Swallowing Austerity Turns Into Irish Way as Strikes Grip South

In a village in Cork in southern Ireland, about 50 farmers and business people meet on Sundays after mass to protest against taxpayer bailouts of bankers.

They hold up their banner, wait for the traffic to stop, and set off on their march 200 yards up the road and back to bemoan the collapse of the country’s economy. As the anniversary of Ireland’s 85 billion-euro ($117 billion) international rescue approaches, organizer Diarmuid O’Flynn said the group has struggled to approach 100 people since they started in March.

“Where we’ve gone we’ve met with almost universal support, but nobody will fall in,” he said. “It’s what is called the bystander theory, the more people who witness a crime the less likely somebody is to intervene.”

While violence and strikes bring chaos to the streets of Athens, Rome and Lisbon, such subdued protests in Ireland support the Dublin government’s claim to European partners and bond markets that the nation doesn’t belong in the Mediterranean.

Prime Minister Enda Kenny, riding high in opinion polls after winning power in February, is preparing to push through another 12.4 billion euros of savings. Italian premier Silvio Berlusconi agreed to resign this week to win parliamentary approval of plans to cut debt and Greece’s George Papandreou stepped down for a transitional government under Lucas Papademos, a former European Central Bank vice president.

Party Over

Yields on Irish bonds maturing in 2020, which soared to a high of 15.5 percent in July, are now down to 8.12 percent. That’s compared with 6.81 percent for similar Italian debt, 13 percent for Portugal and 31.1 percent for Greek bonds.

“There is a sense that everyone was at a party that went a little too wild and we’ve different degrees of hangovers,” said Austin Hughes, chief economist at KBC Bank Ireland. “We’re almost more comfortable in the position of the underdog, and in the position of those trying to catch up.”

Ireland’s economy, once among the fastest-growing in Europe, crashed in tandem with the bursting of a real estate bubble in 2008. Unemployment has tripled, most of the financial system has been nationalized and government austerity measures between 2008 and 2015 amount to more than 30 billion euros, or about 20 percent of gross domestic product.

One Strike

Yet there was only one strike in the country in the third quarter and it involved 17 people, according to a statement from the Irish Central Statistics Office Nov. 9. By contrast, Greek unions have been grounding airplanes, halting public transport and garbage piled up on the streets of Athens to protest Papandreou’s spending cuts. Portugal this month faces its second general strike in a year.

Thousands of students demonstrated in London on Nov. 9 against education budget cuts and increased tuition fees. The police made arrests for public-order offences.

“It is very clear that it sets Ireland apart from some other countries,” Istvan Szekely, a European Commission official overseeing the country’s bailout, said in Dublin on Oct. 20. “It just shows the strength of your social coordination process.”

Spots of protest have emerged. In 2008, demonstrations by pensioners forced the former government to reverse a plan to abolish free health care for people over 70 years old.

Last year, health workers refused to answer phones from the public for a period after the state lopped about 6 percent off their pay. About 30 tents are pitched outside the central bank in the center of Dublin to protest the measures imposed as part of the bailout by the International Monetary Fund and the European Union, the euro region’s second rescue.

‘Democratic Revolution’

In Greece, the first country to receive aid, three people were killed in Athens in May 2010 and riots have broken out sporadically since then. In Portugal, which asked for help in April, the two biggest labor unions are preparing for a repeat of last year’s first general strike in 22 years. Arrests followed a 200,000 strong demonstration in Italy last month.

In Ireland, voters replaced their government in what Kenny called a “democratic revolution.” People have become hardened to the cuts as the country tries to revive its economy through exports. Kenny’s policies have largely followed those of his predecessor, yet polls indicated he retains popularity.

“While they are angry, they haven’t moved to the position to become an active opposition to the government policies,” said Eugene McCartan, 56, who is part of the Repudiate the Debt protest group, which wants Ireland to leave the euro. “People have become somewhat shocked at the scale of the collapse.”

Union Backing

Analysts suggest a mix of reasons behind the Irish willingness to accept austerity. Some, such as Hughes at KBC, say it’s partly because many Irish accept they fueled the boom and bust, by pushing up property prices and seeking pay rises that contributed to the country’s loss of competitiveness.

Other analysts point to unions agreeing to work with the government and a lot disgruntled Irish leaving the country.

“The Irish people could have put their foot down anytime during 2010, but in the end did not,” said Sean Kay, a professor of politics and government at Ohio Wesleyan University in Delaware, Ohio, who has written on Ireland. “That largely was because the major unions were happy enough.”

Irish emigration rose to the highest since the 19th century in the year through April, when about 76,400 people left.

“This history of out migration from Ireland is one of the reasons why we haven’t had more revolt and social protest,” said Chris Curtin, professor of Political Science and Sociology at NUI Galway. “The protest is a walk-out.”

Tipping Point?

To be sure, some analysts say a tipping point may be at hand. Finance Minister Michael Noonan said Nov. 4 that he’ll seek 3.8 billion euros of spending cuts and tax increases in 2012, imposing a third year of austerity.

A week earlier he spoke about how the country was “breaking the perception” that it was some sort of displaced Mediterranean nation in the Atlantic.

He will seek another 9 billion euros of savings between 2013 and 2015 to hit the bailout target of reducing the fiscal deficit to below 3 percent by 2015. Moreover, a slowdown in the global economy is undermining hopes for a recovery in Ireland.

“The new government really doesn’t have any fixes, or policy options that will better people’s lives in any kind of near-term future,” Kay said. “More cuts are coming and people are now beginning to just feel last year’s cuts.”

Back in County Cork, the Irish aren’t ready to rise up in significant numbers. The protester count has dropped to less than 50 from a peak of 70, as local sports games and farm work draw locals away from protests.

“Everybody knows this is happening, but everybody is waiting for somebody else to protest,” organizer O’Flynn said.

To contact the reporters on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net

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