Political Burlesque Follows Economic Chaos in Ireland

The echo-chamber that is Irish political punditry has seen an over-used acronym get another airing in the past few weeks: "GUBU", coined by the late Conor Cruise O'Brien, former UN diplomat, Irish Government Minister and editor of The Observer, stands for "Grotesque, Unbelievable, Bizarre and Unprecedented". Whenever something controversial or unusual takes place in Irish politics, GUBU is the shorthand of choice, irrespective of hyperbole or appropriateness.

Yet, the often bizarre deaththroes of the government led by Brian Cowen and his party, Fianna Fáil, are as close to GUBU as Ireland has seen since the term first entered the political lexicon back in 1982 when Ireland's economy faced a crisis akin to this one.

A half-resignation

Since a hastily arranged press conference two weeks ago in Dublin's Merrion Hotel, when Prime Minister Brian Cowen said that he wanted to remain in his job despite ceding leadership of his party, events have taken a new turn. This move came after a week in which he had staved off a leadership challenge from Foreign Minister Michéal Martin and attempted a ministerial reshuffle. That in turn followed revelations that Cowen had undeclared meetings with one of the executives at the center of Ireland's banking collapse, adding to the perception that his party was in cahoots with those most responsible for Ireland's economic woes.

Since then, Cowen has been succeeded by Martin as party leader, and as of 1 February, was finally seeking the dissolution of the current government. A parliamentary election will take place on 25 February, and could see the traditional party lines of Ireland's politics redrawn. Cowen will not even contest his parliamentary seat in the midlands constituency he has long-dominated, as his party faces obliteration at the polls. Although Fianna Fáil has dominated Irish politics for most of the post-independence era, the severity and nature of Ireland's economic crash has been pinned on the party, perceived to be too close to a cabal of bankers and property developers. The triumvirate is blamed for overheating Ireland's economy with a Ponzi-esque property bubble, resulting in the former "Celtic Tiger's" economy contracting by perhaps as much as 20 percent in the past two years.

After Cowen's resignation from the party leadership, Ireland's Green Party announced on 23 January that it was withdrawing from government, but with the caveat that it would support an allegedly crucial finance bill from opposition. The bill runs to almost 300 pages and has been described as "unintelligible" to anybody bar taxation experts. However, all of Ireland's main parties, except Sinn Féin, formed an alliance of convenience in parliament last week to ensure the measure passed into law. The bill is needed to facilitate Ireland's acceptance of the €85 billion bailout from the IMF and the EU.

The "bailout", however, remains highly controversial, with a 5.8 percent interest rate on repayments seen by many as onerous, if not simply beyond the means of the country. Critics say that the money is intended to shore up the banks and investors, in Ireland and elsewhere, who gambled - and lost - on Ireland's property bubble, and unfairly penalizes the taxpayer for mistakes made by others.

'Mesmerizing'

As the crisis gathered momentum, Sinn Féin's Aengus O Snodaigh said that "our international reputation is going downhill" - a belated understatement given that Ireland was, for a few days, again one of the top stories on international news networks, reprising the dubious profile attained during the "bailout" saga, while the IMF and EU delegations were in-country prior to Christmas.

That said, Ireland's economic reversal has not been met with the same sort of ferocity on the streets as seen in Greece last year. "Mesmerized" was how one backbench Fianna Fáil parliamentarian said he felt after Cowen's attempted cabinet reshuffling, and the same seems to apply to the Irish in general given the tame response to two years of economic disaster. Impunity prevails, and not only has there been no equivalent to the jailing of Bernie Madoff, the disgraced US financier, but on 21 January another senior bank executive, who was belatedly discarded after 2008, was handed a plum job as Secretary General of the Irish Red Cross.

Further, Ireland's almost 14 percent unemployment rate sets a new record measured in absolute numbers. Ireland is also expected to cut €15 billion in public spending over the next three years after billions in cuts already in order to meet EU budget deficit requirements. The Economic and Social Research Institute in Dublin predicts that 2011 will see a record number of Irish emigrate, and research by Kavanagh-Fennell suggests that over 1500 firms went into liquidation in 2010. Indicative of the wider impact of the property collapse, the ESRI estimates that around 300,000 Irish homeowners are in negative equity.

Historic realignment?

Fianna Fáil dipped to eight percent in an opinion poll published recently, and though Martin's succession gave the party a bounce back to double figures, the new leader faces a massive challenge in the election campaign now underway. With the dire economic and socioeconomic situation in mind, the party faces a historic and unprecedented wipeout in the forthcoming elections. It currently holds 71 seats out of 160 available, but could conceivably be reduced to less than 25, and coalition partner Green Party could be left with no representation at all in Ireland's parliament.

While the two main opposition parties Fine Gael and Labour look like they will be the main beneficiaries, the political shifts looming could be more far-reaching than just a Fianna Fáil collapse. Some well-known economists have stated their intention to run in the election as well, amid speculation that a new technocratic center-right party, featuring well-known economists and journalists, could emerge to fill the Fianna Fáil void, in part at least.

The left, however, might well be a more immediate beneficiary, and Sinn Féin and Labour could possibly garner enough support to govern with the backing of left-leaning independents. That outcome would give Ireland its first-ever left-wing administration.

The largest opposition party, however, is Fine Gael, which has typically been Fianna Fáil's main rival. The two are seen as similar in terms of policy, which could limit Fine Gael's appeal come voting day. There are significant policy divisions between Fine Gael and Labour on a number of issues, and the former could win enough seats to form a minority government, perhaps supported in opposition by a rump Fianna Fáil.

The rise of the left?

Sinn Féin took a strongly Marxist turn during the 1969-1998 "Troubles" in Northern Ireland, when it acted as the political wing of the Irish Republican Army (IRA). Spouting leftist economics seemingly stalled Sinn Féin's rise in the Irish Republic after the 1998 peace agreement in Northern Ireland, but now the party and others in the Irish left will have their best shot at overturning Ireland's usually non-ideological voting patterns, with poster-boy Pearse Doherty likely to lead their campaign, despite the presence of Sinn Féin President Gerry Adams, who will be making his first-ever attempt to win a seat in the Irish parliament in a constituency close to the border with Northern Ireland. (Adams is a MP for West Belfast in the British parliament, though he has refused to take his seat there.)

All told, the banking and property crises are potent weapons for ideologues seeking to discredit anything linked to free market thinking in the eyes of disillusioned Irish voters, no doubt angered by a study by the Irish Small and Medium Enterprises Association (ISME) that says that Ireland's economy has shrunk by 22 percent since early 2007. Even as exports increase six percent year-on-year, there are few sources of optimism left.

Yesterday, credit ratings agency Standard and Poor's downgraded Ireland's credit rating once more, after Fine Gael and Labour said they would renegotiate the bailout terms, following Sinn Féin's pledge to refuse the bailout outright. Fine Gael has mentioned a cap on income taxes, despite Ireland's fiscal imbalances. Although Fianna Fáil might well smell an opportunity to brand rival parties as naive and opportunistic in this highly volatile environment, blatant electioneering and naked populism will do little to facilitate a solution to current woes.