News that
the Coalition are in discussions with the EU and IMF won’t come as a
shock. Reports have been circulating for days now that the EU and the
Finance Ministry have been locked in discussions and some have even
claimed that the IMF have been briefing the heavyweight financial
bourgeois press internationally in an attempt to pressurise the
coalition and the opposition parties into seeking a deal.
News that
the Coalition are in discussions with the EU and IMF won’t come as a
shock. Reports have been circulating for days now that the EU and the
Finance Ministry have been locked in discussions and some have even
claimed that the IMF have been briefing the heavyweight financial
bourgeois press internationally in an attempt to pressurise the
coalition and the opposition parties into seeking a deal.
The
European Financial Stability Facility (EFSF) was set up in July in
anticipation no doubt of situations like the collapse of the Irish
banking system and the threat of an Irish economic meltdown. While the
financial markets have reacted favourably to talk of a deal, which they
hope would stabilise the euro zone, it should be remembered that those
hopes have been dashed before, Ireland is only one of the
sickest patients in the ward, not the only one at all. The European
Union have their own interests in mind.
For the Fianna Fáil
leadership however the implications of a deal with the EU are very
serious. Concern over national sovereignty and humiliation in the event
of a bailout which might be of the order of €70-€85
Billion threatens to split the party, which traces its tradition back
to the Republican forces in the Civil War. The offer from the British
Tories to help in the bailout won’t help either. With Cowen at rock
bottom in the polls, the air of chaos and financial mismanagement only
adds to the crisis. FF TD Ned O’Keeffe has called for Lenihan to resign
and reports indicate that attempts to set up a website to promote a
group called Fianna Fáil
Nua were only foiled by a party loyalist buying up the domain name. The
government could easily fall within a few months if not earlier.
Certainly many
workers are looking at the situation with utter dismay, the government
is faced with an electoral disaster at the by election on 29th November and as we have reported at least one FF TD has threatened to vote against the budget. The budget due on December 7th is set to introduce up to €15
Billion in cuts over four years. But even the detail of the budget is
now in doubt. The French and German governments are demanding a rise in
the 12.5% rate of corporation tax by way of compensation for the
bailout. The capacity of the Irish national bourgeois to solve the
problems of the state is in serious doubt. Connolly famously pointed out
that raising the Green Flag over Dublin castle wouldn’t solve Ireland’s
problems as the British would still rule through their banks and their
capitalists. Those words ring true today, but it’s the EU and the IMF as
well as the City of London and the US that call the shots.
While some people
have said that the EU intervention couldn’t be any worse than what we
see now, the reality is that any deal will be accompanied by strict
rules and strictures. Patrick Jenkins writing in the British Financial Times commented:
“Finally,
the authorities in Dublin failed to learn the big lesson from the
Lehman Brothers’ collapse – it is an absence of liquid funding, rather
than weak capital, that kills a bank. Ireland’s guarantee on retail
deposits stopped bank runs on the high street, but corporate clients
have withdrawn billions. At the same time, Ireland has been in effect
blacklisted by the interbank market, leaving the European Central Bank
and Ireland’s own central bank as last-ditch liquidity providers.
With
hindsight, this endgame was inevitable. What is crucial now is that the
strings attached to the Irish bail-out by the EU-IMF delegation are
tough enough – the asset modelling, capital shortfall calculations and
funding projections must be as conservative as possible. It is not only
the survival of the Irish banks that hangs on the credibility of this
bail-out – so too does the health of the eurozone banking system”
The position of
the bourgeois is clear, Ireland has to be squeezed. FF TD Ned O’Keeffe
made a very interesting comment today however and that was that IMF
interventions have lead to the formation of “a lot of left wing countries”.
The point is very interesting in that the history of the IMF
interventions in Latin America in particular was massive austerity
programmes and monetarist economics which created huge misery for the
masses in the ex colonial countries. The movements of the masses in
Venezuela, Bolivia and Ecuador and throughout the whole of the continent
have their roots in the debt crisis of the 80’s.
The crisis in the
Irish economy has repeatedly undermined the idea of social partnership
which had been the norm during the Celtic Tiger years. The series of
attacks on the public sector workers and the repeated failure of the
government and the unions to find any stable deal are symptoms of the
serious crisis. The Croke Park Deal which was forced through ICTU by the
leaders of the main unions in the teeth of opposition from many workers
and a significant secion of the unions, was heralded as a safeguard for
worker’s wages in return for “flexibility” and reform in the Public
Sector.
The Irish working
class faces a generation of austerity, this deal will be accompanied by
rules that will make An Bord Snip look like a bit of light dusting.The
same newspapers and pundits who tried to sell us the Croke Park Deal are
now demanding that it is ditched and that the government attacks
workers wages again, combined no doubt with massive redundancies. This
is a finished recipe for class struggle in the state. But there is a
huge question over the capacity of the trade union leadership to
adequately represent the membership and lead a struggle to defend
services and jobs and conditions. The ICTU leaders are tied to the
perspective of social partnership at a time when the bosses are
preparing a fresh onslaught. The movement needs to prepare for the
struggles ahead. Central to that is to forge a clear sighted leadership
with at least a grasp of how to effectively lead that fight.
