Boom to Bust

The recession suffered by the Republic of Ireland has been described by two IMF economists as “the costliest banking crisis in advanced economies since at least the Great Depression.”² It came after a long period of sustained growth that seemed to have banished the legacy of economic backwardness and put the Irish state on an equal footing with its West European neighbors. Standard hagiographies of the “Celtic Tiger” traced its origins back to the 1960s, when Irish governments had abandoned their attempts to cultivate a domestic manufacturing base through protectionism and turned instead to foreign capital. Some patchy growth ensued over the next two decades, before the Irish economy fell into a prolonged slump for much of the 1980s. With unemployment hovering around the 15 percent mark and the state crippled by debt, the Irish experiment in self-government was scathingly criticized by its intellectuals and by those who voted with their feet and departed for better prospects abroad.³

By the turn of the century, a spectacular turnaround had transformed the national mood. For well over a decade, the Irish economy posted growth rates that were substantially higher than the West European average. Unemployment fell dramatically; for the first time in its modern history, Ireland experienced large-scale immigration as foreign-born workers were attracted by the boom. Several factors had converged to make this possible. The orientation toward foreign direct investment (FDI) belatedly paid off from the early 1990s on; with US companies keen to find investment sites for tariff-free exports to the European single market, Ireland could offer them an English-speaking workforce, low corporation tax rates, and assiduous support from the technocrats of the Industrial Development Authority (IDA). US firms made major investments in software, electronics, and pharmaceuticals. European structural funding made it easier to bridge the gap between Ireland’s limited tax base and the need for public investment in services and infrastructure (a fact usually omitted by those who celebrated Ireland as a rare example of “expansionary fiscal contraction” working in practice).⁴ Demographic change also played a part in the boom, as the ratio of working-age citizens to children and pensioners had improved considerably.

Still, the realities of boom-time Ireland never quite measured up to the hype. For all the talk of Ireland having caught up with its neighbors, there was no sign of convergence when living standards were measured in the round: social protection accounted for 14 percent of GDP in the early 2000s, against an EU-15 average of 27 percent.⁵ The state of the Irish health service was widely considered a national scandal.⁶ Meanwhile, rates of poverty and inequality were second only to the United States among OECD countries. The contribution of the FDI sector was exaggerated by the widespread practice of transfer pricing: between 1990 and 2010, employment at US-owned companies rose by 127 percent, but their declared income went up by a staggering 2,457 percent.⁷ By 2011, the effective tax rate for US firms in Ireland would be 2.2 percent — drastically lower than the figures for Britain (18.5 percent), Germany (20 percent), or France (35.9 percent).⁸

Most ominously, economic growth in the 2000s had come to rely heavily on a gigantic property bubble. After the capital-gains tax was cut by half in 1998, bank loans increased by 466 percent over the following decade and less than 2.5 percent of that sum was invested in high-tech industry, while construction and real estate attracted nearly a third of total lending.⁹ This was made possible by a dramatic surge in credit from German, French, British, and US banks, which accepted the moonshine verdicts of ratings agencies on such institutions as Anglo Irish Bank.¹⁰ Between 2000 and 2007, private-sector debt rose by 612 percent of Irish GDP — almost five times the West European average.¹¹ Few countries were more perilously exposed to a global downturn than the Republic of Ireland.

When Lehman Brothers collapsed in September 2008, the Irish government acted quickly to shore up the private banking system, extending an unlimited guarantee to cover the liabilities of Irish institutions. Seventy billion euros were eventually funneled into the banks to cover their losses from property lending, while a series of austerity budgets took €30 billion out of the national economy between 2008 and 2014, with a two-to-one ratio of spending cuts to tax increases. (Irish GDP in 2014 was a little over €180 billion.) Unemployment soared to 15 percent by 2012, from a pre-crisis level of barely 4 percent, and emigration rates surpassed those of the 1980s slump: by 2014, 475,000 people had left since the crisis began, and 17.5 percent of Irish-born people over the age of fifteen lived outside the state — a higher proportion than in any other OECD member state, including Mexico. As the OECD notes, without this “macroeconomic adjustment mechanism,” the Irish unemployment rate would have approached the levels seen in Greece or Spain.¹²

When a team of officials from the Troika arrived in Dublin at the end of 2010 to take charge of the local economy, the fiasco was complete. European officials had initially reacted with some annoyance to the unilateral moves the Irish government had taken in the wake of the crash.¹³ They later took a stern line against any move to alter the terms of the bank guarantee or even to impose losses on bondholders who had not been covered by the guarantee in the first place. Michael Noonan, finance minister in the Fine Gael–Labour coalition that held office from 2011 to 2016, has claimed that he was directly threatened by the ECB chief Jean-Claude Trichet when he proposed a modest step toward burden-sharing.¹⁴ One thing was beyond doubt: the dominant players in the EU were happy to see Ireland bear a grossly disproportionate share of Europe’s financial crisis in order to get French and German banks off the hook for their reckless lending. Astonishingly, by 2013, Ireland had paid more than Germany in absolute terms to cover the cost of the crisis; there could be no starker illustration of the power imbalance between “core” and “peripheral” states in the eurozone than that.¹⁵

Measuring Recovery

The apparent reversal in Irish fortunes since the trough of the slump has naturally inspired a torrent of self-congratulation in establishment circles. Government ministers basked in the praise of European leaders and were quick to point the finger at other EU member states for their supposed deviations from the path of virtue. Yet the source of those tributes should have inspired suspicion among those less inclined to swoon at the praise of foreign dignitaries: the same people were holding Ireland up as a role model at a time when its economy was still flatlining by every conceivable measure. The principal benchmarks used in assessing the Irish recovery were as follows, in declining order of significance: the absence of social unrest, bond-market spreads, GDP growth, and the employment rate. The first of these indicators was by far the most important, and explains why Angela Merkel, ECB president Mario Draghi, and their associates were so keen to shower praise on Dublin’s record as they faced political turbulence elsewhere in the eurozone. As long as the Irish citizenry seemingly remained passive, everything else was a detail. The other metrics of economic success require careful unpacking.

The interest rate on Irish government bonds came down sharply after the critical point that triggered the EU’s bailout program. But this reduction was largely unrelated to the underlying health of the economy. The most pessimistic view of Irish economic prospects derived from the assumption that inflated bond-market spreads were a function of the private bank debt that had been imposed on the state. However, it is now clear that ballooning interest rates owed more to a general climate of uncertainty about the future of the euro. When Draghi announced in July 2012 that the ECB would do “whatever it takes” to prop up the single currency, the rates began to come down from their previously unsustainable levels, even though the ratio of debt to GDP in the peripheral eurozone states had not improved and was in fact worsening.¹⁶

GDP is almost as doubtful a measure of real economic health, with transfer pricing in the multinational sector rendering all statistics open to question. As the hype surrounding Ireland’s recovery reached a fever pitch, Ireland’s central bank governor Patrick Honohan felt compelled to intervene, warning that much recent growth could be attributed to “distorting features” that derived from the tax practices of multinationals.¹⁷ Figures released in July 2016 purported to show GDP growth of 26 percent the previous year — a moment of low farce that may have punctured the credibility of those statistics for good.¹⁸

The only benchmark that truly corresponds to reality as experienced by the majority of Irish citizens is the employment rate. There has been a real decline in unemployment since its 2012 peak, with the number of those out of work falling below 8 percent by the autumn of 2016. Emigration has kept the figures down, of course, while many domestic job-seekers have been railroaded into cheap-labor schemes to keep them off the books. Two-thirds of all income gains between 2011 and 2016 were hoovered up by those who earned more than €70,000.¹⁹ Nonetheless, the shift in employment trends is the only kind of recovery that offers meaningful relief for those who have borne the brunt of the crisis.

Insofar as the authorities in Dublin have a long-term economic plan, it is founded exclusively on the two main pillars of the pre-2008 economy: FDI and the property/finance nexus. Along with the “virtual growth” based on financial chicanery, there has been some real growth in the foreign-owned sector, with a cluster of digital-economy firms such as Google, Facebook, Apple, and Twitter launching or expanding their operations.²⁰ While the goal of the Troika’s austerity programs in Ireland and southern Europe was to force down unit labor costs, supposedly making exports more competitive, Ireland’s export-led growth has in fact come from high-wage industries, with salaries almost 80 percent higher than in the rest of the economy.²¹ IDA-supported companies account for roughly one-tenth of total employment and are heavily clustered in certain areas; two-thirds of digital-economy jobs, for example, are based in Dublin, which has barely one-quarter of the population.²² The selective benefits deriving from this model have now been jeopardized by pressure from Brussels to bring Irish tax law into line with the regional norm. The European Commission has ruled that tax breaks for Apple constitute illegal state aid and ordered the company to pay back €13 billion to the Irish state — much to the displeasure of the authorities in Dublin, who are contesting the ruling with a determination they never showed when bank debt was the issue.²³

However precarious Ireland’s FDI-based growth may prove to be, it is at least a safer bet than the reheated property market, which has caused house prices in Dublin to soar beyond the reach of middle-income workers barely a decade after the great crash. The only viable solution to a chronic shortage of affordable homes would be a major public-housing program — something government ministers refuse to contemplate because of its likely impact on the balance sheets of property developers.²⁴ Meanwhile, vulture funds have been turning the screws on holders of distressed mortgages that they acquired during the slump, exacerbating the problem still further.²⁵

No Going Back

There have been three clear trends in Irish electoral politics since the crash: unprecedented volatility, decline in support for traditional parties, and a substantial rise in the left-wing vote from a low historic base. Historically, politics in the Republic of Ireland has differed sharply from the pattern in neighboring countries, with two center-right parties, Fianna Fáil and Fine Gael, having dominated the electoral stage since the early years of the state. Support for left-wing forces has traditionally been by far the weakest in Western Europe, averaging 14 percent in the 1980s and 1990s, at a time when the regional average exceeded 40 percent.³³ The rival conservative parties traced their origins to the civil war of 1922–23, but their once-bitter ideological conflicts had largely faded by the 1950s. From that point until the eve of the recession, the configuration of Irish political life was remarkably stable. Fianna Fáil would always outpoll Fine Gael, and Fine Gael would always outpoll the ineffectual Irish Labour Party. Fianna Fáil was the only party that could form a government on its own; Fine Gael could only lead a government with support from Labour; Labour could only get a taste of power as a junior partner to Fine Gael. There was a slight recalibration of this pattern from the 1980s on, when Fianna Fáil abandoned the policy of never forming coalitions with its rivals, and a succession of minor parties entered the stage without managing to displace Labour as Ireland’s third electoral force. But the basic landscape of Irish politics remained much as it had been since the time of Eisenhower and Macmillan.

To the surprise of many commentators, this structure outlasted many of the distinctive features of Irish society that had shaped it in the first place: a scrawny industrial base, the centrality of the national question, and the overwhelming influence of the Catholic Church. It set Ireland clearly apart from its fellow PIGS in southern Europe, which had gone through cycles of revolution, civil war, and dictatorship in the last century. In Greece and Portugal, the electoral strength of the radical left on the eve of the Great Recession put it on a level footing with Ireland’s timid social democrats. But since the crisis began, the Irish party system has been wrenched completely out of shape, and a stable pattern has yet to emerge. Fianna Fáil suffered an outright collapse in the 2011 general election, losing all but twenty of its seventy-one seats. Labour chalked up its best-ever performance on that occasion, surpassing Fianna Fáil with almost 20 percent of the vote, but saw its support evaporate in turn after entering a coalition with Fine Gael. The combined Fine Gael–Labour vote share in 2011 was 55.5 percent; five years later, they could barely manage 32 percent between them, having shed more than half a million votes in the meantime.

Alongside the unprecedented shifts between the traditional parties, there has been an equally pronounced shift away from those parties. During the last prolonged recession in the 1980s, the two center-right parties averaged 79 percent of the vote between them across five general elections; in the last pre-crisis election, they still managed to harvest 69 percent of all ballots cast. In 2016, their combined score fell below 50 percent. In national elections from 1997 to 2011, three-quarters of all votes went to Fianna Fáil, Fine Gael, or Labour. 2016 saw their electoral support drop to a little over 56 percent, while parties that had no experience of government in the Republic and candidates with no party allegiance whatsoever won 38 percent of the vote.

What do these shifts mean in terms of ideology? Ireland’s left turn since 2008 may seem a tame affair in comparison to Greece or Spain, but if we take account of the pre-crisis starting point, the trend is nonetheless striking. Following the crash, the gap between right/center-right forces and their left/center-left challengers narrowed considerably: from almost 50 percent in 2007, it had fallen to 20 percent by 2011. After a century as an outlier, Ireland appeared to be shifting toward the European model of class-based, ideological politics at a time when that model was facing a crisis of its own in several neighboring states. However, a finer-grained analysis revealed a more complicated picture, as the left/center-left bloc referred to above contained disparate forces with little inclination to unite around a common project.

The Irish Labour Party was in prime position to capitalize on the new mood in the 2011 election, and doubled its vote by putting forward a moderate anti-austerity programme; Sinn Féin (to be discussed in greater detail below) also gained ground, as did left-independents and the socialist groups, but all to a lesser extent. Labour then faced the biggest challenge and opportunity since its foundation. By staying out of government, the party could have put itself at the head of a left-of-center bloc already supported by a third of the electorate, and pushed Fine Gael to coalesce with Fianna Fáil in a coalition enforcing Troika-mandated austerity. Instead, it opted to join forces with Fine Gael, scrapping its own election platform and signing up to the full Troika programme. Labour paid a heavy price for this decision in 2016, losing two-thirds of its voters and winning just seven seats — the worst performance in the party’s history, five years after its best.

Labour’s dwindling band of loyalists have insisted that the party had no choice but to do a deal with Fine Gael: lacking the support to form a government of its own, it could at least restrain the larger party’s worst proclivities in office. This line of argument rests on two dubious assertions. The first is that Labour actually did much, or indeed anything, to stop Fine Gael from pursuing an aggressive right-wing agenda. The second is that Labour and other forces to its left had reached the limit of their support in 2011 and stood no chance of challenging conservative hegemony in the next general election. For a party which had already doubled its vote to dismiss the idea that it could progress any further betrays a startling lack of ambition. Facing a government with a programme that was bound to provoke widespread anger, Labour would have had every reason to expect a swing in its favor over the next election cycle. Stephen Collins of the Irish Times let the cat out of the bag in the wake of the 2016 poll, admitting that if Labour had remained on the opposition benches after 2011, “it would probably have emerged as the biggest party by now.”³⁴

With Labour in free fall, the baton passed to Sinn Féin, a party whose rise since 2008 has been founded on a strong anti-austerity profile. Although its European Parliament members sit with the post- and neocommunist parties of the United Left group, Sinn Féin has more in common with the Scottish National Party or Catalonia’s Republican Left; the closest analogy, however, would be with the abertzale left in the Basque Country, the only other political movement in Western Europe with longstanding ties to an armed insurgency. As a party that organizes in both parts of a divided island, Sinn Féin is especially hard to pin down, because the two states differ so greatly in their political complexion. In Northern Ireland, Sinn Féin has won support primarily as a nationalist party, with its position on economic issues less important to voters than its image as the most effective and determined representative of the Catholic-nationalist minority. South of the border, however, the only space available to Sinn Féin lay on the left of the spectrum as a challenger to the Labour Party.³⁵ A left-wing platform was central to its electoral growth in the Republic from the mid-nineties on, but this ideological plank remained subordinate to Irish nationalism, as one of the party’s leading intellectuals has frankly acknowledged.³⁶

Sinn Féin’s political orientation will be discussed further in the final section of this article, as will the broader implications of the 2016 poll. But one thing was already clear before any votes were cast. Labour’s choice in 2011 ensured that voters would not face a choice between two alternative governments with distinctive platforms when they next went to the polls, as neither Sinn Féin nor its Trotskyist rivals would be in a position to make the kind of electoral gains required. The conservative parties had entered the crisis with a commanding lead over their opponents and could thus absorb even a large swing to the left without losing their grip on the reins of power. With the anti-austerity left facing an electoral impasse, the focus of social resistance now shifted unexpectedly to the streets.

Electoral Turbulence

The self-satisfaction of Irish politicians since the crisis began derived above all from the lack of indignados on Irish streets. Yet the winter of 2014 and 2015 suggested that Ireland’s image as a comatose nation whose citizens would accept large dollops of austerity without complaint was under threat. Protests against water charges rapidly snowballed into the biggest social movement the state had witnessed for decades. An earlier challenge to austerity might have been expected to come from the Irish trade unions, which remain by far the most important social organizations in the country. However, from the beginning of 2010 to the end of 2013 there were just thirty-seven industrial disputes involving a little over fifteen thousand workers, from a working-age population of 3.6 million.³⁷ While the failure of organized labor to mobilize against government cutbacks is not unique to Ireland, the Irish movement entered the crisis with its own particular disabilities. Industrial relations during the boom years had been governed by a corporatist system known as “social partnership.” Trade union officials often presented this model as a dramatic breakthrough which had established a new relationship between workers, employers, and the state; business merely saw it as a way to limit wage increases during a time of near-full employment. The real measure of “partnership” was the declining rate of union density, from 53.1 percent in 1995 to 31.7 percent in 2007.³⁸ 45 percent of professionals were unionized when the crisis began, but just 36 percent of plant and machine operatives, 23 percent of construction workers, and 8 percent of hotel and restaurant staff.³⁹

Having proved unable to overcome the hostility of private employers to unionization when the labor market was tight, the Irish labor movement faced an uphill battle as the dole queues lengthened after the crash. The unions were nonetheless able to organize an impressive public-sector strike in November 2009 that mobilized 250,000 workers. Placed temporarily on the defensive by this action, the government’s main priority was to take organized labor off the pitch. This goal was secured by the Croke Park Agreement of June 2010, which traded a promise of no compulsory redundancies or wage cuts in the public sector for a no-strike pledge and an ill-defined but extensive program of “reform” in working practices. Employers and conservative media outlets pocketed these concessions before launching an immediate offensive against the rest of the deal, which was duly scrapped before it had expired so that further job and pay cuts could be imposed on the public service. Such deals allowed the union leadership to preserve the illusion of “partnership,” and Labour’s entry into government supplied another excuse for passivity. With the principal stronghold of Irish trade unionism in the public sector tied down, private-sector employers had even less reason to feel inhibited.

Resting serenely on its laurels, Enda Kenny’s government was then caught unawares by the eruption of protest at the end of 2014. A national march against water charges called by the umbrella group Right 2 Water brought more than a hundred thousand people onto the streets of Dublin in October 2014, the equivalent of a million marching in Spain; it was followed by an even bigger day of action on November 1, with simultaneous protests all over the country mobilizing well over two hundred thousand in opposition to the charges. Right 2 Water was supported by Sinn Féin, the radical left, and several trade unions, but much of the popular impetus came from community-based groups whose supporters had little previous experience of activism.⁴⁰ Protests continued in the early months of 2015, while Irish Water kept pushing back the deadline for registration as widespread noncompliance showed little sign of dissipating. In July 2015, the company was forced to admit that its own carefully massaged figures still showed a nonpayment rate of well over 50 percent.⁴¹

Guardians of conventional wisdom were at a loss to explain this spasm of discontent at a time when the narrative of recovery was ubiquitous. It would have been less of a puzzle if they were prepared to remove their ideological blinkers. To begin with, the benefits of “recovery” had not been felt in the working-class communities that supplied the foot soldiers of the campaign. Second, the message from government and media circles since 2008 had been that desperate times required desperate measures: austerity might not be pleasant, but it was essential to keep the bond-market wolves from the door. If the same voices were now assuring Irish citizens that the national emergency had passed, it was natural that many of those citizens would expect to see their burdens lightened and that they should take action to speed the process along.

A survey conducted at the beginning of 2015 gave a snapshot of opinion among the campaign’s most dedicated supporters. Asked to give their reason for protesting, the majority (60 percent) agreed that “austerity has gone too far.”⁴² The fact that water charges became the lightning-rod for this sentiment was partly fortuitous. A scheme to impose user fees on households for water consumption appealed to the Fine Gael–Labour coalition for a number of reasons. There would be an immediate revenue stream, and they could trim the national debt a little by constituting Irish Water as a formally independent company; its borrowing would thus be kept off the state’s books. Further down the line, Irish Water could be sold off to private interests, keeping the business lobby content. But water charges had the disadvantage of cutting across the carefully cultivated lines of division between tenants and homeowners, private- and public-sector workers, those with jobs and those without. With its latest measure, the government inadvertently catalyzed a mass movement against austerity that brought a whole new layer of people into action, stretching far beyond the traditional left-wing or republican milieu. Fifty-five percent of those surveyed had never taken part in a protest before; now, 78 percent believed that the most effective way to secure political change was through protesting.⁴³

Irish media commentators predictably started proclaiming the death of the water-charges movement as soon as it had begun and set about vilifying the protesters with a degree of mendacity that exceeded the usual standard. A campaign built through social-media networks, whose activists made no bones about their intense distrust of traditional media, was not to be dispatched to the wrecking yard so easily. The government’s strategy suffered a major blow in July 2015 when Eurostat rejected its case for keeping Irish Water off the state balance sheet, demolishing one of the main arguments for setting up the company in the first place.⁴⁴ Right 2 Water celebrated with another big national demonstration at the end of August, showing that it could still bring huge numbers onto the streets. With a general election fast approaching, the issue had lost none of its potency and would have to be grappled with by any government that emerged from the vote.

Ireland’s Water War

The self-satisfaction of Irish politicians since the crisis began derived above all from the lack of indignados on Irish streets. Yet the winter of 2014 and 2015 suggested that Ireland’s image as a comatose nation whose citizens would accept large dollops of austerity without complaint was under threat. Protests against water charges rapidly snowballed into the biggest social movement the state had witnessed for decades. An earlier challenge to austerity might have been expected to come from the Irish trade unions, which remain by far the most important social organizations in the country. However, from the beginning of 2010 to the end of 2013 there were just thirty-seven industrial disputes involving a little over fifteen thousand workers, from a working-age population of 3.6 million.³⁷ While the failure of organized labor to mobilize against government cutbacks is not unique to Ireland, the Irish movement entered the crisis with its own particular disabilities. Industrial relations during the boom years had been governed by a corporatist system known as “social partnership.” Trade union officials often presented this model as a dramatic breakthrough which had established a new relationship between workers, employers, and the state; business merely saw it as a way to limit wage increases during a time of near-full employment. The real measure of “partnership” was the declining rate of union density, from 53.1 percent in 1995 to 31.7 percent in 2007.³⁸ 45 percent of professionals were unionized when the crisis began, but just 36 percent of plant and machine operatives, 23 percent of construction workers, and 8 percent of hotel and restaurant staff.³⁹

Having proved unable to overcome the hostility of private employers to unionization when the labor market was tight, the Irish labor movement faced an uphill battle as the dole queues lengthened after the crash. The unions were nonetheless able to organize an impressive public-sector strike in November 2009 that mobilized 250,000 workers. Placed temporarily on the defensive by this action, the government’s main priority was to take organized labor off the pitch. This goal was secured by the Croke Park Agreement of June 2010, which traded a promise of no compulsory redundancies or wage cuts in the public sector for a no-strike pledge and an ill-defined but extensive program of “reform” in working practices. Employers and conservative media outlets pocketed these concessions before launching an immediate offensive against the rest of the deal, which was duly scrapped before it had expired so that further job and pay cuts could be imposed on the public service. Such deals allowed the union leadership to preserve the illusion of “partnership,” and Labour’s entry into government supplied another excuse for passivity. With the principal stronghold of Irish trade unionism in the public sector tied down, private-sector employers had even less reason to feel inhibited.

Resting serenely on its laurels, Enda Kenny’s government was then caught unawares by the eruption of protest at the end of 2014. A national march against water charges called by the umbrella group Right 2 Water brought more than a hundred thousand people onto the streets of Dublin in October 2014, the equivalent of a million marching in Spain; it was followed by an even bigger day of action on November 1, with simultaneous protests all over the country mobilizing well over two hundred thousand in opposition to the charges. Right 2 Water was supported by Sinn Féin, the radical left, and several trade unions, but much of the popular impetus came from community-based groups whose supporters had little previous experience of activism.⁴⁰ Protests continued in the early months of 2015, while Irish Water kept pushing back the deadline for registration as widespread noncompliance showed little sign of dissipating. In July 2015, the company was forced to admit that its own carefully massaged figures still showed a nonpayment rate of well over 50 percent.⁴¹

Guardians of conventional wisdom were at a loss to explain this spasm of discontent at a time when the narrative of recovery was ubiquitous. It would have been less of a puzzle if they were prepared to remove their ideological blinkers. To begin with, the benefits of “recovery” had not been felt in the working-class communities that supplied the foot soldiers of the campaign. Second, the message from government and media circles since 2008 had been that desperate times required desperate measures: austerity might not be pleasant, but it was essential to keep the bond-market wolves from the door. If the same voices were now assuring Irish citizens that the national emergency had passed, it was natural that many of those citizens would expect to see their burdens lightened and that they should take action to speed the process along.

A survey conducted at the beginning of 2015 gave a snapshot of opinion among the campaign’s most dedicated supporters. Asked to give their reason for protesting, the majority (60 percent) agreed that “austerity has gone too far.”⁴² The fact that water charges became the lightning-rod for this sentiment was partly fortuitous. A scheme to impose user fees on households for water consumption appealed to the Fine Gael–Labour coalition for a number of reasons. There would be an immediate revenue stream, and they could trim the national debt a little by constituting Irish Water as a formally independent company; its borrowing would thus be kept off the state’s books. Further down the line, Irish Water could be sold off to private interests, keeping the business lobby content. But water charges had the disadvantage of cutting across the carefully cultivated lines of division between tenants and homeowners, private- and public-sector workers, those with jobs and those without. With its latest measure, the government inadvertently catalyzed a mass movement against austerity that brought a whole new layer of people into action, stretching far beyond the traditional left-wing or republican milieu. Fifty-five percent of those surveyed had never taken part in a protest before; now, 78 percent believed that the most effective way to secure political change was through protesting.⁴³

Irish media commentators predictably started proclaiming the death of the water-charges movement as soon as it had begun and set about vilifying the protesters with a degree of mendacity that exceeded the usual standard. A campaign built through social-media networks, whose activists made no bones about their intense distrust of traditional media, was not to be dispatched to the wrecking yard so easily. The government’s strategy suffered a major blow in July 2015 when Eurostat rejected its case for keeping Irish Water off the state balance sheet, demolishing one of the main arguments for setting up the company in the first place.⁴⁴ Right 2 Water celebrated with another big national demonstration at the end of August, showing that it could still bring huge numbers onto the streets. With a general election fast approaching, the issue had lost none of its potency and would have to be grappled with by any government that emerged from the vote.

Flags of Convenience

If the Republic of Ireland had been distinguished until 2014 by the apparent passivity of its citizens, its northern neighbor remained as much of an outlier as it ever was. The most sustained and troublesome campaign of protest in Northern Ireland since the recession began was provoked not by any economic issue but by a dispute over national emblems. From December 2012 to March 2013, the region was rocked by unionist demonstrations (and widespread violence) after Belfast’s city council voted to restrict the number of days on which the British flag would be flown outside City Hall. The controversy posed a major challenge for the local power-sharing administration in a region still deeply marked by the long, bitter conflict of the seventies and eighties.

While the protests engaged a relatively small number of people — ten thousand at their high point in mid-December 2012 — they were backed by a much larger cross-section of unionist opinion than such figures would suggest:

The numbers involved in the street protests were only ever a very small percentage of the unionist population. Even in the protest heartland of east Belfast no more than one percent of the population participated in the demonstrations. However there was considerable tacit support: a poll taken in mid-January showed that despite the violence and the losses to traders, 46 percent of unionists thought the protests should continue.⁴⁵

The immediate trigger for the unrest was a mass leaflet campaign in east Belfast by the two main unionist parties, targeting the middle-class, bi-confessional Alliance Party. With neither unionist nor nationalist representatives possessing an overall majority, Alliance had found itself exercising the casting votes on Belfast council and proposed a compromise whereby the Union Jack would be flown on certain designated days. Sinn Féin and its main nationalist rival, the Social Democratic and Labour Party, voted in favor of this compromise. A more constructive unionist leadership, representing a more self-confident community, would have celebrated the deal as a triumph: in the 1980s, few could have imagined a scenario in which Sinn Féin councilors might vote in favor of the British flag being flown in Belfast, even for a solitary afternoon. Straightforward political opportunism certainly played its part, as the Democratic Unionist Party (DUP) leader Peter Robinson had lost his Westminster seat in east Belfast to an Alliance candidate in the previous UK election. But the underlying factors went much deeper than that.

The working-class unionist areas that supplied the majority of flag protesters have seen few material benefits since the peace agreement of 1998 and the belated formation of a cross-community government between Sinn Féin and the DUP in 2007. Long-term economic trends are working against them, the factories and shipyards of Belfast’s industrial heartland having long since closed down, with no other source of skilled blue-collar employment taking their place: “New sites of consumption in the city center, riverfront, and former docks have replaced the traditional productive economy centered on heavy engineering and shipbuilding. Those with skills, education, and access to finance have done well in the new economy, while those without resources are increasingly corralled in the ‘sink’ estates of the inner and outer city.”⁴⁶ The same processes have affected working-class nationalists, who are still at greater risk of unemployment than their unionist counterparts; but nationalists had always been less likely to secure well-paid blue-collar jobs, so the decline of heavy industry has not had the same impact on their fortunes.⁴⁷ In this context, it is all too easy to put forward a narrative that attributes unionist regression to nationalist advance — in much the same way that the radical right has won support in depressed postindustrial regions elsewhere in the UK by holding immigrants responsible for the ravages of neoliberalism.⁴⁸

An especially farsighted political leadership would be needed to assuage these grievances and anxieties without exploiting them for short-term gain. Rare enough in most countries, a leadership of that caliber is certainly not to be found in contemporary unionism. When Northern Ireland’s postwar settlement was taking shape in the late nineties, parties allied to the loyalist paramilitary groups spoke of providing working-class unionists with a voice of their own, and went much further than the mainstream unionist parties in acknowledging discrimination against nationalists under the old Stormont regime. That experiment has ended in failure, however: whether it was sunk by its own political contradictions or by ties with a dysfunctional milieu may be open to debate, but the outcome is not in doubt. The Progressive Unionist Party, once considered the most promising vehicle for a confident new unionism, was last seen trailing after the flag protests in the hope of a modest revival.

The DUP secured its current position as the dominant unionist force by denouncing the Ulster Unionists for their willingness to negotiate with Sinn Féin, whereupon it proceeded to strike a bargain of its own, leaving many supporters bewildered. Long the party of choice for working-class unionists, the DUP had previously combined its hardline stance on constitutional issues with a vaguely left-wing economic program, but has since abandoned that rhetoric to embrace undiluted Thatcherism.⁴⁹ With nothing to offer its working-class voters on the economic front, the party has all the more reason to ramp up tensions over cultural issues — and may not be able to control the upheavals which ensue. Researchers from Queen’s University reached a depressing and ominous conclusion about the sentiment behind the flag protests: “The desire to be heard is not accompanied by any desire to listen.”⁵⁰

War by Other Means

Another reminder of how elusive “normality” remains in Northern Ireland came in April 2014, when Sinn Féin’s leader Gerry Adams was arrested and held for questioning about his alleged role in the abduction and killing of a middle-aged woman in 1972. In what would prove to be the conflict’s bloodiest year, the Irish Republican Army (IRA) had accused Jean McConville of working as an informer for the British Army. She was kidnapped, shot, and buried in secret; her remains were not discovered until 2003. The murder took on fresh political significance when former IRA leader Brendan Hughes accused Adams of giving the order to have McConville killed in an interview that was published after Hughes’s death in 2008.⁵¹ Transcripts of that interview, and of others conducted with republican and loyalist paramilitaries, had been deposited with the history department of Boston College. The idea to use those transcripts as material for a criminal prosecution against Adams appears to have originated with Norman Baxter, a retired police officer whose loathing of Sinn Féin (and Adams in particular) is shared by many veterans of the Royal Ulster Constabulary (RUC) — now repackaged as the Police Service of Northern Ireland (PSNI).⁵² But PSNI officers would not have felt at liberty to arrest a senior political figure without believing that the time was right for such a move and that people further up the chain of command would not stand in their way.

Whatever may have been said behind closed doors, there was a clear public signal from the Secretary of State for Northern Ireland, Theresa Villiers, just two weeks before Adams was taken into custody. Speaking before an audience of religious dignitaries, Villiers laid down a clear line about the way the conflict should be remembered, calling for “a proportionate focus on the wrongdoing of paramilitaries, rather than the almost exclusive concentration on the activities of the State, which characterizes so many of the processes currently under way,” and deploring “a one-sided approach which focuses on the minority of deaths in which the State was involved rather than the great majority which were solely the responsibility of the terrorists.”⁵³ As a dose of rhetorical snake oil, the speech was exemplary. The whole idea of a struggle between paramilitaries and the state forces, between “terrorists” and those upholding the rule of law, has been damaged beyond repair after the inquiries conducted in recent years by various judicial bodies and by the PSNI’s own Historical Enquiries Team (HET). A more realistic picture has emerged of a conflict that pitted the IRA and other republican groups against state forces and loyalist paramilitaries. The British state never perceived the loyalists in the same light as the IRA, as an enemy that would have to be defeated at all costs. Depending on the circumstances, the loyalists were seen as a nuisance that would have to be contained or as a useful ally. Collusion was extensive and systematic across the whole span of the conflict.

This view of the “Troubles” has long been commonplace among nationalists (including staunch opponents of the IRA). The difference now is that it has been vindicated by official reports whose authors can hardly be dismissed as republican sympathizers or dupes. Take, for example, the findings of one HET report on the so-called Glennane Gang, whose members were responsible for well over a hundred murders in the 1970s, including some of the most notorious atrocities of the time: “Members of the Nationalist community and relatives of the victims in cases such as these are convinced that investigations were not rigorously conducted, in a deliberate effort to conceal security forces’ involvement and perpetuate a campaign of terror by loyalist paramilitaries against Catholic civilians. The HET is unable to rebut or allay these suspicions.”⁵⁴ When serving members of the RUC were implicated in a sectarian attack on a Catholic pub, with ballistic evidence connecting their weapons to several killings by the Glennane Gang, they were given suspended sentences (with the exception of one officer who had already been convicted of murder); Northern Ireland’s most senior judge described them from the bench as “misguided but above all unfortunate men” who had been motivated by “the feeling that more than ordinary police work was needed and was justified to rid the land of the pestilence which had been in existence.”⁵⁵

With eminent judicial figures willing to describe the attempted murder of nationalist civilians as “extraordinary police work,” it is hardly surprising that the history of the conflict was littered with similar instances of collusion, many of which have now been carefully documented.⁵⁶ Nor is it surprising that Villiers should be so keen to call a halt to investigations that threaten London’s ability to whitewash the historical record. The arrest of Gerry Adams must be seen in this wider context, as part of a battle over historical memory and as a shot across the bows for his party. For the state, the monopoly of legitimate force, which has been reestablished as a result of the peace process, must logically encompass the monopoly of determining what force is legitimate. The ongoing battle over so-called “legacy issues” has the potential to disrupt a settlement that remains precarious almost two decades after the Belfast Agreement was signed.

Balancing the Books

A more immediate threat to stability, however, came from an issue that brought Northern Ireland closer to the British and European norm: drastic cuts in public spending. Talks at the end of 2014 were meant to resolve disputes over flags, parades, and historical memory, but ended up kicking those matters into touch. They did, on the other hand, result in a clear statement of economic priorities. The text of the Stormont House Agreement committed the parties to “a comprehensive programme of Public Sector Reform and Restructuring” that would lead to “a reduction in the size of the NICS [Northern Irish Civil Service] and the wider public sector.”⁵⁷ This commitment to reduce the size of Northern Ireland’s public sector, like the wider talk of “rebalancing” the local economy, is based on a shoddy diagnosis of the region’s ailments. It is true that Northern Ireland has long depended on a large subvention from the British Treasury, without which it would be unable to maintain current levels of employment. Public expenditure accounted for 67 percent of Northern Irish GDP before the crash, compared to 34.5 percent in its southern neighbor.⁵⁸ But to claim, as so many pundits do, that government spending is “crowding out” private enterprise is to stand reality on its head. In truth, the role of the public sector has expanded because private industry is so weak.

Those who favor the “crowding out” thesis often note that public-sector employment, at 31 percent of the workforce, is almost twice the UK average of 17 percent. However, a clearer picture emerges when we look at the entire working-age population. Public-sector employment per working-age adult may be 4 percent higher in Northern Ireland (18 percent) than in the United Kingdom as a whole (14 percent). Yet the real gulf is between the respective figures for private-sector employment: 59 percent in the United Kingdom and 41 percent in Northern Ireland.⁵⁹ The share of household income that came from social benefits in Northern Ireland was 31 percent before the recession, against 25 percent in Britain and 18 percent in the Republic; the proportion of working-age people on disability benefits was 74 percent higher than in Britain.⁶⁰

These stark figures bear witness to the decline of Northern Ireland’s manufacturing base and the failure of its business class to generate any viable substitute. A similar pattern can be observed in many parts of Scotland, Wales, and northern England, where industry has been sacrificed for a new economic model based on finance and tilted heavily toward London and the southeast. A short-lived construction bubble at the tail end of the global boom that saw Northern Irish property prices soaring past the UK average was never going to be a long-term solution; predictably, it burst when the world economy plunged into recession.⁶¹ It is absurd to imagine that such trends can be reversed by slashing public-sector employment: The sort of “rebalancing” that would entail brings to mind a one-legged man who has the other limb amputated in pursuit of symmetry.

The other magic bullet upon which Northern Irish politicians are relying —  “magic” being the operative word in this case — is a cut in the corporation tax rate. Local political elites have spent years asking London for the freedom to vary the UK rate, and the Stormont House Agreement gave a conditional green light for such a move. Yet this demand has always been rooted in a simplistic and largely misleading view of the southern economy, which attributes its success in attracting foreign investment exclusively to its low rate of corporation tax.⁶² A report by a senior official at the UK Treasury that was published in 2007 found “no clear and unambiguous case” for a cut: “The policy would result in a net cost of about £2.2 billion over ten years, with no prospect of full cost recovery over the long run.”⁶³

Having set out the long-term vision in the Stormont House Agreement, Britain’s Conservative government presented the short-term bill in the shape of a demand for deep cuts in welfare spending. For Sinn Féin in particular this presented a grave challenge, highlighting the divergence between its northern and southern platforms. Sinn Féin’s northern leadership had previously shown little sign of discomfort at the neoliberal drift of economic policy in the power-sharing administration: Deputy First Minister Martin McGuinness signed up to the consensus on corporation tax, describing the prospect of a cut as “an exciting opportunity for the regional economy.”⁶⁴ But even a party as dexterous as Sinn Féin would find it hard to denounce welfare cuts on one side of the Irish border while imposing them on the other, and the party leadership opted to take a stand on the issue. The result was a protracted standoff that threatened to bring down the power-sharing executive. The Dublin government threw its weight behind the Conservative–DUP line on welfare, sensing an opportunity to tarnish Sinn Féin’s anti-austerity image in the South.

Breakdown

For the first time since the Good Friday Agreement was signed in 1998, economic issues had become the main focus of political life in the region, in place of the usual concerns. But the picture was complicated by an unexpected development: the killing of IRA veteran Kevin McGuigan in August 2015, allegedly by his former comrades, which led the DUP to threaten withdrawal from the power-sharing executive.⁶⁵ The budget dispute ultimately ended in a fudge, with the Northern Irish government granting Westminster the authority to impose welfare cuts while pledging to top up benefits from its own resources — a move immediately dismissed as a sleight-of-hand accounting trick by rival politicians.⁶⁶ The so-called Fresh Start Agreement also contained the clearest commitment yet to slash the local rate of corporation tax by 2018.

Sinn Féin and the DUP were thus ready to face the Assembly election in May 2016, with their coalition deal apparently secure for the time being. Both parties held onto the great bulk of their support (although Sinn Féin faced a challenge from the People Before Profit Alliance in Foyle and West Belfast, two urban constituencies where the left-wing group took seats at its expense). Just as the election results were being digested, an unanticipated problem came into view, as a majority of UK citizens voted to leave the European Union. Martin McGuinness hastily called for a referendum on Irish unity on the grounds that 56 percent of Northern Irish voters had opted for Remain; Sinn Féin had campaigned vigorously against Brexit, while the DUP supported the Leave campaign. In practice, support for EU membership could not be mapped onto a border poll in any straightforward manner, even if the balance of opinion did break down roughly along communal lines, with the biggest Remain majorities in strongly nationalist constituencies. But if the question of Scottish independence is placed back on the agenda, the prospect of “being stranded in an offshore appendage of a Little Britain,” as Malachi O’Doherty put it, could spur renewed agitation for Irish unity — or even a partnership of some kind with a newly independent Scotland.⁶⁷

To general astonishment, the DUP’s leader Arlene Foster then drove Sinn Féin to pull the plug on their coalition by refusing to take responsibility for gross incompetence in the management of a renewable-heating scheme that could end up costing Northern Ireland half a billion pounds. In a resignation statement, Martin McGuinness vented his frustration with the DUP’s petty, obstructionist approach; this led Foster’s party colleague Nelson McCausland to boast that Foster had been “too strong and too smart” for Sinn Féin to cope with.⁶⁸ That keen political intelligence was hardly in evidence when the results came in: with a 10 percent jump in turnout, the DUP had lost ten of its thirty-eight seats and came within a hair’s breadth of being outpolled by Sinn Féin. Unionist parties now find themselves on a level footing with their nationalist rivals for the first time in the history of Northern Ireland. If the two main parties are unable to patch up their differences in short order, a period of direct rule from London will intervene. At a time of general uncertainty for the United Kingdom, the DUP has proved staggeringly incompetent in its political tactics. The Union is not in danger yet, but it will need far more effective champions over the period to come than Foster and her associates.

Southern Prospects

The second Northern Irish poll came almost exactly a year after southern voters gave the incumbent parties a bloody nose in their own general election. During the final months of 2015, opinion polls had appeared to show a clear picture. The outgoing Fine Gael–Labour coalition would not be re-elected; support for the three main parties would fall to its lowest-ever level; but there would still be a secure conservative majority in the new Dáil, as long as Fine Gael and Fianna Fái1 could agree to some kind of “grand coalition” deal. All of which came to pass, but with a surprising twist, as the gap between the two center-right parties closed drastically in the final weeks of the campaign. Fine Gael had looked set to outpoll its rival by at least 10 percent, cementing its position as the dominant force in Irish conservative politics. As it transpired, there was almost a dead heat between the two. The calculus behind coalition horse-trading suddenly changed, with one party chastened while the other had a spring in its step. Pundits were quick to blame an excessively right-wing Fine Gael platform, put together with assistance from the British Conservatives.⁶⁹ While Fine Gael spokesmen spent most of the campaign boasting about a “recovery” that many Irish citizens had yet to experience in their daily lives, the Fianna Fáil leader Micheál Martin dusted off the center-left image that was once so important for his party, promising to give investment in public services priority over tax cuts for the upper middle class — and also to scrap water charges. This prompted one optimistic reading of the result as proof of “an emerging social-democratic majority.”⁷⁰ If so, it was a majority with no chance of manifesting itself in government formation.

In one of his final essays, written shortly before Ireland’s 2011 election, the late Peter Mair had identified “a growing divide in European party systems between parties which claim to represent, but don’t deliver, and those which deliver, but are no longer seen to represent”:

Governing capacity and vocation becomes the property of one more or less closely bounded group of political parties … representation or expression, on the other hand, or the provision of voice to the people, when it doesn’t move wholly outside the arena of electoral politics, becomes the property of a second group of parties, and it is these parties that constitute the new opposition. These latter parties are often characterized by a strong populist rhetoric. They rarely govern, and also downplay office-seeking motives. On the rare occasions when they do govern, they sometimes have severe problems in squaring their original emphasis on representation and their original role as voice of the people with the constraints imposed by governing and by compromising with coalition partners.⁷¹

Mair pointed to the experience of his native country as a striking illustration of “the constraints imposed by governing” — above all, the inability of Irish governments to secure debt relief without precipitating a head-on clash with the European Commission and the ECB. Five years later, the impact of recession and austerity had transformed the Irish party system into a perfect example of the “bifurcation” Mair had described. Throughout Europe, traditional parties have been losing support in recent years, but the process has advanced furthest in the peripheral eurozone states, where the Troika and its austerity programs have opened a chasm in political life. Elections in Spain, Portugal, and Ireland during the winter of 2015–16 delivered remarkably similar outcomes. In each case, the dominant center-right and center-left parties lost ground to outside-left anti-austerity forces, but would still have been able to form a government with a solid majority if they joined together in a “grand coalition.” However, this was precisely what those parties wanted to avoid, with the experience of the PASOK–New Democracy alliance in Greece at the forefront of their minds. Nobody wanted to leave parties like Sinn Féin, the Left Bloc, or Podemos at the head of the opposition, where they would have a real prospect of winning the next election, just as Syriza had done in January 2015.

Three different countries produced three different responses to this dilemma. In Spain a second election was called within months, while in Portugal, the Socialists attempted to draw the hard-left parties into a governing alliance without committing to the radical anti-austerity stance Syriza had adopted. The Irish solution was to try and form a grand coalition while calling it something else. After two months of inconclusive talks, during which it seemed as if the deadlock might not be broken without a fresh election, Fine Gael and Fianna Fáil eventually came to an arrangement. Martin turned down the offer of full participation in government, but gave his blessing to a Fine Gael minority government that would have the support of right-wing independents. Stephen Collins of the Irish Times bluntly described it as “a mechanism for the center ground of Irish politics to hold on to power without putting Sinn Féin and the hard left in the position of being the only alternative government.”⁷² If we replace the euphemistic term “center ground” with “right wing,” that formula will do perfectly.

There was a price to be paid: namely the suspension of water charges, upon which Fianna Fáil insisted. This step was greeted with splenetic fury by much of the Irish commentariat, who warned that it would invite further protests against austerity. As Cliff Taylor observed in the Irish Times, “The water-charge controversy was always about much more than water — and so the collapse of political will on the issue in the face of public opposition is bound to have consequences.”⁷³ However, the climbdown was unavoidable: with nonpayment rates soaring upward after the general election, Fianna Fáil could only backtrack on its pledge to suspend charges if it was willing to support a government dragging thousands, if not tens of thousands, of people through the courts by the midway point of its term in office. The three channels of protest carved out by the water-charges movement — electoral campaigns, street marches, and nonpayment — all proved vital. The conservative parties have not abandoned hope of imposing water charges at some point in the future, but their retreat over the issue did constitute a real victory for popular mobilization, in a country its leaders had gleefully held up as the Weak Man of Europe.

There had been an ill-conceived attempt to use the water-charges movement as a lever that could shift the entire balance of political forces: namely, the Right 2 Change (R2C) platform, which was organized by some of the trade-union officials who had supported the protests. R2C placed Sinn Féin at the heart of its ambitions for government formation and tailored its program to accommodate that party’s outlook. In the run-up to the 2016 election, Sinn Féin ruled out going into coalition unless it had the upper hand in any alliance, which left the door open to an arrangement with Fianna Fáil as long as Sinn Féin had more seats in the Dáil. With the two parties neck and neck in the opinion polls for much of 2015 and Sinn Féin consistently polling in the region of 20 percent, the R2C leadership was encouraged to believe that a “progressive government” that could abolish water charges was within their grasp.

A more realistic objective would have been to firm up Sinn Féin’s stance against coalition with the right-wing parties while promoting greater unity among the other political forces involved in the water charges movement. This approach could not have led to the formation of a left-wing government — Labour’s decision in 2011 had taken that option off the table for the next electoral cycle at least — but it might have boosted the anti-austerity vote and rendered it more cohesive. As it turned out, the R2C platform was unable to keep Sinn Féin’s star in the ascendant during the last stages of the election campaign. Its eventual score — just below 14 percent — was still the party’s best performance since the 1920s, but a good deal lower than its polling figures over the previous year and a full 10 percent behind Fianna Fáil. Ireland’s anti-austerity left had found itself in a difficult position after Syriza’s capitulation to pressure from the Troika in 2016, much like its Iberian counterparts. The lesson of the Greek experience was that a more radical approach — including a willingness to ditch the euro if necessary — would be needed to disrupt the Berlin Consensus.⁷⁴ But the first instinct of parties like Sinn Féin and Podemos was to shy away from that prospect, talking instead of a break with austerity within the framework of the eurozone — a scenario that lacked all conviction after the “waterboarding” of Greece.

Despite Sinn Féin’s disappointing result, forces to the left of Labour now have their strongest-ever foothold in the Dáil, while the political establishment has been forced to test out an unorthodox political alliance after burning through its traditional options in the space of five years. Normality has yet to be restored. Three factors are likely to be crucial in the period to come. Will the cohesion of the governing alliance prove greater than that of its opponents? Will the experience working-class communities gained in the struggle against water charges carry over into new forms of social resistance? And will the Irish economy be spared the impact of external shocks from Britain, Europe, or the wider world? The answers to these questions will determine whether the 2016 election proves to have been the beginning of the end or the end of the beginning.