A letter from Doug and Elaine Baker in Northern Ireland
April 2011
Changed times for the United Kingddom’s and Ireland’s economic situation
For several years now the economic outlook in both the United Kingdom (including Northern Ireland) and the Republic of Ireland has been becoming increasingly gloomy and their populations are having to come to terms with new realities. While there are local reasons for the challenges facing the economy in each of these jurisdictions, this is also part of the worldwide recession.
The United Kingdom
After the United Kingdom general elections held in May 2010 Labour was replaced by a Conservative/Liberal Democrat coalition, promising big cuts in spending to deal with the deficit racked up over many years — including those when Margaret Thatcher and the Conservative Party were in power before Labour came into office. VAT, the value-added tax (similar to sales tax in the United States), has increased from 15 to 20 percent and inflation generally is outpacing any rise in income for most people. Each government department is being asked to shave up to 25 percent off its budget. It looks like a lean next few years for spending on education, health and infrastructure. Unemployment is on the rise overall, and young people — including recent university graduates — are finding it particularly difficult to get into the workforce at all, let alone in fields for which they have been trained. At the same time, tuition charges for university and other forms of higher education are rising dramatically, making many question whether it is worth racking up significant debts when the prospects of employment at the end of a course are not good.
Northern Ireland
The implication of all of this for the Northern Ireland peace process is not major, but there are at least three ways in which it does have an impact:
First, the power-sharing Northern Ireland Executive from the outset has had difficulty in reaching agreement on spending priorities, and major decisions about this have tended to be shelved. The reduction in the overall budget available does not make finding agreement on this any easier and the necessity of doing so could exacerbate areas of disagreement between the various parties.
Second, higher unemployment and less hopeful indicators about the economic future always lead to frustration, particularly among the young in more economically disadvantaged areas. Disillusionment in settings where the promised “peace dividend” in terms of economic well-being has not been experienced as hoped for can be a trigger for either condoning or actual engagement in violence by extreme groups who never supported the political settlement inherent in the Northern Ireland peace process.
Third, reduced local job prospects for graduates feeds the brain drain as more head away from Northern Ireland to pursue options elsewhere. While there is not a direct correlation, it is often true that those who have qualified for professional roles also hold more moderate political outlooks. The kind of leaders Northern Ireland needs.
The Republic of Ireland
It is the Republic of Ireland that has experienced the biggest decline in its economy. The Republic had traveled a long way in just a few decades from a largely agricultural economy to the high-tech and consumer-driven Celtic Tiger that impressed the whole world. House prices rocketed by over 500 percent during the boom years. People got carried away with prosperity. However, wild property speculation and crazy bank loans resulted in an exaggerated picture of prosperity. Those who should have been regulating borrowing and spending failed to recognize or respond to warning signs. It would appear that there was a collective state of denial. Eventually the bubble burst and there was no denying the magnitude of the economic crisis facing the Republic. In late 2010 the government had to turn to the European Central Bank and others for an 85-billion-euro ($110 billion) bailout. Following a resulting internal crisis within the ruling Fianna Fail Party and the withdrawal from the coalition government by the Green Party, a general election was called for February 2011.
Voters were angry about the economy and voted for change. Fianna Foil was crushed. They lost three-quarters of their TDs (members of parliament); the Green Party, who had been their coalition partners, lost all six of their seats. Fianna Gael received their biggest endorsement in history, and the smaller Labour Party increased their vote from 10 percent to 20 percent.
Fianna Gael and Labour formed a coalition with 116 of 166 seats in the Dail.
Sinn Fein increased its vote from 7 percent to 10 percent and tripled its number of TDs, including a victory for Gerry Adams, the party’s president, who resigned from his Westminster and Northern Ireland Assembly seats to stand as a TD for Louth. While there is no question Sinn Fein increased its vote significantly, commentators view many of those votes as being ‘on loan’ from Fianna Fail, a party voters wished to punish for negligence during their watch of the economy. The general election is being called a democratic revolution — not on the streets but in the ballot boxes. The new Taoiseach is Enda Kenny of Fianna Gael, who along with his Labour coalition colleagues has enjoyed no honeymoon period and has had to identify huge areas in which to cut public spending as well as attempt to renegotiate repayment of the bailout for the country secured by Fianna Fail prior to the election.
A November 2010 editorial in the Irish Times declared, “Having obtained independence from Britain we have now surrendered our sovereignty to the European Commission, the European Central Bank and the International Monetary Fund.” The major challenge for the victors in the Republic’s general election will be finding sufficient wriggle room with the IMF/ECB/EU to renegotiate the bailout conditions. It is obvious to the vast majority of people within Ireland, the markets and Europe that the Republic’s economy is simply not big enough to repay the debt. Unless measures are taken by Europe to help shoulder bondholder debt, it appears likely that it is only a question of when, not if, Ireland will default.
Outer signs of wealth are still there to be seen in the Republic of Ireland, but everywhere there are also reminders of the boom years that have gone bust and of mad development. These include empty office blocks, warehouses and hotels. However, the most telling reminders are the Republic’s ghost estates: housing developments intended for the thousands of young adults who were not emigrating as in previous generations but staying in Ireland to work and the thousands of new arrivals from Eastern Europe and further afield drawn to Ireland because of the plentiful employment opportunities. They were built with tax incentives and cheap loans from financial institutions that have turned out to be unstable. These “ghost estate” housing developments are dotted around the Republic — 2,800 of them comprising over 43,000 units. Some have been half constructed and then left in that unfinished state. Others have been finished, but no units sold. Others have perhaps one house in five occupied, while others lie vacant and the roads and other amenities unfinished.
Individuals, families and businesses continue to suffer. Irish emigration stands at 1,000 people per week. Low- and middle-income families are feeling the disproportionate pain of a universal levy on their paychecks (this on top of the tax raises and welfare cuts, including the reduction of the minimum wage by €1, and negative equity). As it becomes ever more obvious that a worker is working to pay the interest on the bank bailout and to recompense the financial gamblers for betting and losing, it is little wonder that emigration is seen as a brighter alternative.
It would be fair to say that the Irish population has moved from a sanguine acceptance of their national plight to a simmering resentment of the authority structures and golden circle they hold responsible. The general election saw a realignment of Irish politics, which had been centered on factions formed in the civil war that followed the partition of Ireland in 1920. Fianna Fail (Soldiers of Destiny), which was founded in 1926 by the antitreaty leader Eamon de Valera after breaking with the hardline Sinn Fein (Ourselves Alone), had been dominant since 1932. Fine Gael (Tribe of the Irish) grew out of the protreaty group led by Michael Collins.
The question of Northern Ireland and future Irish unity featured nowhere in this election. It was all about the economy. However, there are clear implications for the Northern Ireland economy, given that the Republic is its largest trading partner.
Northern Ireland Security Update
Since the Belfast Friday Agreement of 1998, the security situation in Northern Ireland has improved immeasurably. The Provisional IRA and the main loyalist terrorist groups have called an end to their campaigns, and their weapons have been decommissioned under an internationally monitored process. In recent years, however, dissident republican groups in Northern Ireland — such as the Continuity IRA and the Real IRA, who continued to oppose the peace process — have grown stronger. Given the understandable focus on Al Qaeda-inspired terrorism in recent years, much less attention has been given to such groups in world news.
However, in the government’s National Strategic Defence and Security Review, published in October 2010, “residual terrorism linked to Northern Ireland” was identified as a Tier One risk to national security: “There is a calculated campaign of violence from small Dissident Republican groups. Despite continuing political progress, their activities have increased in the last 18 months and the security situation is unlikely to improve in the short term. There were around 50 attacks in 2010 compared with 22 in all of 2009. The ongoing recruitment of experienced terrorists and a younger generation will contribute to a continued high level of threat in Northern Ireland, as well as in Great Britain, where the threat level was recently raised from Moderate to Substantial, meaning that an attack is a strong possibility.” Dr. Martyn Frampton has published an important monograph about the history of dissident Irish Republicanism in all its forms, called Legion of the Rear Guard: Dissident Irish Republicanism (Irish Academic Press: Dublin, 2010). The aim of this pamphlet is to offer insight into the current security situation. It provides a timeline of dissident activity, an introduction to each dissident group, examines the relationships they have with each other and asks what their aims are. Drawing on the expert testimony of former security service personnel, Dr. Frampton looks at some of the problems faced by those whose job it is to deal with the threat — in a greatly altered security environment — and discusses possible responses to the revival of violent republicanism. (See our March 2011 Mission Connections letter about the death of Constable Ronan Kerr, most likely carried out by dissidents.)
Both the economy and the increased worry about dissident violence will feature in the outcome of elections on May 5 for both the Northern Ireland Assembly and local District Councils.
Doug Baker
The 2011 Mission Yearbook for Prayer & Study, p. 196
