Global effect of ‘the luck of the Irish’
By Sir Ronald Sanders
BRIDGETOWN, Barbados, Thursday October 20, 2011 - The economic prospects of the Republic of Ireland could indicate whether the world will head for a second recession or for recovery.
While it ranks among the wealthiest countries in the world today in terms of GDP, Ireland is a country long accustomed to economic hardship. It did remarkably better after it joined the European Economic Community (now the European Union) in 1973. An inflow of European funds to bring the country’s infrastructure on par with other better developed European nations, significant corporate investment from the United States with which Ireland has always had strong links due to massive Irish migration, and a significant investment in education, made Ireland highly competitive in the services sector and improved its standard of living dramatically.
In 2010, the United Nations Human Development Index ranked Ireland at number 5 in the world only one place behind the United States and ahead of Canada, Switzerland, Japan and the United Kingdom.
All of that is now under threat, and if the Eurozone does not recover from its present crisis particularly over the Greek bailout and its attempt to contain fall-out in Portugal, Ireland will be further affected.
Ireland has taken strong measures to rebuild its reputation in the services sector, particularly banking. A new report from Morgan Stanley, the US investment bank, draws a clear distinction between Ireland the other bailout countries - Greece and Portugal - saying that the Irish economy benefits from its openness to trade, strong manufacturing base and improving competitiveness. The report says: ‘‘If there is a Eurozone country that can meet the challenges posed by the current crisis it is probably Ireland."
Hopefully, the Morgan Stanley assessment will prove to be correct. If events show it to be wrong, Ireland might have to look for a second bailout from the Eurozone countries and the International Monetary Fund, both under considerable strain at the moment. It received the first bailout in November 2010. The effect of a second bailout for Ireland will not be limited to Europe – it will be worldwide, hurting US businesses in Ireland, repatriation of profits to the US, weakening currencies and encouraging more trade protectionism. Contraction of economic activity and the second recession that is dreaded globally could become a frightening reality.
The good news is that Ireland has experienced two successive quarters of growth (unlike the continued shrinking in Greece and Portugal). Its deficit has dropped to 10 per cent, and the yields on Irish bonds have also fallen to 8 per cent. Investors are clearly more confident that the country will be able to pay off its debts.
“Ireland has taken strong measures to rebuild its reputation in the services sector”. --Sir Ronald SandersA significant part of Ireland’s good fortune is its people. After centuries of calamity, including the shipment in the 17th century of tens of thousands of their people as indentured labourers (virtual slaves) to the Americas, including the Caribbean, and large scale migration to the United States in search of economic opportunities – a practice that continued until the year 2000 – the Irish appear resigned to adaptation and coping. There is a tremendous spirit of “getting on with it and doing the best you can”. It is a spirit that is reflected in the fine literature that has emanated from this relatively small island that is often inspirational even though at times morose.
An indication of the nature of Ireland is that while the world would hardly know it, the Republic has elections on October 27th for a new President who would serve a seven-year term. The campaign for the Presidency has grabbed no world headlines and even in Ireland itself, it has elicited little excitement.
There are several reasons for this principally that the Irish President is primarily a figurehead even though the post is entrusted with certain constitutional powers such as referring a bill to the Supreme Court for a judgement on its constitutionality. The main point of any anxiety within Ireland, and outside of it, is that among the seven candidates is Martin McGuinness, a former Irish Republican Army (IRA) commander.
McGuinness’ Sinn Fein party is struggling to match in the Irish Republic the success it had in elections in Northern Ireland which is part of the United Kingdom of Great Britain. While the long confrontation between British authorities and the IRA, of which Sinn Fein was the political arm, gave Sinn Fein and McGuinness appeal in Northern Ireland for participation in governance, the same draw does not apply in the Republic.
Indeed, recent polls show that McGuinness has slipped from third to fifth place in the race and is very unlikely in the few days left to catch-up with poet and former culture minister Michael Higgins and senator David Norris who is a noted Irish scholar.
A television debate between the seven contenders produced no fireworks, except for a brief reference to McGuinness’ role in the IRA, which targeted civilians during a 30-year campaign against British rule in Northern Ireland, and the impact on Ireland’s international reputation of such a link to the Irish Presidency.
The two women contenders have very little hope of improving their chances. They are casualties of the success of two previous women, who, between them, have held the Irish Presidency for 21 years. This time the sentiment clearly is to give a man a chance. One of the former women Presidents, Mary Robinson, went on to become an outstanding United Nations High Commissioner for Human Rights from 1997 to 2002 and is now closely associated with fighting for justice in Climate Change – a position that endears her to many developing countries that have become the victims of changes in climate that threaten the very existence of some of them.
So the Irish Presidential election is likely to pass with a new President elected without fanfare and fuss. It will make no shattering difference to Ireland and even less to the rest of the world.
Of greater concern now is Ireland’s capacity to overcome the present economic difficulties by rebuilding its competitiveness in services and high-technology industries. If there is a country that should have the proverbial “luck of the Irish”, it should be Ireland itself. The world must wish so.
The opinions expressed in this commentary are solely those of Sir Ronald Sanders. Sir Ronald Sanders is a Consultant and former Caribbean diplomat.