editorial at/@
tortillaconsal punto/dot com
by toni solo, January 24th 2011
Irish Prime Minister Brian Cowen is under pressure from the country's political opposition to bring forward a general election scheduled for March 11th. The urgency stems from a worsening collapse in confidence in Prime Minister Cowen following the economic rescue package agreed between the Irish government, the International Monetary Fund and the European Union in November 2010. Critics of the package argue that its terms will worsen the Irish government's financial position requiring further intervention later in 2011 or 2012. Even so it seems the opposition parties in Ireland will facilitate a vote approving the package.
Ireland's current position
Ireland joined what was then the European Economic Community - now, much expanded, the European Union - in 1973. Since then its foreign policy has been increasingly more aligned with the main powers of the North Atlantic Treaty Organization. The fervently anti-democratic pro-NATO European corporate elites have consolidated their control of the European Union. As they have done so, Ireland's people have become proportionately more vulnerable to shocks resulting from policies implemented for and managed by those elites.
In 2010 the government applied a structural adjustment of €4bn in order to help bail out Irish banks it had recklessly guaranteed in September 2008. Now, in 2011, under the terms of the EU-IMF "rescue", the Irish government will immediately apply a structural adjustment of €6bn growing to €11bn by 2014. Ireland's Economic and Social Research Institute reckons that the government's current commitment to support Irish (ie. foreign) banks is 61% of GDP of around €170bn (of which about 20% is repatriated by foreign companies). Official unemployment is already around 14%.
Ireland's financial relationships are virtually identical to its foreign policy loyalties : the Western Bloc countries of North America, Europe and their Pacific allies. The Bank of International Settlements quarterly review for September 2010 has a table of Ireland's foreign bank creditors' exposure in the first quarter of 2010 as follows :
|
Germany |
Spain |
France |
Italy |
Other European |
Japan |
Rest of the world |
Britain |
United States |
Total |
|
|
Exposure in US$bn |
205.8 |
16.2 |
85.7 |
28.6 |
92.5 |
22.9 |
55.8 |
222.4
|
113.9 |
843.8 |
Especially since the fall of the Soviet Union, Irish governments have committed to a Faustian pact trading their people's sovereign interests for corrupt financial bubble prosperity and anti-humanitarian NATO war mongering. A direct relationship exists between Ireland's cynical collusion in CIA torture rendition flights or US military use of Shannon airport and the current crisis of the Irish economy. Both betray deep failures of moral judgment in the face of neocolonial extortion.
Some context
Successive referendum votes on European Union treaties have shown that people in Ireland tend to mistrust the choices made for them by their ruling class. It is easy to forget that many influential Irish people have followed in the footsteps of politically powerful individuals like Peter Sutherland, former head of BP, and Tony O Reilly, former head of Heinz. The resulting elite network of business relationships and personal friendships has locked official Irish policy making into the continuing relative decline of the Western Bloc countries in relation to emerging competitors.
The Western Bloc's financial elite and their political proxies are determined to protect a corrupt banking sector that made reckless loans despite Ireland's enormous housing and credit bubble, clearly apparent since at least 2004. To do so they have imposed a savage structural adjustment package on people in Ireland despite the fact that the underlying economy is viable and successful. The terms of that package imply prolonged austerity by driving down living standards and diminishing the Irish government's revenue.
Over many years, the US authorities dismantled their financial system's regulatory structure. From 2001 onwards they kept interest rates too low for too long, allowed ratings agencies to issue corrupt valuations of securities and permitted favoured investment banks unprecedented ratios of loans against capital of up to 40 to 1. Among other factors, all this created intense pressure on the European authorities to act in concert with their colleagues in the US and Japan to maintain their Western Bloc financial system in equilibrium by coordinating action on interest rates and currency rates.
This meant that real interest rates in Ireland, where inflation was higher, were negative. So only a determined effort by regulators would have been able to control the resulting credit and housing bubble. But regulators in Ireland followed the example of their US counterparts. They tolerated predatory lending and corrupt accounting, leading to the debacle of companies like Anglo Irish Bank whose very existence depended on the country's massive credit and housing bubble. Now, because their ruling classes are too craven and cynical to defend them, ordinary people in Ireland will pay the losses incurred by greedy foreign banks.
Following its own crisis between 1999 and 2002, Argentina faced the same situation that Ireland does now. Economically, Ireland still has time to follow Argentina's example. But it should go much further and recognize that its people will never enjoy sustainable prosperity if the Irish State does not broaden its autonomous foreign relations as a matter of urgency. Such moves do not require leaving the European Union. Taking them might help break the anti-democratic choke hold of European elites on European Union policy.
The relevance of ALBA
A crucial component of Argentina's post-crisis economic strategy was unstinting support from Venezuela, which bought large quantities of Argentinian government bonds at crucial points in the development of Argentina's recovery. That gave Argentina's then President, Nestor Kirchner, vital options and autonomy he would otherwise not have had. For fundamental economic reasons, any new Irish government after March 11th should take stock and look hard at who its friends really are. Irish foreign policy has been stultified for years revolving around a Brussels-Washington axis.
The strength of that gravitation will weaken as corporate consumer capitalism fails to sustain basic standards of living for large numbers of people and inequality becomes structural. In Latin America a strong continental consensus agrees that reducing inequality is essential to reduce poverty. The symmetry is striking between that consensus and the determination of the European governments to betray the European Union's original alleged rationale. They are imposing structural adjustment on their peoples while cosseting the financial elite that caused the economic crisis to start with.
As European governments reduce their peoples' living standards and increase inequality, the countries of ALBA (the Bolivarian Alliance of the Americas) are doing the very opposite. ALBA is composed of medium and small economies, like Ireland's. The ALBA countries are only beginning to emerge from conditions of neocolonial subjugation that suppressed their true economic potential. What they have done is combine to defend their peoples' interests against the local oligarchies that struck alliances with the dominant powers of North America and Europe. Ireland's oligarchs have done exactly the same as their Latin American counterparts and hoodwinked people in Ireland to integrate ever more deeply into a European Union dominated by its pro-NATO elite.
Ireland should ally with ALBA
One of Ireland's key economic problems is its dependence on imported oil. In 2008 the country imported 191,000 barrels a day, almost 70 million barrels for the year. A preferential deal with Venezuela similar to those under the ALBA-related Petrocaribe programme would enable Ireland to pay half the price of any imported Venezuelan oil within 90 days and the rest over 20 years at 2% interest. On those terms even 10 million barrels of Venezuelan oil at US$90 per barrel would free up annually around US$450 million to assist Ireland's public sector cash flow.
As part of ALBA's global strategy, Venezuela has made bilateral deals with countries as diverse as Portugal, Syria and Belarus. Venezuela's State oil company PDVSA constantly makes deals with foreign counterparts and multinational companies. There is no rational reason for Ireland not to explore a relationship with the ALBA bloc. On the other hand, political, economic, commercial, technological and cultural incentives to do so abound.
Politically, reaching out beyond the corporate capitalist European project would break Ireland's spiral into abject neocolonial dependence on the Western Bloc powers and open up a wider sustainable alternative to failed corporate capitalism. Economically, especially with regard to energy and food policy, ALBA's emphasis on solidarity and complementarity offer numerous advantages to Ireland. In return, Ireland's technological and cultural industries have much to offer ALBA.
Likewise, there is no reason why the ALBA countries and companies like PDVSA should not use Ireland - with its 12.5% corporation tax - as their launch pad into Europe the same way as the United States has done. For the ALBA countries too, diversification of trade and financial relationships will be an important source of potential growth. But the symbolic importance of a formal relationship between Ireland and ALBA goes well beyond economics and trade.
The twin threats of global militarization and environmental change require much closer collaboration between smaller vulnerable countries to defend their interests against economic powers like the United States and the European Union who have shown they are willing to use their military power ruthlessly anywhere in the world. Ireland's experience demonstrates that the European Union will instinctively protect its corporate elites above all else. To protect the fundamental interests of their peoples, countries like Ireland need urgently to combine with emancipatory political and economic projects like ALBA.