By Joe Leary
Special to the BIR
Whether it was the fault of Ireland’s unscrupulous bankers, greed-driven businessmen, or incompetent politicians, the country is now experiencing a traumatic collapse of its ruling government.

Prime Minister Brian Cowen and Ireland’s ruling political party, Fianna Fail, have lost the confidence of the people and new elections in late February or early March are expected to bring a complete change of leadership and, ideally, a new sense of hope to the citizenry.
Ever since Ireland’s severe economic problems became evident three years ago, Fianna Fail and Cowen have come under intense criticism for their handling of the crisis. Naturally, many of the attacks came from opposing political parties seeking to take advantage of the situation, but they have had their effect: Newspapers report polls placing the party’s approval rating at just 14 percent.
The deep recession seems to have affected some nations more than others. In Ireland, the major problem appears to be the banking system and the lending of funds they didn’t have to businesses that were unable to pay them back. The banks in turn borrowed the funds from European banks that became very nervous when repayment looked doubtful. The Irish government, fearing a run on the banks (which had already begun,) decided to guarantee all bank loans, thereby causing much of the country’s current indebtedness.
In order to stay solvent, the government borrowed 85 billion euro from the European Central Bank, thereby committing Ireland to reforming its system and disciplining its banks. The Europeans, of course, were protecting their own banks, which had loaned the funds to Irish banks.
Opposing politicians called these commitments “a loss of sovereignty” and loudly criticized Cowen and his finance minister, Brian Lenihan. In retrospect, the bank bailout in Ireland was probably the start of the government’s downfall.
But a lot more is wrong in Irish society. The recession has hit hard. Many families are suffering, and unemployment is at near 14 percent, the highest in years. Emigration to Canada, Australia, and the United States has increased for the first time in many years. Tourism in Ireland is at a 12-year low. The systems delivering water to homes, hospitals, and offices are frequently breaking down. In some parts of the country, including counties Louth and Clare, suicides are more numerous than automobile fatalities. Aer Lingus is facing daily disruptions of service due to labor problems caused by cost-cutting efforts. And, unfortunately, the Catholic Church has been so damaged that few people – almost no young people – are finding solace within the walls of its churches.
Then came the devastating revelation that Cowen had played golf with Sean Fitzpatrick, chairman of Anglo Irish Bank – a bank that is considered one of the most serious examples of financial malfeasance. Cowen denied talking about the loan problems, but the people either did not believe him or were amazed by his lack of judgment. He lost any semblance of credibility.
Cowen’s majority in the Irish Parliament was already in jeopardy as he faced sponsoring a finance bill through Parliament in order to formalize the agreement with the European banks. By the middle of January, many in his own party were calling for his resignation. He refused, and barely survived a party confidence vote, but on Jan. 22, he announced he would resign – just after six of his ministers had resigned, many saying they would not run again.
In late January, as this column is being written, Cowen remains as Ireland’s prime minister but not the leader of his party, moving one reporter to ask him, “How can you run the country when you can’t run your own political party?”
Fianna Fail has elected as its new party leader Micheal Martin, a 51-year-old Cork man who represented Cork South Central from 1989. He has been foreign minister under Cowen since 2008.
It is apparent that once the European banks’ finance bill is passed, the current Parliament will be dissolved and new elections will be called, probably for late February.
Martin has a very tough fight on his hands in order to make a respectable showing in the election. He has already challenged opposing leaders to debates and added new energy to his party. At last count, Fianna Fail had 72 members in Parliament. Some guess that the party will have no more than 30 seats after the count is in on the upcoming vote. It should be remembered that Fianna Fail has been Ireland’s largest political party for many years; it may be a bit early to count them out completely.
If, as expected, Fine Gael wins the most seats, that party will form a new government in coalition with Labour. The latest newspaper polls (before Martin’s election as Fianna Fail leader) show Fine Gael with 35 percent, Labour with 21 percent, Fianna Fail with 14 percent, and Sinn Fein with 14 percent. Coalition governments are always difficult to manage. In this case, Enda Kenny, the leader of Fine Gael, is a controversial figure and will be tested if he becomes prime minister as is currently anticipated.
Nearly 40 of Parliament’s 166 members are not running for re-election, including former prime minister Bertie Ahern, and about half of those are Fianna Fail members who can easily see the handwriting on the wall.
Whatever the result, the elections will offer a new start for Ireland. The upcoming campaign will be very interesting, and the weeks and months following will be a great opportunity for the country to solve its major problems. The world’s recession seems to be fading, and with all its infrastructure in place, its financial problems addressed with the European loan, and many painful lessons behind them, Ireland and its new leadership should succeed.