The eu deconstructed

Ireland austerity and resistance Eoghan O’Neill traces the post-war course taken by the Irish state and the political and economic consequences of his country’s embrace of the Euro and the austerity policies of the European Union. He charts the growth of resistance to austerity policies and the imposition of water charges and outlines an anti imperialist strategy grounded in the the the struggle for working class power and national sovereignty.

WHAT WERE the main causes of Ireland’s financial crisis? You will hear from many sources that Ireland’s financial crisis was a ‘plain vanilla’ property bubble. With cheap access to credit the Irish banks willingly took out extensive loans so that they, in turn, could lend to the large development and speculation sector that was gaining traction in Ireland.

Irish Government policies incentivised investment in property development while the media promoted this policy of buying and investing in property at home and abroad.

Risky lending practices, started mainly by the Anglo Irish Bank, would see Irish banks becoming more susceptible to risk. Massive loans were given without proper checks on the portfolios and the viability of the investor. Light touch regulation allowed this to continue unabated.

The loans made by the banks began to be exposed to the losses of its borrowers.

A gap of around €200 billion between what the banks had lent (largely to property developers) and deposits taken had been bridged by borrowing in international markets, which, with the ongoing global economic crisis, began to dry up. This culminated in the decision on 29 September 2008 to issue a blanket guarantee to save the banks.The gross amount of liabilities guaranteed under the scheme came to approx €365 billion or two and a half times the Gross National Product.

This analysis puts the blame squarely on the Irish state; on the lending practices of the banks, the failure of the regulator and light touch regulation, on government policy and on the role of the media. It is a neat narrative that on the surface seems credible, however there are a series of events that have to take place before these wheels are set in motion. These were the only policies available to a gombeen1 government at the time due to decades of European integration and the removal of democratic levers from the Irish state to the undemocratic and unaccountable EU 4 The EU deconstructed