Ireland’s economic crisis: EU will bleed us dry!

According to the Minister for Finance Michael Noonan the IMF and the EU are set to make €9 billion profit from Ireland’s bailout. Not content with heaping misery upon millions of working class people, the European Union mandarins want to make money out of it.

According to the Minister for Finance Michael Noonan the IMF and the EU are set to make €9 billion profit from Ireland’s bailout. Not content with heaping misery upon millions of working class people, the European Union mandarins want to make money out of it.

Michael Noonan made his comments at the same time as he was informing journalists that the cuts in next Decembers’ Budget will probably be €4 billion, not the previously announced €3.6 billion. The previous projections were based on the economy growing, which of course it isn’t, and there is no prospect of any economic growth for the foreseeable future that will fundamentally alter Ireland’s current disastrous economic state.

The Irish government and political establishment promote the EU as a “kindly uncle”, a benefactor that has the Irish people’s best interests at heart. This assertion is far from the truth.

The EU as an institution is not benign. Its political and bureaucratic leaderships are committed to the project of creating a politically integrated and economically united European super-state. The major EU powers, the European Commission and the European Central Bank will do whatever it can to protect and maintain the core interests of the “EU project” and the major European banks and financial institutions.


The European debt crisis threatens to derail European integration, and the break-up of the eurozone. Even as the eurozone is struggling to put together a new financial rescue package for Athens, warning signs keep flashing of an erosion of trust in its strategy. The Greek rescue and the European financial stability facility were meant to tide countries over until private lenders recovered from a temporary panic. It has turned out that the panic is chronic.

Yields on the sovereign obligations of Greece, Ireland and Portugal remain near record highs. This does not mean that these countries’ plans for securing the sustainability of their public finances are unbelievable. But it does mean that markets do not believe them. In this sense, the rescues are failing. The Greek one has not lured back private investors; the Irish and Portuguese loan packages have not stopped contagion.” – Financial Times 6 July 2011.

The attempt to resolve Europe’s financial crisis will inevitably fail. Look at Greece and you will see the future facing the working class of Ireland, Portugal, and Spain. Now the contagion may even be spreading to Italy, the world’s eighth largest economy. If this happens the euro will not survive.

The Greek working class is being hammered by the EU and the IMF. The austerity terms of the first bailout deepened the recession – 50,000 businesses went bankrupt in 2010. Industrial production fell by 20%. Unemployment skyrocketed. Inevitably the economy could not cope with such measures and a second bailout was sought.

The EU and IMF intervened again but instead of changing tack they have thrown the economic equivalent of petrol on to an out of control forest fire. The second bailout will be even more deflationary than the first making a Greek debt default a certainty. The second package includes a 10% cut in public spending, a 33% cut in public sector workers pay and the sacking of 20% of public sector workers. “If Greece leaves [the euro], its new independent currency will collapse; its interest rates will soar; its public debts will become unfinanceable; it really will default on its debt as it has so frequently in the past. It will slide back into being a failed state – with a military coup one all too possible response to the crisis” – Will Hutton The Observer February 2011. Hutton is not alone “The U.S. Central Intelligence Agency warned in a report that the tough austerity measures and the dire situation could escalate and even lead to a military coup”, Germany’s daily Bild.

A default in Greece will cause massive losses in banks all over the world but particularly in France and Germany and the knock on effect will result in a contagion of defaults that would include Ireland.

All of this is happening in Greece despite a second bailout and a renegotiation. It is happening because the major EU powers are determined to bleed the working class dry to pay for the crisis in their system.

The Fine Gael / Labour government is a willing partner in this process. According to the Irish Times (5 July 2011), in reference to the EU, Tanaiste Eamon Gilmore “said the State was grateful for that assistance even if it had suffered a huge loss of effective sovereignty that would only be restored when it could once again pay its way in the world…We have been the beneficiaries of European solidarity, without which we would have been unable to fund the State”.

The EU and the ECB are guilty accomplices in the process that created the monstrous property and credit bubbles that played a major role in destroying the Irish economy. Far from being the beneficiaries of a fraternal handout, the Irish working class are victims of an historic mugging with the EU determined to get their pound of flesh in order to save their banking system and make a profit into the bargain!

By 2014 Professor Morgan Kelly estimates that Ireland’s national debt will have ballooned to €250 billion – €120,000 per worker. Bankruptcy, default and all that goes with it is now inevitable. SITPU president Jack O’Connor accepts that there is no possibility of 1.8 million workers paying this debt. He even speculated at the ICTU conference that the unions might yet come round to supporting a default. However, this is not as part of a plan by a senior right wing union leader to struggle against the government and the EU/IMF austerity programme – no he too looks to the ECB for salvation.

In his speech he also called for the government to develop a scheme with pension fund trustees to secure 5% of their assets, €4 billion for investment in infrastructure and venture capital in the domestic economy. He said this would “more than offset the deflationary effect of the €3.6 billion cut scheduled for Budget 2012 and create upwards of 80,000 jobs”. Jack O’Connor wants to use workers’ pension funds – not the wealth of the rich – to give some stimulus to the economy whilst accepting that the public spending cuts in December’s Budget should still go ahead and thousands of public sector workers will lose their jobs. Invest €4 billion – cut €4 billion – it is economic madness!

Irish workers are on a collision course with the EU. The EU will bleed the working class dry and then kick Ireland out of the eurozone when it defaults in order to protect the profits and interests of the capitalist elite.

Alternative to austerity

The Socialist Party believes that Ireland should refuse to pay the debt. But this is not enough. A struggle by the working class against Fine Gael/Labour’s austerity programme must also be linked to a struggle against the political and bureaucratic leaders of the EU. Real European solidarity will exist when the working class in Ireland link up and support their fellow workers in Greece, Spain, Portugal, Britain and other EU countries in their struggles against the Europe-wide austerity contagion.

Ireland or indeed Europe’s economy cannot be rebuilt in such a way as to guarantee a decent future for the working class and young people on the basis of capitalism. The struggle against paying the debts and against austerity must be linked to a struggle for democratic public ownership and control of the banks and big business. A socialist economy and a socialist Europe is the only way to resolve this crisis in order to provide a better life for all – not a an EU super-state based on exploitation which will put profit first.



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