POLITICAL UPHEAVAL IN IRELAND

The last few weeks has seen some unprecedented
political upheaval in Ireland. Set against a
background of a worsening economy and a financial
crisis the drama began when the Green Party
announced that they would be leaving the coalition
government. They indicated that they would be
prepared to support the passing of the Finance
Bill, which brings into effect the recent tax and
cut budget that was a condition of the IMF
bailout. The Greens were clearly unimpressed with
the way the ruling Fianna Fail party dealt with
the negotiations with the IMF and surprised many
by their decision to quit.

This was to be no immediate walk-out though. The
Green Party demanded an election early in 2011
with March or April being cited by Fianna Fail as
their preference. It was not to be. Taoiseach and
Fianna Fail leader Brian Cowen was effectively
ousted from his position as leader, forced to
resign, with the strange situation arising of a
ruling Taoiseach not being leader of his own
political party. Cork TD Michael Martin was elected
leader of Fianna Fail but will not be appointed
Taoiseach as the General Election had to be brought
forward at the insistence of the Greens.

The drama was not over though. Several independent
TDs demanded and received concessions in return
for their support of the Finance Bill which will
now become law. The Labour Party strangely
facilitated the passing of the Finance Bill while
constantly decrying its measures. It is unclear if
they are going to reverse any of its detail. Fine
Gael also seem content to let Fianna Fail bring in
the harsh budget measures, certain in the
knowledge that they are very likely to be the
country's ruling party in a few weeks time.

GENERAL ELECTION CAMPAIGNING UNDER WAY

The surprise decision by the Green party to bring
down the government has been seen by many as their
attempt to seize some sort of moral high-ground
prior to the general election campaign proper.
Historically smaller coalition parties have
usually fared poorly after their time in
government and given that the current government
is deeply unpopular it seems likely that the Green
Party will be decimated at the polling booth. They
do have some popular TDs in John Gormley, Trevor
Sargent and Eamon Ryan, but there is a real
possibility that they could lose all of their
seats, sending the party into oblivion.

Fine Gael are delighted with the recent
developments having been on an election footing
for several months. Their party leader Enda Kenny
survived a poorly executed attempt to remove him
as leader with challenger Richard Bruton firmly
put in his place. Reservations about the political
judgement as well as the communication skills of
Enda Kenny continue to veneer the entire Fine
Gael message. In the earliest shot of the election
campaign Enda Kenny scored and own-goal when
challenged to a three-way debate with Labour and
Fianna Fail by Micheal Martin. His assertion that
all five parties (adding the Greens and Sinn Fein)
should be included in any televised debates was
seen as an admission of weakness by media
commentators. Fianna Fail and Labour have
threatened to have their own 2-way debate unless
Fine Gael accedes, a scenario that would be very
damaging for Fine Gael. Either way, this kind of
mishandling of a relatively straight-forward
matter is just a hint of the reason why
there are so many reservations about Enda Kenny.
He is still on course however to be head of the
largest political party after the election, and
thus set to become Taoiseach.

The Labour Party are about to be 'called out'.
For the last year their leader has been the
darling of the media, riding high in the opinion
polls while offering a good presentation as a
debater. The problem for Labour is that their
policies are not fully formed or explained and
while they have made great gains in criticizing
Fianna Fail over their handling of the economy
during the last two years it is relatively easy
to be destructive and much harder to be
constructive. Their policies are now going to
come under the microscope so it remains to be
seen if their popularity survives this acid test.
Their refusal to vote against the recent Finance
Bill while berating its measures seems to be a
case of 'having it both ways'. It is now time to
get off the fence with Fianna Fail in particular
eager to get at Labour. It is the Labour Party
who have benefitted most from Fianna Fails loss
of support.

Sinn Fein's support seems volatile. The two
civil-war parties are almost ideologically
identical while the Labour party's socialist
tradition has been watered down into a
supposedly pro-business stance. Sinn Fein are
much more radical and will seek to take votes from
Labour and Fianna Fail, especially in urban and
traditionally republican areas. Their party leader
Gerry Adams is himself seeking election to the
Dail in the coming poll and he is certainly a high
profile candidate. The question is whether they
can convert their relative popularity into
parliament seats. Prior to the last election they
were similarly well placed to make gains but such
gains did not materialise. Their paramilitary
history along with somewhat radical economic
policies are also off-putting to large swathes of
the electorate. If they cannot make the
breakthrough in the coming election with just
about every parameter in their favour then it
is hard to see them ever being anything other than
a fringe minority party in the Republic.

Independent candidates look certain to make big
gains in the upcoming election. A general dismay
with party politics in general combined with a
keen observance of just how much influence
independents had over the current government
will likely result in the largest ever number of
independent and small-party candidates being
elected. They could even form an uneasy alliance
with Fine Gael should that party get anywhere
close to an overall majority.

And what of Fianna Fail? Opinion polls put the
party at its worst level ever. Surely they will
be invigorated by the election of Michael Martin
as party leader. He has made a good start
by apologising for the poor decisions made by
Fianna Fail in government. This is something that
Brian Cowen and Brian Lenihan were never willing
to do, choosing instead to blame external factors
in the world economy for the economic crisis in
Ireland. While it is true that the worldwide
property crash and subsequent banking crisis were
out of Ireland's control the willingness to base
the economy on the construction industry while
allowing appallingly lax regulation of the
banking sector are certainly faults that lie
squarely at Fianna Fail's door.

The Fianna Fail party though, is very good at one
thing in particular: elections. They have
consistently and professionally managed their votes
in constituencies in order to gain the maximum
number of seats. They will surely focus on their
local representation rather than their tarnished
record in government when they go knocking house
to house and perhaps the devastation wont be as
bad as feared. One thing is certain though and
that is that the party is going to lose a large
number of seats, likely trailing in behind Fine
Gael and Labour as the third most popular party
in the country. Right now they would probably
settle for that.

IMF BAILOUT DEAL LIKELY TO BE REVISITED

Despite assertions from the EU and the IMF that
the terms of the recent bailout for Ireland cannot
be changed the rate of interest being charged is
a particular irritation to the majority of Irish
people. The 6% rate being charged to Ireland is
nearly double that available on the open market.
The national debt is expected to reach the 200 BN
Euro mark by 2013 with almost a third of all
taxes raised being paid in loan interest to service
this debt. This is clearly a disastrous situation
for any country and is one that the majority of
citizens want reviewed.


RETAIL INDUSTRY ON ITS KNEES

The three year decline in domestic retail sales in
Ireland seems to be accelerating and will certainly
cause huge job losses in the industry. The advent
of the new Universal Social Charge (a tax) appears
to be hitting people hard in their wage-packets and
the result is that they are not spending. The first
few weeks of 2011 have been a disaster for Irish
retailers and this following on from the snow and
ice that kept shoppers away over the Christmas
period.


HOUSE BUILDING AT 35-YEAR LOW

2010 saw the smallest number of new houses built
in Ireland in 35 years with just over 14,600 new
dwellings being constructed. By contrast there
were over 93,000 dwellings constructed in 2006.
Employee numbers fell from 272,000 in 2007 to
121,000 in 2010, a devastating reduction for a
country with a population of less than 4.5
million people. House prices continue to fall in
some sectors although they have stabilized in
some other sectors of the market.