Monday, September 26, 2011

Dublin treated with double standards by Brussels elite

Sometimes it is the softly-spoken who can be the most dangerous. Olli Rehn is a case in point.

A few months ago, Ireland’s EU commissioner Máire Geoghegan-Quinn made this observation about Rehn’s initial handling of the financial crisis in her country (and mine): “This was ‘Mr Nasty’ coming in to tell the Irish people and the Irish government what to do. And then suddenly, he gave an interview on television and people said, ‘This guy. Mr Nasty?’ It doesn’t fit with the man at all. He explained everything in a very reasonable way.”

Rehn may be an affable bloke. But as the Union’s economic policy chief, he is implementing measures that have nasty consequences.

I have obtained copies of the briefing notes that Brussels officials prepared for Rehn when he was pondering what should be done about Ireland in 2010 and the beginning of 2011. The stench of arrogance and callousness from these papers is overpowering.

Right now, I am reading a “scene setter” that Rehn perused before a November meeting with Irish opposition leaders and “social partners” (as representatives of bosses and workers are called – misleadingly – in Brussels parlance). It dismisses a call by trade unions to extend the 2014 deadline by which Ireland has been enjoined to bring down its budget deficit to within 3% of gross domestic product (GDP). “Even if this was politically feasible, it would be an arithmetical impossibility,” the document says. “Financial markets will simply not allow Ireland to kick the can further down the road.”

“We know best”

I’m not a huge admirer of Ireland’s trade union leadership, mainly because it has been too eager to curry favour with the powerful. But the EU officials’ attitude of “we know best” is disgusting. The deficit limits they regard as sacrosanct are the result of arbitrary criteria that make sense only to the German government and its slavish followers in the Commission and the European Central Bank.

It is also significant that another internal Commission document contradicts the line from Rehn’s team. This second document is a briefing note prepared for a meeting between José Manuel Barroso, the institution’s president, and Klaus Regling, head of the European Financial Stability Facility (the “bail-out” backstop for eurozone countries), in December. It says that the 3% deadline should be postponed to 2015 as this would be a “more credible target”. Something that was an “arithmetical impossibility” less than a month earlier became feasible with a click of the fingers.

A third paper indicates that a general election held in Ireland during February this year was essentially fought on lies. The centre-right Fine Gael, which emerged as the largest party after that poll, promised voters that it would “burn the bondholders” and that Irish banks would not receive another cent from the state until they imposed losses on creditors. Yet the Commission’s document, dating from January, suggests Brussels had already told senior figures in Fine Gael to rule out that option. “A possible involvement of banks’ senior bondholders (‘haircut’) has been excluded and renegotiating this would run counter to the progamme’s main objective – restoring confidence in the Irish banking sector,” it says.

Callous indifference to suffering

The most disturbing thing about the 11 internal documents I’ve seen is how they call savage cuts to social expenditure “appropriate”, without registering a smidgen of concern for the people affected. The cuts are proving especially cruel to children with learning difficulties. A report shown by the national broadcaster RTE recently illustrated how one school in Wexford – a county in the south-east – has lost five special needs assistants. That story is being replicated across Ireland, hampering children from learning the most basic skills such as the ability to write their own name.

It is a tenet of elementary justice that nobody should be punished for a crime he or she did not commit. Why is Olli Rehn punishing Irish children for a crime of which they are entirely innocent? And why should education be hit at all? Even during its “Celtic Tiger” boom, Ireland was spending proportionately less on schooling than the average for industrialised countries, according to data from the Organisation for Economic Cooperation and Development.

If Rehn’s team had been a little more thorough in its research, it would have realised that despite Ireland’s problems, the country still has a fair amount of wealth. Merrill Lynch (now Bank of America’s wealth management division) has calculated that the country had 19,000 “high net worth individuals” (HNWIs) last year, a rise of 5% from 2009. HNWIs are people with over $1 million in “investable assets”.

It is striking that the Irish Business and Employers Confederation (IBEC) has been demanding all kinds of measures that hurt ordinary people. It has demanded the scrapping of the minimum wage, downsizing of the public sector and reform of social welfare to “incentivise” work. Yet IBEC and its chums in the Irish government and the Brussels institutions won’t contemplate going after the rich. Why can’t a limit be set on the amount of money people can have, so that they are required to hand over anything above that limit to the exchequer?

Paul Krugman, the economist, last week compared Europe’s austerity agenda to bloodletting. Doctors no longer believe that patients can be healed by draining their blood; they will just get weaker. The same goes for economic management, yet Rehn and the blinkered bureaucrats around him are continuing to prescribe medicine that simply doesn’t work.

●First published by New Europe, 26 September 2011.

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