Dr Jim McDaid’s decision to resign as a TD is just the latest symptom in the terminal crisis affecting the Fianna Fáil/Green coalition. While the government still holds a tenuous majority of three seats, there are four by-elections pending, the chances are that we will be propelled into a new general election sooner rather than later. Doubtless Cowen and Lenihan will try and hang on. But the opinion polls and the economic catastrophe mean that the coalition is likely to lurch from one crisis to another.
The next storm cloud on the horizon is the possibility of an IMF intervention. Tonight [Tuesday] the Bond markets are trading 10 year Irish Government Bonds at 7.4% interest rates and the risk spread between German and Irish Bonds has reached a record 4.9%. Colm McCarthy author of the Bord Snip Report commented in the Independent on Sunday 31st October:
“The only factor the Government can do anything about at this stage is the budget deficit. If they do too little to convince the markets, the game is up and the Irish Government will be unable to finance itself, which means an IMF/European bailout and economic policy dictated from outside the country. How bad would that be?
“Both Government and the main opposition parties are committed to avoiding this outcome and there are solid reasons for supporting their stance. Some commentators seem to believe that a bailout would be a soft option. But there is no good reason to expect that this would be the case. The EU and the IMF would agree to lend to Ireland for a period of years, subject to an exit strategy and a timetable. The rate of interest would be expensive; the total amount would not necessarily be generous; and the exit strategy would require that Ireland restore its creditworthiness on a tight timetable.
“Bailouts come to an end and the IMF and EU would expect their money back. It is an illusion to expect that the budgetary austerity we face can be avoided through resort to a bailout. Recent discussion in the Dail and elsewhere has created an impression that the binding constraint is the target for 2014 imposed by the EU. This assumes that, were the EU to relax this target, Ireland could borrow a larger amount in the markets. There is no reason whatsoever to believe that this is realistic. In a bailout, a tough target would certainly be imposed.
“There is a further complication: the Irish banks are virtually unable to borrow, even with a State guarantee. Almost all of their new funding is coming from the European Central Bank (ECB), from which they borrowed an additional €23bn in September to re-finance maturing debt. At some stage, bailout or no bailout, the Irish State must regain its creditworthiness and so must the commercial banking system.”
So the best option that the coalition can come up with to convince people to support them is “let us cut now or let the IMF and the EU dictate a policy with deeper cuts”. But for hard pressed workers neither of these is an option. Wage cuts, unemployment and short time working have cut family budgets to the bone. Pensions have been cut, benefits cut and services placed under huge pressures also. How much more can people take?
The Irish bosses are in a complete impasse. Capitalism in Ireland has demonstrably failed. Neither the coalition nor the Fine Gael leaders have any alternative to the crisis. All of the parties are in crisis. It is not ruled out that a leadership challenge within FF might result in a split in the Party, but there will be huge pressure to try and hang on.
Key to the future of the coalition however is the role of the Labour Party leaders. Labour could potentially win a majority in the Dáil in the next election. But to do so the first prerequisite is to present a clear socialist alternative.
A genuine socialist leadership would explain the reasons for the capitalist crisis and would present a programme to break decisively with capitalism. That means nationalisation of the banks, insurance companies and big industry under democratic workers’ control and management, cancellation of the national debt and nationalisation of the banks. A democratically drawn up Socialist plan for the economy and a massive scheme of public works would lay the basis for cutting the working week and mopping up unemployment while preserving pay rates and beginning to transform society in the interests of working people.
If the Labour leaders continue to tail end the bourgeois parties in the state and fail to offer a socialist alternative the best that we can expect is a Fine Gael dominated coalition with Labour ministers carrying out policies dictated by Enda Kenny and the Fine Gael. The Irish working class deserve far better than that. As James Connolly explained in the Workshop Talks in 1909:
“The capitalist, I say, is a parasite on industry...
“The working class is the victim of this parasite - this human leech, and it is the duty and interest of the working class to use every means in its power to oust this parasite class from the position which enables it to thus prey upon the vitals of Labour.
“Therefore, I say, let us organise as a class to meet our masters and destroy their mastership; organise to drive them from their hold upon public life through their political power; organise to wrench from their robber clutch the land and workshops on and in which they enslave us; organise to cleanse our social life from the stain of social cannibalism, from the preying of man upon his fellow man”.
02 November 2010