Plan Outside: Going it alone Ireland

Today the Labour Party leader, Eamon Gilmore, was having fun down in Limerick aping the Rubberbandits by telling potential voters: "Feck the bailout, we've a plan outside". Labour's position has hardened over the past few days, perhaps due to seeing the dregs of the plunging Fianna Fáil support trickle off to Sinn Féin, rather than give a boost to the traditional third party. Labour may be polling in the early 20s - a good place to be for it historically - but when Labour is pushing Gilmore as Taoiseach, they would want to make greater headway over the next few weeks.

So Labour revealed its plan earlier this week, and it's more ambitious in its bailout renegotiation aims. Instead of the deficit-reducing plan (reducing it to 3% of GDP) lasting until 2015, as currently agreed, it should be pushed back to 2016; instead of a €9 billion adjustment, it should be €7 billion. Labour is hoping that if they reach their aims, there will be another billion for it to invest in the economy.

This isn't as unilateralist as Sinn Féin, who really would tell the IMF to take their money and go home. In the meantime, Sinn Féin hopes to raid the pension fund to invest in the economy, while raising taxes to cover the gap between tax receipts and state spending for the next year. Sinn Féin's leader, Gerry Adams, is not known for his economic competence, and has been questioned over SF's version of past events, and whether there is simply enough money to be raised to cover the whole state bill without cutting public services. (Here's a 20 minute radio interview with him on RTÉ) Sinn Féin hopes that by shutting down and amalgamating banks so private debt is separated from the public, the bond market will be kind after only a year.

While Labour may be talking unilateralist, yet standing on a renegotiating platform, there seems to be little discussion about what a real unilateralist stance may do to Ireland and the wider Eurozone economy. The original rationale for Ireland accepting the bailout was that Portugal - and perhaps even Spain - may need to be bailed out if Ireland refused, and that it was unlikely for Ireland's situation to have sufficiently improved after 6 months, if it chose to rely on its pension fund. Portugal may have survived its first borrowing test, but, if the Greece-Ireland pattern is anything to go by, it won't be long until the European Financial Stability Mechanism will need to be called on again. With France and Germany launching their own plan today, it’s clear that there's a general consensus that things in the Eurozone need to change. How would unilaterally pulling out of the EFSM affect the Eurozone and Britain, at a time when it's the export sector that is one of the few areas of the economy that we can feel good about? Surely the core of the Eurozone would be damaged financially, as they have to borrow more to bail out banks and other countries, or, conversely, they let them fail (either one or the other or both), in which case there will be a lot of economic turbulence.

Would Ireland have enough money, or be able to raise enough, in such an economic climate to sufficiently invest in and revive the domestic economy before we need to go back to the bond markets? Of course, I could be way, way, off in many of my assumptions here: I know little of economics. However, shouldn't these issues, and how the Eurozone is going to be run in the future, be debated more?

What shine there was on austerity has now definitely come off, and despite the resignation to fixing the deficit, parties of all colours are now talking about investment to some degree. The consensus is that Ireland will eventually have to default and cannot continue to pay of the private debt it has accumulated. If unilateralism doesn't work, then negotiation will have to. So there's the fundamental question of how each of the parties are seeking to influence opinion and shape the debate: through the Europarties; contacts with other governments; shaping plans for how the Eurozone should be run?

I've heard very little of this from any of the parties here. "We must save our corporate tax rate", is the line in the sand we draw, but a simple "it's good for Ireland", is unlikely to be an endearing stance. There is very little argument about why tax competition is a good way to run a currency union - and surely this is the best way of attracting allies and forming a coherent vision of the Eurozone. It's sad to see that the response to other countries debating our taxes, and Eurozone taxes in general, is mostly "they should mind their own business". We also contributed to the Greek bailout, and were at the table when the conditions were drawn up, so we have to give aid as well as receive it: shouldn't we focus on the Eurozone as something we have an equal right to have an opinion on and argue about, rather than sulking that other people dare discuss our corner?

Fine Gael has tried to show that they have strong European connections - and imply that they're best placed to renegotiate the deal - when Enda Kenny met Barroso last month:



The hyped-up music - a mix between The Incredibles and Mission Impossible - may detract from the credibility (you can skip to 1.16), but at least it shows an awareness that negotiation means convincing others, not just ourselves.