How the Celtic Tiger Lost Its Stripes
From New Left Review:
For much of the past two decades, the Republic of Ireland found itself hailed as a crowning glory of neo-liberalism. Between 1993 and 2000, Irish gnp grew by an average of 9 per cent a year; unemployment—which had reached a peak of 17 per cent in the 1980s—had almost disappeared by the close of the century. A nation that had stood ignominiously on the economic sidelines during the trente glorieuses of its larger and richer neighbours suddenly vaulted past them all, even reaching the psychologically vital milestone of a per capita income higher than Great Britain’s. Foreign journalists rushed to praise the Irish economic miracle, which could handily be attributed to its willingness to don the golden straitjacket and embrace the logic of global capitalism. Neo-liberal pundits from Thomas Friedman to George Osborne urged the rest of Europe to ‘follow the leapin’ leprechaun’ down the road of low taxes, light regulation and flexible labour markets. After witnessing the transformation of Ireland from basket-case to economic paragon, who could possibly deny the validity of the formula?
The eu–imf package of December 2010 has hammered the final nail in that particular coffin. With unemployment standing at 13 per cent and gdp having registered the largest dips ever recorded—7 per cent in 2009 alone—the Republic has now been saddled with a punitive interest rate of 5.8 per cent on a multi-billion euro loan that will be immediately used to repay German, French and British banks. This burden stems from the Irish government’s decision in September 2008 to offer an unlimited guarantee of the liabilities accumulated by its putrid banking system—and the refusal of the major European states to consider imposing a loss on ‘senior bondholders’, i.e. the said banks. It will most likely prove impossible for the Irish state to meet its interest repayments, creating further instability for the Eurozone and negating the prospects of an Irish recovery.
The terms of the deal cast an ironic light on one of the major themes of Irish political debate throughout the Celtic Tiger years. It was articulated most famously by Mary Harney—leader of the Thatcherite Progressive Democrats and veteran of the Fianna Fáil-led coalition which has held office since 1997—when she asserted that Ireland was ‘closer to Boston than Berlin’: more in tune with the Anglo-American economic model than with the welfarist leanings of continental Europe. Harney’s trite slogan was adopted by the Irish commentariat, with the value sign reversed by those on the liberal left who assumed that the eu would represent a more humane and progressive form of capitalism. Now Boston and Berlin have come to town, marching in step, and there is little to choose between them. Indeed, the imf has shown itself to be somewhat more enlightened than the eu, if only because it does not consider it imperative to defend the interests of European banking giants. It is a measure of the trauma that even the Irish Times felt compelled to distance itself in sub-Yeatsian style from the country’s new financial masters:
It may seem strange to some that the Irish Times would ask whether this is what the men of 1916 died for: a bailout from the German chancellor with a few shillings of sympathy from the British chancellor on the side . . . Having obtained our political independence from Britain to be the masters of our own affairs, we have now surrendered our sovereignty to the European Commission, the European Central Bank and the International Monetary Fund.