Editorial from Irish Political Review, May 2009

Home And Away

Twenty years ago the Irish State appeared on the verge of bankruptcy. Escape seemed impossible. And then there was the Celtic Tiger—conjured out of thin air by the magic of money under the system of globalist capitalism.

The conjurer, of course, was Charles Haughey.Haughey put on a great show in a Europe which had still not submitted to British pressure for deregulation. The Europe of Kohl and Mitterand was a very different thing from the Europe of Merkel and Sarkozy and Berlusconi. Merkel was a Christian Democrat in the Communist GDR [German Democratic Republic]. When released into the Federal Republic she had no bearings in it and the two forms of substantial capitalism—the corporatist European and the laissez-fair Ameranglian, had no tangible meaning for her. The British complaint that the socially-engaged capitalism of Europe was virtually socialist got through to her and she did her best to dismantle and de-regulate a society which was wedded to the old forms. (The British Minister for Free Capitalism In Europe at one point was Kim Howells who, not long before, had been in the business of overthrowing capitalism as a revolutionary socialist aligned with Arthur Scargill, the miners' leader.)

Sarkozy is a fashion statement. Berlusconi is a skilful trickster, operating amidst the ruins of Italian Christian Democracy with only the exhausted remnants of a failed Socialist Party as Opposition, in a society which in the past has shown it can run its affairs rather well without much in the way of Government.

When Europe still had a purpose, it was convinced by Haughey, when he was President of the EU, that Ireland had moved out of Britain's shadow and now counted for something in international affairs in its own right. And Ireland was rewarded for the appearance of substance conferred on it by Haughey with massive subsidies—8 billions, small time now, but vast in those olden times of the 1990s.

And then Haughey performed the great money trick on the Docks. He had been one of the new native business class that began to emerge in the 1950s and to erode the Ascendancy stratum of inherited wealth—accumulated under Penal Law monopoly—that had survived in critical areas until then. (That can be the only rational basis for the obsessive hatred of him by the Irish Times.)

The very modern ideal of having a Government and a Legislature which is disconnected from vested interests in the economy and in society did not exist then. If it had, the Celtic Tiger would probably not have been born. The outer world was then very effectively represented in the Dail, and the possibilities of the current economic situation could be seen and could be seized.

The English Constitutional ideologue, Bagehot, said that grand display was a necessary function of state. In very olden times—before the 1980s—the Church provided impressive displays for the State. But, since those times, the major impressive display in secularised Ireland was that put on by Haughey.

But Government must also be representative of powers in the economy and must be able to direct them. And never before or since have powers in the economy been so well directed by government as in Haughey's time.

Garret FitzGerald made a living by writing on the economy in the Irish Times for many years, but his economic acumen as applied to business would have left him penniless, but for the extraordinary kindness of his creditors. He fared no better as Taoiseach.

Haughey used the powers of government, and his connections with the new class (his coterie, if you prefer) of wealthy businessmen, of which he was an original member, to perform the money miracle.

He made Ireland part of the financial heartland of globalist capitalism. Money in vast quantities began to pour in through the Financial Services Centre on the Docks in the 1990s, as it has done for centuries into England through the City of London—and at the expense of the City of London.

And, under Haughey's influence, corporatist arrangements of the Christian Democratic kind began to function in Ireland. And it is beside the point to discuss whether Haughey was either a Christian or a Democrat, or a sceptic and an oligarch. He set up the Partnership system, and it worked better than might have been expected.

Some years ago the Northern Bank in Belfast was robbed of about £26 millions. It was authoritatively stated that the Provos did it. Bertie Ahern said it as Taoiseach. John Bowman, as Chairman of Questions & Answers, poured scorn on the possibility that they might not have done it. The white van in which the money was taken from the Bank was caught on camera, and was followed on a series of cameras—the North is covered with them—until it disappeared somehow.

A bank clerk was prosecuted but, in the absence of evidence, the case failed. (Such things still happen in the North.)

Only one identifiable bit of the stolen money was ever found. The fact that it was found in a Social Club of the Royal Ulster Constabulary was immediately understood by all right-thinking people to be proof positive that the RUC had NOT done the robbery.

Some weeks ago a Corkman was tried on a charge of receiving some of the stolen money, knowing it to be the proceeds of the Bank Robbery. Judging by newspaper reports (which were grossly inadequate), no evidence was presented that the man had received any of the money taken in the robbery. He was convicted. (Those things are better managed down South.)

The man in question ran a money-lending, or mortgage, business in the form of cash transactions. He did not do this secretly. His disagreement with the banking system was on public record. In the days of the Celtic Tiger, property transactions mushroomed. Large numbers of people who had emigrated to England immigrated back. Properties had to be bought and sold and money had to be changed. And then people who did well out of the Financial Services Centre boom began buying second houses in Europe. And productive enterprises which had been small scale in 1990 expanded and acquired international ramifications.

Very soon half a million became the price of a normal house.

A money-lender doing cash transactions would need to have millions in hand. We were told in sensational newspaper reports at the time of the arrest that this man had millions in wheelie-bins. And we were supposed to conclude that he was up to no good.

Some Northern Bank notes were found amidst all the other notes. There was no evidence that they had come from the robbery. It seemed good enough that they had come from the robbed bank, which was 300 miles away.

Suddenly we were out of the world of the Celtic Tiger, where millions of all sorts rolled around everywhere, and we were back in the small-time era of Lemass, when possibly a Northern Bank note was never seen in Cork. (In the UK a number of Belfast Banks were allowed to print their own money, while Dublin could only have Bank of England money. This continued after independence, when the Bank of England printed notes with Irish pictures for the Irish. "Irish" money was sterling, and was always treated as such in the North. This was, of course, financially advantageous to Britain. The establishment of Irish money on its own footing began with Haughey.)

The running of a mortgage business on a cash basis independently of the banks must have seemed suspiciously eccentric a couple of years ago to people who could hardly lift a finger without the help of a bank. It does not seem so foolish now.

The man in question was convicted on the strength of a confession which he retracted, saying he signed it under duress. It appears from some reports that he was subjected to sleep deprivation—one of the Five Forbidden Techniques for which Barak Obama has apologised.

His son was also charged, and pleaded guilty. Because he pleaded guilty no evidence was presented against him, and he was not brought to the witness box to give evidence against his father.

A persistent theme of the Garda questioning was said to be the involvement of Phil Flynn: Implicate Flynn and we will go easy on you. If you fail to implicate him, you will suffer the same fate as the McBreartys in Donegal.

Back in the 1960s Flynn was a kind of revolutionary socialist. In the seventies or eighties he became an effective reformist, the leader of the IMPACT Union, and a member of Sinn Fein. In his capacity as a reformist socialist and Trade Union leader he approached Haughey with a proposal for what became the National Agreement system and Haughey took it up and made it work.

It seems that, along with being a Union leader with an input into the formation of state policy, Flynn became a businessman in his own right, with extensive European connections and a prominent position in a major Scottish bank.

This would be something very extraordinary in a system of developed capitalism. But Ireland is still essentially in the phase of development that used to be called "national bourgeois". This was one of the things we disagreed with Flynn about way back then. We made theoretical allowance for national bourgeois development. He rejected it. But he was the one who participated in the national bourgeois development. And, unlike many others, he did some good in the process.

A lot of learned nonsense is spouted about Ireland and the Credit Crunch. There is a tendency to take a moralising attitude to the role of developers in bringing it about.
Ireland grew fat on the crumbs from the Globalist table in the good times. The question was how the money gained was going to be invested. In the national budget, the bulk of it went to paying off the National Debt, which became one of the lowest in Europe. And, even after present measures have been taken into account, the National Debt will be lower than Britain's in years to come.

It might have been preferable if some of the surplus had been put into productive enterprises, but it was difficult for Ireland to stand out against the general EU policy of leaving things to the market. While an independent country has a certain leeway, there is a limit to what a small economy like that of Ireland can do within the capitalist system. And Britain had succeeded in making its laissez faire form of capitalism dominant in European institutions. The developers did what came naturally: and some of the things they built will stand the test of time. The improvements in infrastructure will be of lasting benefit.

The experts write as though there is a perfect solution to the crisis. The fact is that there is not. Keynes understood early on that an economic system was too complex to be guided on the basis of theoretical prescriptions: the thing was to try out ideas which had a chance of bringing about the desired effect. This the Irish Government is doing with some ability and a great deal of energy. And it can certainly be said that the solutions come up with in Ireland are far superior to those being introduced in Britain and the US: at the same time it has to be said that the bank crisis is not so severe in Ireland. At least there are assets in existence which the Irish Government is able to buy from the banks. Anglo financial innovations produced financial instruments with no corresponding physical assets or, where there are, several competing claims to the same assets: and these instruments were financed by the banking sector with no adequate collateral. That said, both in America and Britain Government is throwing huge sums of money into a bottomless pit. The American bail-out scheme has the State taking 100% of the risk and taking 0% of the profit.

The Irish scheme is to set up a National Assets Management Agency which will compulsorily purchase toxic assets from banks, also taking over the collateral. A mechanism for determining the price to be paid is still to be established, but the banks will not be paid the full value of the loans they made that are being taken from them. If that leaves the banks short of funds with which to provide loans and working capital to enterprise, the Government proposes to give them such funds by purchasing shares in the banks. There will be losses for the shareholders of these institutions.

The Assets Agency will enforce the repayment terms of the loans it has taken over and gradually seek to realise the value of the assets it has bought. If, in a decade's time, it emerges that the Government has paid the banks too much for these loans, a further levy will be taken from them.

This new proposal is additional to the Bank Guarantee Scheme already operating, and will probably supersede it in effect.

The Banks initially financed the loans they made by borrowings, much of it from abroad. It has been suggested that the Banks should renege on those borrowings. It is hard to see how Ireland could maintain the strong position it has established for itself in international financial circles by doing this. While providing financial services is unlikely to be the engine of growth in the future that it has in the past, Ireland will not benefit by destroying its credit-worthiness internationally.

The question arises what will be the new engine of growth, now that financial services will play a much diminished role.

In the present financial crisis, the vigorous financial actions taken by Fianna Fail are reminiscent of the way it acted in the protectionist era of the 1930s. Then the Irish economy was protected and enabled to grow by the use of tariffs. Now it is to be protected by direct intervention in the banking system. The State has realised that the Banks are incapable of addressing the general problem: that they are in denial about the scale of the problem. While formal protectionism is off the agenda, de facto protectionism has become prevalent in major European countries. States have directly aided industries, not by means of tariffs but using other measures.

The Irish State is currently financially extended with its rescue of the banking system. However, there is a lot of capital at home and abroad which is seeking a safe home. The Government can issue targetted Bonds for the public to take up, with redemption dates in the future. The first bond could be for the purchase of Eircom, a failed privatisation. Using money subscribed for an 'Eircom Bond', the State should buy back the telecommunications industry and develop its potential. There are many similar investments which could be made.

At the moment Teagasc is the only voice calling for the development of the agricultural sector. In fact, as Charles Haughey realised early on, agriculture should be a mainstay of the Irish economy. There is an untapped demand for organic food, raw and processed: and it is ridiculous that Ireland should be importing food at all. What the present crisis has revealed is that the idea of leaving such matters to the whim of the market, or to the will of external political agencies is untenable. There are still national economies and the need for strong national governments.

Peter Robinson and Martin McGuinness—First Minister and Deputy First Minister of Northern Ireland—have protested to Sir Anthony O'Reilly about the disparaging attitude of the Belfast Telegraph towards the efforts of their Government to solve the global economic crisis. If Northern Ireland is a state—and the academic historians seem to have agreed to pretend that it is—then its its Government should certainly be criticised for failing to act decisively in the world crisis. If it is not a state——

The Irish Foreign Minister, Michael Martin, has published a book about a period of history which has not yet become history in the sense of being over and done with. The title is Freedom To Choose: Cork And Party Politics In Ireland 1918-1932. The thing about that period is that Ireland did not have Freedom To Choose. It acted under compulsion from the greatest Empire the world had ever seen. It chose to part company with that Empire in December 1918 but the Empire would not let it. At the end of that period, 1932, Mr. Martin's party came to office and took the risk of repudiating the enforced subordination to the Empire of 1922, and got away with it because the power of the Empire had decayed during the intervening years.

If Mr. Martin had written a truthful account of the choices made by Ireland in defiance of Imperial compulsion he would risk an international incident. Britain does not take kindly to having the truth told about what it has done in the world. It is for it to choose what should be remembered and for others to forget what it did to them. That is the recipe for harmonious relations. It would have been irresponsible for an Irish Foreign Minister today to publish a truthful account of what Britain did to Ireland when Ireland chose to part company with it in 1918. Mr. Martin has not acted irresponsibly in that respect.

One thing the book does is make clear that the comprehensive misrepresentation of Irish history of that era by the Oxford University Press was not something done behind the back of Fianna Fail and without its consent. The centrepiece of that misrepresentation was Peter Hart on Republicanism in Cork in 1918-22. The chicanery of Hart's method has been demonstrated conclusively. Hart was acclaimed by the History Department of Cork University at first. A mass meeting for the purpose of adulation was held, at which an attempt to enter a note of dissent was howled down. But Cork University has not recently been defending Hart's academic method, such as interviewing the dead and omitting crucial paragraphs in British documents when reprinting them. But neither has it been subjecting them to criticism. What its notion of "academic freedom" demands is battening down the hatches and riding out the storm so that it will still have Hart there, with his systematically falsified history, when the fuss dies down. And they trust it will die down. They know the Irish cannot sustain that kind of effort for long. Or was it the British who knew that? Or is there a difference in Cork University these days?

There was no need for the Foreign Minister to quote Hart. But he does so, again and again. This can only mean that the new Fianna Fail dynasty in Cork, being constructed by Mr. Martin, will have Hart's falsified history as part of a new authorised version.

Mr. Martin comments on how "national issues" were kept dominant by Sinn Fein in the 1920 Local Government elections, in place of municipal issues. But the great municipal issue was whether Local Government bodies would hold allegiance and pay dues to the Dail or Dublin Castle. The British interest hoped that the PR system would muddy the clear result of the 1918 General Election. It didn't.

The "Treaty" sort of slips in unnoticed, and we are straight into "Civil War". Mr. Martin says that leaders on both sides indicated that they did not want it. Why then did they have it? The obvious answer is because Whitehall kept up the pressure for it. Mr. martin does not show that that is the wrong answer.

The Labour Part made a big showing in the 1922 Elections. Treatyites and Anti-Treatyites had made a Pact to field an agreed list of candidates so that the balance in the Dail would be maintained, and it was approved by the Dail. But Whitehall condemned it as undemocratic, saying that the people must be free to choose between conflicting parties—even though the British Coalition had won the 1918 Election with an agreed Tory/Liberal list. Collins was summoned to London and ordered to break the Pact. He came home and did so on the eve of the Election. The Labour Party, which had not contested the 1918 or 1921 Elections, contested this one. In the confused situation it did rather well. When the Dail elected in June 1922 eventually met in September, the Treatyites had started the Civil War under a Whitehall ultimatum, threatening action by the British Army if it did not do so.

The Labour Party had been taunted by some Treatyites with having submitted to De Valera's "Labour Must Wait" slogan in 1918. It would wait no longer. It contested the 1922 Election and three months later found itself the official Opposition in a Dail in the midst of a "Civil War" which neither it nor the Dail had had any say in starting and facing the most right-wing Government there has ever been in independent Ireland.

Mr. Martin wonders that Labour climaxed in 1922 and then went into recession. The reason of course is that it did not wait long enough. Reformist Labour needs a secure framework of state to function within. It jumped the gun in 1922 and paid for it.

Mr. Martin's party was formed out of the losing side in the "Civil War". If the Treaty established an independent, democratic state in Ireland—and that is the consensus of our new history—then De Valera was a terrorist fighting democracy in 1922-3. Mr. Martin prefers to evade the issue. But it cannot be evaded. Evasion is concession.
Fianna Fail was formed out of Anti-Treaty Sinn Fein a couple of years after its military defeat. It said it would not swear an Oath of Loyalty to the Crown. The electorate in the mid-1920s began to revert to the Republican ideal, from which it had been frightened by British threats in 1922. The Treaty Party (called Fine Gael nowadays), victorious in war, might have managed the shaping of the Free State into a stable democracy by removing the Oath as a precondition of sitting in the Dail. It chose not to do so, even though the British Government in 1926 was a shadow of what it had been in 1922. It used the Oath as a device for excluding its defeated enemy of the Civil War from the Dail. It became a practical possibility that the party that won the election would be kept out of the Dail. In that situation Kevin O'Higgins was shot. In the ensuing emergency Fianna Fail entered the Dail. Did its break its undertaking not to take the Oath to the Crown? Mr. Martin leaves his reader to understand that it did.

De Valera described in detail the procedure he went through on entering the Dail. On the way in there was a room with a book in it. And the clerk indicated that he should sign the book. There was a Bible in the vicinity of the book. He took the Bible and put it away in a corner. Then he signed the book. And, if that was what happened, he did not swear an Oath. Swearing is not signing. It is what one does holding a Bible and saying, "I swear" etc.

Perhaps the new post-everything Fianna Fail represented by Mr. Martin regards all of that sort of thing as superstitious nonsense anyway. But is it altogether prudent for a Government Minister to gloss over perjury?

Mr. Martin suggests a Treatyite/Anti-Treatyite continuum of development:

"Collins's 'stepping stone' idea is of vital importance with regard to the development of politics in the 1920s and 1930s and in particular to the development of Fianna Fail which later incorporated the idea into its own political programme" (p. 510).

The "stepping stone" argument, by which many were drawn to the Treaty side, meant accepting what was conceded by Britain in the Treaty and using it to take what was withheld as the opportunity arose. But that is what was not done in the 1920s.

It was extremely ill-advised of the Foreign Minister to publish a book about that period. It was bound to be either a confrontation with Britain or an incoherent evasion of confrontation. And there could never have been any real doubt which it would be.

In mid-April the Irish delegate to the UN attended a UN Conference on Racism, held in Switzerland. On the instructions of the Foreign Minister he walked out during the speech of the Iranian President when Israel was mentioned. All the members of the EU walked out. Only the delegates of 150 states remained and applauded the Iranian President. The small minority of a couple of dozen that absented itself is the International Community. The vast majority that stayed is something else.
Incidentally, the 'International Community' appears to be white.

On the evening of the walk-out the British delegate was asked to explain why Zionism was not racist. He couldn't.

The Iranian President said that Europe had absolved itself from guilt for what it did to the Jews by helping the Zionists to destroy the Palestinian people. If the EU could have refuted the accusation, we assume it would have done so instead of burying its head in the sand.


Home And Away.

Facing Off The Emergency (the Irish Supplementary Budget).

Commonwealth (Reader's Letter).
Seán McGouran

A World Full Of Blind Spots.
Jack Lane

Ireland's Comparatively Healthy Debt/GDP Ratio.
Manus O'Riordan

Shorts from the Long Fellow The Inevitability Of Socialism; The Financial Crisis; The Irish Crisis; Economists Intervention; Government Performance; NAMA; Stabilisation Fund; Budget Deficit; A New Nation?; British Commonwealth).

Beware Falling Objects.
Feargus O Raghallaigh

Sheila Kelly.

Pat Murphy Tributes.
Tony Monks, Malachi Lawless.

Corporate Crime Measures.
Tom Sherida

Does It Stack Up? (Accountants and Bank-Bailouts)
Michael Stack

Still Birth.
Wilson John Haire

Lord Bew On 1916 Insurrectionists And Democrats.
Manus O'Riordan

Obama And Ataturk.
Pat Walsh

Labour Comment
Edited by Pat Maloney

SIPTU Demands "Social Dividend" From Banks-Bailout.
Jack O'Connor (General President, SIPTU)

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