By TANA FRENCH
DUBLIN — FOR the past month, Ireland has been outraged by tapes of Anglo Irish Bank officials, back in 2008, discussing lying to the government about how big a loan they needed, and how they knew there was no chance that the loan would ever be repaid. That loan was the first domino in a sequence that ended with the whole Irish economy flat on its face.
It’s not the bankers’ actions that have outraged people — pretty much everyone had a fair idea that this was what had gone down. It’s the overpowering sense of amorality revealed on the recordings, which were released by the Irish Independent newspaper. The bankers have a great laugh about the situation. It genuinely never seems to mean anything to them that the taxpayer is going to be forced to pay their bills, to the tune of tens of billions. More than that: it never seems to occur to them that their actions might harm people.
I write psychological crime, so I spend a fair amount of time thinking about morality and amorality and what underlies them. And it seems to me that this amorality could be a symptom of something deeper: a total disconnect between action and consequence.
Ireland’s population is just over half that of New York City’s. Our ruling class — including many of the politicians, bankers and property developers who wrecked the economy — is a tiny community, interwoven by friendship, marriages, education, sports and financial transactions to a degree that would be unimaginable in a bigger country. That interweaving has created a safety net that won’t let any of the ruling elite fall. If you’re a banker and your golf buddy’s kid wants to be a banker, then it doesn’t matter if the kid is an idiot, or if he kills cats for kicks: you’ll take him on, and you’ll keep him on.
For many of these people, action and consequence don’t apply; their lives are mapped out from birth, and nothing they do will alter that map. It seems to me that that would be intensely disempowering, even terrifying. Instead of being a series of interlinked actions, life is made up of a scattering of events that have no discernible relationship to one another and that you don’t influence in any real way. In that climate, it would be difficult to develop the sense that your actions make any difference, that you have any responsibility for the consequences. Without cause and effect, there’s no foundation for morality.
I’m not saying this is an excuse. It isn’t. But, like everyone in Ireland, I want answers — for the taxes piled on taxes, for the enormous cuts to essential services, for the dole queues and the flood of emigration, for the desperation in the voices of people who are trapped in ghost estates and don’t have the money to buy their kids shoes. And I wonder if this could be one small facet of one of the answers.
Another question, maybe a more interesting one, is how people who weren’t part of that powerful elite got sucked into the property pyramid scheme that fueled the boom. Some commentators have implied that the answer is basically the same: people got deep into credit-card debt, or took out mortgages for 10 times their income, because they were temporarily sucked into the psychosis of the powerful and it didn’t occur to them that there might be consequences.
But I wonder if, for these people, the truth might actually be the opposite.
Throughout the economic boom, the politicians and bankers and property developers, along with the news media, were telling all of us that cause and effect were perfectly, inextricably linked: “If you buy a vastly overpriced and shoddily built house in the middle of nowhere, the economy will keep growing, and in a few years your house’s value will have doubled, and you can sell it to some other sucker and buy something you actually want and live happily ever after and UTOPIA!!!” It was as simple and certain as sticking a coin into a vending machine: insert Action X, and the life machine will inevitably whir and beep and spit out Future Y.
THE Irish are notoriously cynical, but the Utopia myth hit at exactly the moment when we were most open to unquestioning belief. The majority of Irish people were so desperately poor, for most of the country’s history, that when suddenly we weren’t broke any longer, the cynicism was washed away by the flood of prosperity. We needed to believe that the Celtic Tiger hadn’t simply wandered in, because that would mean it could wander out again. We needed to believe that we had somehow made it happen, and that therefore there were things we could do, like buying overpriced houses, to make it keep happening. We needed, basically, to believe in that chain of action and consequence.
And so the Irish tendency to raise an eyebrow at anything that’s presented as certain paradise dissolved just at the moment when it was needed most.
A lot of my generation believed that chain was unbreakable. When it shattered, so did they — not just financially (although that too), but also psychologically. Their whole sense of a world governed by coherent cause and effect, of their ability to have any agency in their own lives, came under attack.
Those people, the ones who trusted too deeply in action and consequence, were the ones who got utterly, shamelessly destroyed by the people who had no such belief. I’m pretty sure the effects of that betrayal, for Ireland, will take decades to fully unfurl.
Tana French is the author, most recently, of the novel “Broken Harbor.”
Kevin O’Rourke links to an interesting paper by Jeff Frankel which discusses different ways recessions are measured. The standard European measurement says that when an economy falls two quarters in a row it is officially in recession (we know all about that given our official double-dip). This measurement has the advantage of being statistically clear and simple. This, though, can lead to false readings. For instance, over two years the economy declines in half of the eight quarters – leaving it much lower. If, though, none of those quarters were consecutive, then according to the European measurement, there was no recession even though output has fallen. This may be an extreme case but it shows how quirky this measurement can be.
The US has a different way of measuring recessions. According to Frankel:
‘In the United States, the arbiter of when recessions begin and end is the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER). The NBER Committee does not use that rule of thumb (Europe’s two consecutive quarters of decline), nor any other quantifiable rule . . . When it makes its judgments it looks beyond the most recently reported GDP numbers to include also employment and a variety other indicators, in part because output measures are subject to errors and revisions. The Committee sees nothing special in the criterion of two consecutive quarters.’
The problem with this approach is that there is no single definitive measurement so disputes easily arise.
I’d like to introduce another way to measure a recession. It is based on the sinking-ship metaphor. A ship starts sinking. It eventually stops and starts to rise again. While it’s rising back to the surface we can say that it is in recovery mode. However, it will remain below water until it gets back to the surface.
Similarly with an economy: an economy goes into decline, eventually stops falling and starts rising. However, it remains metaphorically below water until it returns to the point at which it had started sinking. If an economy is below its pre-recession levels it remains ‘recessed’.
Take, for instance, the US Great Depression in the 1930s. The economy tanked big time in 1929. However, by 1935 the economy had experienced nearly three years of rising GDP, employment, consumer spending and investment. However, no one then (or now) would have said that the Great Depression was over by 1935 – it was still well below its 1929 level.
In 2007, the economy was generating a little over €43,000 for every woman, man and child. As seen, according to the IMF projections, even by 2018 the economy will not have returned to the 2007 level. It won’t happen until 2019. In other words, the economy will remain under-water for 11 years – in other words, ‘recessed’.
Of course, this is GDP – which is flattered by multi-national accounting practices (profit-tourism, etc.). What does it look like when we measure GNP per capita? Here we use the Government’s own assumptions in their end-of-the-decade scenario.
When looking at this domestic measurement (with all its faults) we find that the economy will be underwater for 14 years. 14 years. We won’t find ourselves above pre-recession levels until 2022. And if that’s not depressing enough, the ESRI’s John Fitzgerald estimates that even our GNP figures are over-stated given the presence of re-domiciled multi-nationals. The real GNP figures are substantially lower which suggests that a return to the surface could take even longer based on projected trends.
Staying with the metaphor, when the ship returns to the surface what kind of shape will it be in? Even though the economy has returned to the surface, many people will still be underwater. The Government’s end-of-the-decade scenario projects double-digit unemployment by 2019. Average real wages may not return to pre-recession levels until 2020 and even later. How many will still be living in deprivation, how many in poverty, how many will have emigrated? The ship may be back on the surface, hundreds of thousands won’t be.
To give another idea of what we’re facing into, let’s use the Government’s assumptions to track the ‘jobs recession’.
We won’t return to pre-crisis levels of employment until 2024. That’s 16 years under-water.
So when we start growing again – GDP, domestic demand, employment – just remember: we will have to grow for a long-time just to get back to where everything started collapsing. In other words, the ship may start rising soon but we will be underwater for a very long time.
Hopefully, you can hold your breath.
By Michael Taft,
Michael Noonan the Minister of Finance said
Ireland is emerging from its economic crisis, Finance Minister Michael Noonan has declared in this opening remarks of the Budget 2013.
“the economy could soar like a “rocket” next year as new figures showed that the country’s goods-trade surplus jumped 20% in January compared to the same month last year”.
Three things all serious people know are true
This post was written by Kevin O’Rourke
A holy trinity — or perhaps a troika? — of beliefs has guided policy since 2010. These are that austerity is expansionary; that the sky will fall in if ever the debt to GDP ratio exceeds 90%; and that the way to do austerity is to cut expenditure rather than raise taxes.
All of which is very convenient if what you really want to do is shrink the state.
We know how well the first two nostrums have performed when confronted with empirical evidence, so you might think that people would be just a wee bit cautious about stating the third as gospel truth. But no, here is Mario Draghi:
First, fiscal consolidation should be based on reductions in current expenditure rather than increases in taxes. Unfortunately, many of the fiscal consolidation measures were implemented in an emergency situation, with most governments choosing the simplest route, which was to raise taxes. And here we are talking about raising taxes in an area of the world where taxes are already very high, so it is no wonder that this had a contractionary effect.
Paul Krugman helpfully reminds us where this belief came from, and what happened next. The ECB is constantly telling us that it has a narrowly restricted mandate, with its primary concern being inflation. In that case, then surely the least that we are entitled to expect is that it keeps its views about the composition of fiscal adjustments to itself?
WHY YOU SHOULD MARCH ON 9TH FEBRUARY 2013
The banking collapse has left the average EU citizen with a bill of €192. Bad enough you might think until you consider that the average Irish citizen will have to cough up €9,000 to rescue the banks. That’s right; it’s not a misprint; there’s not an extra zero in there.
That’s why there are protest marches on 9th February.
That’s why you should be there.
Because despite pious platitudes that Ireland is a special case the EU has decided that the European banking crisis must be dealt with by each individual country regardless of size or ability to pay. So much for the idea of a community!
Ireland makes up just 0.9% of the EU population, and the Irish economy makes up 1.2% of the EU’s GDP. But even though we are a tiny part of the EU we have to cough up 42% of the European banking crisis.
All in all the banking bailout is set to cost us €64bn.
Trying to pay this €64bn bank debt is behind five years of austerity.
Trying to pay this bill is costing jobs and driving thousands to emigrate.
Trying to pay this bill is behind increased taxation and more threatened wage cuts.
After five years of austerity we all know that without a bank deal there is no hope of recovery and that continuing with this failed policy will cripple Ireland for generations to come.
We must send a clear message across Europe that we need a deal on debt.
The ICTU Rallies on February 9th 2013 are your chance to send that message and to protest against the cause of our economic crisis – bank debt. A large turnout will show the EU leadership the depth of feeling in Ireland about the issue.
Marches on the afternoon of 9th February are planned in:
At the risk of being tedious once again on the subject of history there are plenty of examples of small nations using their brains to balance competing powerful dynamics around them. The island and city states between ancient Greece and Persia being one historical example.
Ireland has one good natural industry which provides a national income stream and that is agriculture and its related exports. There is another provided by our location that is criminally underutilised and that is ‘blue farming’ or sustainable marine farming. We’re not short of raw material there either. Other than that, it has a high profile in the world for tourism – an industry that has been known to be abusive to its potential customer base in the past, it has to be said. Most of the ‘service’ sector of the Irish economy is fake – an accountants’ trick.
We have no reason by our location to come into conflict with the BRIC countries. It should be perfectly possible for us, provided we form the habit of thinking along these lines and drop the insecure paranoia about how close to Berlin or Boston we happen to be on any given day, to be able to steer a path for ourselves.
We have the worst of all worlds at the moment no self-governance over finance, the balance of trade destroyed because we are exporting large sums of money regularly out of the Irish economy to pay currency gamblers and their mates abroad, a financial centre which has no interest in paying any kind of meaningful rent to be in the country and serves only to distort the domestic economy, a professional class incapable of undertaking any national project without robbing as much of whatever budget can be robbed and an utterly dull secretariat convinced of its own importance but unable to take on any major initiative without expensively buying in ‘expertise’.
Mineral wealth corrupt backhander deals enriching state negotiators with the result that that potential income stream has been delivered to looters.
Ireland desperately needs a serious insurrection and a unilateral nationalisation of resources plus a policy of refusing to sell off other assets with the threat of default if the vultures demand such sales. For the first time in its history Ireland has a nuclear deterrent and that is around the possibility of taking the Euro area down by pressing the button marked ‘default’.
Our servile policies in this area maintained by a group of carpetbaggers called politicians result only in us being treated as the servant in the room. Looking ahead – who is going to respect Ireland in negotiations when we have our political leadership being patted on the head with his little photo on the front of a corporate rentboy publication and the designation ‘European Servant of The Year’?
History again – sovereignty is never achieved or held without demanding and insisting on it. There are no examples anywhere of a country being handed its self-determination as a gift by other nations and power blocs. It is something that has to be fought for and held. Germany and the EU are not some fine day going to say ‘good lads, here you go, you’ve been very good and now off you go and enjoy yourself’.
Anyone who thinks Ireland will emerge as a sovereign nation again at some point given current conditions is a fool of the very worst kind. The paradigm must be changed, whatever the pressures against. Failure to insist on sovereignty over time will result only in servitude.
Captain Con O’Sullivan 10th November 2012
Irish Golden Circle still shining despite massive recession — Still running the show despite bankrupting the country
Brian Goggin, formerly of the Bank of Ireland
They were called the golden circle, the people in the inside loop who made lots of money during the boom years here.
I’m not just talking about the property speculators and developers playing with their borrowed billions who were in an inner platinum circle all of their own. The golden circle was far wider than that.
It included bankers, lawyers, accountants, financial advisers, brokers, management consultants, IT experts, the top layer of professionals of all kinds — and it also included the senior levels in the civil service and state agencies, the guys and gals who actually run the country for the politicians.
So having comprehensively screwed up the country and plunged us into a financial catastrophe so bad that we had to be rescued by the IMF and the EU, all these guys and gals are now out of a job, right?
Not at all. This is Ireland, after all. The unbelievable, extraordinary truth is that almost all these experts and advisers have held on to their top jobs and are still doing very well, thank you very much.
While the ordinary folk here struggle in the darkness of lay-offs, welfare cutbacks and tax hikes, the sun is still shining brightly on our golden circle.
Of course there has been some token changes. At the very top of the Department of Finance, the Central Bank, the Financial Regulator‘s office and, of course the banks, a few people were shifted. A couple went to cozy positions in Europe with big salaries attached, and the others were put out to grass with pension pots worth millions and huge golden handshakes so they can continue to enjoy the privileged lifestyles they expect.
Only a very small number of people were moved from the leadership roles they had. In fact you could count on two hands the number of top dogs who were moved.
The majority of the top layer of people, who all played a part directly or indirectly in destroying our economy, are still there. The senior civil servants, the financial experts, the consultants, the lawyers, the accountants and auditors are all there and still being paid boom time salaries and fees.
The game has changed, of course. Instead of advising the government and businesses on the boom, they are now advising them on the bust.
The bankers and accountants and auditors and consultants who failed to see the developing bubble are now the ones making fortunes dealing with all the businesses that are going bust. Dozens of them have even been hired to play key roles in NAMA, the national bad bank where all the toxic property loans have been dumped.
So the very people who made the mess are now the ones making a very lucrative living out of trying to sort it out. Two or three of the biggest legal firms and accountancy firms here which were up to their necks in the boom are now “advising” on the bust.
This is enough to give you indigestion. But what is really sickening is that the members of this very large golden circle are still charging eye-watering fees for their services.
We’re talking hundreds of euros an hour here. And
they are getting away with this even though the country is broke — and it’s broke thanks to their incompetence.
It starts right at the top, of course, with our politicians, who are paid far more than their European counterparts. We all know the taoiseach (our prime minister) earns more than the U.S. President. But he also is paid more than the British prime minister and more than the heads of most European countries, which may be a less dramatic comparison but is more relevant.
The same applies to the civil servants who head up government departments here, and to many other areas of Irish government and professional life. Consultant doctors and top lawyers in Ireland earn far more than their counterparts in Europe.
Further down the ladder, senior teachers here earn at least 20 percent more than teachers in Britain, for example. And it goes on and on, increasingly dividing Irish society into those who are comfortable and those who are struggling to make ends meet.
The common factor among those who are doing okay — in case you haven’t spotted it already — is that they all work for the state or for semi-state organizations (except for the bank bosses, although you could say they also work for the state since the state now owns the banks).
This influences fees that are charged by others who provide professional services to the state (like lawyers and accountants) and so they keep their fees and charges high. Why should they bring them down when they see all the others in the golden circle hanging on to their high pay and status?
What all this means is that we are developing two Irelands. There are those who are paid by the state, directly or indirectly, and who see no reason to moderate their pay or pensions as long as the state can borrow enough to keep going; since it’s all paid for by borrowing, there’s no real limit.
Then there is everyone in the private sector, where pay and pensions depend directly on the ability of a company to make a profit and stay in business –and for more and more of them, the cost of keeping a job or continuing to get a pension means taking huge cuts in what they are getting.
The pension divide between the two Irelands is even more nauseating than the pay situation. Let’s start with two of the most infuriating examples from the top of the golden circle.
You may remember the name Brian Goggin, the boss of Bank of Ireland during the boom. You also may remember the name Eugene Sheehy, who was the boss of AIB during the boom and property bubble, which of course only happened because the two banks (the biggest in Ireland) made it possible through reckless lending.
Sheehy has a bit of extra notoriety because he was one of the senior bankers who had the late night meeting with the taoiseach and the minister for finance in September 2008 and pleaded for help to help them get through their “temporary liquidity problem.”
The result was the government guaranteed all bank debt, a decision that has bankrupted the country because the real level of the bank debts was many times greater than Sheehy and his buddies revealed to the government that night.
The banks did not just have a liquidity problem. They were insolvent. They were completely bust, owing tens of billions of euro with not a hope of ever being able to pay it back.
So Goggin and Sheehy were major players in destroying the Irish economy and losing us our economic sovereignty. Not only that, but we taxpayers have had to meet the cost of pouring billions into AIB and Bank of Ireland to keep them open.
Did the two boyos go to jail? Or even have to do some community service to atone for what they had done? Not at all. This is Ireland, after all.
They were both moved, given early retirement. And this is the best bit. Goggin is on a pension of €650,000 a year for the rest of his life. Sheehy’s pension is €450,000 a year for life.
Both are still relatively young. Sheehy has gone
back to college. Goggin is back at work, playing a leading role in a multi-billion U.S. investment group that is targeting distressed property loans in Ireland and buying baskets of insurance policies from finance institutions here that are under pressure.
These are extreme examples of the way golden circle members here get looked after. But the same stuff goes on all the way down the state food chain, with state employees getting very generous guaranteed pensions for life, typically between half and two thirds their final salary.
And it’s all funded by state borrowing, so there is no limit on what it costs. Contrast this with the private sector, where almost 80 percent of company pension funds are bust, thanks to the financial collapse.
Let’s take an example to illustrate what’s going on. The pension fund in Independent Newspapers, the biggest newspaper group in Ireland where this writer has worked, now has a black hole in it of some €160 million and is probably going to be closed down, leaving a lot of people with little or nothing.
Meanwhile out at Dublin Airport, the umbrella pension fund that looks after staff in Aer Lingus, the DAA company that runs Irish airports and a linked aircraft maintenance company, has a black hole in it of €750 million. Because Aer Lingus and the DAA are semi-state companies, the unions are trying to force the government to pump money into this pension fund so staff can get their full pensions.
And you are all going to know about this very soon because the unions are threatening a wave of strikes in the run up to Christmas that could disrupt trans-Atlantic flights.
The fact that the pension fund is bust — there’s no way back from a €750 million deficit — and the state is bust, makes no impression on these semi-state workers. As far as they are concerned the state must borrow to back fill their pension fund. It’s that simple.
In the real world of the private sector, such nonsense is not an option for workers because their companies cannot borrow like this and could go under if they tried. Independent Newspapers is already struggling for survival, quite apart from its pensions problem.
It’s a two Ireland scenario. Unfortunately the politicians and the civil servants who run the country are all part of the Ireland that is okay.
They talk a lot, but there is no action to reduce the problem for the private sector workers who are part of the other Ireland. Instead we get lectures from union leaders about avoiding a race to the bottom in wages and pensions.
Like I said, the golden circle is still shining, but the glow is making the rest of us feel like throwing up.
Earlier this month, Providence Resources announced that an oil field at Barryroe, off the coast of Cork, is expected to yield 280 million barrels. The company’s CEO, Tony O’Reilly Jr, the son of the media mogul, told the Today programme that this was ‘very good news for Providence shareholders and the Irish economy’. The first part of his statement is undoubtedly true: Providence’s share price rose sharply on the back of the Barryroe news. That Ireland’s economy will benefit is much less likely.
According to the World Bank, Ireland offers ‘very favourable’ fiscal terms for oil and gas companies. At 25 per cent, Ireland’s government take is among the lowest in the world. Norway’s, by comparison, is 78 per cent; Yemen’s is 95 per cent. Ireland also boasts some of the most generous tax-write offs in the industry: companies can offset all costs before they declare profits, including any ‘incurred in the 25-year-period prior to commencement of field production’, from such activities as drilling unsuccessful wells in Irish waters.
When a company finds oil or gas in Irish territory, ownership and control of the resource is transferred in full to the company; no royalties are paid to the state; the company can choose to export the oil or gas; they do not have to land the resources in Ireland or use Irish services or personnel.
In the late 1950s, the minister of industry and commerce (and future taoiseach) Seán Lemass sold the first exclusive exploration drilling rights in Ireland for £500 to Madonna Oil, a shell company owned by three American representatives of the Messman-Rinehart Oil Company of Wichita and the Ambassador Oil Corporation of Forth Worth. In 1961, a two-thirds share in the rights was sold to Continental Oil and Ohio Oil International for $450,000.
In 1971, Marathon Oil (as Ohio Oil International had become) discovered gas off Kinsale, Co. Cork. The terms of the government deal under which the gas was extracted were so favourable to the company that it became an issue in the 1973 general election. Influenced by Norway’s creation of a state oil company, the new minister for industry and commerce, Labour’s Justin Keating, set about recalibrating Ireland’s relationship with oil and gas companies: the state would have a stake in any commercial find; corporation tax on oil and gas revenue was set at 50 per cent; production royalties would be levied.
eating’s amendments did not last long. In 1987, the energy minister Ray Burke – who in 2005 was jailed in relation to corrupt payments received in office – abolished royalty payments and state participation in oil and gas development. In 1992, the finance minister (and another taoiseach in waiting) Bertie Ahern cut corporation tax for the industry from 50 per cent to 25 per cent, where it broadly remains, despite some alterations to the new licensing terms made by the Green party minister Eamon Ryan in 2007.
Ireland’s oil and gas regime reflects the dominant logic of Irish economic policy: low taxes will make Ireland attractive to foreign companies, even if they are simply harvesting the country’s natural resources and creating little in the way of jobs or tax revenue. That speculative Irish licence holders get rich in the process is no cause for concern.
A year ago, the minister for communications, energy and natural resources, Pat Rabbitte, announced that 13 new offshore exploration licences had been awarded. ‘Ireland must continue to communicate the message to international exploration companies that Ireland is open for business,’ he said.
In 1973, the Union of Students of Ireland published a pamphlet entitled What’s Mined is Ours! The Case for the Retention and Development of Irish Minerals under Public Ownership. According to the foreword, ‘those with a vested interest in the development of Irish mineral resources appear to have access to unlimited finance for public relations purposes.’ One of the text’s three signatories was the USI president, Pat Rabbitte.
The Irish economy is so bad, even the country’s famed pubs are hurting.
That’s right, there are fewer pubs in Ireland at which to drink away your sorrows, thanks to a combination of worries not the least of which is the brewing crisis on the European continent, according to USA Today.
The report offers some sobering numbers for the “publicians” of Ireland, who have seen more and more closings since the Irish economy in 2006, driven by a housing boom to rival the one seen in the United States.
Irish bar sales fell 5 percent in the past year alone and the number of bars fell to 8,300 from 10,000, according to USA Today’s story. Pubs that survive do so by cutting workers, closing during the week and cutting back hours, according to the story. Some owners are also taking some unique measures: offering to drive drunk patrons home themselves, for example.
Bars aren’t the only thing disappearing: 3,000 Irish leave the country each month, with Irish emigration levels at their highest point since the Famine.
Fallout from the European economic crisis has devastated the continent. In Greece, suicides are up, as this Wall Street Journal story from last year detailed. And last month, the Eurozone reported record unemployment at 11.3 percent.
[Shell to Sea] It’s a damning indictment of Irish media that most of the media referring to the Irish oil and gas give away recently is from across the water.
Discovery of oil off the southwest cost of Ireland has prompted talk of it being great news for the Irish economy. It could certainly do with some. But the announcement that known oil reserves are commercially recoverable is unlikely to offer any great boon to the economy as a whole. There may be a bonanza, but it will be only for a small coterie of Irish banking, property and oil tycoons who continue to benefit from the state’s largesse while most of the population struggles in the fifth consecutive year of economic slump.
There is a long history of pillage of Ireland’s natural resources, beginning with England’s deforestation of the country for its navy. More recently, domestic politicians have continued that trend. The disgraced former energy minister Ray Burkewas in office when Fianna Fáil granted extraordinarily favourable oil exploration licences to oil companies. The former head of Enterprise Energy Ireland, Brian O’Cathain, is reported to have said that some oil developers, such as Shell, will pay no royalties at all for the lucrative Corrib field, worth up to €10bn, and elected representatives have called on the current Fine Gael/Labour party coalition government to reverse the deal, so far without success.
The troika of EU, IMF and European Central Bank have insisted that Irish taxpayers bail out bondholders in failed Irish banks even while the domestic economy continues to contract. The domestic troika, Fine Gael, Fianna Fáil and Labour, continue to insist there is no alternative.
Providence Resources, which made the recent announcement about the oil reserves, also benefits from exceptionally low tax rates and the facility to write any exploration costs against tax. It is like being reimbursed for buying lottery tickets until one or more is a winner. Except that finding oil in Ireland’s offshore has long been a certainty, and the elevated price of oil now makes exploration highly profitable.
The chief executive of Providence, Tony O’Reilly Jr, explicitly hopes to emulate the British experience. This seems unlikely for two reasons. The tax rates for North Sea oil at the time of commercial exploitation ranged from 50% to 75%, and the major oil companies in Britain, such as BP, also owned “downstream” businesses of refining and selling oil commercially, which protected them against fluctuations in the oil price. In contrast, without the necessary investment in refineries, the virtually untaxed developers in Irish waters may not even bring the oil onshore to Ireland.
But the North Sea oil boom under Thatcher is hardly a model of sustainable growth. Then, government oil revenues allowed an earlier version of austerity (then labelled “monetarism”) to be followed by tax cuts and the profligacy of the “Lawson boom“. Now that Britain is once more an oil importer, latter-day Thatcherites who imagine the Tory triumphs of the 1980s can be repeated are living in a fantasy. There is no positive legacy for Britain of the North Sea oil boom.
This week’s events show another model is possible. Hugo Chávez’s victory marks him as one of the few leaders anywhere to be re-elected since the global economic crisis began. Venezuela has had very large oil revenues for decades, but only since his government took control of the industry, away from foreign multinationals and local oligarchs, has the wealth it creates been distributed among the population. Unlike Ireland, and all the countries implementing “austerity”, poverty in Venezuela is declining, healthcare and education improving and the economy is growing. If Ireland is to benefit from an oil boom it needs to look to Chávez, not to Thatcher.
A member of the Irish parliament has claimed that the legalization of cannabis would help solve the country’s financial woes.
Self-confessed hash user Flanagan has been a long time campaigner for the legalization of the drug.
He even claims the proposed change to the legislation could take in more revenue for the state than the controversial household charge.
“It has been estimated legalizing the drug would be worth €476million a year (over $600million) to the economy in revenue through taxation and savings to the criminal justice system,” he said.
“Money currently ends up in the pockets of criminals and it would be better spent in the health service.”
Flanagan is currently researching the topic as he intends to present a private members bill on the legalization of cannabis for recreational use.
He also told marchers he had been contacted by over 50 people suffering from multiple sclerosis and other illnesses asking him to fight for the legalization of cannabis for medicinal purposes on their behalf.
“This is a different issue and there is a cast-iron case for legalizing it for medicinal purposes,” he added.
Last March, Deputy Flanagan announced that he giving up using the drug while in Ireland as he was concerned for his family over his potential to be arrested.