The EU ignores the Irish people, again

6 March 2011: Daniel Finn on the EU's reluctance to renegotiate Ireland's loan package, and the new opportunities for the left in Irish politics.

Over the years, the leaders of the European Union have had quite a lot of practice in ignoring decisions made by the Irish people. When the Nice and Lisbon Treaties were voted down emphatically, there wasn’t even a moment’s pause before the instruction came down that Ireland would have to vote again and behave itself the second time around. So it must have come very easily to Olli Rehn and Jean-Claude Trichet as they explained that whatever the Irish electorate may have voted for last week, it doesn’t matter a damn. As Trichet succintly put it: “For us, the plan is the plan.” Rehn explained that “the issue of bondholders – senior debt in the banks – is not on the cards nor on the agenda concerning Ireland”. The same article in the Irish Times noted that while there may be discussion of a cut in the interest rate on Ireland’s EU-IMF loan package, “diplomats close to the talks say only a modest decrease may be in prospect”.

To take full measure of the contempt for democracy revealed by these statements, we need only remind ourselves of what people actually voted for on February 25th. The only two parties in the election standing over the EU-IMF deal negotiated in December were Fianna Fáil and the Green Party. Fianna Fáil suffered by far the worst defeat in its history, declining from almost 42% to just over 17% of the vote. The Greens were wiped out altogether, losing all their seats. All told, less than one-fifth of the electorate endorsed the governing parties. The rest of the vote was divided between groups (Sinn Féin and the United Left Alliance) that rejected the EU-IMF package altogether, and others (Fine Gael and Labour) that called for its re-negotiation. The latter parties concentrated their attention on two issues for re-negotiation: the interest rate and the insulation of bondholders from any losses.

In both cases, the argument for a radical restructuring of the deal is unanswerable. The rationale for the prohibitive interest rate charged on the money Ireland is borrowing - much higher than the cost borne by the EU in making the cash available - is that it should be punitive, and discourage bad behaviour. This doesn’t stand up to a moment’s scrutiny. The Irish people did not borrow money they can no longer pay back - the private banks did. Fianna Fáil did not consult the people on its decision to make private bank debts the responsibility of the Irish state. At the earliest possible opportunity, Irish citizens ejected FF from office and gave it an unprecedented electoral mauling. Perhaps Rehn and Trichet believe that those citizens should have acted sooner - instead of waiting for the next election, they should have risen up to overthrow the government the day after the bank guarantee was passed. I would be delighted to think that such robust Jacobin thinking holds sway at the European Commission, but it seems difficult to credit.

The case regarding the bondholders is even clearer: much of this debt was not even covered by the terms of Fianna Fáil’s disastrous bank guarantee. If these gentlemen wish to reclaim their gambling losses at the expense of the Irish people, they should be required to come here themselves and call around to people’s homes, demanding a fiver or a tenner from each household. It would be interesting to see how many return alive.

Yet it’s hardly surprising that EU officials demonstrate such contempt for the will of the electorate: if they looked to the Irish commentariat for guidance, they would find exactly the same mentality at work. Stephen Collins - chief political columnist for the Irish Times - demanded in the wake of the election that Labour form a coalition with Fine Gael:

“The severity of the economic crisis demands a national government composed of the two biggest parties.” He also insisted that in such a coalition, Labour would have to defer in every possible way to Fine Gael’s perspective on the scale and speed of cutbacks in public spending: in other words, since the feckless electorate had refused to give Fine Gael an overall majority in the Dáil, Labour would have to do the job for them.

It appears certain that Labour will bow to such counsel, helping lead Ireland further down the same disastrous path it has followed since September 2008, instead of taking the opportunity to lead a strong left-wing opposition that could form a government next time around. But fortunately, others on the left need not confine themselves to railing against Labour’s cowardice. The new Dáil will have its strongest ever group to the left of Labour: over twenty TDs, including Sinn Féin, the United Left Alliance and left-wing independents. The ULA alone - with more seats in Dublin than Fianna Fáil - is close to matching the level attained by the Workers Party in the 1980s (the last time Labour faced a significant challenge from its left).

For decades, one of the major strategic dilemmas for those interested in transforming Irish society has been what position to adopt towards the Labour Party: should they try and replace it altogether, or push it in a more radical direction? The election result has made things a lot simpler. Whether we expect to clear Labour out of the way, or enlist its support for a new left-wing alliance, the course of action over the next few years will be the same: to organise the strongest possible opposition to continued austerity and economic vandalism under the new government.