Thursday

13th Aug 2020

Debunking the Troika's 'success' in Ireland

  • The EU is keeping a low profile in Dublin, despite the 40 year anniversary of Ireland's membership (Photo: Valentina Pop)

As Ireland's three-year bailout programme is coming to an end, its lenders are keen to present the exit as proof that austerity policies can work - but economists and social activists are sceptical.

"It is very good to be back to Dublin as a normal visitor. Ireland is having a very successful exit from the EU-IMF programme," said Istvan Szekely of the European Commission, part of the country's troika of creditors.

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For the past three years Szekely has been coming to Dublin every three month together with his colleagues from the International Monetary Fund and the European Central Bank to assess "compliance" with the reforms and budget cuts required for each tranche of Ireland's €85 billion bailout.

Ireland had to seek financial assistance in 2010 because its decision to guarantee all banks - under pressure from other eurozone countries and the European Central Bank - overwhelmed the state's coffers.

Pension funds were raided, welfare benefits cut back, hospitals closed, while the country's debt rose to 123 percent of GDP, four times higher than before the banks were bailed out.

According to Irish trade unionists, economists and opposition politicians who met the troika team, Szekely and his ECB counterpart, Klaus Masuch, were the most stubborn on austerity policies.

The IMF representative in the first two years of the programme, Ashoka Mody, earlier this year admitted that the emphasis on austerity was wrong and that part of Ireland's debt should have been written off.

"All our demands fell on deaf ears within the troika, except for the IMF, with whom we had a reasonable bilateral relation," David Begg, head of the Irish Congress of Trade Unions, told this website.

Asked if he saw any errors regarding the commission's stance within the troika, Szekely said: "Yes, we are very critical of our own activity."

He suggested that improved advice will come in the future as part of the strengthened macro-economic surveillance powers the commission now has.

"As an economist I am always very humble," the Hungarian-born EU official said.

Highest emigration in Europe

He said the biggest challenge facing the Irish government is unemployment and mass emigration.

Statistics released Thursday (21 November) by Eurostat show that Ireland tops the European list of countries where the number of people leaving the country is higher than the ones coming in - by 35,000.

Ireland also saw a dramatic shift over a relatively short period of time. It went from the highest net immigration levels in Europe to the highest emigration in just six years, overtaking the Baltic states and Kosovo.

Economists and campaigners says that the one-percent drop in the Irish unemployment figures (to 13.5%) over the past year can also be explained by the high emigration rates, particularly among youngsters.

A group of students in Dublin meanwhile has launched a campaign called "We are not leaving" after the Irish government sent out letters encouraging young people to seek jobs abroad.

"There is a very clear message from the government that young people should leave. Obviously an attempt to hide youth unemployment figures. They have also massively reduced unemployment benefits for people under 26," says Tommy Gavin, one of the campaign organisers.

The 25-year old sociology student says he does not have a problem with the idea of going abroad, but stresses that it should be a personal choice, not something the government "tells us to do."

To Michael Taft, an economist working for the trade union Unite, "the government shouldn't be doing this favour to foreign companies for free."

Housing crisis

With most of the Irish financial crisis due to property speculation and a construction boom gone bust, trouble may be brewing as next year the banks' books will be scrutinised for bad loans and mortgages, as part of a eurozone exercise by the ECB.

Data from the Irish finance ministry shows that 17 percent of mortgage payers are falling behind the payment calendar. However, scenes such in Spain where people are fighting evictions are not seen yet in Ireland, where banks tend to shun this measure for historical reasons.

Before Ireland's independence from the UK, British landlords often evicted Irish "serfs" who could not pay their dues. But despite this taboo, the Irish central bank is increasing pressure on the commercial banks to "repossess" houses where mortgages are not paid.

For social housing, the situation is even more dire. Some 113,000 people are on waiting lists that can take up to 10-15 years before a subsidised flat is granted, says John Bissett, a community worker.

"What has happened is that inequality has increased. There are people living on 50 euro or less after paying their bills. We have had eight austerity budgets since 2008, in the community sector there have been about 35-40 percent in cuts," Bissett said.

Yet despite the widespread sense of injustice of people paying for rich bankers who escaped unpunished, Ireland has not seen social unrest like in Greece or Spain.

"There is a profound sense of injustice, but also a feeling we can't do anything about it. We're a small country on the periphery of the EU, powerless against the European Commission, the ECB, the IMF," said Michael Taft.

Although the 2011 elections ousted the centre-right Fianna Fail party from its long rule, the new government continued with the same policies.

"We may have a democracy, but it is a one-policy state," Taft said.

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