Foreign Policy In Focus

The implosion of the Irish real estate bubble, as well as gutted inspection regimes, begat the Great Horsemeat Crisis.

As the Great Horsemeat Crisis continues to spread—“gallops” is the verb favored by the European press—across the continent, and countries pile on to blame Romania (France, Holland, Cyprus, etc.), what is becoming increasingly clear is that old-fashioned corporate greed, aided and abetted by politicians eager to gut “costly” regulations and industrial inspection regimes, is behind the scandal.

In a sense it is fitting that the whole imbroglio began in Ireland, where inspectors in Ulster first indentified that hamburgers should have more properly been labeled “horsewiches.” The Emerald Isle has more horses than any country in Europe, and, according to the Financial Times, in 2007 Ireland produced 12,633 thoroughbred foals and has some 110,000 “sport” horses.

The year 2007 was just before the Irish real estate bubble imploded, bankrupting the nation and impoverishing millions. And the year the “Celtic Tiger” died was very bad news for horses. Thousands of the creatures were simply turned loose by their financially strapped owners, and the number of horses sent to slaughterhouses jumped from 2,000 in 2008 to 25,000 in 2012.

The Irish-horse connection goes back to when Celtic-speaking people first burst out of Central Europe during the second century B.C. Celtic cavalry and chariots—the Celts introduced the latter to Europe—were pretty formidable, as the Romans discovered on a number of occasions.

Horses have always been a high-status item in Ireland, and during the colonial period the English figured out a devilishly clever way to take advantage of that. According to the Irish Penal Laws of 1692, no Catholic—the vast majority of native Irish were Roman Catholics—could own a horse worth more than five pounds. So the English would go into the countryside, select a thoroughbred, and force the breeder to sell them his horse for a pittance. Sometimes the “buyers” would then turn right around and re-sell the animal to its former owner for hundreds of pounds.

When the Irish first discovered horsemeat in the food chain, they claimed innocence and blamed the Poles. It turns out, however, that a small slaughterhouse in Tipperary was shipping horsemeat labeled as beef to the Czech Republic. The British blamed the Romanians, and Rupert Murdoch’s newspaper, The Sun, took the opportunity to indulge in his favorite sport: ethnic bashing. A “grim Romanian slaughterhouse built with EU (European Union) cash” was the culprit, blared the largest (and sleaziest) tabloid in England.

The Romanians did indeed use EU cash to build a plant, but the slaughterhouse produced records showing that they had correctly identified the meat as horse. Romanian Prime Minister Victor Ponta complained that Romania was routinely made the EU’s scapegoat.

Then the Swedes got into the act and blamed France, and it does appear it was the French company Spanghero that slipped “old Dobbin” into the food chain. Spanghero denied the charge and, in its defense, trotted out yet another animal: a weeping crocodile. “My first thought is for the employees,” said a choked up Laurent Spanghero at a press conference. “My second thought goes to our kids and grandkids that carry our name. We have always taught them the values of courage and loyalty and today we have been plunged into dishonor.”

Except, according to French Consumer Affairs Minister Benoit Hamon, Spanghero could hardly have failed to notice that the meat it was importing from Romania was much cheaper than what the company normally paid for beef. A kilo of horsemeat costs .66 cents, a kilo of beef, $3.95. According to Hamon, Spanghero made $733,800 substituting horsemeat for beef.

Then things got really murky.

The Netherlands said the Cyprus-based meat vendor Draap that sold the meat to Spanghold was responsible, and the company’s track record would suggest the Dutch had a point. In 2012 Draap was convicted of selling South American horsemeat labeled as German and Dutch beef.

But it turns out Draap—based in Cyprus but run by a trust in the British Virgin Islands—is owned by the company Guardstand, that in turn owns part of the arms dealing company, Ilex Ventures. According to prosecutors in New York, convicted international arms dealer Viktor Bout owns Ilex Ventures. Guardstand’s sole shareholder, reports Jamie Doward of The Observer, is Trident Trust, which sets up companies in tax-free nations. Guardstand helped set up Ilex.

Sorting this out will be nigh on impossible, because tax havens like Cyprus and the British Virgin Islands are not about to give up their secrets, and the powerful corporations that shelter their ill-gotten gains there know how to keep inspectors at bay.

Hypocrisy has been in abundance during the Great Horsemeat Crisis.

Owen Paterson, the British environmental secretary who oversees food safety and is a member of the Conservative Party, thundered in Parliament about an “international conspiracy.” However, the current Conservative-Liberal government has instituted cutbacks on inspections by the Food Standards Agency (FSA), and turned enforcement over to some 330 local authorities.

“It is a shame that testing by the FSA has been reduced,” Dr. Chris Smart told the Guardian. “I am sure there will be other crises that come along in the next few years.” And given that UK food prices have risen nearly 26 percent that will surely be the case. Inspectors have already uncovered adulterated olive oil and paprika made from roof tiles.

At the heart of this are the continent-wide austerity programs that have driven up the ranks of the poor, requiring low-income families to rely on cheap meat or go without. “Why was horsemeat present in beef burgers?” asks Elizabeth Dowler, a professor of food and social policy at Warwick University. “Because the price has to be kept as low as possible.” Horsemeat is one-fifth the price of beef, so the temptation is to either adulterate beef with horse, or sell it as cheap beef. “This has the most impact on those with low income and large numbers of children,” says Dowler. “People in this situation have no money to buy better quality burgers, or to go to a butcher and make their own mincemeat. Instead they depend on special 3-for-2 offers. The problem is linked to poverty.”

Horsemeat for some, beer and skittles for the likes of Spanghero.

But the real culprits in this crisis are the banks in Britain, Ireland, Germany, the Netherlands, and Spain that ignited the economic crisis by artificially pumping up real estate bubbles. Up there in the docket with the bankers should be the politicians who shoved through development schemes, waived environmental regulations, and turned a blind eye to speculation. And when everything crashed, the taxpayers—the vast majority of whom never got in on the boom years—got stuck with the bill.

Poor Ireland. The EU-enforced austerity scheme has raised the unemployment level to above 15 percent—30 percent for young people—and saddled homeowners with onerous tax and fee hikes. Wages have been cut, health care fees raised more, and welfare butchered. In spite of these “reforms,” the economy grew an anemic 0.9 percent in 2012, and is scheduled to rise to 1.5 percent in 2013, down from the 2.2 the government originally predicted.

And the Irish economy is actually much worse than the figures indicate, because much of the wealth Ireland currently creates goes into the coffers of huge multinationals attracted to the island’s 12.5 percent corporate tax rate, the lowest in Europe. As the Economist points out, “The Irish people have fared much worse than the Irish economy.”

And the pain for the average Irish working person is due to get worse. The 2013 budget will cut spending $4.6 billion, increase taxes, and add yet more austerity in 2014 and 2015. All of this woe has drawn widespread praise from the EU and the International Monetary Fund, which suggests that if a bank praises you, it is time to reach for a barricade.

This is not just a European problem, because the trend toward cutting back on regulations and inspections is worldwide. For instance, under pressure from the agricultural lobby, the U.S. Food and Drug Administration has backed off trying to reduce the amount of antibiotics used on livestock. According to a recent report by the National Antimicrobial Resistance Monitoring System, 80 percent of all the antibiotics manufactured in the U.S. are used on animals. The result is that antibiotic-resistant salmonella is spreading rapidly in chicken and turkey populations, and turning up in hospitals, clinics and gymnasiums. 

Horsemeat is going to be the least of our problems.

For more of Conn Hallinan's essays visit Dispatches From the Edge. Meanwhile, his novels about the ancient Romans can be found at The Middle Empire Series.

Someone has pinched the heart of St. Lawrence O’Toole, and thereby hangs a typical Irish tale filled with metaphors, parallels, and some pretty serious weirdness.

Who done it? The suspects are many and varied.

Could the heist from Dublin’s Christ Church Cathedral have been engineered by the infamous “troika” of the European Commission, the European Bank, and the International Monetary Fund? Seems like a stretch, but consider the following: O’Toole—patron saint of Dublin—was, according to the Catholic Church, famous for practicing “the greatest austerity.” Lawrence liked to wear a hair shirt underneath his Episcopal gowns and spent 40 days in a cave each year.

That is a point of view the troika can respect. They have overseen a massive austerity program in Ireland that has strangled the economy, cut wages 22 percent, slashed education, health care, and public transport, raised taxes and fees, and driven the jobless rate up to 15percent—30% if you are young. At this rate many Irish will soon be living in caves, and while hair shirts may be uncomfortable, they are warm.

There are other suspects as well. For instance, St. O’Toole was friendly with the Norman/English King Henry II, who conquered the island in 1171. The Irish are not enamored of Henry II, indeed most of them did their level best to drive the bastard into the sea. Not Lawrence. He welcomed Henry to Dublin and, according to the Church, “Paid him due deference.”

So “deference” establishes yet another suspect: the current Fine Gael/Labor ruling coalition. Fine Gael leader and Irish Taoiseach (Prime Minister) Edna Kenny has already signed the new European Treaty, but was forced to put it up for a public referendum at home (no other EU county is being allowed to vote “yea” or “nay”). Kenny is pressing for a “yes” vote, and Labor’s Tánaiste Eamon Gilmore argues that a “yes” vote would be a “vote for economic stability and a vote for economic recovery.”

The Treaty will not only continue the austerity program, it will move decision-making to EU headquarters in Brussels. This will mean that governments will be powerless when it comes to the economy. Think “Model United Nations” and lots of earnest high school students.

Who will make these decisions? Good question. Well, it turns out that a committee of the German Bundestag debated the Irish austerity proposals before the Dublin government even got a chance to look at them. How did that happen? Again, good question, but no answer yet.

Maybe German Chancellor Andrea Merkel lifted O’Toole’s heart. She certainly has a motive: Merkel is leading the “austerity is good for you” charge, a stance that has battered economies from Spain to Greece. In any case, the Irish are already suspicious of the German chancellor. An anti-austerity demonstration outside the Dail, Ireland’s parliament, featured a poster calling government ministers “Angela’s Asses.”

Much of the economic crisis in Europe—and virtually all of it in Ireland— is due to the out-of-control speculation by German banks, along with the Dutch, Austrian, and French financial institutions. “Yet it is the working people of Ireland and Europe who are being asked to pay the price,” argues Des Dalton of Sinn Fein. It appears that the Germans have discovered that one does not need Panzer divisions to conquer Europe, just bankers and compliant governments.

“Compliant” however, has run into some difficulties in Ireland, a place where “difficulty” is a very common noun. On Mar. 2, Sinn Fein President Jerry Adams trekked out to Castlebar in the west of Ireland to resurrect the ghost of Michael Davitt, founder of the Land League and leader of the 1878 Land War (there was an earlier one from 1761 to 1784, but more on that later). Adams told the Mayo County crowd “The Irish people cannot afford this treaty.”

The Castlebar symbolism was about as heavy as you can get. Davitt, along with the great Irish Parliamentarian Charles Stewart Parnell, launched the land war from that city, calling up the words of the great revolutionary, James Fintan Lalor: “I hold and maintain that the entire soil of a country belongs by right to the entire people of that country.”

These days that is not a popular sentiment in most European capitals, where governments are shedding public ownership in everything from airlines to energy production. The Irish government is trying to sell off several lucrative holdings, including Aer Lingus, Ireland’s natural gas company, and parts of its Electricity Supply Board. The state’s forestry will be sold as well. “It is the depth of treachery to sell billions of Euros worth of State assets to pay bad gambling debts,” Socialist Party member Joe Higgins said in the Dail.

The land wars were a reaction to efforts by the English to apply to Ireland the Enclosure Acts, a policy that sold “common land” to private landowners and forced the rural population of England, Scotland and Wales into the hellishness of industrial Manchester, Birmingham, Glasgow and Liverpool.

As Laura Nader and Ugo Mattei maintain in their book “Plunder: When the rule of law is illegal,” what is currently happening in Ireland (and all over Europe) is a 21^st century version of the Enclosure Acts. The last vestiges of public ownership are being systematically auctioned to the highest bidder, and the concept of “the common good” is fading like the ghost of providence.

But not without a fight.

While Adams was resurrecting the spirit of Michael Davitt, demonstrators were besieging Parliaments in Greece, Spain and Romania.

Ireland rejected two previous European treaties, only to pass them in a second round of voting. However, under the new rules, it no longer has veto power. If 12 out of the 17 Euro Zone countries endorse—pretty much considered a slam-dunk—then the new treaty goes into effect.

A number of commentators are saying that the 12-country threshold makes the Irish referendum irrelevant, but a “no” vote will be a blow to the Euro currency, and it might eventually encourage similar “no” votes in other countries. In that sense, the Irish tail could end up wagging the European dog.

Since Irish stories always include parallels, there is certainly one to be made between the first land war and the current debt crisis. The 1761 effort by English landlords to apply the Enclosure Acts to Ireland ignited resistance, first in Limerick, then spreading to Munster, Connacht and Leinster. Crowds of Irish tenants dressed in linen masks and coats—hence their generic name, the” Whiteboys”— burned hayricks, knocked down enclosure walls, and hamstrung cattle. On occasion they pitched land agents into the local bog.

The Irish resistance to the Enclosure Acts was not unique, but a very odd thing happened in Ireland: they won. A combination of population growth and war had driven up the price of food, so even the small-scale agriculture practiced by the Irish was profitable. Plus the rent capital skimmed off the Irish peasantry was playing an important role in helping to capitalize the English industrial revolution. Add to this the resistance, and the English decided that it was in their best interests to back off.

The average Irish tenant knew nothing about international finance or capital accumulation, but they got the idea that if you dug in your heels and went toe-to-toe with the buggers, you could beat them. It was a momentous experience, and a collective memory that would help fuel more than 150 years of rebellion.

Can the current Irish resistance movement turn the tide against the austerity madness that has gripped the European continent? Well, the Left is on the rise (in some places, so is the Right). Sinn Fein’s support in the most recent opinion polls shows a 25 percent approval rating, up 4 percent. In comparison, Fianna Fail—the party that ushered in the current crisis—has dropped from 20 percent to 16 percent. Labor has fallen to 10 percent, and Fine Gael is at 32 percent. Other Left parties are also doing well.

Indeed, the Left seems to be resurging in other countries as well. A center-left party in Slovakia ousted a right-wing government, and France seems posted to vote socialist. The Greek Left is fractious, but its various stripes now make up a majority.

Weirdness. Remember weirdness? For starters, an 832-year-old heart is pretty strange. And it wasn’t just the heart that was snatched. Someone also stole a splinter of the “true cross” (if one added up all the splinters in all the Cathedrals of Europe you end up with a fair size forest). And then there is the matter of the cheekbone of St. Brigid that just missed getting lifted from a church in North Dublin.

In the end, saints will not preserve Ireland from an invasion of the austerity snakes. The Irish people will have to do that. But they sport an impressive track record of overturning imperial designs, and they have long memories: put enough people into the streets of Castlebar (Dublin, Cork, Waterford, Galway, Limerick, etc.) and the bastards will back off.

As Adams said in Castlebar, “Stand together, stand united, and there is nothing we cannot achieve.”

For more of Conn Hallinan's essays visit Dispatches From the Edge. Meanwhile, his novels about the ancient Romans can be found at The Middle Empire Series.

(Pictured: Padraic Pearse.) 

“I say to the masters of my people, beware. Beware of the thing that is coming, Beware of the risen people who shall take what yea would not give.”
-- Padraic Pearse, Irish poet and revolutionary, executed May 16, 1916 for his part in the Easter Rebellion.

It is almost a hundred years since Pearse and his comrades were executed in the aftermath of the failed rising of 1916, but the people who run the International Monetary Fund (IMF) and the European Union (EU) might take a moment to read his poem—originally read over the grave of the great Fenian leader, Jeremiah O’Donovan Rossa—and take notice: an election is scheduled for Feb. 25, and Irish eyes are not smiling.

At stake is whether Ireland will lock itself into decades of high unemployment, burdensome taxes, and eviscerated social services in order to bail banks and real estate speculators out of trouble, or rise up and say “enough.”

The current economic crisis that turned the once formidable “Celtic Tiger” into a throw rug is the direct result of massive speculation by banks—both domestic and foreign—in Ireland’s real estate bubble. From 1994 to 2008, house prices in Dublin rose 500 percent, and speculators went on a massive construction spree that filled up the landscape with “ghost” projects: houses that were never finished or would never be lived in. Unemployment is 14 percent, and personal income has declined 20 percent. Projections are that more than 100,000 people will emigrate in the coming two years.

The banks and politicians were the major culprits in the speculation madness, with the former handing out cash they didn’t have, and the latter making sure that fees, taxes and regulations were waived. Ireland has the lowest corporate tax rate in Europe. Michael Lewis, writing for Vanity Fair, has calculated the following: the Anglo-Irish Bank lost 34 billion Euros, which, if measured by its percentage of the national economy, would be the equivalent of 3.4 trillion dollars in the U.S. Using the same formula, the losses for all Irish banks—106 billion Euros—would translate into 10 trillion dollars. Do keep in mind that Ireland is half the size of Alabama and one tenth the size of Texas.

The ruling coalition of Fianna Fail and the Green Party pushed through a $114 billion EU/IMF bailout, one that required Ireland to go back to the Iron Age, or maybe the Stone Age, when all is said and done. Taxes on the income of working people were raised to 41 percent, the minimum wage was slashed, tuition raised, and social services disemboweled. And Ireland was locked into paying back the EU at the usurious rate of 6 percent, even though the EU is borrowing the money it is lending to Ireland at 2.8 percent.

The bailout has tanked what was left of the Irish economy—the pre-bailout estimate of a 2.3 percent growth rate has been downgraded to 1 percent—and enraged the populace. One of Ireland’s current heroes is Gary Keogh, who took two rotten eggs—he prepared them by leaving them in his garage for six weeks—into a shareholders meeting of the Anglo-Irish Bank and egged the bank’s chairman. 

The Feb. 25 vote will see six parties vying for votes in the 26-county elections. The current ruling party Fianna Fail, and Fine Gael, the Labor Party, the Green Party, Sinn Fein, and the brand new United Left Alliance (ULA).

A brief scorecard.

Fianna Fail (“Soldiers of Ireland”) has dominated the politics of the Irish Republic for 60 out of the last 88 years. Its economic philosophy is free market, and its social policies are conservative and closely aligned with the Catholic Church. Its traditional base is small farmers and businesses, but in recent years it has been able to draw on the enormous wealth of property speculators and financiers. If there is any one party responsible for the current meltdown, it is Fianna Fail, and it may drop from its current 71 seats in the 166-member Dial to as few as 30.

Fine Gael (“Family of the Irish”) is center-right, and the second largest party, but it hasn’t won a general election since 1982. Its economic politics are not much different than Fianna Fail’s, and the party voted—with minor reservations—for the EU-IMF bailout. Its base is large farmers, rural businesses, and Dublin professionals, and it tends to be socially liberal.

The Labor Party is center-left and an offspring of several earlier parties, including the Democratic Left, the Irish Workers Party, and the Official Sinn Fein Labor. Its base is trade unionists, civil servants and teachers, and it also voted for the bailout. Its leader, Eamon Gilmore, is demanding that bank bondholders absorb some of the pain from the bailout. If it does well, it will probably go into a coalition with Fine Gael, although there will be friction over Fine Gael’s program to privatize public services.

The Green Party has only six seats, and it is almost certain to feel the wrath voters will level at Fianna Fail, its coalition partner. It is a mostly urban party whose only real accomplishment was to ban stag hunting. It may cease to exist after Feb. 25.

Sinn Fein (“Ourselves Alone”) is a left party, and the only one to vote against the bailout. While it currently holds only five seats in the Dial, it recently took a seat away from Fianna Fail in a Donegal by-election. Its unrelenting opposition to the bailout is earning it points with trade unionists and civil servants, and the party may be on the verge of a major breakthrough, possibly even outpolling Fianna Fail.

The United Left Party (ULP) is a newcomer, formed in November 2010 from the Socialist Party, the People Before Profits Alliance, the Workers & Unemployed Action Group, plus former Labor Party members and independents. It also opposed the bailout and says it will not go into a coalition with either Fine Gael or Fianna Fail.

Sinn Fein contends that the bailout’s austerity program will destroy whatever is left of the Irish economy, an argument that recently got strong support from the British Office for National Statistics. The Office found that the United Kingdom’s economy had fallen by 0.5 percent because of a falloff in services and consumption. While the new Conservative-Liberal alliance tried to blame the bad news on the early December snowstorms, economists generally agreed that Britain’s draconian austerity budget was largely to blame.

“Now we are seeing the first signs of what the Conservative-led government’s decisions are having on the economy,” the British Labor Party economic spokesman told the New York Times. Even the Confederation of British Industry chimed in. The new government has “been careless of the damage they might do to business and to job creation,” said Confederation Director Richard Lambert. “It is not enough just to slam on the brakes.”

Fianna Fail says it wants to renegotiate the 6 percent interest rate, and the Labor Party wants bondholders to take some of the pain, but so far, only Sinn Fein is demanding that the agreement be dumped. Sinn Fein President Gerry Adams says his party would reject the bailout, reverse the cuts, and submit a new budget that would ensure that those that can afford to pay will pay more. “We reject the EU/IMF deal, which is a digout for greedy bankers and speculators, not a bailout for the Irish citizens.”

Odds are the Fianna Fail will get shellacked, Fine Gael will win big, and go into a coalition with Labor. But the latter alliance will be an uncomfortable one, and there are rumors of a deal between Fine Gael and Fianna Fail. The idea would be for Fine Gael to rule as a minority government with an agreement by Fianna Fail to support it. That would allow Fianna Fail to slip into government through a side door.

The key to all this will be how well Sinn Fein and the ULA do, and whether either party gets enough votes to torpedo a Fianna Fail-Fine Gael gentleman’s agreement. What Labor will do in this case, is unclear. There is no love lost between Labor and Sinn Fein, but Labor is deeply worried that if it highlights its centrist credentials, Sinn Fein and the ULA will draw off large numbers of angry trade unionists. 

One thing is clear: The Irish are angry, and they aren’t being quiet about it. “All deputies receive calls to their Dial offices from members of the public,” says Sinn Fein Dial leader Caoimhghin O Caolain. “Often they are the old, the sick and the vulnerable. Yesterday my office received one such call from an elderly man whose blind pension was cut in the budget. He had one simple message: ‘Give us a voice.’ We must all listen to him and to countless others like him.” 

Any attempt to renegotiate the terms of the bailout will meet stiff resistance. Lorenzo Bini Smaghi, a member of the European Central Bank executive board, says that the EU would not allow any “reneging” on the agreement. On the other hand, the Germans seem to be edging away from the EU’s hard-nosed posture of enforcing punitive interest rates.

Whatever party does a better job of tapping into Ireland’s anger will likely do well Feb. 25. But the outcome of this election is not just a concern for the Irish. Greece—another victim of EU/IMF austerity—will certainly be watching what happens and whether Ireland will be the first country since Argentina declared bankruptcy in 2002 to say “Enough.” Waiting in the wings are Spain and Portugal.

Ireland is just a little island, with not many people and a lot of rain. But on occasion it engages the attention of the world. It did so in 1798. It did so during the Great Famine of 1845-48, and again on Easter Sunday, 1916. It may do so again on Feb. 25, 2011 when Pearse’s risen people will have their say.

More of Conn Hallinan's work can be found at Dispatches From the Edge.

Two images came to mind as the International Monetary Fund (IMF) and the European Union began systematically dismantling what is left of the shattered Irish economy. One was a photo in the New York Review of Books of an abandoned, up-scale house in County Leitrim, a casualty of the 2008 housing bubble. The other, an 1886 conversation about the aftermath of the 1845-47 potato famine between Sir Wilfred Blunt and the Bishop of Confert at Anghrim, the site of Ireland’s last stand in the rising of 1688.

“They call it the last battle, but this is not true, for the battle has gone on ever since,” the Bishop told Blunt. “Look at those great grass fields, empty for miles and miles away. Every one of them contained once its little house, its potato ground, its patch of oats…and where are they now? Engulfed in Liverpool, London, New York…and all for making a few English landlords rich.” 

Substitute “bankers” for “English landords” and one has to conclude that Karl Marx didn’t have it quite right: in Ireland history repeats itself the second time as tragedy, not farce. 

Historical analogies are tricky, but the potato famine and the current economic crisis have parallels that are hard to ignore. In both cases the contagion was foreign born. The 1845 fungus—Phytoph thora infestans—came from Mexico via Boston and the Netherlands. The 21^st century bubble came from Wall Street and Bonn (German banks are Ireland’s largest creditors). And in both cases the devastation was a result of conscious policy choices by the powerful.

A little history. 

The 1845 fungus pretty much killed every potato in Europe, but only in Ireland was there mass starvation. Because only in Ireland had there been a conscious colonial policy to encourage population growth. Ireland in 1845 had about 10.8 million people, more than twice what it has today. Population density meant a desperate competition for land, which, in turn, kept rents high. Places like rural Connaught had a population of 386 persons per square mile in 1845, considerably denser than England’s. The vast bulk of that population—78 percent to be precise—was dependent solely on the potato for subsistence. 

The other great advantage of a high population was taxes, which were increased 170 percent from 1800 to 1849. During the same period they fell 11 percent in England. “Over-taxation is not an accident,” remarked Marx, “It is a principle.” He had that one right. 

When the blight struck, this entire edifice collapsed. No one really knows the final butcher’s bill, but between 1841 and 1851 the population plummeted from 10.8 million to 6.2 million. About a million of these emigrated, though many of those died enroute—the ship Avon lost 236 out of 552; the Virginius, 267 out of 476—or when they arrived. Of the 100,000 Irish that immigrated to Canada in 1847, 40,000 died within the first month. How many starved at home? Maybe three million? Maybe more.

The exodus today is smaller, but about 65,000 left last year, and the estimate for 2010 is 120,000. There won’t be mass starvation, but the IMF-imposed austerity package will slice deeply into social services, battering Ireland’s unemployed. Tens of thousands are being evicted from their homes while more than 300,000 houses stand empty, like the one in Leitrim. This time around there will no be cottages filled with corpses as there were 163 years ago, but in the months to come there will be plenty of homeless and hungry. 

Ireland’s economy in 1845 may have been unsustainable for the many, but it was quite profitable for a few. There was even plenty of food produced during the famine, but it went to the landlords. In 1847 crops worth 45 million pounds sterling were exported, including hundreds of tons of wheat, barley, and oats, along with cattle, butter and cheese. While the Irish starved, those responsible for their condition drank, ate and made merry. 

Jump ahead to 1990.

As a new and “disadvantaged ” member of the European Union, Ireland was subsidized to the tune of nearly 11 billion Euros. In a small country that’s a lot of money. With its highly educated, English-speaking population, proximity to Europe, modest wages, and the lowest corporate tax rate in Europe—12.5 percent—Ireland was the ideal place for multinationals like Pfizer and Microsoft to take up residence. The country’s debt was low—12 percent, one quarter of Germany’s—with good social services. Thus was the “Celtic Tiger” born.

Then came the blight.

Bankers and moguls, allied with Irish politicians, saw a chance to make a killing in real estate. From 1999 to 2007, bank loans for real estate and construction rose 1,730 percent, from 5 million Euros to 96.2 million Euros, more than half the GDP of the island. “It was not the public but the private sector that went haywire in Ireland,” saysFinancial Times columnist Martin Wolf.

House prices doubled and mortgage holders routinely paid out a third of their income to service loans. The politicians manipulated the tax structure to make it easier for developers to avoid taxes and fees, all the while subsidizing speculators with billions of Euros. “The lines between thievery and patriotism, between the private advantage and the national interest, became impossibly blurred,” says Fintan O’Toole in “Ship of Fools: How Stupidity and Corruption sank the Celtic Tiger.”

Ireland went from a small but dynamic economy to one dominated by an enormous bubble, its banks laden down with bad debts, its financial institutions vastly overextended.

When Wall Street melted down, sparking off a worldwide recession, the bubble popped, the edifice collapsed, and Ireland’s debt rocketed to 32 percent of GDP. And, like in 1845, it was the little who people took the hit. O’Toole estimates that Irish taxpayers shelled out $30 billion Euros to rescue the Anglo-Irish Bank, essentially the entire tax revenue for 2009. While the banks got a bailout, the Irish got savage austerity.

Joblessness is at 14.5 percent, 24 percent for young people. Personal income has declined more than 20 percent. Welfare benefits are due to shrink between 4 and 10 percent, and public sector wages from 5 to 15 percent. The Irish will be looking at a decade of lower wages, fewer services, regressive taxes, and record joblessness in an economy burdened with repaying an 85 billion Euro ($113 billion) IMF/European Union “bailout” at an onerous 5.83 percent interest rate. Of course “bailout” is a misnomer: The package is little more than a slight of hand that shifts private debt onto the shoulders of the public.

But the Irish are not famous for being quiet. Workers in Waterford seized their factory last year. In early November 25,000 students wearing t-shirts proclaiming “Education not Emigration” descended on the Dail, Ireland’s parliament, to oppose increases in student fees. And tens of thousands of trade unionists, led by pipe and drum bands, marched up historic O’Connell Street late last month carrying slogans reading, “It’s not our fault, we must default,” “Eire not for sale,” and “IMF out!” In a recent by-election in Donegal, the leftist Sinn Fein Party shellacked a government candidate. The government, says Sinn Fein President Jerry Adams, “Has no mandate to negotiate such terms and impose such a burden on the ordinary taxpayer.” 

It will not be the last defeat for the Fianna Fail/Green Party governing coalition. The government’s “bailout” is specifically designed to fall on the needy. While 17.5 billion Euros will come out of the National Pension Reserve Fund, bondholders and banks will go untouched. Even the Financial Times was moved to condemn the “ongoing transfusion of wealth to those who recklessly financed the country’s real estate bubble.” Fianna Fail and the Greens will pay come the next election. But that may be too late if the government rams the “bailout” through, thus setting the plan in stone.

Like the 1845 blight, the financial contagion is spreading. Spain and Portugal are on the ropes, and Italy is in deep trouble. This time around the Irish will have plenty of company in their misery.

However, there is a way out that doesn’t involve inflicting enormous pain on millions of people who had nothing to do with causing the crisis:

1)  Reject the pact or, if it is approved, repudiate it following a general election.

2)  Dump the Euro and go back to a currency under Irish control. The Euro’s days are likely numbered in any case.

3)  Suspend home evictions and put through a jobs bill.

4)  Renegotiate the debt with the “Argentina option” in the wings: Argentina was caught in a debt crisis in 2001 and subjected to a barbaric IMF-imposed austerity plan. The Argentines told the IMF to lump it, declared bankruptcy, and successfully rebuilt their economy. 

Of course the bankers and the IMF will scream like the banshees, but that would be music to Irish ears.

More of Conn Hallinan's work can be found at Dispatches from the Edge.