Ireland: New coalition, same attack on the working class

Fight Racism! Fight Imperialism! 220 April/May 2011

On 7 March Fine Gael and the Labour Party formed a new coalition government in Ireland following the 25 February general election. The previous Fianna Fail/Green Party coalition had become the first government casualty of the economic and social crisis in the Eurozone. The new coalition is committed to implementing the austerity programme of its predecessor and to ensuring that the crisis in Ireland will be resolved at the expense of the poor and working class. As we have argued, there can be no capitalist solution to the crisis; the new government can do nothing to extract Ireland from its financial and social crisis.


Fine Gael took 36.1% of the vote and now has 76 out of 166 TDs (members of parliament), with the Labour Party taking 19.4% of the vote and gaining 37 TDs. Fianna Fail, which had held power for 20 of the past 23 years saw its vote crash from 41.6% to just 17.4%, reducing it from 73 TDs to 20. The Greens, who had helped prop up the previous coalition, lost all six representatives. Sinn Fein increased its vote from 6.9% to 9.9%, taking it from five to 14 TDs, with leader Gerry Adams topping the poll in the border county of Louth.

Corporation tax

None of the main parties had anything to offer the working class other than increased attacks on living standards. What united them was defence of the extremely low corporation tax rate of 12.5% – one of the lowest in Europe. It has been a source of dispute in the EU, with Germany and France arguing that it should be raised and be linked to the terms of the loans given to the Irish state. The corporation tax rate in Britain is between 21% and 28%. In France it is 33% and in Germany 29%. It was this low rate of tax which helped Ireland attract foreign investment which led to ‘Celtic Tiger’ boom. At its height between 1999 and 2002, Ireland became the world’s most profitable country for US corporations, with profits doubling in that period. Today, Microsoft, Google, Intel, Facebook, Paypal and eBay are among those multinationals headquartered in Ireland which benefit from the low tax rate.

Sinn Fein also supports the lower taxation, despite its radical rhetoric during the campaign. The party is already in government in the Six Counties, where it is implementing savage cuts; these will deepen following elections to the Northern Assembly on 5 May. It was suggested in the UK Budget on 23 March that the North could see its corporation tax lowered in line with the Twenty Six Counties in order to attract private foreign investment to the public sector-dependent statelet.

One feature of the February election was the success of the United Left Alliance (ULA), a coalition of left-wing parties including the Socialist Party and the Socialist Workers Party, which won five seats. The ULA was formed in November 2010 as an electoral coalition in opposition to the crisis in Ireland. While its programme ( contains many progressive points, such as opposition to the bank bail-out, calls for jobs and defence of the public sector, it has been criticised by some Irish socialists for lacking an explicit socialist standpoint and for its avoidance of the national question. It is not clear at this stage what it represents or whether it will fight for and advance the interests of the Irish working class.

Battles ahead

The new government faces battles both in its relationship to Europe and with the escalating social crisis at home. New Prime Minister and Fine Gael leader Enda Kenny and his deputy Labour Party leader Eamon Gilmore want to renegotiate the terms of the International Monetary Fund (IMF) and European Union bail out. (See FRFI 218 ‘Ireland – economic crisis escalates’) On Germany’s insistence Ireland will pay substantially more interest on its EU loan than it will on the IMF loan. At a summit of the heads of government of the 17 Eurozone countries on 11 March, Kenny called for a reduction in interest rates on the EU loan. German Chancellor Angela Merkel responded that ‘there must be some give and take’. Germany and Britain are the major creditor nations to Ireland and as such will exert dominance over Irish affairs. The conflict over Ireland’s low corporation tax continues as we go to press on the eve of a European Summit on 24/25 March, with Kenny insisting that an increase to the corporate tax rate would be ‘non-negotiable’.

It is unclear for how long the current social and political peace will hold in Ireland. Job losses and insecurity are on the increase. In 2007 unemployment stood at 4.7%; today it is over 14.6%, and is only offset by increasing migration. Every week 1,000 people migrate overseas; as one young woman told RTE television, ‘you don’t go to parties any more, you go to going-away parties’.

The economic crisis is still in its infancy and political forces capable of resisting the savage cuts and attacks on living standards, which will intensify in the period ahead, are yet to develop. The important question to ask now is where are the political forces who are prepared to fight for and defend the interests of the Irish working class?

Paul Mallon


Ireland: the key to the British revolution by David Reed

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