Workers Hammer No. 219

Summer 2012


EU austerity in Ireland

Under heavy pressure from EU leaders, the Irish government won approval of a “Fiscal Treaty” in a referendum on 31 May. The treaty enshrines in the constitution the vicious attacks on the working class that is a condition of the bailouts of the banks. Only half of those eligible bothered going to the polls, and working-class districts in Dublin voted heavily against the measure. The Irish Labour Party called for a “Yes” vote, shamelessly promising that a “Yes” vote is a vote “for economic stability and economic recovery”. The following article, reprinted from Workers Vanguard no 1003 (25 May), is based on a report written before the referendum by a comrade in Ireland.

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Our last article on the country, “Ireland ravaged by European economic crisis” (Workers Hammer no 213, Winter 2010-2011), was written when the Irish government had just negotiated an 85 billion euro bailout from the EU, to be paid back at exorbitant interest rates. We described the National Recovery Plan, the austerity programme that was drawn up at the time, as the “harshest attack on the living standards of the working people in the Irish state’s history”. The attacks focused on public sector workers, people on welfare, those working minimum-wage jobs and students. These assaults are reminiscent of the last financial disaster in Ireland in the late 1970s and ’80s, but then the government had the option of devaluing the currency, which it did repeatedly. The euro takes that option off the table.

Of primary importance to the EU was saving the banks. It became very clear that the property price bubble in Ireland had been created by the massive extension of credit not just by Irish banks but also German, French and British banks. The bubble burst in a spectacular way, with property prices now down around 50 to 60 per cent. Panic ensued among European bankers, who knew that this wasn’t just a “bad day at the races” but that the amounts involved would cause banks to collapse and “contagion” to spread, especially to the stronger economies at the heart of the EU.

In February 2011, shortly after the National Recovery Plan was implemented, the country went to the polls in a general election. Fianna Fail, the bourgeois party that has run the country for most of the time since the 1930s and that is historically linked to small farmers and much of the working class, was badly beaten in the elections. The turnout was very high, with people venting their anger at the party blamed for the financial disaster. Many of the small farmers turned to the Republicans of Sinn Fein, who are seen as a more radical version of Fianna Fail. Sinn Fein did well, but not as well as they had hoped. Working-class areas voted in exceptionally high numbers of Labour Party TDs [members of parliament]. Five seats were won by the United Left Alliance (ULA), an electoral lash-up of reformist groups. Among them are the Socialist Party (SP), affiliated with the Committee for a Workers’ International; People Before Profit, which is run by the Socialist Workers Party (SWP), followers of the late Tony Cliff; and the Tipperary-based Workers and Unemployed Action Group.

The current government, which formed after those elections, is a coalition of the right-wing bourgeois Fine Gael party, which is traditionally supported by business and big farmers, and the Labour Party. Commenting on the usefulness of the Labour Party to the bourgeoisie, we observed: “Promising ‘to give the people the leadership required to turn this country around, rebuild the economy and restore national morale,’ Labour is best placed of all the parties to try to convince the working class to knuckle down and accept austerity.” And that has been exactly its function, with the connivance of the union leadership.

The current government has made the previous one look tame. Unemployment is officially 14 per cent, up from about four per cent in 2008. Even then, only those receiving the paltry twelve-month unemployment benefit are counted. Furthermore, nearly one per cent of the population emigrated last year alone. The “troika”, made up of the European Commission, the European Central Bank (ECB) and the International Monetary Fund (IMF), laid out the course to be taken. Acting in the interests of the Irish bourgeoisie as well as the European imperialists, the Fine Gael/Labour government got busy slashing unemployment benefits, welfare payments, single-mother allowances and child benefits and depriving thousands of free medical care.

The “troika” has also demanded the imposition of additional taxes, including a new property tax that was initially set at 100 euros per household regardless of wealth, to fund services and utilities in Ireland. It also insists that water, which had been a public service, be paid by each household separately. Fine Gael has been relishing the introduction of these taxes and charges that involve meaningless amounts to their wealthier base but are punitive to the working class and the poor.

A powerful expression of the anger in the country was the opposition to the introduction of the 100 euro property tax. In order for the government to collect the charge, it first needed to register all the households. Out of an estimated 1.8 million households, one million had refused to register by the deadline, despite talk of extreme fines. Meanwhile, the property tax is due to be raised enormously next year.

Fine Gael never misses an opportunity to embarrass Labour politicians, making them look like the lapdogs they are. Phil Hogan, the Fine Gael minister responsible for introducing these taxes, announced the installation of water meters in every house in Ireland during the Labour Party’s annual conference. Recent polls show that this strategy is working quite well for Fine Gael. It has only lost a few percentage points, while working-class disgust at Labour has translated into increased support to Sinn Fein, which is now polling at over 21 per cent, making it potentially the second largest party in the country.

The austerity treaty

Among the measures that the EU has cooked up to try and protect its euro is the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union. Economists call it the “Fiscal Treaty”, the government here calls it the “Stability Treaty”, while those opposed, quite rightly, call it the “Austerity Treaty”. First on the chopping block will be the working class in the periphery EU states, with the working class of the imperialist countries like Germany and France next in line.

Ireland is the only country in the EU where this treaty is to be put to a referendum, since in Ireland changes to the constitution require a popular mandate. In the event of a “Yes” vote, it will become unconstitutional for the Irish state to run a deficit over a preset level. As such, it is unsurprising that the government is not all that confident of getting the “Yes” vote demanded by EU leaders, who are not happy about the treaty being put to a referendum. Currently, all discussion on the upcoming referendum is overshadowed by the election results in France and Greece, and the German reaction to them. In Ireland, there is a strong sense of just how far down the food chain the country is when it comes to putting pressure on the EU.

In early April, an IMF spokesman suggested that the Irish government should consider some degree of “debt restructuring” and measures to ease the burden on mortgage holders. Within a few days, the European Central Bank sent in Joerg Asmussen, an ECB official and member of the German Social Democrats, to make it very clear that the ECB disagreed. According to the Irish Times (13 April), Asmussen gave a speech in which “he told the audience that Ireland’s economic woes are mostly of its own making”. Asmussen warned: “Any desire to offload this debt could have dire consequences.”

And in case anybody was in doubt about whose money they are talking about, the German Christian Democrats sent over their economic policy spokesman, Joachim Pfeiffer, the same day to make the same points, if in a little more touchy-feely manner. Pfeiffer praised Ireland as a “model student”. What he wants to see is: the reduction in public debt, the restoration of competitiveness and the stabilisation of financial markets. What this means in practice is slashing public sector wages, working conditions and pensions, increasing the use of temporary contracts and paying back all the money while not raising taxes on businesses — or burning the banks.

Not to be outdone in the threats department, the Irish government has been painting a catastrophic picture should the Irish people vote “No”. Supposedly, Ireland will be cut off from world financial markets, public sector wages will go unpaid, foreign companies will up and leave, etc. The Fine Gael Minister for Finance, Michael Noonan, has promised an extraordinary budget that would increase taxes on everything should the “No” vote prevail. Of course, a “Yes” vote, which would tie Ireland to the financial restraints of the treaty, will mean all that and much more. Martyn Turner, the cartoonist at the Irish Times, captured it quite nicely: “If we vote yes…we won’t be allowed to borrow any money. If we vote no…nobody will lend us any money.”

Capitalist austerity and the working class

A recent opinion poll in the Irish Times (19 April) shows slightly more support for a “Yes” vote (30 per cent) than “No” (23 per cent), with a whopping 39 per cent still undecided. There is quite a strong class differentiation in these polls, with working-class areas very much opposed to the “Austerity Treaty”. Much of big business is campaigning for a “Yes”, with posters from the Irish Business and Employers Confederation all over the place.

Fear plays a big part among those polling “Yes”, particularly among the urban petty bourgeoisie and small farmers. Images are conjured up in the press of Ireland returning to the dark days of the 1950s and ’60s. Farmers fear losing all subsidies from the EU, and they don’t fancy competing on the open market with India and China.

Under pressure from their base, four of the larger unions in Ireland have come out counselling their members to vote “No”. Disgracefully, but not surprisingly, Jack O’Connor, the leader of Ireland’s largest union, the Services Industrial Professional and Technical Union (SIPTU), has said it will recommend a “Yes” vote on the condition that a stimulus plan is also put in place.

Despite the anger among workers, there has been very little in the way of class struggle. Prior to the February 2011 general elections, the trade unions mobilised huge demonstrations, including a march in Dublin of 180,000. Since then, demonstrations have been small, as union leaders have helped to maintain social peace. One example is Vita Cortex, a foam mattress manufacturer that shut down its operation in Cork. Workers occupied the factory and refused to let the bosses remove equipment. SIPTU leaders limited the struggle to getting the workers their statutory redundancy payments, while allowing the other Vita Cortex factories, including in Northern Ireland, to continue to operate as normal.

Amid the recent attacks on the highly unionised public sector workers, nurses, teachers and social workers are regularly vilified in the press as overpaid and living cushy lives. Yet the leadership of the unions has made no attempt at a class-struggle response. Faced with an earlier round of budget cuts, the trade union bureaucracy signed the 2010 Croke Park agreement, which effectively renounced class struggle until 2014. Such “partnership” agreements ensured that wages remained low during the boom years so as not to endanger the Celtic Tiger economy. Now they are being used to take away any benefits that workers still have.

The left and the treaty

The “Fiscal Treaty” should be voted down. But while the United Left Alliance is calling for a “No” vote, it does not link this opposition to the need for class struggle against the attacks of the Irish bourgeoisie and the EU robber barons. Instead, the SP and SWP reformists in the ULA seek to tinker with the terms of austerity as a part of applying pressure to reform the EU. In a 2 May leaflet, the SP’s Joe Higgins states that a rejection of the treaty would be “a powerful demand for a change of course”. Or as the 30 April SWP leaflet titled “The Fiscal Treaty Demystified” declares: “If you believe in a fairer solution to the economic crisis Vote NO.” Neither can bring themselves to utter the word “imperialism” in those leaflets.

So committed are the reformists to offering a solution to the crisis within the framework of the capitalist system that the ULA TDs Clare Daly and Richard Boyd Barrett jumped at the opportunity to meet with representatives of the “troika” in Dublin in January. When given an audience, they presented these imperialist bloodsuckers with their suggestions for a less onerous bailout policy for working people, from higher taxes on the rich to preventing the sale of public assets.

Like the Labour Party, to which it is an auxiliary, the ULA offers no challenge to the rule of the capitalists and bankers. What is needed is a revolutionary workers party that fights for class-struggle opposition to capitalist austerity and seeks to mobilise the working class to overthrow the whole wretched capitalist system. Such a party will be committed to fighting for a Socialist United States of Europe.