The general election in the Twenty-Six Counties is being fought against the backdrop of two momentous events: the greatest economic crisis to face the statelet since its foundation, and the surrendering of what was left of economic sovereignty to the International Monetary Fund and the European Union.
The extent to which sovereignty has been surrendered was starkly observed last week at a press conference hosted by the European Central Bank at its headquarters in Frankfurt where the president of the bank, Jean Claude Trichet, had a very clear message for voters in the Twenty-Six Counties. Questioned about the possibility that a new government in Dublin might seek to renegotiate the IMF/EU deal and may force international bondholders to take some losses on their gambling debts, Trichet had a blunt and forceful message to a rather tame proposition.
Speaking in the mode of a colonial overlord, he made clear that power resided with the international institutions of the EU and IMF, that voters’ choices were limited and that the power of capital would prevail:
“The implementation of the plan is absolutely essential, in the opinion of the European Central Bank for the credibility of the country... I would only say that there is a plan. This plan has been approved by the IMF, by the international community and by the Commission in liaison with the ECB. Let’s apply the plan! That is my message.”
So what is “the plan”? Well, it is clear that the plan of the EU is to protect German, French and British investment banks who lent recklessly to Irish banks and to salvage the European Monetary Union. It is equally clear that this plan will impoverish tens of thousands of households across the Twenty-Six Counties.
These investment banks are the infamous ‘bondholders’ whose debts working people in Ireland have been saddled with as a result of the blanket bank guarantee scheme: domestic Irish banks owe German banks €113 billion [£95 billion]; British banks €107 billion [£90 billion] and French banks €36 billion [£30 billion]. While German, French and British banks pumped up Irish banks with cheap credit, inflating the property and credit bubbles, the message from Trichet is that the EU will protect the banks of its most powerful states, even at the price of impoverishing this and future generations of Irish people. This is democracy EU-style, where the rights of citizens are crushed underfoot by the dictatorship of the private markets.
Currently, workers are experiencing significant losses in their pay packets as the impact of Brian Lenihan’s regressive Universal Social Charge begins to take effect. Measures such as this, along with the continued depression of wages and high rates of unemployment are causing a deflationary spiral. The household debt burden is substantial and has grown exponentially over recent years. According to figures from the Central Bank, lending to households more than doubled in the four years between January 2004 and January 2008.
There are now at least 70,000 households in the Twenty-Six Counties in significant difficulty meeting their mortgage repayments. Last week’s decision by Permanent/TSB to raise standard variable mortgage interest rates by one per cent will potentially drive many thousands of these households over the edge. We are hurtling towards a major crisis and ordinary people and working class communities will be forced to defend their homes from the bailiffs who will be sent by the European investment banks.
Despite the fact that the current policies imposed both by Fianna Fáil and their EU/IMF masters have destroyed the living standards of working people, the establishment media is quick to deride any party that proposes that the private banking debt be repudiated and the IMF sent packing along with their anti-social austerity measures. The tired old cliché ‘we are where we are’ is trotted out by political representatives who seek to get back to business as usual and create new avenues of profit for the wealthy.
Those who argue for the redistribution of wealth and a reversal of the cuts are labelled ‘loony lefties’ while the right-wing economists and politicians who support cutting the blind pension and child benefit in order to secure the wealth of international bondholders are deemed to be rational beings.
Throughout the first week of the general election campaign, there has been much political debate about plugging the gap in the budget deficit and the right-wing’s view of the consequent ‘necessity’ for public spending cuts. So narrow are the confines within which public debate in the Twenty-Six Counties is currently framed that it seems the lunatics are firmly in control of the asylum.
There has been scant discussion of the fact that there is actually vast wealth in the Twenty-Six Counties, which the political establishment chooses not to pursue. éirígí and its colleagues in the 1% Network have been campaigning for almost a year highlighting the fact that just one per cent of the population of the Twenty-Six Counties controls 34 per cent of the wealth. Even taking into account the recession, this tiny elite continues to control assets in excess of €120 billion [£100 billion], yet the political establishment holds firm that workers and social welfare recipients should shoulder the burden of privately accumulated debt.
Furthermore, there is vast wealth off the coast of Ireland which the state handed over to oil corporations. But for the brave and determined actions of the Shell to Sea campaign over the last decade, the €10 billion [£8.4 billion] worth of gas in the Corrib field would have already been lost and there would be no debate about the giveaway of a further potential €500 billion [£420 billion] in oil and gas reserves off the coast of Ireland.
As the bosses pursue their campaign to drive down wage rates, they are equally determined to maintain their own low corporation tax rate of 12.5 per cent. IBEC, the bosses’ representative body, launched its election demands this week, which included the maintenance of both the low rate of corporate tax and the recent cut to the minimum wage; calls for the scrapping of Registered Employment Agreements, imposition of a tax on the family home, introduction of a workfare programme, enhanced privatisation programmes and reductions in employer PRSI contributions.
IBEC has substantial lobbying power and is supported by both the IMF and all of the political parties currently represented in Leinster House in maintaining the 12.5 per cent corporation tax rate. While workers are being crucified with pay cuts, additional taxes and the so-called Universal Social Charge, the bosses have full political support in Leinster House in maintaining the current system of corporate welfare.
Last year, the exchequer in the Twenty-Six Counties took in a total of €31.5 billion [£26.4 billion] in tax revenue, of which €3.75 billion [£3.1 billion] came from corporation tax. US multinationals have long used the Twenty-Six Counties as an effective tax haven, through transfer pricing and availing of tax exemptions on patents. This allows corporations to inflate their profits to avail of the low rate of corporate tax. It was recently revealed that Google used this money laundering device to cut its tax bill between 2007 and 2010 by a staggering €3.1 billion [£2.6 billion], reducing its effective overseas tax rate to just 2.4 per cent. Facebook is preparing a similar arrangement using the Twenty-Six Counties to channel its profits onto the Cayman Islands.
In 2009, Dell Corporation transferred its manufacturing operation from Ireland to Poland, a country with a higher rate corporate tax rate of 19 per cent. Dell withdrew from Ireland, not because of the corporate tax rate, but because it found a cheaper source of labour in Poland. Are the proponents of the 12.5 per cent corporate tax rate suggesting that wage rates in the Twenty-Six Counties be driven down further in order to maintain ‘competitiveness’ with other low wage economies? The ‘Celtic Tiger’ economy that has crashed so spectacularly was built upon an overreliance on Foreign Direct Investment and low taxes on profits. It seems the political establishment is determined to get back to business as usual and is unwilling to acknowledge the systemic failures of this economic model.
While a general election is upon us, with the likelihood of a Fine Gael-led government there is no prospect that the current agenda will change in any way. Fine Gael is committed to the IMF/EU deal and a further three years of savage budget cuts. The party has vowed to sack tens of thousands of public sector workers, has already drawn up plans to privatise the ESB, supports the imposition of water charges and a tax on the family home and, this week, announced plans to privatise public health provision. It is clear that a Fine Gael-led government will be no different from a Fianna Fáil-led one: the working class will be forced to carry the debt burden of the rich.
There has been much debate in left-wing circles and elsewhere about the failure to mobilise significant forces in response to the war being waged on working people. It is clear that, for many, the general election represents an opportunity to give Fianna Fáil a kicking. And so it does. The toppling of many of those elected representatives responsible for acts of economic terror against working people will gladden the heart of many a worker.
The working class, however, needs political representation of a kind that not only fights for its interests in the elected institutions but also in the workplace and on the streets. With the likely elevation of Fine Gael to power, there needs to be a renewed sense of urgency in building widespread opposition to both the international institutions that control the Twenty-Six County state and their native lackeys.
The fight against cuts and corporate welfare and the defence of the working class is only just beginning.