by Frank Schnittger
Fri Jul 22nd, 2011 at 07:36:04 PM EST
As the news from Somalia worsens and the shock from the Norway attacks sinks in, its easy to become a bit of a bad news junky. However in recent times there have been a few signs that there may be light at the end of the tunnel in Ireland's quest for salvation and (if I may mix my metaphors) that some green shoots may be appearing. Given that I have contributed some apocalyptic diaries on Ireland's economic and political prospects, it seems only right that I should also report on what could be interpreted as hopeful developments.
A short list of such positive developments in recent months could include the following:
- A new Government has been elected in a sharply contested election without violence
- The Queen's visit helped to put to bed historic enmities between Ireland and Britain
- Barack Obama's visit was a success for other reasons
- Irish tourism has shown signs of recovery
- The success of four Irish Golfers in winning Major Golf Championships in the USA and Britain will help revitalise the Golf tourism business
- The Irish Government has forcefully declared an end to Rome rule.
- Exports remain vibrant and are still double imports
- Economic growth may reach 2.5% next year and the interest burden of Ireland sovereign debt may peak at 20% of Government revenue - below the peak during the 1980's recession.
- The terms of the ECB/IMF/EU "bail-out" have been improved by up to 1 Billion per annum (0.7% of GDP).
- Foreign direct investment rose 20% in the first half of this year
- Ireland is on track to produce 40% of its electricity from renewable sources by 2020 and perhaps to become the lead electricity exporting country in Europe.
OK, it's much easier to be cynical and dismiss much of the above, some of which will only have the most tenuous of links with economic recovery. Taken together, though I think we may have "bottomed out" both politically and economically. Follow me below the fold to see if the case for a positive outlook stacks up:
1. General Election
Many will argue that the new Fine Gael/Labour Government is ideologically no different from its Fianna Fail/Green predecessor. Both are committed to implementing the austerity plan agreed with the ECB/IMF and an export market orientated approach towards achieving economic recovery. However the electorate did have a choice - Sinn Fein and the United Left Alliance did offer ideological alternatives which received only limited electoral support. The TINA (There Is No Alternative) ideology that default was not an option won in the end - with considerable media support - bit that is not to say that TARA (There Are Real Alternatives) voices were completely drowned out.
For all its faults, the Irish electoral system did what electoral systems are supposed to do: channelled a lot of popular anger into a change process, punished those who were seen to have performed badly, and gave a new generation of leaders their chance to show if they can do better. Nearly half the Parliament was replaced with new faces. Many have wondered why the Irish didn't explode with anger like the Greeks, and some theorised that Ireland lacked an infrastructure of dissent. But lets sing the praise of a political process that can achieve at least some measure of change without violence.
2. The Queen's Visit
It is easy to scoff at the significance of an eighty year old women with little direct political power visiting the country, but only those who have grown up on an island convulsed with anger and an urban guerilla war can appreciate the symbolic significance of the titular head of an opposing nation and religious tradition visiting the country to warm applause wherever she went. Sure, for security reasons her direct contact with the hoi polloi was limited but there was a genuine fear that a very unfortunate and perhaps even tragic security breach could have occurred. I got into a spat with Facebook bloggers who wanted to throw eggs or worse and there is still a strong under-current of anti-British feeling that is completely at odds with the reality that a significant majority in Northern Ireland remain committed to staying in the United Kingdom. Millions of Irish were forced to make their homes in Britain (and the USA) when the Irish economy and polity couldn't provide a viable home for them even after independence and so the links between us are simply too close for us to hate the Brits without hating ourselves. It is probably not coincidental that the UK offered Ireland Bilateral loans in the wake of the ECB/IMF debacle and has now offered to reduce the interest rate on those loans before we could even ask.
3. Barack Obama
By contrast, Barack Obama's visit was much more of a public relations stunt for his political benefit. But his visit too, had an important economic and political subtext: At a time when many in Ireland were feeling very let down by the EU (as well as by our own political elite) Barack's visit underlined that of all the European countries, Ireland has retained strong emotional and personal connection with the USA. Most foreign direct investment in Ireland still comes from US companies and the USA remains Ireland's single most important trading partner after the UK. After all the bad news surrounding the Irish economy, Barack's visit, and the positive images it invoked, will do the prospects for increased trade and investment no harm at all.
Tourism is Ireland's largest indigenous industry, contributing in excess of 4% of GNP and providing employment for over 200,000 people in every community throughout the island. Tourist numbers have incresed by 9% so far this year.
Sport is replacing religion as the opium of the masses but is also becoming of increasing economic importance both directly and indirectly. The roots of the Celtic Tiger economic revival are sometimes traced to Ireland's defeat of England in the 1988 European cup finals in Germany. The performance of Irish rugby teams in winning the Grand Slam (2009), the Heineken cup (Munster 2006 and 2008, and Leinster 2009 and 2011) and the Celtic League (6 times in last 10 years) has all helped to build a culture of confidence and success.
The economic value of sport has been estimated at 1.26% of GNP, but this will doubtless increase with the inexorable rise of golfing tourism partly due to the victories of Irish golfers in 6 of the last 16 Major golf tournaments in the world: Padraig Harrington (British Open 2007 and 2008, US PGA Championship 2008); Graeme McDowell US Open 2010; Rory McIlroy US Open 2011; and Darren Clarke, British Open 2011. The economic significance of this resurgence is hard to estimate, but With Rory McIlroy rated by many as the next Tiger Woods, it could be significant. Interestingly, both Rugby and Golf are organised on an all Ireland basis and there has never been a significant sectarian divide in either.
6.The end of Rome rule
Much of the divisions on the Island have been fuelled by the protestant/Unionist conviction that Irish independence from the UK was Rome rule in disguise. There was much to justify the assertion: John Costelloe Taoiseach in the 1948-51 and 1954-57 famously declared that he was a Roman Catholic first, and an Irishman second. His Government's first act was to send a telegram to the Vatican promising fealty to its views. Fianna Fail Taoiseach Eamonn DeValera drafted the 1937 constitution with explicit Roman Catholic Hierarchy and Vatican input and promising to respect the "Special Position" of the Roman Catholic Church.
The economic significance of this is that it also embedded a conservative Catholic bourgeoisie in power - dominating the economy through the professional classes and family businesses which throttled all entrepreneurial activity by outsiders. A culture of "it's not what you know, but who you know" dominated all activity and ambition was limited to obtaining a comfortable middle class lifestyle and the status this conferred. A broadening of access to education and an influx of foreign direct investment from the 1960's onward weakened the strangle hold of the national bourgeoisie but a culture of privileged entitlement to sinecured employment in the state sector prevailed.
The complete rejection of Vatican influence in the wake of the child abuse scandals puts a formal end to that hegemony. Ireland will not be the same again.
7-11. Economic indicators
I will not labour the point of the economic indicators which point to an end to the precipitous decline in GNP and the beginnings of growth. Time will tell whether a significant recovery is achieved, and it will in any case be a long time before unemployment declines sustainably. But at least the gloom of the last 3-4 years is beginning to lift, and some signs of political and economic recovery are beginning to emerge.