Labour’s way is Frankfurt’s way

» Eoin Ó Murchú

The debt is not reduced by one penny, the interest rate is not even lowered

JUST AS the Fine Gael/Labour Government is trumpeting another EU deal on our finances to supposedly ease the burden on the long-suffering Irish public, Labour former TD Derek McDowell adds his voice to the debate, claiming that there is no alternative to the politics of austerity and urging Labour to stick to the plan.

Unfortunately for McDowell, on the very day that he published this nonsense in The Irish Times (11 April), the architect of the austerity plan — former IMF official Ashoka Mody — admitted that the plan was flawed and the policy wrong from the start.

As Sinn Féin said at the beginning of the process, austerity is not working. Now the IMF official has recognised this, though the Labour hierarchy seems unable to confront economic reality.

The economic arguments are well-rehearsed: austerity is depressing demand at a recessionary time when we need economic stimulus and new job creation.

For McDowell, however, it is an issue of “patriotism”, no less. “The country” is in an economic mess, and Labour is sacrificing itself (on large salaries and pensions for its most senior officers and advisors) to put “the country” first.

The obvious question is what country? Even in McDowell’s ‘country’ of 26 counties, there are two Irelands, just as there are two Englands (as the reaction to Margaret Thatcher’s death in England has graphically illustrated).

There is an Ireland of the rich and privileged, whose interests — in banking, investment, and European integration — have been protected at all costs; and there is an Ireland of the rest of us, who have borne the major share of the burden of economic collapse, whose children are sent away on export, whose lives and futures are devastated.

In the election campaign, of course, Labour spoke the good talk:  Fianna Fáil (and Fine Gael) austerity was wrong then. But once it got into government, Labour surrendered to Fianna Fáil and Fine Gael policy, with devastating consequences for the mass of ordinary people, and for their own party’s long-term prospects.

For McDowell, none of this is of any consequence.

• Labour’s Derek McDowell, IMF mission chief Ashoka Mody and Finance Minister Michael Noonan

Nor indeed for Taoiseach Enda Kenny. He airily dismissed IMF official Mody’s condemnation of austerity as “the benefit of hindsight”. But, as Independent TD Stephen Donnelly pointed out, austerity is not a hindsight issue: it is current policy, still being pursued by Fine Gael/Labour and essentially supported by Fianna Fáil.

Noonan’s New Deal, alas, changes very little. The deal is to allow us a seven-year extension of the time within which we have to repay European and IMF loans given to us to let the state take on a debt burden that never rightly belonged to us.

The debt is not reduced by one penny, the interest rate is not even lowered, and the most we have achieved is to push the debt out to later years when we will end up giving even more to the German banks than we are currently doing.

This is supposed to make us more attractive to the international financial markets, who will see us able to bear more new debt now, even if we won’t seven years down the line!

The New Deal, of course, is in reality just another chapter in the lurch from one euro crisis to another. This currency is doomed, and the only real solution is to face that fact and accept an orderly dismantling of the currency, with debts not rightly belonging to the Irish people being repudiated.

With a new Irish currency, managed by a Central Bank purged of eurofanatics, we can retrench in a way that damages the most vulnerable least, and genuinely makes job creation, a new availability of credit and an overall stimulation of the economy paid for by the rich the centre point of a new government strategy.

It requires a new state banking context, not a tired attempt to recapitalise the failed banks which brought us the crisis.

This is the way forward but politically it is only possible when a majority of our people reject the austerity parties and when, in particular, genuine Labour activists reject the champions of austerity in their own ranks.

The challenge posed by Gerry Adams at the Sinn Féin Ard Fheis to Labour is central. Do the forces exist in Labour to respond to this challenge and consign Derek McDowell’s preposterous arguments to the dustbin of history, just as the electors of Dublin North Central consigned him to the political dustbin some years ago?