The massive protests in Dublin this weekend, by some 100,000 Irish workers and trade unionists, adds Ireland to the ever-extending list of European countries – Iceland, France, Greece – whose capital cities have been paralysed by the active discontent of disgruntled citizens. The demonstrations took place one day after the part-publication of an astonishing report into the activities of Anglo-Irish Bank, an institution which once counted the most eminent and wealthy persons of the state as its clients and benefactors, which made huge amounts of money in the years counted as the 'Celtic Tiger' boom, and which, some months ago, was nationalized with great haste, little information and much indignity. The report details the extent to which Anglo-Irish had become, in large part, the private fund of its directors and their friends. Now public property, the bank could end up saddling the country with billions in bad debts. This extraordinary series of events has, within the space of little over a year, brought a country that was recently rated as among the most prosperous in Europe and (more improbably) the 'happiest in the world' to the brink of ruin. Yet the three nodes of Ireland's current crisis are now familiar to a world locked in the grip of epochal recession: property, banking and politics.
In the late 1990s, property became not only an indicator of wealth, but its main engine, and the absurd inflation in house-prices – and concurrent over-employment in the construction sector – became the major driver of economic growth. This was, of course, utterly untenable, and by the middle of this decade, there was a series of urgent warnings that Ireland's prosperity was overly reliant on an immense, unsustainable housing bubble. The banking sector – comprised by the 'Big Three' of AIB, Bank of Ireland, and Anglo-Irish Bank, along with numerous other smaller concerns – eagerly facilitated the growth of the bubble, and a raft of novel financial products and credit systems were on hand to satisfy the public's desire to be in on what seemed a sure investment. One hundred per cent mortgages were unquestioningly bestowed on young couples; billions in loans were granted to developers, who were partitioning between them vast swathes of commuter-belt land in Kildare, Louth and Wicklow; and the vaulting, ugly, glass-and-steel works of commercial property magnates began to overpopulate the interior of Dublin. Above all, banks and a thin crust of their senior executives were wildly enriched, and began displaying all the traits associated with bank officials at their most odious.
Representative of this was the behaviour of those that reigned atop the vertiginous world of high finance - none more emblematic than Sean FitzPatrick, the former Chairman of Anglo-Irish, known as 'Seanie' to his friends, among whom he counts the current and former Taoiseach, Brian Cowen and Bertie Ahern. Before Christmas Mr FitzPatrick, who once ludicrously styled himself a man-of-the-people banker, was found to have committed an extraordinary fraud on his shareholders, having maintained a covert loan facility for himself from the bank worth over €87 million. He accomplished this deception with diligent subterfuge, moving the loans off the books when they were required to be declared, and moving them back when the coast was clear, all the while publicly proclaiming the most pious adherence to proper practice and due diligence. The 'hidden-loan' controversy was, however, only the visible fringe of the iceberg: below lurked a vast body of unknown scandals. Drip-fed to the public over a number of weeks, they have revealed a banking culture corroded to its very core by hubristic greed.
It is the baleful operation of politics, however, which has proved to be the catalytic element for the full manifestation of Irish disgust, and which has filled the streets of Dublin with irate workers. Fianna Fail, the natural party of Government since independence, presided over the boom, but did so both as the compliant arm of the construction sector, and the willing servant of the designs of finance. The fiscal policies they enacted - centred essentially on lowering the burden of taxation on property and labour - were guaranteed to overheat the property market dangerously. When this was put to him some years ago, Brian Cowen made it clear that it was not the place of Government to stop people buying houses. Needless to say, untold amounts of money were thus rendered to the developers and the bankers, who were, not incidentally, intimate with the Fianna Fail inner circle. This culture of collusion even has its own shorthand – the 'Galway Tent' – named after the structure at the Galway Races which was annually laden with politicians glad-handing the bank executives and property tycoons that financed their campaigns.
Venality was compounded by irresponsibility, a massive growth in Government spending - always neatly timed for electoral advantage - and profligate waste of public money, all of which was forgiven by a populace drunk on what it perceived as its own outrageous fortune. What was less noticed at the time but has generated a large part of this crisis was the decision to lower taxes even further in 2006-2007, and to rest a substantial part of our internal revenue on the precarious altar of asset values and house prices. Undertaken in the vain belief that what goes up can only go further up, this disastrous fiscal policy has led, with the severe downturn in the property market, to a gaping hole in the public finances. Tax revenue in 2009 was forecast to be almost €43 billion: a month ago, however, the Government told the European Commission that it now expects this year's tax revenue to be below €37 billion. To make up the shortfall, the Government has taken its scythe to the usual vulnerable retinue of social programmes, medical services and the salaries of public sector workers. Borrowing from international capital markets now makes up the shortfall.
An increase in taxation, widely seen as a necessary corrective to Ireland's deficit crisis, has been ruled out by a nervous Cabinet: similarly, no steps have been taken to puncture the fiscal immunity of millionaire Irish citizens who evade tax through legislative loopholes. What is more, little or nothing has been done to stem the acceleration of job-losses suffered all across the country. Last month, some 36,000 citizens joined the dole queues, and the daily sight of a passive Government, resting the blame for our ill fortune on global forces beyond its control, has soured the electorate dramatically. There are now idle wonderings as to whether Fianna Fail will survive this downturn as a viable political force at all: thoughts undreamt of just six months ago.
These conjoined events - the collapse in asset values, a global downturn, the revelations of corruption at the upper tiers of banking, job-losses in the tens of thousands, and a supine and disliked Administration - have wrought a grim sense of dread all about the country. The sequel, however, may prove even worse. In an extraordinary move last year, the Government guaranteed the liabilities of Irish banks, without fully knowing what those liabilities – all of which relate to devalued property – were. Here, the trifecta of land, banking and politics could prove fatal to the country's economy, as the Government moved swiftly and without adequate explanation to cosset their friends in the banking sector in the pillow of the public purse. Yet if those liabilities prove overly burdensome, Ireland itself will see its credit dry up, and the borrowing it needs to do won't be possible. Morgan Kelly wrote in The Irish Times last week that if the banks had bad debts of '€10–€20 billion, we will survive. If they are of the order of €50-€60 billion, we are sunk.' He is not optimistic, and given the scale of banking duplicity, he has no reason to be. His forecast is apocalyptic: 'If we suffer a sudden stop [of credit], people will see their pensions and Government spending slashed to pay off the gambling losses of Sean FitzPatrick and his pals. The Irish social fabric would certainly rip and unprecedented civil disorder ensue.'
Those at the top have, as yet, shown little evidence of any real contrition. The Government has consistently sought to deflect questions about how its policies may have contributed to the crisis: everyone was responsible, philosophized the Minister for Justice, Dermot Ahern, a few weeks ago, and therefore no one was. Sean FitzPatrick was asked if he would say sorry to the Irish people for what he had caused: 'The cause of our problem was global,' he said, 'so I can't say "sorry" with any kind of sincerity.' Later that day, incidentally, he gave a speech calling on the Government to cut social spending, attacking with especial vigour the 'sacred cows' of universal child benefit, state pensions and guaranteed health cover for the aged. A senior businessman has lauded those who partook in the iniquities at Anglo-Irish as 'heroes'. And the CEO of Bank of Ireland caused a stir last week when he was unable to give a precise figure for his remuneration this year, having seen his bank's shares become close to worthless: 'around two million', he ventured. These kind of let-them-eat-cake moments have led to a growing radicalization of Irish workers.
While I was having drinks with some old friends just before Christmas - most of whom work in banking or finance - we all marvelled at the scale and suddenness of the collapse, and spoke, bewilderingly, of emigration and unemployment, things we had been led to believe were the stuff of our history books. To those who came of age in the early part of the century, in a generation hailed as the first in Ireland that could properly make its future 'at home', the notion that we now have to depart, again, for Canada or Britain, America or Australia, creates deep bitterness, and genuine anger. Yet the last 15 years of plenty currently have about them a sense of unreality, as though they were somehow outside history. Indeed, Bertie Ahern opined memorably at the height of the boom that 'we live in the future'. Ireland, perhaps more than any other country in Europe, will now have to come to grips with returning to the past. (Sean Coleman)