A Celtic Tiger for some, but a kitten for most?

Ireland is in recent years engulfed by the crisis in the euro-zone that affects many other European countries. The country went from being one of the shining examples in the EU, to receiving an EU/IMF bail-out loan to avoid bankruptcy.

Many new EU states from Eastern Europe aspired to become “new little Irelands,” but perhaps all was not what it seemed during the Celtic Tiger booming years. Not everyone benefited equally and the surge of wealth revealed the fragmentation of the Irish society. This era also revealed the reality and constant changes of the Irish political life, ideology and mentality.

With the Irish economy booming during the past decade, it seems incredible that just twenty years ago the country was in a state of economic collapse. (1) That did not happen overnight. Ireland had to go through a series of transformations and reforms, in order to reap the benefits of its economic “Tiger”. But some of them eventually lead to alteration of its social structure and even contributed to its economy’s eventual demise.

During the ‘40s Ireland introduced control by professional management through the County Management Act. So County managers had the incentive to build on the strengths of local communities and probably had better prospects in encouraging local development. (2)

Once professional management was introduced into local government, it was reasonable to assume that this structure would be used to make the administration more responsive to local needs. Instead, the central government progressively reduced the powers of local government over the succeeding years. (2)

The local role was diminished and the whole drift of policy was towards centralization. There it developed a political system, welfare oriented, centralized, bureaucratic and controlled by competition among highly organized elites. For the ordinary citizen, they were remote, distant and impersonal. (3)

So the politics of this democratic system are above all the politics of compromise, adjustment, negotiation and bargaining. Carried out by professional and quasi-professional leaders who constitute only a small part of the total citizen body. Politics that is un-ideological and even “anti-ideologic.” (3)

This system and its ethos, marginalizes small, rural and local communities. If we look at the uneven spread of wealth among Ireland’s counties and also its social groups, then we see clearly that the country is being governed by a form of elitism.

County Donegal for example never saw the development that Dublin had and now is one of the worse hit regions in Ireland by the crisis. Unemployment there is far higher than many other counties and emigration is very common.

So having first failed to use local administration as a means of bringing democracy down to grassroots level, the centralization of the Irish government led in fact to a style of decision making that became removed from democratic control. (3)

In turn, this has led to a decline in the parliament’s ability to be an effective critic of policy. The British style Cabinet government belittles the role of the elected representative. Policy is made and public affairs are decided by ministers and their civil service advisers. Always after consultation with the spokespersons of organized groups, appropriate to the matter under review.  (3)

All of this is a long way from the people’s elected representative or from the representative assembly. Clearly, Ireland’s politicians do not appear to believe in the participation of the people in the making or influencing of decisions that affect their lives. For them, community empowerment is a very delicate matter.  (3)

But Ireland is not a sovereign nation anymore. Since it joined the EU, it has willingly given up some of its sovereignty to be part of this club. And with the help of Europe and foreign investments from the USA, its multinational companies and policies that favored the global capitalist system, Ireland became one of the most globalized economies in the world.

How have this contributed to the country’s transformation? Globalization means that many economic and cultural activities are increasingly played out in the world as a single place, rather than within national borders. While the nation state is still a very viable entity, power is increasingly placed in the hands of unelected policy-makers. (4)

In other words, all decisions in Ireland are not taken always according to the Irish people’s wishes or needs. Some are taken with the cooperation or compromise of the Irish elites with the European or global ones. The purpose of course is to maintain the current economic, corporatism and economic system that has been ruling our planet progressively since WW2.

After the war, we have seen the development of an international order, initially under US hegemony. Firstly the creation of an international monetary system based upon the dollar, enabled the movement and profits and funds to a greater frequency than direct investment. (5)

Secondly the post-war settlement in Europe, a politically imposed one based on Marshall Aid and NATO, tied Western Europe to the USA. (5) Ireland, in order to get access to financial aid through the Marshall plan, had to reform and open its economy to foreign investment.

But inviting foreign investment is problematic, because it removes a crucial component of national ideology, namely that the people control their economy. (5) Ireland’s open economy and reforms, lead to the industrialization of the former conservative and farming country. Its supporters utilize the frameworks of such transformation from a “modernization “or “development” theory. (6)

However, from analyses produced by Marxists and radicals, there is a danger that the banalities of the bourgeois thought will be replaced with an equal problematic form of Marxist left-wing nationalism. That treats Ireland as an extension of the world capitalist system and the Irish state as the instrument of a “comparador” bourgeoisie, in direct alliance with foreign capital. (6)  

And that has happened with the dominion of the Fianna Fail party in the Irish politics for the past decades. They are a traditionally “leftist” populist party, which was the main actor in Ireland’s rise to prominence, but also its decline.

With policies that helped the perpetuation of their dominance in Irish politics, they have contributed to the creation of a “bubble” economy. They have overspent on social security policies to maintain the status quo of the various Irish classes. But their dependence on foreign investment to fund their spending left the country also vulnerable, to the global economy, the markets and their volatility.

To achieve foreign investment they had to end national protectionism. By cutting the state-workers link and with external dependent industrialization, they cold fragment the workers from one another. (7) Thus Ireland had never a strong Union organization and presence, especially on the private sector.

According to Nicos Poulantzas, a Greek Marxist political sociologist, the growth of direct foreign investment in the dependent areas of Europe, such as Greece and Spain, has been to stimulate the development of what he terms “an internal bourgeoisie.” (8)

In his work Poulantzas presumes that the state is constantly involved in the negotiation of compromise with secondary class elements, and in the forging of hegemonic strategies, through which the rule of capital may be retained. The state realizes this mission through its capacity to organize and unify the dominant power bloc, by permanently dividing the dominated classes. (9)

That is evident in the Irish political reality. The State is constantly negotiating certain agreements with the unions, like in the case of the Croke Park Agreement. It is an agreement between the Irish Government and various public sector unions. Against a background of layoffs and pay cuts in the private sector, the government agreed not to impose public sector layoffs or further public sector pay cuts. (10)

In return the public sector unions agreed to call no industrial action, and to cooperate on wide scale reforms of the public sector aimed at increasing efficiency. The Irish government is now looking to amend what has been agreed, as it is looking to cut the salaries of the public servants. (10)

For the elitists, real decision making power will always be concentrated in the hands of a small number of political decision makers. And they will be directing the actions of a large scale bureaucracy to achieve that. (11)

Elitism, which was revived around the turn of the 20^th century by mainly European critics, has challenged the optimistic expectations about a participatory democracy, which has been expressed by socialists and liberal thinkers in during the previous century.  (12)

The German theorist Robert Michels wrote of an “iron law of oligarchy.” Under which effective decision-making power in any large scale organization would always come to rest with a small elite group, to the expense of all rank-and-file members. (12)

In Ireland that is evident. A small group of rich people made a fortune out of the Celtic Tiger years. Bankers, property developers and various social partners were the ones who benefited the most, when immigrants, the poorer classes of the Irish society, the workers, the disabled and pensioners were the losers.

It is clear that the discourse in Irish politics rarely acknowledges its neo-liberal ideological content. It is also obvious that social partnerships were not about democracy. The institutional arrangements to deepen democracy, did not work for it. (13)

When the Fianna Fail government introduced social partnership in 1987, it was not long to realize that it was giving business virtually anything it asked for. Like low corporation and capital taxes, low social insurance contributions and a virtually unregulated labor market. (13)

Community and the voluntary sector became a tool of welfare provision, rather than developmental active citizenship. The ability and voice of the civil society to criticize policy and lobby for social change were muted. (13)

So while the Marxists believe that the state is displaced expression of a society divided by class and exploitation, the neo-liberal thinkers see the modern state as an increasingly domineering and malign influence, imposing itself upon society. (14)

They echo the fear that has been voiced by Hobbes, that the modern state would come to be so powerful and so authoritative that it would crush all freedom and autonomy in civil society. The rise of the neo-liberalism was the consequence of the pursuit by parties of all persuasions of a broadly social democratic agenda. (14)

In this agenda the state intervened ever more extensively in society, to seek to increase levels of economic activity, to redistribute economic growth and to underwrite the welfare status of its citizens. States extended their policies into more areas of social life, including the “intimate” sphere of the family. The more they intervened, the greater the resources it had to extract from the society. (14)

And so after the accumulation of failed government interventions and the raising of the resources to fund them triggered a process of government overload. States were extracting more and more resources from society, as to impose their unsuccessful agenda of reforms upon it. (15)

Ireland has a passive citizenry with relatively a low voter turnout and low levels of political party membership. There is a dominance of multinational capital over the weakened trade union movement, whose base of support was more and more restricted to public sector workers. On the contrary, there is an increasing rising of the international capitalist class. (13)

The Irish political elite allowed the country’s economy to inflate and behaved selfishly. The government, following the global trend of absolute freedom and independence of the banks, did not intervened in the country’s financial system. The Central Bank of Ireland acted irresponsibly and did not make any effort in regulating the banks, thus not doing the job they were appointed to do.

The Irish government was then forced to make the tax payers to pay for their mistakes and those of the bankers. But this model is not confined in Ireland only. It benefits transnational economic and financial elites and in fact, empowered by them. What will the future of the country be and can any real reform take place, when the inequality is promoted and institutionalized by the Irish government itself?





References:

1)      Why Ireland’s economic boom is no miracle. By Brian Beary. The Globalist. (http://www.theglobalist.com/storyid.aspx?StoryId=6172)

2)      Ask not for whom the Tiger roars. Fintan Tallon. Oak Tree Press, Dublin.2000. Page No 18.

3)      Ask not for whom the Tiger roars. Fintan Tallon. Oak Tree Press, Dublin.2000. Page No 19.

4)      What did we do right? Michael J. O’Sullivan and Rory Miller. Blackhall Publications. 2010. Page 8-9.

5)      Ireland: divided nation, divided class. Austen Morgan and Bob Purdie. Ink Links. 1979. Page 55.

6)      Ireland: divided nation, divided class. Austen Morgan and Bob Purdie. Ink Links. 1979. Page 59.

7)      Ireland: divided nation, divided class. Austen Morgan and Bob Purdie. Ink Links. 1979. Page 66.

8)      Ireland: divided nation, divided class. Austen Morgan and Bob Purdie. Ink Links. 1979. Page 67.

9)      The Modern State. Christopher Pierson. 2^nd edition. Routledge, Taylor and Francis Group. 2000. Page 62.

10)  Croke Park Agreement. The Wikipedia. (http://en.wikipedia.org/wiki/Croke_Park_Agreement)

11)  The Modern State. Christopher Pierson. 2^nd edition. Routledge, Taylor and Francis Group. 2000. Page 68.

12)  The Modern State. Christopher Pierson. 2^nd edition. Routledge, Taylor and Francis Group. 2000. Page 67.

13)  Dr. Heikki A. O. Laiho, 2013 notes, on Exploring Political issues. DBS. Based on Kirby and Murphy.

14)  The Modern State. Christopher Pierson. 2^nd edition. Routledge, Taylor and Francis Group. 2000. Page 63.

15)  The Modern State. Christopher Pierson. 2^nd edition. Routledge, Taylor and Francis Group. 2000. Page 64.

A European Ministry of Finance?

The ongoing economic crisis in Europe and its currency creates an unprecedented need to find solutions. Yet somehow the way our leaders are dealing with it, has only caused a great divide among the European nations. There has been widespread criticism about the decisions our leaders took and the recent developments in Cyprus are just one example. 

  “I cannot remember that European policy makers have seen anything coming throughout the euro crisis,” said Paul de Grauwe, a professor at the London School of Economics and a former adviser at the European Commission. “The general rule is that they do not see problems coming.” (http://www.nytimes.com/2013/03/27/world/europe/europeans-planted-seeds-of-crisis-in-cyprus.html?pagewanted=all&_r=0)

If that is true, then how can we trust our leaders to come up with a plan that actually works? Our future is in their hands and they are seen to constantly disagree, bicker with each other while playing dangerous power games. The German leadership is pulling its weight in the euro club and we see Mrs Merkel and her finance minister Mr Schauble, expressing their opinions on what other states must do. As if they were elected by every European to lead them, so they think that they can speak for us all.

If anything else this crisis just exposed all weaknesses of the European elites and the real "state of the Union!" It is clear now that the only solution to save the euro and Europe's economy, would be something that our governments are trying so desperately to avoid. More "European" governance and a harmonized European economy. 

This is not a new idea. In 2008 and the beginning of the crisis French President Nicolas Sarkozy, called the Eurogroup to be replaced by a "clearly identified economic government" for the euro-zone. Stating it was not possible for the euro-zone to continue without it. The euro-zone economic government would discuss issues with the European Central Bank, which would remain independent.

This government would come in the form of a regular meeting of the euro-zone heads of state and government, similar to the European Council. Rather than simply the finance ministers which happens with the current Eurogroup. He said that "only heads of state and government have the necessary democratic legitimacy" for the role. This idea was based on the meeting of euro-zone leaders in 2008 who met to agree a coordinated euro-zone response to the banking crisis.


This is in contrast to an early proposal from former Belgian Prime Minister Guy Verhofstadt who saw the European Commission taking a leading role in a new economic government, something that would be opposed by the less integrationist states. Sarkozy's proposal was opposed by Eurogroup chair Jean-Claude Juncker, who did not think Europe was ripe for such a large step at the time and opposition from Germany killed off the proposal. 

Mrs Merkel approved of the idea of an economic government, but for the whole of the EU, not just the euro-zone as doing so could split the EU and relegate non euro-zone states to second class members. (http://en.wikipedia.org/wiki/Euro_Group)


I agree with Mr. Verhofstadt's and Mr. Sarkozy's proposal, but I disagree that the control of the euro-zone governance should be given to the hands of the EU Commission. In my opinion we need an EU or euro-zone ministry of finance. The Commission is not elected by the citizens and should not have so much power, it is not accountable to us. If this new body will have to answer to any EU body, that should be the European Parliament. 

We should have a legitimate and elected by the people head of this new "ministerial" position, so that it would be answerable to them. Right now we give way too much power and importance to the banks and look where they got us. Do I want a strong powerful European Central Bank with no control by the European Parliament, or at least some accountable elected politician? No.

It was that absolute freedom of all the Central Banks across Europe that lead us to this crisis. In Ireland, many scandals came out of the corruption and tragic mistakes that the officers of the Irish Central Bank made. They were simply not doing the job they were appointed to do, they were not regulating the banking system. And in many cases they were turning a blind eye to what was happening in the country. 

I agree that we need to keep the euro but only if the euro-zone becomes more transparent and democratic. Why have a super powerful ECB that will answer to no elected accountable politician? A European "Ministry" of finance would be a solution, thus further unification. Otherwise let's forget the whole thing as it does not work, for the people at least. We have set up the euro while having no single government or economy in Europe.

There are of course already two  bodies that are helping Europe manage its finances. The so called Eurogroup and the Ecofin. Prior to the Lisbon Treaty, the Eurogroup had no legal basis. This had some advantages as, because it was not a Council formation, it is smaller and more informal resulting in more constructive and confidential discussions than the full Ecofin Council. It also means that it does not have the usual rotating six-month presidency meaning its work is streamlined and strengthened when compared to the other institutions. (http://en.wikipedia.org/wiki/Euro_Group)

The Eurogroup sounds like a good potential basis for the formation of this new "ministry." Unlike the Ecofin that meets once a month and its presidency is rotating every six months, the Eurogroup has a permanent president. The only trouble with both groups is that they are comprised by ministers of our governments. So inevitably there will be a certain amount of antagonism among the ministers. Is this perhaps the true reason that the Eurogroup came under so much criticism over its handling of the Cyprus financial crisis?

We will have to create a body that is independent from our national governments and answerable to the European Parliament. The Ecofin group is a part of the European Union Council, thus is controlled by them. If Europe has managed to agree on a permanent representative of a Common Foreign and Security Policy (CSFP), then why not do it for its economy that is in tatters for almost 4 years?

A few years back Europe was not ready for such move, as Mr. Juncker stated. But the crisis seems to be worsening and engulfing one by one all EU states. We feel that our national governments are more trustworthy to deal with it and we are becoming more and more skeptical of the EU institutions.

But if we really have a closer look, it was actually our national governments and politicians that did and keep doing the worse damage to our economies. We should not have any country and its government or minister of finance, notably Germany, dominating European politics.

For smaller states a better deal is in hand in the form of a federal formation. Either we all decide the future of our economies together, or we are told what to do by the leadership of one or two powerful European "partners." What do you think is best?

Defending European values and culture.

I grew up in a Europe dominated by American or "Anglophone" songs and movies. But I remember when I was young, I was exposed at home to music from France, Italy and Greece, apart from the popular English speaking
one. So what ever happened to European music and movie industries now-days?

When you are exposed to music or any form of art other than your native from a young age, you eventually become "bi-cultural." So when most of Europe is consuming mainly American music, films, television programs and series, then how will our future generations identify themselves?

In the past Europe was the birth place of the so called "Western civilization," with centuries old creativity and heritage so abundant, that made our continent dominant in most arts. Europe contributed to the global heritage hugely, but now it is merely a follower.

The "Western" culture is today  mainly expressed by the American or Anglophone productions, while the rest of Europe is apparently the consumer of these products with few exceptions. Our ruling elites possibly believe that by "Americanizing" us all, they create a common culture for Europe to help with its unification.

If I was exposed in Romanian movies when I was a young kid for example, possibly I would speak Romanian by now. Or at least I would have a very close affiliation with anything coming from that country. But I was exposed in American movies, so I am writing this article in English. When you come in contact from a young age with another culture, by watching movies and TV series produced by this culture, then you adopt it.

In many countries of Eastern Europe that were under Soviet influence, the affirmation that they are now "Western" comes with a flood of Anglophone songs and movies into their market. Just as it happened in Greece in the past, when the country needed to be "Westernized" and stay under European or American influence.

But why don't we instead of relying on USA to "Westernize" us, promote our own arts and heritage by selling it from one to another? Besides, aren't we Westerners already? We know more about New York from all the films we are watching, than Warsaw, Prague or Milan for example.Never mind the fact that we do not know much about some of the new EU states that joined recently, or are going to join soon.

European integration should not be just financial or political. If we want to succeed in it, we will also have to invest in culture as well. Culture and heritage is what binds people together, not an economy. We could start watching each others cinema and television programs. Listen to each others music. Organize pan-European art festivals, promoting and investing in art in all EU states.

We invest and subsidize almost everything in Europe, why can't we treat our art as a commodity as well? The Americans are making millions in revenue from selling their films and music to us. From royalties to everything that is attached to their entertainment industries.

If we do so we enforce and safeguard our arts, culture and heritage, individually as countries but also as a continent. We ensure the continuation, revival and influence of European arts in the world stage, but also that of our values. Our values are reflected in our arts and passed on through them.

And by exposing ourselves to each others culture we get to know each other too, promoting European integration. Perhaps in the end, we will create a common European heritage that will have a little bit from every corner of Europe. And that can be far more binding, than any currency or single market.

The Irish position of the new CAP.

Roughly 40% of the annual EU budget is currently taken up by CAP, the well-known system of agricultural subsidies and programs that first came into force in 1962. The EU’s new budget for 2014-2020, the Multiannual Financial Framework (MFF), is currently under discussion. The Commission has proposed funding of almost €383 billion for CAP funding for this period, which is significantly less than the €410 billion allocated under the 2007-2013 MFF.

 

For Ireland, along with many other EU Member States, adequate EU CAP funding is crucial, as it provides an essential support for the agriculture sector in the respective economies. In Ireland, this sector provides an essential platform for our largest indigenous industry, the agri-food and drinks sector, which accounts for 18% of our total industrial output, employs approximately 150,000 people, and generates an annual output of about €24 billion. This sector also makes a significant contribution to our exports. For this reason, the Irish Government is trying in current MFF negotiations to protect CAP funding and keep it more in line with current levels.

 

Multiannual Financial Framework (MFF) Negotiations

It is important to note that CAP negotiations can only take place within the general context of MFF discussions, as the vast majority of payments awarded under Heading 2 of the MFF are, in practice, given to the agriculture sector and CAP funding. This is due to the fact that Heading 2 addresses the use of natural resources in sustainable growth. With this in mind, the recent special Summit of the European Council on the 22 and 23 November must be considered. The positions of the various Member States were found to be too far apart to allow a budget to be drafted that was an acceptable compromise to all 27 Member States. The MFF will be discussed again at the European Council in early February 2013, and will therefore have a key bearing on the prospects for agreement on CAP reform during the Irish Presidency.

 

No consensus position was reached at the special Summit largely because the current economic crisis has seen the positions of various Member States split into two camps: those proposing cuts to EU contributions, and against the EU cutting the rebates returned; and those opposing any cuts to cohesion and other funding, such as agricultural. Ireland is firmly in the latter group. In practice, most funding under Heading 2 is allocated to the CAP, under Pillars 1 and 2. Pillar 1 covers ‘Direct Payments and Market Supports’, and Pillar 2 covers ‘Rural Development’. This briefing will examine Ireland’s position under these separate headings.

 

Implications for Ireland

By this time next year, Ireland will have received more than 1.4% of the total EU budget (over €14 billion), for the 2007-2013 period. Of this, €12 billion will come under the CAP, including over €1 billion per annum in Direct Payments to farmers under Pillar 1, and roughly €348 million in rural development funds under Pillar 2. When the Commission budget blueprint was released in 2011, Ireland was of the view that it represented a good starting-point for negotiations. However, there was concern that the amount of money proposed in the blueprint for agriculture spending was the minimum amount that would be necessary. These concerns still hold.

 

The Irish Position on Pillar 1 (Direct Payments and Market Supports)

For Ireland, the key issues relating to Pillar 1 in the MFF and CAP reform are:

 

The size of the CAP budget

From the outset the amount of money proposed for agriculture spending was viewed as the minimum necessary. In this context, throughout these negotiations Ireland has continued to resist pressure from some Member States for further cuts in the agricultural budget.

 

How the EU will allocate the CAP funds between Member States

Ireland is generally happy with the method proposed for the distribution of direct payments between Member States. The Commission has not yet indicated how it will distribute rural development funds, and Ireland is arguing that it should get its fair share, based on past performance.

 

Commission blueprint proposals for connecting CAP funding to environmentally friendly practices in the agricultural sector

The Commission blueprint states that 30% of CAP funding should be tied to ‘greening’ efforts in the agricultural sector, and that it should be flat rate in nature. Ireland would have concerns about the accelerated move towards flat rates that this would involve, and instead of a separate payment would prefer the ‘greening’ element to be a percentage of each individual farmer’s overall direct payment. Ireland would also like to see changes made to the three individual ‘greening’ criteria (permanent grassland, crop diversification and ecological focus areas) so as to make them more operable across all Member States.

 

Distribution of payments within Member States (internal convergence)

The Commission’s proposal to move to flat national or regional rates by 2019 would cause very significant transfers of funding between Irish farmers. Ireland, supported by other Member States who would similarly be adversely affected by such a move, has called for a more measured approach based on the Commission’s own method for the distribution of direct payments between Member States. This would limit the losses suffered by individual farmers by moving only part, rather than all, of the way to the average payment per hectare over the period.

 

Definitions of an ‘active farmer’ and a ‘young farmer’

Ireland’s priority is to ensure the avoidance of payments to non-farmers in a way that does not create additional bureaucracy. Furthermore, Ireland holds that Member States should be allowed to identify objective criteria – for example, a minimum standard of agricultural education – in order to ensure that the young farmers’ scheme can be targeted at genuine young farmers. On small farmers, Ireland would prefer that this scheme is optional for Member States.

 

The Irish Position on Pillar 2 (Rural Development)

For Ireland, the key issues relating to Pillar 2 are:

 

1. Apart from the overall funding for rural development mentioned earlier, the main concern arises in relation to the incorporation of rural development funding into what is known as the Common Strategic Framework, with other structural funds.

 

2. Other issues such as the restriction of investment to farms of a certain size, the absence of a forestry premium for loss of income, the designation of areas of natural constraint and the potential effects of Pillar 1 greening payments on agri-environment payments are also of concern to Ireland.

 

Conclusion

Minister for Agriculture, Food and the Marine, Simon Coveney TD, has stressed that the full realization of Ireland’s agri-food potential hinges on the attainment of a well-funded CAP and a measured reform package that will continue to provide the basis for the sustainable development of the Irish agriculture sector. The next number of months will be crucial to the future of the Irish agricultural industry and negotiations on an agreement will most likely conclude during the Irish Presidency of the Council of the EU.

 - The Team at European Movement Ireland

 

Source:  www.europeanmovement.ie.