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Ireland’s Government Grab – What Lies Ahead for the Celtic Tiger?

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Ireland’s Government Grab

What Lies Ahead for the Celtic Tiger?

A historic upset in Irish politics has left the nation uncertain as to what the new government will bring.

Learn the why behind the headlines.

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Irish Poet William Butler Yeats wrote, “Cast your mind on other days that we in coming days may be still the indomitable Irishry.” In short, the Irish have always overcome because they have persistently looked past their current suffering and remained optimistic that a better future awaits them.

Yeats’ words of encouragement are what Ireland needs to hear. The nation is struggling to comfort itself from the financial shame of becoming the second eurozone nation after Greece to accept a joint International Monetary Fund/European Union bailout of $95 billion.

The country, which has fought to establish itself since gaining independence from the British in 1921, has continually faced challenges head on—always with an adventurous spirit—which has set it apart from its British neighbors since early times.

After the devastating 1840s potato famine, which decimated a large percent of its population and caused up to a million people to migrate, Ireland once again rose to become one of the wealthiest nations on Earth.

Yet it appears the proverbial “luck of the Irish” may have run out. The bailout—and fallout from it—caused uproar across the country and led to one of the most extraordinary months in the history of Irish politics. While IMF/EU-advocated austerity measures eventually passed in the parliament, it destroyed the principal governing party.

In response, Irish prime minister Brian Cowen dissolved parliament, stepped down as leader of the ruling coalition, Fianna Fail, and turned the government over to the next most favored party leader, Micheal Martin. Despite guarantees from Mr. Cowen that he would stay until elections in March, pressure from within bumped up the date of the elections to the end of February, and prompted talk of a new coalition government.

The economic collapse and sudden changeover has left even the most optimistic Irishmen downtrodden. One of its most well-known financial forecasters, Morgan Kelly, writing in The Irish Times, stated, “From here on, for better or worse, we can only rely on the kindness of strangers.”

The nation, the third-largest island in Europe and home to 4.6 million people, is struggling with its new role as international beggar.

All eyes are on Ireland as to how the new government will bring change to its beleaguered people—and how it will help the professed “indomitable” nation regain its former glory.

Growing Crisis

In the early 1950s, Ireland embarked on a program of economic realignment. Taxes were lowered and foreign investment sought. The new economic model was largely based on technology and commerce, with less reliance on agriculture. As a member of the European Union, the republic was able to access funding to help with the implementation of the new economic model.

The aggressive changes to the country resulted in it becoming the fastest growing economy in the world, earning it the moniker “Celtic Tiger.”

“Sensible policies and a benign global economy helped [Ireland] catch up with European neighbours that for decades had left it languishing,” The Economist reported. “Between 1993 and 2000 average annual GDP growth approached 10%…Over the last decade the boom turned bubbly, as low interest rates and reckless lending, abetted by dozy regulation, pushed up land values and caused Ireland to turn into a nation of property developers.”

“The Irish became, by one measure, the second-richest people in the European Union. ‘The boom is getting boomier,’ said Bertie Ahern, Ireland’s taoiseach (prime minister), in 2006. The government began exporting the Celtic Tiger model, telling other small countries that they, too, could enjoy double-digit growth rates if they followed Ireland’s lead. People splashed out on foreign holidays, new cars and expensive meals. ‘We behaved like a poor person who had won the lottery,’ says Nikki Evans, a businesswoman” (ibid.).

From 1995 to 2007, the economy grew at an average yearly rate of 6 percent GDP. Unemployment also fell sharply and the Irish Republic welcomed immigrants seeking employment, reversing the earlier emigration trend of the country, which saw the loss of thousands of people as a result of a weak economy in the 1980s.

Then the downturn came—and the Emerald Isle experienced one of the worst recessions in the eurozone. The economy declined by an average of 3 percent GDP in 2008, and worsened to 8 percent GDP in 2009. The real-estate market, which was booming at the time, courtesy of cheap loans from banks, took a nose dive as mortgagers defaulted on their loans.

“Property prices started sliding in 2006-07, leaving the banks hopelessly exposed…On September 15th 2008 Lehman Brothers tumbled, sending a giant tremor round the world. Two weeks later, with the share prices of Irish banks in free fall, the government took the fateful decision to guarantee liabilities worth €400 billion ($572 billion) at six financial institutions.

“The costs of the rescue mounted as the banks’ losses grew, springing a giant hole in the public finances. The banking crisis had become a sovereign-debt crisis. International investors began to target Ireland as a weak link in the euro zone, raising its borrowing costs to unsustainable levels” (ibid.).

Two of the country’s largest banks, Anglo-Irish Bank and Bank of Ireland, required a $46.4 billion bailout to remain afloat.

Much to the chagrin of the Irish people, the government complied. “The figures shocked the public because over the past two years ordinary people had been told the cost to the state of Anglo-Irish bank would be nothing, then 4bn euro [$5.5 billion], later 12bn euro [$16.6 billion], then 18bn euro [$24.8 billion], later 24bn euro [$33.1 billion] before finally reaching 35bn euro [$48.4 billion],” BBC News reported.

The British media outlet wrote, “When the truth dawned on Sunday 28 November that there would be an 85bn euro [$119 billion] bail-out with an annual interest payment average of 5.8% many people felt lied to; others believed the government had negotiated a bad deal.”

Up and Away

Due to the nation’s financial predicament, the country faces another wave of emigration.

An estimated 280,000 homes across the nation do not currently have people living in them. Of those, 23,000 have never had occupants. In addition, one in 10 Irishmen is said to not be able to keep up with his mortgage payments.

“People are going to extraordinary lengths—not paying other bills and borrowing heavily from their parents—to meet mortgage repayments, both out of fear of losing their homes and to avoid the stigma of admitting that they are broke,” Mr. Kelly wrote in his editorial for The Irish Times. “In a society like ours, where a person’s moral worth is judged—by themselves as much as by others—by the car they drive and the house they own, the idea of admitting that you cannot afford your mortgage is unspeakably shameful.”

He later stated, “The gathering mortgage crisis puts Ireland on the cusp of a social conflict on the scale of the Land War [1879], but with one crucial difference. Whereas the Land War faced tenant farmers against a relative handful of mostly foreign landlords, the looming Mortgage War will pit recent house buyers against the majority of families who feel they worked hard and made sacrifices to pay off their mortgages, or else decided not to buy during the bubble, and who think those with mortgages should be made to pay them off. Any relief to struggling mortgage-holders will come not out of bank profits—there is no longer any such thing—but from the pockets of other taxpayers.”

As a result of failing banks and their affect on the market, The Christian Science Monitor reported that the country faces double-digit unemployment: “According to government statistics, unemployment is now above 13 percent and 27,700 people left the country in the first four months of this year, more than anytime since 1989. An estimated 5,000 Irish people leave every month, an increase of 81 percent on figures from 2009.”

As seen during previous economic downturns, this wave of emigration is causing even more pain to the already suffering economy.

Spiraling Situation

Although the Irish are struggling to remain positive about the new government—and the future of the country now that the bailout has been received—the situation does not leave much room for hope.

The nation’s finances are under the control of the IMF, and it remains indebted to larger countries, France and Germany, for years to come. On top of that, it has experienced a kind of government changeover that it has not had for 85 years, with the ouster of Fianna Fail, the party which had garnered the most seats in parliament since 1932. The leader of the newly elected majority party, Enda Kenny of Fine Gael, has repeatedly said he will attempt to renegotiate the terms of the bailout.

The new government also faces a host of possible scenarios in coming months. Several media outlets speculated on the difficulties for the government:

“There is talk in the euro zone of building a stronger social and political counterpart to monetary union, which might include such notions as harmonised tax bases and labour laws,” The Economist reported. “The symbolic pinch-point for Ireland is its 12.5% corporate-tax rate, which France and Germany self-interestedly want to force up. Their argument is that they are bailing out a bust Irish government which is holding taxes artificially low (never mind that Ireland’s low corporate-tax rate yields proportionally bigger revenues than in most other countries).”

All major Irish parties have stated they are against such a measure and will fight to protect the corporate tax rate at any cost.

“In Dublin, [there is] the prospect of opposition parties shifting the burden of paying bad bank debts from taxpayers—that is, voters—onto investors, many of them foreign, who hold the banks’ bonds,” The Globe and Mail stated. “Such a move could not only unravel last year’s Irish bailout deal but, perhaps more dangerously, undermine banks in the UK, France and Germany which lent heavily in Ireland and constrict bank lending in general.”

The same Globe and Mail article quoted economist Alan McQuaid: “Getting the banks back to some sort of ‘normal’ lending practices should be the key objective of a new government…Until the banking sector crisis is fully resolved and things improve on the labour market front then the supply/demand for credit will remain subdued in our view, severely hampering the recovery prospects for the economy as a whole in the process.”

Likewise, The Christian Science Monitor wrote, “Ireland will likely have to raise taxes and cut public services, including the unemployment benefits and, according to some sources, retirement pensions that many are now relying on.”

Other measures the country has already undergone since accepting the bailout include cutting the minimum wage, raising the sales tax to 23 percent, and making citizens pay water bills, which they have never had to do.

While many do not believe the measures will result in the same kind of upheaval as has occurred in Greece, various protests since that time have broken out, as detailed in an editorial in The Jerusalem Post.

“One day, the Irish government swears that it does not want, nor will it accept, a rescue package from its partners in the EU, the next day it is signing up for just that, and on the third day the mob tries to storm the country’s parliament building.

“The third of those developments is the most extraordinary, because it is so out of place for the Irish public to take such extreme and violent measures. But…the Irish middle-class is now in open revolt against a government and ruling elite that it believes is corrupt to the core and that has, in cahoots with the country’s bankers, destroyed their savings, wealth and pensions and ruined the country.

“Yet, if it was only an Irish problem and if only the Irish people were enraged, the whole sorry tale would attract minor attention on the inside pages. It is because of the growing realization that Ireland, like Greece before it, is merely the tip of the European iceberg-meltdown, that it remains center stage.”

Historical Connection

The Ireland-Greece connection goes further back than the financial similarities and bailouts the two nations were forced to accept. Historical evidence from one of the world’s oldest books reveals that their respective histories are related in a surprising way.

Ireland is the descendant of Dan, one of the tribes of ancient Israel, identified in the Bible as an adventurous pioneering nation.

Notice the following from America and Britain in Prophecy by David C. Pack: “It has been mentioned that the tribe of Dan had populated Ireland centuries before the Israelite tribes from the Assyrian captivity began to arrive…which strongly reinforces not only God’s prophecy about this tribe but also the authority and certainty of His prophecies about all the modern nations of Israel!

“One of Dan’s key characteristics was the tendency to abruptly migrate to new territories. Notice what Moses foretold about this tribe: ‘And of Dan he said, Dan is a lion’s whelp [an impatient, adventuresome cub]: he shall leap from Bashan’ (Deut. 33:22). As a young lion, Dan would ‘leap from [the region of] Bashan.’ Some of the inland Danites lived in the proximity of Bashan, occupied mainly by the half-tribe of Manasseh. Yet, recognizing the Assyrian invasion was imminent, these Danites migrated to distant territories. About 1285 BC, their Danite coastal relatives had taken to their ships, when God used Deborah and Barak to deliver Israel from Jabin of Hazor (Judg. 5:17). In escaping danger, these adventuresome Danites pounced upon (like a lion cub) newfound opportunities in other lands.”

Historical references confirm that the Danites in Greece eventually moved to Ireland, as shown in Mr. Pack’s book.

“Beginning with exploration, and the development of trade among the Greeks and Phoenicians, Dan became the pioneer of Israel, both on land and sea. Dan pushed into the far areas beyond the Black Sea (anciently called the Euxine) and explored many rivers from those points in Asia on into Europe. Dan further pushed throughout the Mediterranean and on into the broad Atlantic. The Baltic Sea and the shores of Denmark became home for many of them, while Ireland became the sanctuary for many others, where they became known as the ‘Tuath di Dannan,’ or ‘Tuatha de Danaans,’ both translated as ‘the Tribe of Dan.’

“Notice this prominent source [The Annals of Ireland], helping to establish when Dan first arrived in Ireland: ‘The colony called Tuath De Danan…conquered the Firbolgs, and became masters of Ireland…It appears that the Danans were a highly civilized people, far more skilled in arts and sciences than any of the other ancient colonies that settled in Ireland…[and] ruled in Ireland about two centuries, or one hundred and ninety-seven years, according to the Psalter of Cashel, and were highly skilled in architecture and other arts, from their long residence in Greece…’”

The roots of this “indomitable” force extend far past what many people realize—and its future will be beyond what any political party will be able to bring to the downtrodden nation.

To learn more about Ireland’s incredible history—and its connection to Greece—read David C. Pack’s book America and Britain in Prophecy.

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