Ireland becomes a NAMA Republic

All across Ireland the evidence of an enormous property crash hits one in the face with empty houses and office developments all over the country. Many of these, it is now admitted, will be bulldozed. There are apparently 620 “ghost” estates in which 5,000 families live amid 15,000 empty or unfinished homes. From poster boy of the boom the Irish have hit the ground hard and fast. The property crash has bankrupted all its banks, which have been saved only by the state guaranteeing all their debts; taking away their bad loans and pumping billions into what is left to recapitalise them. All this may cost as much as €82.9 billion in an economy estimated to be producing only €132.6 bn in 2009.The peak to trough fall in Gross National Product has been estimated at 16.5 per cent, vastly bigger than the UK (6.4%), and even bigger than Iceland, which fell by 12.9 per cent. The national debt will increase from under 25 per cent of Gross Domestic Product in 2007 to over 100 per cent in just a few years. This year the budget deficit will equal almost 20 per cent of GDP. The Greek deficit in 2009 that caused the Eurozone crisis was ‘only’ 13.6 per cent.

Unemployment has risen to over 467,000 in a population of less than 4.5 million. Salaries in the public sector have fallen by at least 15 per cent, social welfare reductions have hit those in and out of a job and public services are being slashed. The budget in December this year must make cuts of at least €3 bn with more the year after and the year after that; all this after a budget cut of €3 bn in December last year and €5.5bn in April 2009. The fall in GDP is therefore a fall in the income of the working class and middle class. The ‘bad bank’ – National Asset Management Agency (NAMA) – that is taking over the banks’ worst loans at above their real value, so bailing them out, has plans to fund the property developers who inflicted the crash to the tune of €5 billion. Behind the fall in national income therefore is a massive transfer of wealth from the working class to the bankers, developers and the international money men charging high interest to the Irish state for the borrowing required to fund the budget deficit and the bank bail out.

Resistance

Such a large and sudden cut in living standards and transfer of wealth could not but provoke massive anger and resistance. In March 2009 over 120,000 people marched against a ‘pension levy’ which was simply an increase in taxation. Trade union leaders promised strong action and many unions balloted for strikes with a real possibility of simultaneous action by a number of public sector unions.

But then the union leaders called the strikes off and announced new talks with the government. They released a document setting out their strategy and invited those balloting for action to endorse it as the strikes’ objective. This policy, ‘a better, fairer way’, accepted that working people had to pay their fair share of a crisis for which they bore absolutely no responsibility. The only demand was that the rich pay as well. The bail out of the banks that was going to nearly quadruple the national debt was effectively ignored. Instead the trade union leadership in the Irish Congress of Trade Unions (ICTU) asked for the pain of cuts to be spread over a longer period. They asked for a fiscal stimulus similar to that of the UK and US, but proposed amounts that were far too small to have any real effect and failed to explain how a state with a huge budget deficit and without its own currency could afford such a policy.

The correct analysis that the draconian cuts planned would further deflate the economy and lead to a vicious spiral of cuts and recession hid the incorrect policy that Keynesianism would protect Irish workers. The real significance of the ‘better, fairer way’ was to foist on Irish workers acceptance that they would have to pay for the crisis. ICTU nowhere said what amount was fair and they ruled out opposing NAMA. The huge transfer of wealth to the bankers was to go unopposed.

The talks with the state effectively neutered workers opposition and allowed the government to introduce huge cuts in the April 2009 budget. Even before they commenced ICTU President David Begg had warned that the outcome of any agreement and the content of the emergency budget was likely to be disappointing. He wasn’t wrong.

The trade unions leaders then announced a new campaign ‘Get Up, Stand Up’. They called a series of demonstrations across the state on 6 November 2009 which was supported by tens of thousands. It was notable however that the vast majority were from the public sector. The government through the mass media had launched a truly vicious campaign pillorying the cushy conditions of public sector workers compared to those in the private sector. The campaign of the trade union leaders played into its hands by not promising to defend public services but only the wages, conditions and employment of public sector workers.

Planned strikes were called off again and talks between the government and union leaders resulted in a new deal for public sector workers to vote on – the Croke Park deal. This accepted all the cuts that had been inflicted, a pay freeze for years, acceptance of wholesale reorganisation of the public sector including outsourcing, changes to the working day, a ban on strikes to oppose these measures, a weasel promise to restore pay rates if possible and no more cuts in pay but only if things didn’t get worse. ICTU managed to get this policy through this year. In effect the workers had now said yes to the decimation of their living standards.

How?

How has this awful defeat been inflicted? Of course the war is not over but this should not make us lose sight of reality, only the stupid can pass off such a reduction in living standards as anything but defeat. Central to imposition of the austerity drive has been the support of the trade unions. Irish unions while declining relatively have increased their absolute membership over the past decades. The union leadership however has strangled the unions as independent means of workers’ mobilisation through a policy of social partnership with the bosses and government. This has left them utterly unprepared for a frontal assault by these same partners. The centralisation and bureaucratisation, not to mention corruption, of the union movement has wasted rank and file activity and initiative. The policy of union leaders in not organising in the multinationals and downgrading organising in the private sector has facilitated the government’s policy of divide and rule.

They have also played on the weak political consciousness of workers to push through a nationalist policy, of sharing the pain in the national interest, in order to disarm anger and opposition. Their alternative Keynesian policies leave the question central of the crisis – what we do about the banks – without an answer. No alternative to the cuts is possible within such a perspective.

If there is one thing more shocking than the enormity of the crash and the union betrayal it is that the government that presided over the bubble and its bursting is still in office. It knows it will suffer disaster at the next election and has nothing more to lose. The opposition parties are happy with it in power because this saves them taking the same unpopular decisions. The left has played into this delaying tactic through a long established electoralist strategy which sees the principle problem as one of working class representation. They have therefore concentrated on their electoral projects. A strategy of ‘left’ unity is however in tatters now that the Greens, held up as part of the left, are in government implementing the worst cuts in history. Ritualistic opposition to social partnership, lack of clear socialist politics, the usual political sectarianism married to opportunistic alliances have all come home to roost. The alternative starts with reversing all of these failures.

Joe Carter