue to make the longer voyage to the Canary Islands . The main focus for African migrants, and the people traffickers who transport them, has become Italy and its islands adjacent to the Libyan coast. A steady stream of migrants had been crossing from Libya for several decades, something Gaddafi cleverly exploited for his own ends, being able and ruthless enough to turn the flow on and off to extract concessions from Europe, threatening otherwise to flood the EU with millions of migrants.

With Gaddafi’s overthrow, and the near anarchy that has engulfed Libya since, the stream of refugees has become a torrent. The scale is now staggering . 170,000 refugees are estimated to have landed in Italy alone in 2014, 140,000 from Libya, and already this year over 40,000 have arrived during the winter months, when the sea is particularly inhospitable. With 500,000 waiting for boats these numbers are expected to increase sharply during the summer months. Italian sources estimate that up to 200,000 immigrants might arrive in2015. (As I write, four thousand were landed over the second weekend in May.)

It’s a lucrative business. The boats are supplied by traffickers who charge up to $1,000 per passenger. They are often old, unsafe vessels, sometimes only dinghies, overcrowded and without facilities. Many carry several hundred, which works out at very big bucks. The voyages can be perilous, up to 100 miles (Lampedusa, the nearest Italian island, is 70 miles from the African shore), with the optimum expectation, at the end, of being rescued by the Italian navy and transported to holding centres in Sicily and an uncertain future in a continent that shows little signs of welcome.

Until recently, this silent migration, with accidents, shipwrecks and deaths commonplace, passed largely unheeded outside Italy and Malta beyond brief news reports and media comments . Over 3000 are estimated to have drowned in 2014. In 2014 Italy actually mounted a special naval rescue operation in response to the rising toll of drownings, while diplomatically the Italian government appealed to its EU partners for more burden sharing – current internal EU agreements stipulate that migrants remain the responsibility of the first country receiving them.

There was little response. Immigration, particularly of poor economic migrants from different cultures, is a sensitive political issue throughout Europe, with considerable support for anti-immigration parties in a number of countries. Those countries willing to admit more asylum seekers – Germany and Sweden – concentrated on refugees from the conflicts in Syria and Iraq, and even here the numbers admitted merely scratched the surface. The African problem was seen as primarily an Italian one, though, with unrestricted movement among Schengen countries ( the EU except Britain and Ireland) there are obvious implications for all.

Then events last April catapulted the issue onto Europe’s front pages and prompted an emergency summit of Europe’s leaders. A boat capsized, within sight of rescuers, drowning 800. The death toll for 2015 was reported to have already topped 1,600 – more than the Titanic, as one aid worker commented. 10,000 were picked up from other boats in the same week. There was public outcry and outrage, with lobbyists calling the tragedy a stain on Europe’s conscience.

The emergency summit on April 23, together with subsequent Ministerial meetings, agreed on some measures to address the problem but there is little likelihood that they will produce significant results. Funding to combat traffickers and to enhance the EU’s existing “Triton” search and rescue mission was tripled, allowing increased naval patrolling (Ireland is among those sending a ship to participate), the use of force against traffickers was mooted (but how, where and with what authority ?) and discussions on sharing out some of those rescued and admitting more refugees generally have begun. More fanciful and unworkable ideas – establishing “transit camps” in North Africa for would-be migrants, allowing temporary stays in Europe, followed by repatriation – have been floated.

The issue has exposed deep flaws in the EU’s policy, such as it is, on asylum and refugees, with countries like Britain flatly refusing to take any more refugees and others baulking at taking large numbers. To absorb 500,000 would mean a distribution of one tenth of one per cent of Europe’s population among twenty eight countries. The chances of this happening are remote.

But something else has changed also since 1990. In “The March” a European official comments that Africans too have televisions and asks for how long the world’s poor will be willing to put up with their situation. Today the poor have the Internet, mobile phones and global communications. Europe and the rich North have been brought closer to the poor South. They can see how well the rich minority on the planet live and they want some of it. The Arab Spring was one manifestation of this. Perhaps in a perverted sense Islamic State is also. Most assuredly the multitudes waiting to take a risky boat journey for the chance of a better life is as well, whether in the Mediterranean or East Asia. And they’re not going away anytime soon.

21/05/15

SECTION TWO OF 1969

Benjamin Franklin remarked that taxes and death were the only two certainties. A century earlier French Finance Minister Colbert defined the art of taxation as “so plucking the goose as to obtain the largest amount of feathers with the least possible amount of hissing”. And we all know what befell the woman who said only little people paid taxes.

Whatever else can be said about tax there’s almost universal agreement that current systems are basically unfair. Every country employs a system of levies, reliefs and exemptions that have evolved out of a mix ranging from political beliefs, expert advice to foster desirable social and economic developments, a vague commitment to equitable treatment ( at least among OECD states), down to special pleading and cronyism, the latter two normally carefully disguised. Once legislated for (in or out!), particular provisions regarding tax tend to be regarded as holy writ, with any change assuming a zero sum status. Those who benefit hunker down; those who don’t howl for change.

We in Ireland have had several fairly unique tax exemptions. Back in the era of real hardship – synonymous with the pre-Lemass/Whitaker era before 1960, when the country was literally bleeding to death – farmers, the chief bred-in-the-bone source of the country’s modest wealth, were by and large free from tax. It was meagre income/ meagre capital allowances, rather than any special treatment. Nevertheless, after EU membership, when farmers at last had some income thanks to Europe’s CAP, the perceived favourable tax treatment of farmers generated some resentment and criticism from urban taxpayers.

When at last the country began to develop a significant manufacturing base, via for the most part FDI, exported manufactured goods earned a tax exemption. This survived and morphed into a generalised zero taxation rate for manufactures, making Ireland a desirable place for foreign investment. There is little doubt that this favourable tax regime, ably promoted by Ireland’s Industrial Development Authority, helped the successful development of the Irish economy from the mid – seventies on.

This very success eventually prompted attacks from the European Commission and several member states, seeking to end the exemption on the grounds that it gave Ireland an unfair advantage in attracting foreign investment. Perhaps, but then Ireland already has significant strikes against, in the form of geographical peripherality and the extra costs of bringing goods to market.

The battle with the Commission is ongoing and has seen grudging acceptance – on both sides – of a modified tax rate of 12.5% on manufactures. When Ireland went broke several years ago there were fears that Europe would keep the plug pulled unless the favourable rate was abandoned but this threat did not materialise. The pressure, however, continues, with the strongest argument for abolition the fact that many large multinationals use their Irish branch to launder profits to avail of the preferential tax rate. The counter argument is that the multinationals will simply find somewhere else equally or more accommodating.

One unique and enduring Irish taxation measure HAS captured the imagination and attracted much international interest. In introducing the Irish budget in 1969 the then Irish Finance Minister, Charlie Haughey drew “particular attention to Section 2 which deals with the exemption from income tax of earnings of writers, composers, sculptors and painters”. Whatever else he will be remembered for, Haughey will be forever associated with this measure. As anyone with experience in government will testify, most legislation, particularly involving changes in taxation, emerges after a gestation period of debate and consideration, sometimes public, sometimes internal. Section Two of 1969, however, appears to have come out of left field and indeed it’s difficult to conceive of another Irish politician coming up with the idea.

How to treat income generated from artistic endeavour has long been a problem everywhere. Aside from the handful of mega successes who earn millions, most of the artistic community in any society live and earn modestly. Financial success, where it comes, is often concentrated in one or two years with fallow periods before and after. Prior to 1969 the artistic community in Ireland had been lobbying for a change in the system to allow royalties or revenue to be spread across several years; this at a time of low incomes, low tax thresholds and very high rates of marginal tax ( dubbed surtax). Not surprisingly the bureaucrats found enough practical objections (chiefly involving relativities) to do nothing. Haughey’s measure cut that particular Gordian Knot.

The scheme was broadly, though not universally, welcomed. One crusty revenue official remarked to me, with sage perspicacity, that Haughey was seeking to create another group of people who would pay no tax! This at a time when Ireland’s retarded economic development was finally speeding up, with fortunes being made particularly in building and property development, where tax breaks and loopholes abounded. Yet such riches did not touch much on the artistic community at the time nor for long afterwards, despite Haughey’s initiative.

The terms of the scheme were quite clear: earnings from an original book, play or other writing, a musical composition, painting or sculpture, deemed by the Revenue Commissioners to have artistic merit, were exempted from tax. So first there had to be earnings! The expressed aims were to foster and encourage the arts generally and artists to remain in Ireland ( 1969 was the year the Nobel Prize for Literature went to one famous Irish exile – Samuel Beckett). Irish residence (including for tax purposes) was, and is required. Claims could not be made retrospectively, thus ensuring that there was a stream rather than a flood of writers and artists into the country, as some critics had feared.

The scheme ground on without amendment for a generation, despite several efforts by Revenue to have it reined in. Most of those covered benefitted modestly. To counter “administrative creep,” guidelines were introduced in 1995 and revised in 2013. By then there had been change. For as Ireland boomed, and incomes rose, so too did the incomes of artists and writers. When the Freedom of Information Act was deemed to cover those benefitting, the information revealed caused some surprise, particularly the revelation that a small handful of individuals, including some rock stars (on royalties from musical compositions) were saving millions in tax.

In 2007, thirteen of the 2,427 availing of the scheme were earning in excess of €500,000.The exemption was capped in 2006 at a generous €250,000 (roughly $300,000) and further reduced to stand now at €50,000, as well as being enmeshed in the high earners’ tax restrictions. The latest figures available, for 2012, show that roughly 64% of those benefitting had incomes below the exemption, with many having less than half that amount.

Section 2, now Section 195 of a 1997 act, is again under attack, on the usual grounds of equity, with Revenue again leading the charge. In a perfect world the case for abolition would be unchallengeable. But, given the gaps, loopholes, deficiencies and blatant unfairness, which characterise the way in which income (including welfare payments) and wealth are treated in Irish legislation, why single out this? In the broad scheme of things the measure costs little. To end it would be a victory for the bean counters, no one else.

T’S THE ECONOMY, STUPID

Year Five of the Government, still lagging in the polls but with ratings for both parties beginning to improve. It’s less a case of an increase in popularity, more the avoidance of banana skins recently. Ministers have also demonstrated a willingness to be proactive on some issues – something noticeably lacking last year.

There are other factors. With the election campaign in almost full swing some minds at least are concentrating on what alternatives are on offer. They’re not great. Fianna Fail, anchored at a low level of support, can scarcely criticise a government which has largely implemented its own blueprint for recovery. Sinn Fein comes with legacy baggage and a fanciful populist economic programme which seems unlikely to stand up to any serious forensic scrutiny. Ditto for anti-austerity groups and individuals on the left; it is difficult to envisage any coherent electoral threat emerging from them or other independents articulating dissatisfaction over sectional and local grievances. Disenchantment with the political system, yes; more independents yes; an alternative government no. The appeal of the newly launched Renua party is difficult to gauge at this stage; its first priority will be to establish itself.

Externally, the failure of the new Greek government to make much headway in writing down its debts has also helped. Any deal it might manage to secure spells trouble for the government here, so the deafening silence from the left over its lack of progress so far has spoken volumes. This may change – Greece might get its deal, but on the evidence so far it is unlikely to be a radical one. The saga is providing a lesson in basic economics as well as one in realpolitik. The Greeks have four months from end February to negotiate something.

By then some domestic issues here may be either resolved or coming to the boil. Irish Water remains a running sore. By June the impact of the first water bills will have registered and the level of the “can’t pay, won’t pay” movement become clearer. Will the bills fuel more mass street protests? Or will the middle classes back off, uncomfortable with the aggressive tactics of a minority of activists? The issue is too close to call and has huge potential to bury the government. Mishandled from the start, can the current structure survive a non-compliance figure of 40%? And how will the 60% compliant feel about paying for the water of the other lot?

Perhaps, like the Poll Tax in Britain a generation ago, the politically best solution would be to fudge, dump, and start again. There appears to be enough buoyancy in rising government revenues to carry the cost until the issue has been thrashed out comprehensively. Given that this is the second largest infrastructural project in the history of the State it surely merits this. Irish Water has proved a quango too far and this message, which has resonated from the public in letters of red, should be taken on board politically. Despite protestations this has simply not yet happened.

Poised for take- off also is the problem of Repossessions/Evictions. Readers of this column will know I have been pointing up for several years the political impossibility for any Irish government to countenance thirty thousand plus evictions, period. Following several bouts of can kicking over the years, a) we’ve now run out of road, b) the banks – what’s left – have exited zombie status and are again profit making, and c) property prices are once more on the rise. The banks, holding all the cards, scent an opportunity to repair balance sheets and maybe even make a profit. The result has been a dramatic surge – to one thousand a month – in applications to the Courts for repossession orders.

It has been a slow process – but, like melting ice, at a certain point the pace begins to pick up. Which is where we are at. Presumably the Government hoped the issue would not become toxic this side of the election. And, indeed, it may well be that the number of ACTUAL evictions (as opposed to court orders issued but not executed) in the year to come will be few, with court delays and adjournments. However, the issue is now out there and the sticking –plaster attempts to deal with private insolvencies thus far have been exposed as totally inadequate.

Government at last appears seized of the issue but what to do? In a nutshell, the problem is the thirty seven thousand plus mortgages over two years in arrears (around one-in-twenty of the total). Realistically these mortgages are dead and will never be redeemed. These are not mortgages on properties to let – for which there is no public sympathy – these are on the family homes of ordinary people.

Writing down – or off – the debt raises the issue of “moral hazard” – admittedly a dubious concept in view of our bailout of the banks – and bankers – and the emergence, phoenix-like and relatively unscathed, of many of the major figures and developers who stoked the boom. But there are obvious difficulties in justifying debt forgiveness for the next-door-neighbour to someone who has dutifully paid often crippling mortgage repayments, and suffered the increased taxes and levies since 2008. Perhaps a new NAMA can be devised, one with a mandate to sort out and rein in the banks and deal on a case by case basis. The issue merits this. Government strategists should be wary lest a series of hard luck cases emerge, replicating the political damage of the medical cards fiasco last year. Like Irish Water it’s a political problem requiring a political solution. Both require action.

While these and other issues make for general uncertainty over the next twelve months, the Government’s prospects have definitely improved, underpinned by Ireland’s economic recovery. It’s patchy, it’s partial, but it is undoubtedly real – as the employment figures and improved tax revenues demonstrate. It’s not rocket science, nor is it the result of brilliant stewardship by the Government, whatever politicians may claim. By and large the Government stuck to the Troika programme it inherited and is beginning to reap the benefits, the Irish Water farce aside.

The international climate has helped considerably. Favourable economic conditions in our biggest non-Eurozone markets (Britain and the USA), the sharp decline in world oil prices and the drift downward of the Euro against the dollar and sterling have each played a part in stimulating the economy. Factor in unprecedented low levels of interest rates in the Eurozone, and the embracing by the European Central Bank of quantitative easing and the Government could hardly have better conditions to work around. The annual burden of financing the public debt has been reduced, and, combined with some debt restructuring, this has enabled it to claim that, overall, it has (just about) protected the levels of basic social welfare payments, collateral damage at the margins notwithstanding.

Will it be enough? There are precedents, Truman in 48, Major in 92. Both faced inept opposition. Given a continued favourable economic climate, no major banana skins and in the absence of a coherent plausible political and economic alternative, the Government might just squeak it. If so it would be a comeback worthy of Lazarus.

18/03/15

TO BE A TAOISEACH: HAUGHEY PART I: THE PATH TO POWER

Charlie Haughey merits more than one column. A recent TV mini-series,” Charlie,” with Aidan Gillen (“The Wire”) in the title role, topped the ratings here, demonstrating how Haughey continues to fascinate over two decades since he was in power.

He was Ireland’s seventh Taoiseach and held the office for a total of seven years and three months. Together with Garret Fitzgerald he dominated politics in Ireland for a generation, but, while Fitzgerald is generally regarded with respect and affection, Haughey continues to provoke strong feelings for and against. His whole political career attracts attention. Indeed arguably his achievements before becoming Taoiseach outweigh what he did in the top job.

Mention Haughey and a myriad of images come to mind. $500 Charvet shirts (each!).The 1970 Arms Trial. The bungs from rich businessmen. The “ Irish solution to an Irish problem.” Teapot Diplomacy.” The failed heaves against him. The “We are Living Away beyond our Means” speech. McCracken. Moriarty. And many more.

His administrations included the disastrous short lived GUBU government of 1982 and the much more successful one after 1987, which at last took the harsh but necessary steps to begin fixing a broke economy ( firm actions he had ducked eight years before). His legacy includes populist features now woven into the fabric of society, such as free travel for the elderly, together with programmes to assist the Arts (and artists), including a tax exempt scheme and the establishment of Aosdana. Whether there is anything more enduring must await the verdict of history.

Ireland in the Sixties was a time of opportunity for some, with Ireland experiencing her first (mild) economic boom. Haughey, an accountant, prospered, becoming a rich man with a circle of influential and wealthy friends among builders, speculators and businessmen. His odyssey in a few short years from a semi-detached in a north Dublin suburb to first one, then a second mansion, with extensive lands, was already becoming the stuff of legend and attracting attention. He was also making his mark in politics, with a clear ambition to become Taoiseach.

He was not alone. He was one of a group of ambitious, brash, relatively youthful politicians who came to the fore in Fianna Fail in the sixties, displacing the party’s geriatric old guard as the country finally emerged from decades of stagnation. The issue was who would succeed Taoiseach Sean Lemass, Haughey’s father –in-law. In the event, in 1966, the party opted for a compromise candidate, Jack Lynch, leaving the leadership ambitions of several , including Haughey, unfulfilled but undiminished.

Haughey had already proved an able, competent and modernising Minister for Justice; Lynch appointed him Minister for Finance in 1966. His tenure in Finance, when he was in effect in control of the Government’s finances, saw the emergence of a distinct Haughey style. It was, above all, high profile. Where there was substance, there was style in abundance, something that morphed later into a tendency to talk up and oversell achievements. It was clear also who was the boss. Ken Whitaker, Departmental Secretary and architect of Ireland’s economic revival, was shunted sideways into the Central Bank.

Yet his ability was also clear. As Minister, with little fiscal room for manoeuvre, he championed a number of populist measures, costing little but proving immensely popular. These included free travel and other subsidies for the elderly and the 1969 tax exemption scheme for writers, artists, and composers. (The scheme wasn’t perfect – to benefit one had to earn money first and few did – but it established Haughey firmly as a patron of the arts. That it helped create, in effect, a class of people who paid no tax at the expense of those who did was conveniently overlooked.) In the leadership stakes he appeared to have the edge over his chief rivals, former schoolmate George Colley, who had actually run against Lynch in 1966, and Neil Blaney, a militant republican from Donegal.

Then Northern Ireland exploded . The Fianna Fail cabinet was split. Haughey, not previously known for strong republican views, became involved in 1970, together with Blaney, in an attempt to import arms destined for republicans in Northern Ireland. There are still unanswered questions about the whole affair, including Haughey’s motive. Was it simply political, to avoid being outflanked on the Fianna Fail right by Blaney, in a move aimed at undermining the low-key Lynch? If so it was a miscalculation. The 1970 Arms Crisis did for Blaney and almost did for Haughey. A galvanised Lynch fired both; Haughey was acquitted in the subsequent court case.

Haughey’s political career seemed over, but, unlike Blaney, he was clever enough to avoid expulsion from Fianna Fail, which would have consigned him also to the permanent political wilderness. He ate humble pie from Lynch, while garnering support among the party rank and file over several years. Restored to the front bench (in opposition) in 1975, he joined the Cabinet as Health Minister in 1977. He was handed the perceived political hot potato of introducing measures to legalise the sale of contraceptives, required by a Supreme Court decision, and did so (the “Irish Solution”). He also introduced Ireland’s first serious anti-smoking measures. But these were sideshows.

Fianna Fail had bought the 1977 election, securing a huge majority (their last), by undermining the tax base with frivolous giveaways including the abolition of road tax and property taxes on private dwellings. The second oil crisis in 1978 stopped the economy in its tracks and was followed by a series of damaging industrial disputes, culminating in a postal strike lasting over four months in 1979. Disastrous European election results, as well as the murder of Lord Mountbatten by the IRA, fatally damaged Lynch. In December 1979 Haughey mounted a successful coup against a jaded Lynch, edging out Colley in a close contest among Fianna Fail parliamentarians (forty two to thirty six) and becoming Taoiseach without an election.

Despite reservations from Garret Fitzgerald ( who spoke of Haughey’s “flawed pedigree” in the Dail), and George Colley (“ low standards in high places”) Haughey took over with considerable benefit of the doubt from the public after the preceding two years of disastrous government. He was known, or believed, to have disapproved of Fianna Fail’s economic policy and in fact one of his first actions as Taoiseach was to drop the architect of that policy, O’Donoghue, and abolish his Department. And, while he had arguably received a hospital pass– an economy in poor shape halfway through the government’s term of office – it was certainly no worse than the one his father-in-law had inherited in 1959.

Initially he made all the right noises and appeared hands on and proactive. At his first press conference he condemned the Provos unreservedly. Several weeks later, in a televised address to the nation he spelled out the serious state of the economy and the need to reduce the national debt. He called for economies and the curbing of borrowing , stating flatly that “we are living away beyond our means.” It was a phrase that was to come back to haunt him. But right then the question was, having lusted for power – and got it – how would Haughey use it.

20/02/15

KNOWN KNOWNS AND UNKNOWN UNKNOWNS

It’s almost Rumsfeld territory.

The Government, battered after its annus horribilis, is trying to pick itself up and undo the damage in the year and a bit before the election. Few give it much chance. It is eight months since Labour showed in double figures, almost a year since Fine Gael got 30%.

However, the earliest opinion poll of 2015 offered some solace with slight increases in support for both Coalition partners to 24% and 8% respectively. While any recovery has a long way to go, some Fine Gael supporters are grasping at the straw that only six months before the last election their support was similarly languishing but recovered strongly. True; but then they were in opposition, not in government with a record to defend. This applies also – in spades – to Labour, who are under sustained attack from the Left over broken election promises.

Pundits argue that the unpopularity revealed in the polls has been too long in the making and cannot be reversed in the short time available, citing the difficulty of regaining the electorate’s trust once lost. Some see a post-election scenario in which three parties (FG, FF, and SF) would each have broadly similar levels of support, in the mid-twenties, with a further twenty-odd percent going to a Macedonia of independents, new parties and those of the hard left, the balance going to a Labour party rump.

Whether this or some other new political landscape will emerge remains to be seen. A year is a very long time in politics and there are different factors at play. Strategists of both government parties are fairly clear on what must be done – or avoided – to give them a reasonable chance. First there must be an act of faith – that the pendulum will swing back, not fully but just enough. Voter disenchantment can be volatile as well as enduring, particularly if there is no readily available viable alternative on offer. This probably saved the skin of several past Fianna Fail administrations. Still to be resolved is whether and to what extent the two parties will present jointly.

Second, avoid Banana Skins – or, if slipping, minimise the damage asap. The handwringing over Irish Water, the bleating defence of the indefensible over medical cards, cost the Government dearly last year. Cop outs like trying to blame a quango, or an unelected Regulator, or whinging that legislation ties the Minister’s hands, simply will not work where the public is seized of an issue. A government is elected to govern, not deliver excuses. Tough decisions may on occasion be necessary and the electorate tends to understand; wrong decisions, or no decisions, they will not.

Third, take on the opposition on the economy. The budget deficit remains huge, even factoring out interest payments on Ireland’s bailout. Borrowing continues. We are still living way beyond our means to sustain current levels of welfare and to run the state. The opposition have been coy on alternatives, beyond soaking the rich. They should be pushed on specifics.

It is not enough to point proudly to seeing off the Troika. An achievement, certainly, but one that has already been oversold. There is speculation that a new Greek government may, as threatened, reject or seek to renegotiate with the rest of Europe the terms of Greece’s economic bailout. Merely an election promise or a nuclear option? Should the Greeks secure a favourable deal by acting tough, the Government’s Troika boast would be rubbished. While Fianna Fail can be largely discounted on this, since it negotiated the Irish bailout terms, the potential boost to Sinn Fein, the hard left and independents could be considerable at the worst possible time.

Fourth, above all: Be Alert! Known knowns like Irish Water and medical cards have been identified – painfully – and attempts to cope with them put in train. This appears to have worked for the medical card issue. However the anti – water campaign is still very much alive and two significant dates are looming. The first is the early February deadline for registration, which will demonstrate whether the disaffected middle is satisfied with the government’s compromise climb-down. The second is Easter, when the first water bills issue (and shortly after the property tax has been extracted).

The government has been playing up the tax cuts from 1 January, pointing to taxpayers having more money in their pockets. These savings, however, look set to be cancelled out by the water bills, while the estimated 40% who pay no tax will feel the charges even more. The hyped €100 for registering with Irish Water won’t arrive until much later in the year. Watch this space!

There is also what could be waiting in the long grass. After years of cutting and trimming there are several potentials and it behoves the strategists to keep an ear very close to the ground – or at least to the daily radio talk shows. The plight of the homeless flared up before Christmas and there is currently the annual waiting-on-trolley scandal in hospital emergency departments, which seems worse this year. There could be legacy issues regarding past scandals – though these could affect all parties – and it will be interesting to see how the government handles the imminent report on the direct provision regime for asylum seekers. One other unknown is the extent of the rising tide of house repossessions and what effect these will have politically. On this issue the can-kicking appears to have reached a cul de sac. None of these are critical as yet.

There ARE positive factors. One which the pundits, the population and the politicians seem to have woken up simultaneously to is the spin off from the dramatic fall in oil prices. Lower prices for petrol and home heating have provided a welcome cash boost – rivalling that of the budget and with a multiplier effect. How this will play out in terms of a general feel good factor is a big unknown. Some of the benefits could be offset by the downward drift in the exchange rate of the Euro. There could also well be public ire should the lower fuel prices not be reflected in terms of cuts in electricity and gas prices. Irish consumers pay dearly for electricity in particular and a forensic examination of the feather- bedded companies is long overdue. This one is a slow burner (ouch!).

With the most recent economic trends there is some leeway to placate public opinion, by rowing back or reversing some of the austerity measures over the next year. A start has already been signalled with for example overtures on pay to the public sector. There will definitely be at least one giveaway budget and a good chance of a second. The Spring Economic Statement may prove to be more than just words if the polls remain unfavourable.

Nothing will prevent massive seat losses for the Government parties in the next Dail. Yet the strongest card it has may well prove to be the electorate’s reluctance to endorse Sinn Fein or to court the possibility of a government in thrall to a disparate group of independents. Now that WOULD be an Unknown Unknown!

22/01/15

TEA PARTY POLITICS – IRISH STYLE ?

The very latest polls suggest that in the next election the three major centre parties would be unable to muster a majority between them, while Sinn Fein’s support continues to grow, and the strongest support is for independents of various hues (chiefly left-wing).

Most worrying is that the trend in the polls evident throughout 2014 resembles the melt down in Fianna Fail’s support before 2011. One or two polls could be dismissed but not the last half dozen which have seen support for Labour collapse and support for Fine Gael also decline sharply. As I write there is nothing to suggest, beyond pious hopes, that this will change. And, where public opinion has actually been tested – in the local and European elections in mid-year and in subsequent by elections – the poll figures have been, ominously, validated.

The Government must be asking itself “Where did it all go wrong?” The most secure government in the country’s history has imploded so severely in 2014 that its chances of being returned to power seem slim.

Nobody said it would be easy – three years of unremitting austerity with tax increases and benefit cuts had severely dented the Government’s popularity. However, in the absence of any credible alternative, with the economic corner turning, and with the political kudos for successfully seeing off the Troika, 2014 promised much. Factoring in the gradual waning of mid-term unpopularity and two possibly favourable giveaway budgets before a 2016 election, the prospects last January seemed reasonably positive.

That at least was the theory. And, in the macro sense, things went according to plan. The economy bounced back big time and at a surprising pace. It appeared the Government had got it right – austerity worked. Debt targets were met, austerity seemed to be ending and there was talk of a billion to play around with in October’s budget with the promise of more to come. Twelve months on, the Government is in a shambles, with support for both coalition parties seriously degraded.

In retrospect, in political terms, the Troika Era was an extended honeymoon period for the Government. All the nasty cuts and new taxes could be blamed on the Troika and Fianna Fail, which had let them in. A type of Dunkirk spirit obtained in which the public, by and large, put up and shut up. People did not take to the streets. However, once the Troika departed, it was end of honeymoon and back to the kitchen sink.

While national bankruptcy had been averted, the country’s finances repaired, and “core” welfare benefits preserved, aspects of the cutbacks, and the scattergun approach to economising, particularly in the small print of measures taken, proved toxic. Cuts yielding little in savings emasculated many small services and programmes which helped the sick, disadvantaged and politically powerless. The monies could have been saved elsewhere by targeting some of those “core” heavy hitters through, e.g. means testing child benefit or even slightly raising income tax and blaming the Troika. It might have worked, though try explaining that to people losing out on a carer or a respite or other grant . The resulting drip feed of public disillusionment and simmering anger was not perceived officially at the time.

This was compounded by a succession of tactical and strategic blunders by the Government during 2014, culminating in the fiasco over Irish Water, an issue that rumbled on throughout the year before coming to a head in November. The blunders had a cumulative effect. Just about every issue and crisis during the year was mishandled, exploding the myth of government competence.

Early on a furore over the level of salaries paid to the top executives of some state funded charities brought down Fine Gael’s ablest political strategist Frank Flannery .The Garda Whistle-blower controversy, complemented by allegations of bugging the Garda Ombudsman’s office, morphed into a major crisis that saw the removal of the Justice Minister, his Department’s top official, and the Garda Commissioner.

Soon after, an obvious populist proposal to give free GP care to the under sixes ran foul of public outrage at a parallel attempt to save money by reviewing – and withdrawing – thousands of discretionary medical cards issued to genuinely sick people. The official protestation that the under-sixes proposal was the first stage of a roll out of universal free GP access fooled no one, with medical experts pointing out that this was to prioritise the healthiest ahead of those in greater medical need. The medical card fiasco was in part responsible for the Government’s lamentable showing in the mid-year elections, which prompted the resignation of Labour leader Gilmore and the kicking sideways of accident prone Health Minister Reilly.

An attempt to relaunch the Government’s Programme in July briefly held promise, with Ministers talking up the state of the economy and generating expectations of a giveaway October budget. In the event they oversold, with the budget’s modest provisions satisfying nobody. But even before that the Government’s credibility was further shredded by the McNulty Affair in which the Fine Gael candidate for a Senate vacancy lost after revelations that he had been nominated to a state board at the last minute in order to boost his election credentials. Small potatoes stuff but many saw it as the type of stroke politics and political sleaze associated with Fianna Fail.

Next came the revelation that the junior Environment Minister was employing, as his driver, a fellow party member who was also a government appointed director of the new Irish Water quango. Stroke politics with a vengeance. A hasty Government announcement of a new system ( a “portal”) governing public appointments to state boards – long a traditional form of patronage for rewarding loyal supporters – was greeted with derision.

Cue Irish Water – a slow burner. The Troika proposed in 2010 that Ireland join the rest of her EU partners ( and help bridge the budget deficit) by charging for water. Fianna Fail, outgoing, had bought into this, and the new Government did likewise. A simple flat-rate charge would have sufficed while all aspects of the matter were examined, the issue complicated by the legacy factor – the existing infrastructure is inadequate, antique (some pipes date from the Nineteenth Century) and defective (with up to 40% of water lost through leakage).

In a catastrophic political misjudgement Irish Water was established, with start-up costs of several hundred million dollars, much of this for consultants, an acknowledged level of over manning from the start and with some contractual systems locked into place until 2027. Public anger was compounded by the revelation of a bonus culture in salaries, including those underperforming. When the likely hefty scale of the charges became known, the issue boiled over. Street protests culminated in a massive demonstration by over 100, 000 in November. The left had a field day.

The issue became a lightning rod for discontent, with the middle classes joining in. The Government blustered, then caved in, slashing and deferring the proposed charges. Those opposed remain adamant. Right now the Government is hunkering down and keeping fingers crossed but such is the degree of public disenchantment that all the mainstream parties are running for cover. Is this the beginning of tea-party politics, Irish –style?

18/12/14

PAISLEY

“By their Fruits Ye shall know them; ” Matthew 7.16

Now the Month’s Mind is over, how should we regard him?

Park for a moment that late Damascus –like conversion to power sharing, that invoking of the Song of Solomon when he took over as Northern Ireland’s First Minister.

He was never short of a pithy phrase:
“Blaspheming Roman Scum” — Catholics.
“They breed like rabbits and multiply like vermin” — Irish Catholics.
“This Romish man of sin is now in Hell” — on the death of John XXIII.
“Bog People” — the Ulster Irish dispossessed in the Seventeenth century.

My personal favourite was his frequent retort to Irish reporters asking a difficult question – “Let me smell your breath.”

Time Magazine once described him as an Elmer Gantry style figure. Yet Paisley was much more than a glib shyster spouting the bible at ignorant US plebs. He was a towering figure in Twentieth Century Irish history, one who played a major part in what we still refer to as “The Troubles.” And he had support – right to the end he was Northern Ireland’s greatest vote getter.

He fused Religion and Politics in a way rarely seen in modern times. When he first emerged, we did not take him seriously. A Neanderthal using phrases and language not heard – or widely believed – since Cromwell. There’s a moral here. Listen carefully to what people are saying – everyone from Hitler to Bin Laden – and ignore at your peril!

He came to attention initially in 1959 when he threw the Bible he professed to espouse at Donald Soper, a Methodist minister who doubted its literal truth. But it was Catholics at whom he directed his special ire. The Pope – any Pope – was the Whore of Babylon, or Antichrist, whatever that means. He picketed the Second Vatican Council. He picketed and disrupted ecumenical services in Britain. His shouting figure, surrounded – usually – by a posse of placard waving louts, some wearing clerical collars, became a familiar figure on our televisions in the 1960s.

He was superb at hurling biblical quotes at his opponents, drawing inspiration from the King James’ Bible. The Jacobean scholars who crafted this literary masterpiece have much to answer for. Would – could – Paisley and legions of pulpit thumping bigots over the ages have achieved the same effect with the anaemic New English or Douai versions?

He was, of course, more than just a bible spouting bigot. He was a brilliant demagogue. While much material has been lost, look at his Drumcree speech in 1995 on You Tube, or the fragments that survive from the 60s. Oswald Mosley and Enoch Powell have been described as accomplished mob orators. They simply weren’t in Paisley’s class. Hitler’s rants – from the newsreels – come closest. And Paisley shared with Hitler the ability to turn minds with his words, albeit – thankfully – on a much smaller stage.

He was a towering, intimidating, aggressive figure, burly and well over six foot at a time when most people were not. His bellow added to the charisma, for he was the shouter – downer par excellence. I never witnessed him bested, even when thrown out of meetings or events. Yet he could be personable and charming when he wanted, as he was when I encountered him a quarter of a century ago.

At some time in the fateful decade of the Sixties, while ranting at Catholicism, he focussed on politics – perhaps always his intention. His targets expanded to embrace Irish republicanism, whether in the imagined menace from the Republic or in the discriminated minority of Irish nationalists – Catholic to boot – within the North. He was on surer ground here.
For if most of his listeners deep down had scant regard for the hellfire in the afterlife he raged about, many were worried, and indeed fearful, of the country to the South, less prosperous, with its revanchist constitutional claim, and its Catholic Church-dominated society . They were equally apprehensive of the nationalist minority living among them and were conscious also of their own minority status on the island as a whole and the dubious political settlement that had gifted them their position.

“We will never forsake the blue skies of Ulster for the grey mists of an Irish Republic.” Paisley tapped into these fears, exploited them, painting the issues as zero sum and opposing every concession or reasonable attempt at compromise. He told Bernadette Devlin in 1968 he would rather be Protestant than just. He spent four decades holding fast to that tenet. He provoked serious rioting in 1964 over the display of a tricolour during elections in Belfast. He opposed and picketed meetings between the political leaders on the island. When the Civil Rights movement got under way in 1968 he organised violent counter-demonstrations.

Even as people began to be murdered in large numbers he had a Teflon-like quality for evading direct responsibility. Yet few doubted where he stood. I recall the numerous crude graffiti in Belfast in those early days “UVF – Rev. Ian” and the more pointed one in a nationalist area that threatened vengeance. Yeats in a late poem pondered whether his play had sent “out certain men the English shot.” Paisley, though never directly fingered for involvement, with his superb demagogy and his gift for harnessing and igniting quiescent fears, as many loyalist paramilitaries have testified, provided support and sustenance for their actions.

When political settlement seemed possible, wrecking became his forte. In 1969 he destroyed a decent Prime Minister, derailing a reform process that could have prevented the awful decades that followed. In 1974, when calm was needed, he was to the fore in wrecking the Sunningdale power-sharing agreement. Any Unionist politician advocating compromise was outflanked by Paisley, his career destroyed. He opposed the 1985 Anglo-Irish Agreement (“ Never, Never, Never.”). A decade later, when the ceasefires were in effect, he did his best to fan the flames yet again at Drumcree.

Then, the sea change. Paisley was the last man standing, every rival Unionist politician routed, his party, the DUP, the largest Unionist party. Suddenly, incredibly, he abandoned his previous stances and went into government with Sinn Fein in 2007, declaring that “Northern Ireland has come to a time of peace, when hate will no longer rule.” He was by then 81. One perceptive commentator probably got it right by suggesting that mixed in with egotism was his final realisation that compromise was the least bad option. “ Sunningdale for slow learners.”

His tenure in government lasted only a year. Later he claimed to have been forced out by his own party and remained bitter to the end. But, his age apart, it is not hard to see why he was ousted. By going in with Sinn Fein, however he dressed it up, he lost the ability to wreck, to command a veto, becoming just another politician. By saying Yes he clearly helped set Northern Ireland on a new path. The tragedy is that this could have been achieved decades earlier, and so much bloodshed and bitterness avoided, had Paisley not rampaged through the middle ground of moderate unionism. We would think better of him had his conversion been more timely.

He won’t be missed.
19/11

A MAN FOR ALL SEASONS

Who did Irish television viewers choose in 2001 as the Irishman of the Twentieth Century? The
answer might surprise. None of the Taoiseachs I mentioned in my last piece, nor our Poets. No sports
personalities or rock stars. It says a lot about the public’s ability to be discerning that they chose a
mild mannered former civil servant, Ken Whitaker, still happily with us at age ninety seven.

A strong candidate as the greatest living Irishman, he is now the subject of a compelling biography
by one of Ireland’s foremost biographers, Anne Chambers, which traces his rise in the bureaucratic
ranks, his spells as Secretary ( head) of the Department of Finance, and Governor of Ireland’s
Central Bank (Ireland’s Fed), and his long and very active retirement.

Particularly fascinating is the account of the close working and personal relationships between Ken
Whitaker and two Irish Taoiseachs, Sean Lemass and Jack Lynch and his involvement in the two
defining aspects of their rule, handling the economy and dealing with the crisis in Northern Ireland. In
both of these his role and influence were key, without ever stepping over the boundary lines between
dutiful civil servant and elected politician.

Ken Whitaker was no Sir Humphrey, the character in a 1980s BBC satirical comedy, a bureaucratic
mandarin who shamelessly manipulated his political master. “A brave idea, Minister,” Sir
Humphrey’s response to a ministerial initiative which was either suicidal politically or of which he
did not approve. Sir Humphrey also stood ready to advance the five reasons for doing nothing on any
issue.

Whitaker defined his approach as giving Ministers the best possible unbiased advice when policy was
being considered, and, once decided on, carrying out that policy to the best of his ability, regardless of
personal views. But this could require at times a need for harsh truths, none more so than in the
Ireland of 1957.

The period since 1945 had been disastrous for Ireland, economically and socially. Several appalling
governments had presided over stagnation that threatened to become terminal. Between 1949 and
1955 Ireland’s GNP increased by just 10.5%, compared to 36.5% in the rest of Europe, a Europe
recovering, incidentally, from war damage –something neutral Ireland had been spared. In 1957 2% of
the population – almost 60,000 people – emigrated. My own family was among them, as were some
people reading this column.

De Valera, re-elected Taoiseach at seventy five, seemed oblivious. He was on recent record as
stating that the restoration of the Irish language remained “Fianna Fail’s greatest national objective.”
Economically the country had languished behind high tariffs to protect a handful of inefficient
industries, while agriculture, exporting almost exclusively to Britain, was hamstrung by Britain’s
cheap food policies. This low risk and myopic approach might have been justified to get the country
through the Second World War without starving but by 1957 it had had its day. Irish politicians
seemed never to have heard of Keynes, which had at least the virtue that they did not try to borrow to
the hilt.

There was no lack of ideas. Ken Whitaker had plenty, He was just forty and already acknowledged as
Ireland’s most brilliant civil servant. His rise had been meteoric, culminating in his appointment as the
youngest ever Secretary of the Department of Finance, acquiring on the way a Master’s Degree in
Economics as well a considerable reputation among his peers internationally. His problem was that
politicians simply did not listen.

Then one did. Whitaker’s blunt analysis of the Irish Economy for the new government pulled no punches. “Policies of protectionism were condemning “the people to a lower standard of living than the rest of Europe.” Then the killer. Unless there were new policies, Whitaker wrote, “it would be better to make an immediate move towards re-incorporation in the United Kingdom rather than wait until our economic decadence became even more apparent.”
Harsh truths indeed from a civil servant to his political masters, but words that needed to be said – and listened to. The strong man of the Cabinet, and heretofore leading advocate of protectionism, Tanaiste Sean Lemass, listened and threw his weight behind Whitaker.

The seminal “Economic Development “document, written by Whitaker and a small dedicated team, was approved by the Government during 1958. It was eventually published, unusually, under Whitaker’s name. There would be no doubting who had come up with the new ideas, but once they worked there was honour all round. The ideas could not have worked without political support, and to his credit Lemass provided it.

Whitaker’s ideas were incorporated in a modest economic programme for growth up to 1963 including export- oriented expansion, the encouragement of inward investment and movement towards free trade. The targets were achieved, critically boosting the country’s morale by showing that things could improve. Further programmes followed. The economy, and Ireland, was never the same again, with Lemass, Taoiseach after 1959, providing the muscle.

Chambers’ book is packed with fascinating detail on the political and economic events of the years that followed as Ireland grew economically and, with Ken Whitaker’s sure hand at the tiller, opened up to international organisations and towards the emerging EEC. He was never afraid to speak his mind and rapidly became the close confidant of both Lemass and his successor, Jack Lynch.

Ken, a Northerner from Rostrevor, had developed a close personal relationship with Northern Ireland Premier Terence O’Neill in the course of attending IMF meetings. This relationship led to the ground-breaking O’Neill Lemass meetings in 1965, which initiated dialogue between the two parts of Ireland and fostered the beginnings of official cross border cooperation. Whitaker thought long and hard about how relations between the two parts of the island might be improved.
This stood him – and Jack Lynch, and Ireland – in good stead when O’Neill’s reforms collapsed and the North began to slide towards chaos. A passionate opponent of violence, he presented a thoughtful position paper to Lynch as early as November 1968 pointing clearly to the ruinous costs of any reunification and advocating a long term strategy of good
neighbourliness. In 1969 he moved to become Governor of the Central Bank at age 52, for reasons still unclear. What IS clear is that he and Charlie Haughey, his Minister, did not get on. We can only speculate.

He continued to provide counsel and advice to Jack Lynch, particularly in facing down Haughey, Blaney and co in 1970 – another reason for his country to thank him. And, for a generation, he provided considered and reasoned contributions to the search for peace. He became a senator. He continued to work on for decades in other areas of public service, chairing bodies including prison reform, the Irish language, Irish fisheries, and, at eighty, a constitutional review group. He retains a love for classical music.

His biography is well worth a read, capturing the man, and would make a good Christmas stocking filler. One chapter, “A Man for All Seasons” is clearly one affectionate image the author has of her subject.

Ken Whitaker was born in the Year of the Rising. It would be fitting if he were there to celebrate its centenary. No one deserves the Centenarian Bounty more.

20/10

N.B. I had just reviewed Anne Chambers’ book on Ken Whitaker for the Irish Independent. I had been confined to 850 words for the review, but felt that more should be written about an outstanding public servant at a time when there is so much denigration of the public service in Ireland and elsewhere. This does slightly more justice to the man.