John McAnulty of Socialist Democracy (Ireland) provides an analysis of the forthcoming exit of Ireland’s economy from the direct control of the IMF, EU, ECB Troika
Ireland’s exit from the Troika mechanism, that had taken over as the effective government of the country, has been presented as a triumph for democracy and national independence by the coalition government. One can almost imagine the Fine Gael and Labour coalition government reenacting the 1916 rising and holding the GPO against the forces of the IMF and ECB.
The only discussion has been a heated one around the conditions of exit. Was the government right to exit right away? Would it have been more prudent to seek a “parachute” in the form of a €10 billion line of credit?
This whole discussion is an exercise in smoke and mirrors. Ireland remains utterly prostrate under the heel of the imperialist powers. The capitalist parties inside the state can imagine no other way of doing things and the majority of workers at present see no prospect of an alternative reality.
The exit is essentially a political act. The coalition government was elected on the promise that it would end corruption and incompetence, end the national humiliation of the Troika occupation and renegotiate the terms of the bailout. Now it is preparing to defend itself in forthcoming local and European elections in a situation where it has imposed a grinding austerity and is widely hated.
The coalition will argue that the merciless imposition of austerity is an example of necessary efficiency. It will present the second 2013 bailout, which extended the repayment terms until 2054, as a renegotiation. Finally it will claim the current exit as a triumph of nationalism and a purging of national shame.
Just how false all this is, is best illustrated by the background to the exit.
- First there is a “parachute.” The Irish bourgeoisie have built up their own €25 billion line of credit over the past year by using a limited short-term borrowing facility allowed under the Troika. The cost will be met by Irish workers with an additional €1 billion in interest payments.
- Secondly, we will not escape supervision. Ireland has a repayment schedule stretching until 2054 that is overseen by the European Central Bank. They have the country on a choke chain. The 2013 rescheduling was never formally agreed by the bank. Rather the terms were simply noted and can be changed at any time. In addition the Troika will return from time to time to stage inspections.
- The third element that has to be considered is the contradictions within the European austerity policy. Ireland is the poster child for that policy. A successful exit would represent confirmation that European economic strategy was succeeding. However it is equally important that Ireland be shown no mercy. Spain and Italy have just been advised that their budgets do not meet the requirements of the Financial Stability Pact and France that theirs is on the borderline. Even major European powers are forced to directly confront the working class and risk rebellion as they push down the cost of labour.
Ireland did not accept a line of credit – but it was not offered one. With the new German government not yet in place, extended negotiations might have fed doubts about the Irish recovery. In any case there are many critics of Irish policy. Austerity aimed at the working class has been successful, but a large layer of gombeen capital and an army of retainers have avoided any onerous taxation or modernisation. Another major element is the Irish government’s fear of further pressure around their policy of subsidizing transnational firms with a corporation tax rate of 12.5%.
And that fact alone lays bare the utter dependence of the Irish state. The freedom it fights for is the freedom to subsidise transnational firms.
Behind the tactical calculation about the use of the bailout exit to maximize their election prospects there is a political reality. The Irish capitalist class is largely parasitic. It long ago gave up dreams of an independent capitalism and an Irish democracy. It sees it future in negotiating contracts with and providing services for a transnational sector that operates in a parallel economy and puts the native economy in the shade. A return to the bond market is, for Irish gombeen capital, a return to its natural environment.
However the freedom to play the market carries a substantial risk. While profits in the transnational economy have recovered, the domestic economy remains flat. The banking sector is still on its knees and massive household debt will be increased by the impact of yet another austerity budget. There is no rebalancing of the Irish economy. It is utterly dependent on imperialism and on native speculation. One of the claims of revival is based on a renewed housing boom in Dublin. The growth in property sales has led to National Asset Management Agency (NAMA), the asset recovery agency, offering for sale a major business park in Dublin at a price of €250 million. This will be presented as a victory, with a book profit, but in reality in will represent a massive asset loss to the Irish public. All prices assigned to NAMA assets are based on their long-term market value, an entirely fictional value based on the fact that, at the time NAMA was set up, they were all virtually worthless. In order to establish a value the public was forced to take a “haircut” of between 30-50% and all calculations of profit and loss were based on the Long Term Market Value.
What is evident is that an Irish recovery is utterly dependent on a European recovery and that both are based on a suppression of wage rates, denial of basic services and the seizure of public assets. This guarantees that there will be no recovery for the workers. In fact, although there are claims of revival, there are no signs anywhere of a strong and sustainable recovery.
Ireland’s exit from direct Troika control is not in any sense Ireland’s freedom. Irish capitalism has long lacked the “generally democratic content” that Lenin wrote about.
A new call for freedom waits on the fall of the current movements of class collaboration and the resurgence of the revolutionary, democratic and socialist tradition within the working class. The raw material for such a resurgence is all around us in the everyday class struggle. Although currently at a low ebb, occupations, disciplined strikes, organized rejections of austerity and major movements of civil disobedience are all unremarked components of everyday struggle in the very recent past. A weakness in the enemy, an unexpected victory for our side, could all lead to a revival of struggle and a sweeping away of a leadership firm in its conviction that there is no alternative to the domination of capital.