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Ireland's political and cultural magazine
— June - July 2010
must be held at the very
latest in two years time. Very possibly it will
take place much earlier and may be triggered
by the Green Party suddenly discovering that
it has an irreconcilable ‘principled’ difference
with Fianna Fáil on some issue and therefore
has to take the ‘selfless’ decision to walk out of
government. Such cynical opportunism comes
easily to the leadership of the Greens faced with
the need to rehabilitate themselves with former
voters dismayed by their abject capitulation to
Fianna Fail.
It is very likely that the Labour Party will
form a coalition government with Fine Gael in
the wake of that election unless the political
landscape is altered far more radically by seis-
mic movements of working people in opposi-
tion to the savaging of their living standards and
public services. For this reason both of these
parties must now be obliged to be very spe-
cific on the exact economic policies they would
implement in government.
There is a fundamental dishonesty about
Labour’s approach to General Election cam-
paigns. The party puts forward a detailed man-
ifesto for the campaign but pointedly fails to
explain to voters which elements can be conve-
niently dropped after an election to make pos-
sible a coalition with Fine Gael. Equally, it fails
to state which elements of Fine Gael’s manifesto
it may accept in a Programme for Government
even if it clashes with its own.
The economic crisis of Irish and European
capitalism and its consequences will most likely
dominate the coming election. There is a funda-
mental choice to be made by any political party
seeking to be in power. Does it accept the basis
of the present policy which is that working peo-
ple, pensioners and the poor are to continue
to be saddled with the consequences of the
economic crimes and contradictions of a sys-
tem dominated by speculators, developers and
sharks in the financial markets? Or does it fun-
damentally challenge that system and campaign
for an economic, social and political transfor-
mation - revolutionary changes in fact – to the
present set up?
Were the Irish Labour Party true to the ideas
of its founders, including James Connolly and
Jim Larkin, it would adopt the latter course. It
is clear, however, that it will not, but will opt
for the current policy with some cosmetic
changes.
The Labour leadership condemned the sav-
age cuts in the pay of low- and middle-income
public sector workers. That is easy to do. But
then, treacherously, it demanded that these
workers should meekly accept the blow. Leader
Éamon Gilmore criticised the limited strike
action of public-sector workers last year and
also the work-to-rule by members of the Civil
and Public Services Union this year. He stead-
fastly refuses to say whether he supports the so-
called Croke Park deal - claiming this would be
political interference in industrial issues.
This is an incredibly cynical position for the
Labour Party to adopt. The party was founded,
after all, as the political arm of the Labour
movement. This deal represents an abject
betrayal of the trade-union leaders who were
sent into the talks by their members to secure
a reversal of the pay cuts, only to emerge with
the cuts still in place and a whole raft of other
attacks on working conditions besides. Labour
is silent because the party would itself insist
on such a deal if in government.
In Spain, Greece and Portugal the sharks in
the financial markets - international investment
banks and hedge fund operators – are raking in
billions from their manip-
ulation of the current cri-
sis. Working people are
being crucified to pay for
their speculation and for
the crisis in general.
It is so-called Socialist
parties which are imple-
menting the cuts in each of
these countries - socialist
parties with which the Irish
Labour Party is affiliated
and shares an outlook. The
reality is that all the Social
Democratic and Labour Parties in Europe have
capitulated to the pressure of neo-liberal capi-
talism over the last twenty years. All embrace the
market and therefore the rules of the market and
the right of the financial speculators to exercise
the kind of dictatorial power over economies and
society that is now increasingly clear to all.
The political result of all this is a Europe-
wide vacuum on the Left. The genuine Left, those
who seek the ending of capitalism and socialist
change are therefore confronted with the task of
constructing a new mass party of working peo-
ple which will seriously fight for this; and that
means also standing four square in active oppo-
sition to the present attacks on living standards,
jobs and public services.
Joe Higgins is an Irish Socialist Party politician. He was
elected as a Member of the European Parliament for the Dublin
constituency at the 2009 European Parliament election.
“all the Social Democratic and
Labour Parties in Europe have
capitulated to the pressure of
neo-liberal capitalism”
Joe Higgins
Labour sold out long ago
It doesn’t want economic, social
and political transformation
of establishing the
Eurozone years later was to reconcile France
to German reunification following the USSR’s
collapse.
This political agenda used economic means
that most economists who were not EU-ideologues
regarded as quite unsuitable for that purpose. The
irrationality of this ill-conceived and doomed
project is now playing out before our eyes.
The value of having one’s own currency
and with it the ability to follow an independent
exchange rate policy was shown decisively in
Ireland from to .
This was the only period in the history of the
Irish State when we followed an independent
exchange rate policy and in effect floated the Irish
pound, giving us a highly competitive exchange
rate. This boosted Irish exports, inhibited compet-
ing imports and gave us the “Celtic Tiger” years of
high economic growth.
From the s to the Irish pound was
pegged at par with sterling, reflecting the conserv-
ative economic outlook of those then running the
State. This gave Ireland an implicitly over-valued
currency, which inhibited economic growth and
employment in those years.
In we broke the link with sterling, but
tied ourselves instead to the Deutschmark in the
European Monetary System (EMS) in preparation
for Economic and Monetary Union (EMU). Britain
did the same, but the markets forced Britain to
devalue in September .
When this happened Ireland stuck with the
Deutschmark, so that by January the Irish
pound was worth pence sterling. All hell
then broke loose, for our over-strong currency
was ruining the State’s foreign trade, which was
mostly with the UK and USA.
This forced a devaluation of one-tenth from
to pence sterling in February . We
had a similar devaluation vis-à-vis the dollar and in
effect floated the Irish pound. This floated down-
ward for the rest of the s. It was a nominal
pence sterling when we adopted the Euro..
At the time the Republic did roughly one-
third of its trade with the other Eurozone coun-
tries, one-third with the UK and one-third with
the USA and the rest of the world.
The devaluation gave us a highly com-
petitive exchange rate. This in turn encouraged
foreign and domestic investment. Our annual eco-
nomic growth rate, which had averaged -% a
year from the s to the early s, doubled
to % in -. It averaged % a year between
then and . In the first years of Euro member-
ship the value of the Euro fell vis-à-vis the dollar
and sterling, fortuitously adding to Ireland’s eco-
nomic competitiveness.
With supreme folly Ireland’s ultra-Europhile
politicians decided to join the Eurozone in
on the assumption that the British would join it in
a year or two, but they did not and will not.
The Eurozone will give us permanently lower
interest rates, said the ESRI’s John FitzGerald
at the time. Eurozone interest rates were low
at the time to suit Germany and France, which
were then in recession. Ireland was in boom and
needed higher interest rates to prevent price bub-
bles. Instead we halved our interest rates on join-
ing EMU, giving huge impetus to the borrowing
binge that followed in -.
Now we are caught inside the Eurozone with
an over-valued Euro exchange rate as the sterling
and dollar areas with which we do the greater part
of our trade float their currencies downward and
we cannot do likewise.
The prime culprits in this are the Euro-
federalists in Iveagh House and Merrion Square
who advise Foreign Minister Mícheál Martin,
Finance Minister Brian Lenihan and their pred-
ecessors, backed by their ideological cheerlead-
ers in the editorial office of the Irish Times. They
include the Grand Panjandrums of Irish Euro-
fanaticism: Garret FitzGerald, Peter Sutherland,
Alan Dukes, Pat Cox, Brigid Laffan, Brendan
Halligan, Ruairi Quinn and David Begg, and their
acolytes in the leadership of our political parties
and in the media.
The lesson of the Euro crisis is that the struggle
for national independence and national democ-
racy should have priority over everything else
until these have been attained - and that to attain
them Irish democrats, whether on the Left, Right
or Centre of politics, need to unite, or at least cam-
paign in parallel.
In the present context this means raising the
demand for the State to leave the Eurozone so as to
restore an independent Irish currency. We should
join the other EU States that are in the EU but are
not trapped in the Eurozone and restore our eco-
nomic sovereignty.
“There is no example in history of a last-
ing monetary union that was not linked to one
State” , said Otmar Issing, chief economist of the
Bundesbank and later director of the ECB. And
of course there are many examples of States that
were both monetary and fiscal unions but which
have disappeared into history because the soli-
darity that bound their component nationalities
and regions together, sometimes for long periods,
broke down. Where now are the USSR rouble, the
Czechoslovak crown, the Yugoslav dinar or the
Austro-Hungarian thaler?
Unless we leave the Euro, all the media rheto-
ric about delinquent bankers and developers, or
business interests bemoaning the credit crunch,
or trade unions calling for priority to be given to
jobs and investment, are so much blowing against
the wind.
Anthony Coughlan is Director of the National Platform EU
Research and Information Centre, Dublin
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— June - July 2010
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